10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

[X]     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2003

OR

[  ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________
Commission file number 1-10841

GREYHOUND LINES, INC.

and its Subsidiaries Identified in Footnote (1) Below
(Exact name of registrant as specified in its charter)

Delaware	86-0572343
(State or other jurisdiction	(I.R.S. employer
of incorporation or organization)	identification no.)
15110 N. Dallas Parkway, Suite 600, Dallas, Texas	75248
(Address of principal executive offices)	(Zip code)

(972) 789-7000
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
8 ½ % Convertible Subordinated Debentures, due March 31, 2007	American Stock Exchange

     Securities registered pursuant to Section 12(g) of the Act:
None.

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [X] NO [  ]

     Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]

     Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). YES [  ] NO [X]

     Aggregate market value of Common Stock held by non-affiliates of the registrant on June 30, 2003, was $0.

     As of March 15, 2004, the registrant had 587 shares of Common Stock, $0.01 par value, outstanding all of which are held by the registrant’s parent company.

(1)	This Form 10-K is also being filed by the co-registrants specified under the caption “Co-Registrants”, each of which is a wholly-owned subsidiary of Greyhound Lines, Inc. and each of which has met the conditions set forth in General Instructions I(1)(a) and (b) of Form 10-K for filing Form 10-K in a reduced disclosure format.
(2)	The registrant meets the conditions set forth in General Instructions I(1)(a) and (b) of Form 10-K and is therefore filing this form in a reduced disclosure format.

Co-Registrants

This Form 10-K is also being filed by the following entities. Except as set forth below, each entity has the same principal executive offices, zip code and telephone number as that set forth for Greyhound Lines, Inc. on the cover of this report:

			I.R.S. Employer		Jurisdiction
	Commission		Identification		Of
Name	File No.		No.		Incorp.
Atlantic Greyhound Lines of Virginia, Inc.		333-27267-01		58-0869571	Virginia
GLI Holding Company		333-27267-04		75-2146309	Delaware
Greyhound de Mexico, S.A. de C.V.		333-27267-05	None		Republic of Mexico
Sistema Internacional de Transporte de Autobuses, Inc. 802 Commerce Street, 3rd Floor Dallas, Texas 75201 (214) 849-8616		333-27267-08		75-2548617	Delaware
Texas, New Mexico & Oklahoma Coaches, Inc. 1313 13th Street Lubbock, Texas 79408 (806) 763-5389		333-27267-10		75-0605295	Delaware
T.N.M. & O. Tours, Inc. (Same as Texas, New Mexico & Oklahoma Coaches, Inc.)		333-27267-11		75-1188694	Texas
Vermont Transit Co., Inc. 345 Pine Street Burlington, Vermont 05401 (802) 862-9671		333-27267-12		03-0164980	Vermont

As of December 31, 2003, Atlantic Greyhound Lines of Virginia, Inc. had 150 shares of common stock outstanding (at a par value of $50.00 per share); GLI Holding Company had 1,000 shares of common stock outstanding (at a par value of $0.01 per share); Greyhound de Mexico, S.A. de C.V. had 10,000 shares of common stock outstanding (at a par value of $0.10 Mexican currency per share); Sistema Internacional de Transporte de Autobuses, Inc. had 1,000 shares of common stock outstanding (at a par value of $0.01 per share); Texas, New Mexico & Oklahoma Coaches, Inc. had 1,000 shares of common stock outstanding (at a par value of $0.01 per share); T.N.M. & O. Tours, Inc. had 1,000 shares of common stock outstanding (at a par value of $1.00 per share); and Vermont Transit Co., Inc. had 505 shares of common stock outstanding (no par value). Each of the above named co-registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period such co-registrant was required to file such reports), and (2) have been subject to such filing requirements for the past 90 days.

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GREYHOUND LINES, INC. AND SUBSIDIARIES

INDEX TO FORM 10-K

		Page No.
	PART I
Item 1.	Business		5
Item 2.	Properties		12
Item 3.	Legal Proceedings		13
	PART II
Item 5.	Market for the Registrant’s Common Equity and Related Stockholder Matters		15
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		16
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk		28
Item 8.	Financial Statements and Supplementary Data		29
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		57
Item 9A.	Controls and Procedures		57
	PART III
Item 14.	Principal Accountant Fees and Services		58
	PART IV
Item 15.	Exhibits, Financial Statement Schedules and Reports on Form 8-K		59
Amended/Restated Certification of Incorporation
Bylaws of Greyhound Lines, Inc.
Second Supplemental Indenture
Supplemental Executive Retirement Plan
First Amendment to Executive Retirement Plan
Second Amendment to Executive Retirement Plan
Third Amendment to Executive Retirement Plan
Executive Retirement Plan Trust Agreement
Amended Employment Agreement
Amendment to Amended Executive Employment Agrmt.
Memorandum of Agreement
Change in Control Severance Pay Program
Form of Change in Control Agreement
Subsidiaries of the Registrant
Certification of CEO Pursuant to Section 302
Certification of CFO Pursuant to Section 302
Certification Pursuant to Section 906

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Risks Associated with Forward-Looking Statements Included in this Form 10-K

     Statements in this Form 10-K that are not purely historical facts, including statements regarding beliefs, expectations, intentions, projections or strategies for the future of Greyhound Lines, Inc. and subsidiaries (the “Company”), may be “forward-looking statements” under the Private Securities Litigation Reform Act of 1995. All forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from the plans, intentions and expectations reflected in or suggested by the forward-looking statements. Such risks and uncertainties include, among others, the general economic condition of the United States and the future level of bus travel demand; the impact of future terrorist incidents; operational disruptions as a result of bad weather; the Company’s future yields; increased costs for security; the cost and availability of excess insurance coverage and the Company’s ability to retain authority to self-insure; the impact of changes in fuel prices; the effect of future Government regulations; potential pension plan funding requirements; limitations on financing flexibility and availability due to the potential inability of the Company to obtain extensions of the maturity date of its revolving credit facility or to remain in compliance with covenants required under its various debt agreements consequently affecting the ability of the Company to continue as a going concern; changing credit markets; the ability to renew labor agreements without incurring a work stoppage or slowdown; disruptions to Company operations as a result of forced relocations of terminals or garages; and other factors described from time to time in the Company’s publicly available Securities and Exchange Commission filings. The Company undertakes no obligation to publicly update or revise any forward-looking statements to reflect events or circumstances that may arise after the date of this filing.

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PART I

ITEM 1. BUSINESS

General

     Greyhound Lines, Inc. and subsidiaries (“Greyhound” or the “Company”) is the only nationwide provider of scheduled intercity bus transportation services in the United States. The Company serves the value-oriented customer by connecting rural and urban markets throughout the United States, offering scheduled passenger service to more than 2,600 destinations with a fleet of approximately 2,800 buses and approximately 1,700 sales locations. The Company also provides package express service, travel services and, in some terminals, food service. For the year ended December 31, 2003, the Company generated total operating revenues of $975.5 million.

     The Company serves a diverse customer base, consisting primarily of low to middle income passengers from a wide variety of ethnic backgrounds. The demographic groups that make up the core of the Company’s customer base are growing at rates faster than the U.S. population as a whole. The Company believes that it is uniquely positioned to serve this broad and growing market because (i) the Company’s operating costs, which are lower on an available-seat-mile basis than other modes of intercity transportation, enable it to offer passengers everyday low prices, (ii) the Company offers the only means of regularly scheduled intercity transportation in many of its markets, and (iii) the Company provides additional capacity during peak travel periods to accommodate passengers who lack the flexibility to shift their travel to off-peak periods.

     On March 16, 1999, the Company’s stockholders approved the Agreement and Plan of Merger with Laidlaw Inc. pursuant to which the Company became a wholly-owned subsidiary of Laidlaw Inc. (the “Merger”).

     On June 28, 2001, as part of a financial restructuring, Laidlaw Inc., Laidlaw USA, Inc., Laidlaw International Finance Corporation, Laidlaw Investments Ltd., Laidlaw One, Inc. and Laidlaw Transportation, Inc. filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the Western District of New York, under a jointly administered case captioned, In re: Laidlaw USA, Inc., et al, Case No. 01-14099. On that date, Laidlaw Inc. and Laidlaw Investments Ltd. also filed cases under the Canada Companies’ Creditors Arrangement Act in the Ontario Superior Court of Justice in Toronto, Canada, court file no. 01-CL-4178. Neither Greyhound, nor any of its subsidiaries were included in, or made party to, these reorganization filings and proceedings.

     Effective June 23, 2003, Laidlaw Inc. emerged from the court-supervised reorganization process after completing all required actions and satisfying or reaching agreement with its creditor constituencies on all remaining conditions to its Third Amended Plan of Reorganization. This Plan was confirmed by the U. S. Bankruptcy Court for the Western District of New York by order dated February 27, 2003. In accordance with the Plan of Reorganization, Laidlaw Inc. completed an internal corporate restructuring, in which Laidlaw International, Inc. acquired all of the assets of Laidlaw Inc., a Canadian corporation. Additionally, pursuant to the Plan, Laidlaw International, Inc. domesticated to the United States as a Delaware corporation. Laidlaw International, Inc. and its predecessor Laidlaw Inc. are referred to as “Laidlaw.”

Markets

     Passengers. While the Company’s major passenger markets are large metropolitan areas, its business is geographically fragmented, with the 50 largest sales outlets or the 1,200 largest origin/destination city pairs producing approximately 50% of 2003 ticket sales. Demographic studies have shown that the Company’s potential riders are concentrated in the northeastern, southern and industrial mid-western United States, as well as Texas and California. The typical passenger travels to visit friends and relatives and generally has an annual income below $35,000. In many cases, the Company’s passengers report that they own automobiles considered sufficiently reliable for a trip of a similar distance, but travel by bus because they are traveling alone or because of the lower cost of bus travel. The majority of the Company’s customers usually make the decision to take a trip only a short time before actually traveling and, for the most part, pay cash for their tickets on the day of departure.

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     Package Express. The Company’s package express service targets commercial shippers and delivery companies that require rapid delivery of small parcels, typically between 100 and 500 miles. The Company’s product offerings include standard delivery, which is the traditional low-value, terminal-to-terminal delivery product, as well as priority and same day delivery, which are the premium priced products typically delivered door to door. The Company satisfies the door-to-terminal/terminal-to-door portion of priority and same day deliveries principally through relationships with over 300 courier companies, which serve over 400 markets. Shipments include automotive repair parts, wholesale foods, computer parts and forms, fresh flowers, optical, medical and dental supplies, architectural and legal documents and pharmaceutical products. With its extensive network and multiple schedules, the Company is able to provide expedited service, especially to rural areas. Most shipments arrive at their destination on the same day they are shipped or by 8:00 a.m. the following morning. The Company also provides local courier services through its subsidiaries in three metropolitan markets: Minneapolis, MN, Chicago, IL and Houston, TX. In addition, the Company provides shipping services at its retail counters in selected markets as an Authorized Shipping Outlet for United Parcel Service.

     Food Service. The Company’s food service division gives passengers the ability to purchase food, gifts and logo merchandise in over 55 terminal locations. In addition to cafeteria-style restaurants, convenience store type “grab and go” facilities and gift shops, the Company also offers national brand concepts such as Star Hardee’s, KFC, Blimpies and Pizza Hut.

     Travel Services. The Company offers charter and tour services (“travel services”) principally for group travel to and from specific events, such as concerts, sporting events, casinos and conventions. Generally the passenger business provides the bus and driver resources for these travel services on an “as available” basis, such that resources are often only available in off-peak periods, generally weekdays outside of the peak summer and holiday periods. However, the Company has also established dedicated bus and driver resources for travel services operations in certain cities so that the operations in these cities are not completely dependent on resource availability from the passenger business and are, accordingly, able to offer travel services on the weekends and in the summer. Additionally the Company operates “meet and greet” services for cruise lines at five ports in the United States. The “meet and greet” service consists of meeting cruise line passengers (usually at airports) and transferring these passengers and their baggage to and from cruise ships.

Marketing and Advertising

     The Company’s marketing and advertising philosophy is geared toward stimulating travel through price awareness, improving the awareness and image of Greyhound among potential customers and inducing first-time and repeat travel. The Company uses various means to advertise its passenger travel business including radio, television and print media (primarily yellow pages). Additionally, the Company offers convenient around-the-clock fare and schedule quotations via a toll-free telephone number through its telephone information centers and through the Company’s internet web site. The Company’s telephone centers and web site handled 40.1 million requests in 2003, an increase of 2.3% over 2002. The Company also markets its passenger and in-terminal services through advertising in the terminal facilities and on its ticket jackets.

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Operations

     The Company utilizes approximately 130 company-operated bus terminals and approximately 1,520 agency-operated terminals and/or sales agencies. Maintenance garages are maintained at 27 strategic locations and are supplemented by company-operated service islands and fueling points. The Company currently has approximately 4,400 drivers based in approximately 100 different locations across the country. In the Greyhound Lines unit, drivers report to driver supervisors who are organized into 11 districts reporting to district managers of customer operations. The scheduling and dispatch of the buses and drivers is a centralized function that coordinates with the districts in the planning and execution of daily operations. The flexing of capacity to meet demand is accomplished through the management of national dispatch operations for equipment and drivers, rental of additional buses to cover peak demand periods, planning and coordinating extra sections with the districts and analyzing and implementing pooling and through service arrangements with other carriers. Annual planning of the fleet size and driver requirements by location is also centralized. Subsidiaries of Greyhound Lines independently coordinate and manage their own driver and fleet resources.

     Information technology is an integral component of the Company’s operations. The Company’s information systems support, among other things, its web site, scheduling and pricing, dispatch, operations planning, bus maintenance, telephone information center, customer service, point of sale, payroll and finance functions. As of December 31, 2003, the Company’s automated fare and schedule quotation and ticketing system, called TRIPS, was in use at 434 locations.

Competition

     Passengers. The transportation industry is highly competitive. The Company’s primary sources of competition for passengers are automobile travel, low cost air travel from both regional and national airlines, and, in some markets, regional bus companies and trains. Typically, the Company’s customers decide to travel only a short time before their trip and purchase their tickets on the day of travel. The Company’s everyday low pricing strategy usually results in “walk-up” fares substantially below comparable airline fares. In instances where the Company’s fares exceed an airline discount fare, the Company believes the airline fares are temporary or are typically more restrictive and less readily available than travel provided by the Company. However, the Company also utilizes advance purchase discount programs in order to attract the price sensitive customer. Price, destination choices and convenient schedules are the ways in which the Company meets this competitive challenge.

     The automobile is the most significant form of competition to the Company. The out-of-pocket costs of operating an automobile are generally less expensive than bus travel, particularly for multiple persons traveling in a single car. The Company meets this competitive threat through price and convenient scheduling.

     Additionally, the Company experiences competition from regional bus companies and small local bus companies that cater to particular ethnic groups. Price, frequency of service, and convenient scheduling are the current strategies of the Company to meet this competition. The Company’s competitors possess operating authority for, but do not currently operate over, numerous routes potentially competitive to the Company. Based on market and competitive conditions, the regional bus companies could operate such routes in the future. Competition by U.S.-based bus and van operators for the market represented by Spanish speaking customers in the U.S. is growing. As of January 1, 1997, barriers to entry into the regular-route cross-border bus market between the U.S. and Mexico were scheduled to be reduced under the North American Free Trade Agreement (“NAFTA”), although entry into either market would still be regulated by the respective U.S. and Mexican regulatory authorities. In March 2002, the U.S. Department of Transportation (“DOT”) issued a series of rules establishing the process that Mexican-domiciled companies must follow to obtain authority to perform cross-border bus operations into the United States. These rules require Mexican companies to comply with all U.S. safety requirements and labor and immigration laws. A federal court stayed these rules late in 2002 until DOT completes an environmental impact review required by federal law. DOT commenced the environmental impact review, but also appealed the adverse court decision to the U.S. Supreme Court. In late 2003, the Supreme Court agreed to hear the appeal and is expected to issue a decision in mid-2004. Once either the environmental impact review is complete or the Supreme Court rules that no such review is required, the Company

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could experience significant new competition on routes, to, from and across Mexican border points. Additionally, certain U.S.-based operators are providing cross-border service into Mexico at this time. NAFTA also permits U.S. carriers to make controlling investments in carriers domiciled in Mexico and permits Mexican carriers to make controlling investments in carriers domiciled in the United States. In addition to bringing new competition, the Company believes that the changes under NAFTA will increase the volume of bus travel along both sides of the border and provide the Company with a growth opportunity. The Company believes that the most effective way to service passengers in this market is through ventures or ticket selling arrangements with Mexico-based bus carriers. The Company has established a separate operating subsidiary that, through these ventures, provides through-bus service at most major gateways between the United States and Mexico. Additionally, in some of its terminals Greyhound Lines sells tickets for travel in Mexico on Grupo Estrella Blanca (“GEB”), a Mexico-based bus carrier, and GEB sells tickets for travel in the U.S. on Greyhound Lines in certain of their terminals in Mexico.

     Package Express. The Company faces intense competition in its package express service from local courier services and overnight express and ground carriers. The Company continues to develop programs to meet this competition and further develop its package express business. These programs focus on system upgrades to improve service, billing and tracking for its customers, localized marketing strategies, and local, regional or national alliances with, or acquisitions of, pick up and delivery carriers. Due to the incremental nature of the package express business, the Company is able to provide same-day intercity package express service at distances of up to 500 miles at a substantially lower price than those charged by other delivery services.

     Food Service. The captive nature of the food service operations in the Company’s terminals limits competition; however, in some locations proximity of terminals to fast food outlets and convenience stores can pose a competitive factor.

     Travel Services. Charter services are provided by several thousand local operators as well as a few regional carriers. Pricing, type of equipment and consistency in service are the principal factors both in generating new business and retaining existing customers. The Company principally competes based upon price and consistency of service, and continues to develop diversified product offerings in order to meet the customers’ demands.

Operating Environment

     The Company’s business is affected by changes in economic conditions, consumer preferences and spending patterns, medical and wage inflation, demographic trends, consumer perceptions of transportation safety, costs of safety, security and environmental measures, road congestion and the weather. Following the September 11, 2001 terrorist attacks the Company increased its spending for safety and security in the bus terminals by approximately $5 million annually. Additionally, it is possible that the Transportation Security Administration (“TSA”) could mandate security procedures that exceed the level currently provided by the Company further increasing costs. The Company has also incurred significant increases in insurance costs principally due to medical inflation, increases in excess insurance premiums and several significant claims arising from in-transit criminal assaults against drivers. Past terrorist acts and incidents on buses, or perceptions about future attacks, including changes in the Homeland Security threat levels, have and could continue to adversely affect the demand for the Company’s services.

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Seasonality

     The Company’s business is seasonal in nature and generally follows the pattern of the travel industry as a whole, with peaks during the summer months and the Thanksgiving and Christmas holiday periods. As a result, the Company’s cash flows are also seasonal with a disproportionate amount of the Company’s annual cash flows being generated during the peak travel periods. Therefore, an event that adversely affects ridership during any of these peak periods could have a material adverse effect on the Company’s financial condition and results of operations for that year. The day of the week on which certain holidays occur, the length of certain holiday periods, and the date on which certain holidays occur within a fiscal quarter, may also affect the Company’s quarterly results of operations.

Workforce

     At March 1, 2004, the Company employed approximately 11,000 workers, consisting of approximately 3,600 terminal employees, 4,400 drivers, 1,000 supervisory personnel, 700 mechanics, 400 telephone information agents, and 900 clerical workers. Of the total workforce, approximately 9,000 are full-time employees and approximately 2,000 are part-time employees.

     At March 1, 2004, approximately 46% of the Company’s employees were represented by collective bargaining agreements. The Amalgamated Transit Union (the “ATU”) represents approximately 4,400 of the Company’s employees, including drivers, about half of the Company’s mechanics and terminal workers in four locations. The largest ATU agreement (“ATU 1700”), covers the drivers and maintenance employees and had an expiration date of January 31, 2004. During January 2004, a new bargaining agreement was tentatively agreed to by the parties. This agreement was submitted to the membership of ATU 1700 for ratification and the expired agreement was extended to March 26, 2004. On March 26, 2004, the membership of ATU 1700 ratified the agreement. The new agreement expires on January 31, 2007.

     The United Transportation Union Local No. 1697 (“UTU 1697”) represents approximately 140 drivers at one of the Company’s wholly-owned subsidiaries. The collective bargaining agreement covering these employees expired on February 28, 2004, and the parties are continuing to negotiate. If the members of the UTU 1697 were to engage in a strike or other work stoppage the Company could experience a disruption in operations that could have an adverse effect on the Company’s financial condition and results of operations.

     The International Association of Machinists and Aerospace Workers (the “IAM”) represents approximately 400 of the Company’s employees, including the remaining mechanics. The IAM agreements expire on October 1, 2004. The Company also has bargaining agreements with the International Brotherhood of Teamsters, which represent approximately 100 employees at three terminal locations and the United Transportation Union, which represents approximately 200 employees at two of the Company’s subsidiaries.

Trademarks

     The Company owns the Greyhound name and trademarks and the “image of the running dog” trademarks worldwide. The Company believes that this name and the trademarks have substantial consumer awareness.

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Government Regulation

     The Department of Transportation. As a motor carrier engaged in interstate, as well as intrastate, transportation of passengers and express shipments, the Company is, and must remain, registered with the DOT. Failure to maintain a satisfactory safety rating, designate agents for service of process or to meet minimum insurance requirements, after notice and opportunity to remedy, may result in the DOT’s ordering the suspension or revocation of the registration of the Company and its right to provide transportation. DOT regulations also govern the qualifications, duties and hours of service of drivers, the standards for vehicles, parts and accessories, the maintenance of records and the submission of reports pertaining to the Company’s drivers, buses and operations. The Company is subject to periodic and random inspections and audits by the DOT or, pursuant to cooperative arrangements with the DOT, by state police or officials, to determine whether the Company’s drivers, buses and records are in compliance with the DOT’s regulations. The Company, from time to time, has been cited by the DOT or state authorities for non-compliance with regulations but, nevertheless, has retained a satisfactory safety rating. The Company has also been authorized by the DOT to partially self-insure its bodily injury and property damage liability. See “Insurance Coverage.” The DOT also administers regulations to assure compliance with vehicle noise and emission standards prescribed by the Environmental Protection Agency (the “EPA”). All of the buses in the Company’s fleet contain engines that comply with, or are exempt from compliance with, EPA regulations, but, on occasion, the Company has been cited and fined for non-compliance with noise or emission standards.

     Surface Transportation Board. The Company is also regulated by the DOT’s Surface Transportation Board (the “STB”). The STB must grant advance approval for the Company to pool operations or revenues with another passenger carrier. The STB, moreover, must authorize any merger by the Company with, or its acquisition or control of, another motor carrier of passengers. The Company must maintain reasonable through routes with other motor carriers of passengers, and, if found not to have done so, the STB can prescribe them. The Company is party to certain agreements, which are subject to STB authorization and supervision.

     State Regulations. As an interstate motor carrier of passengers, the Company may engage in intrastate operations over any of its authorized routes. By federal law, states are pre-empted from regulating the Company’s fares or its schedules, including the withdrawal of service over any route. However, the Company’s buses remain subject to state vehicle registration requirements, bus size and weight limitations, fuel sales and use taxes, vehicle emissions, speed and traffic regulations and other local standards not inconsistent with federal requirements.

     Other. The Company is subject to regulation under the Americans with Disabilities Act (the “ADA”) pursuant to regulations adopted by the DOT. The regulations require that all new buses acquired by the Company for its fixed route operations must be equipped with wheelchair lifts. Additionally, by October 2006, one-half of the Company’s fleet involved in fixed route operations will be required to be lift-equipped, and by October 2012, such fleet will need to be entirely lift-equipped. The regulations do not require that existing buses be retrofitted with lift equipment, nor do the regulations require the purchase of accessible used buses. Currently the added cost of a built-in lift device in a new bus is approximately $35,000 plus the Company incurs additional maintenance and employee training costs. Passenger revenues could also be impacted by the loss of seating capacity when wheelchair passengers are on the bus, partially offset by potentially increased ridership by disabled persons. At December 31, 2003, approximately 17% of the Company’s fleet used in fixed route operations were wheelchair lift-equipped. To meet the 50% requirement by October 2006, and assuming no change in current fleet size, the Company must retrofit with lifts or replace 869 of its non-lift-equipped buses with lift-equipped buses.

     Following the September 11, 2001 terrorist attacks the Company increased its spending for safety and security in the bus terminals by approximately $5 million annually. Limited government assistance, in the form of grants, is being offered to the bus industry and on August 20, 2003, the Company received a grant of approximately $10.1 million from the TSA for the one-year period ending August 19, 2004. The grant provides reimbursement for incremental spending on safety and security – related initiatives such as: increased passenger screening in the bus terminals, bomb detection devices, installation of protective shields in the driver compartment of buses and installation of “on-board” communication devices. Although the Company has received a one-year grant there can be no assurance that additional grants will be extended in the future.

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Insurance Coverage

     Following the Merger and through August 31, 2001, the Company purchased its insurance through Laidlaw with coverage subject to a $50,000 per occurrence deductible for property damage claims and no deductible for all other claims. Additionally, on December 31, 1999, the Company transferred liability for all known, and unknown claims, and all related insurance reserves, associated with the period prior to March 16, 1999 to Laidlaw for which Laidlaw received compensation in an amount equal to the book value of the reserves. Effective September 1, 2001, the Company began purchasing insurance coverage from third-party insurers for claims up to $5.0 million subject to a $3.0 million per occurrence deductible or self insured retention for automobile liability and $1.0 million per occurrence deductible or self insured retention for workers’ compensation and general liability. As of September 1, 2003, the coverage for all claims is subject to a $3.0 million per occurrence deductible or self insured retention. The Company purchases excess coverage for automobile liability, general liability and workers’ compensation insurance through Laidlaw for claims which exceed $5.0 million. The Company also continues to purchase from Laidlaw coverage for physical damage to Company property and business interruption subject to a $100,000 per occurrence deductible.

     The predecessor agency to the STB granted the Company authority to self-insure its automobile liability exposure for interstate passenger service up to a maximum level of $5.0 million per occurrence, which has been continued by the DOT. To maintain self-insurance authority, the Company is required to provide periodic financial information and claims reports, maintain a satisfactory safety rating by the DOT, a tangible net worth of $10.0 million and a $15 million trust fund to provide security for payment of claims. At December 31, 2002, and continuing to date, the Company’s tangible net worth has fallen below the minimum required by the DOT to maintain self-insurance authority. In March 2003, the Company sought a waiver from DOT of this tangible net worth requirement. On July 25, 2003, the DOT granted the waiver of this requirement through December 31, 2004. As a condition of the waiver, the Company was required to increase the self-insurance trust fund by $2.7 million. As of December 31, 2003, the trust was funded in the amount of $17.7 million. The DOT will also require the Company to make additional trust fund contributions to the extent that self-insured reserves exceed (as measured semi-annually) the then balance in the trust fund. During the waiver period, the Company’s self-insurance authority will be subject to periodic review by the DOT.

     Insurance coverage and related administrative expenses are key components of the Company’s cost structure. Additionally, the Company is required by the DOT, some states and some of its insurance carriers to maintain collateral deposits or provide other security pursuant to its insurance program. At December 31, 2003, the Company maintained $25.7 million of collateral deposits including the above $17.7 million trust fund and had issued $49.2 million of letters of credit in support of these programs. See Note 7 to the Consolidated Financial Statements. The loss or further modification of self-insurance authority from the DOT or a decision by the Company’s insurers to modify the Company’s program substantially, by either increasing cost, reducing availability or increasing collateral, could have a material adverse effect on the Company’s liquidity, financial condition, and results of operations.

Environmental Matters

     The Company may be liable for certain environmental liabilities and clean-up costs at the various facilities presently or formerly owned or leased by the Company. Based upon surveys conducted solely by Company personnel or its experts, 30 active and 11 inactive locations have been identified as sites requiring potential clean up and/or remediation as of December 31, 2003. Additionally, the Company is potentially liable with respect to four active and seven inactive locations which the EPA has designated as Superfund sites. The Company, as well as other parties designated by the EPA as potentially responsible parties, face exposure for costs related to the clean up of those sites. Based on the EPA’s enforcement activities to date, the Company believes its liability at these sites will not be material because its involvement was as a de minimis generator of wastes disposed of at the sites. In light of its minimal involvement, the Company has been negotiating to be released from liability in return for the payment of nominal settlement amounts.

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     The Company has recorded a total environmental liability of $5.5 million at December 31, 2003 of which approximately $0.7 million is indemnifiable by the predecessor owner of the Company’s domestic bus operations, now known as Viad Corp. The environmental liability relates to sites identified for potential clean up and/or remediation and represents the present value of estimated cash flows discounted at 8.0%. The Company expects the majority of this environmental liability to be paid over the next five to ten years. As of the date of this report, the Company is not aware of any additional sites to be identified, and management believes that adequate accruals have been made related to all known environmental matters.

Code of Ethics

     The Company has adopted a written code of ethics, “Code of Business Conduct and Ethics” which is applicable to, among others, the Company’s Chief Executive Officer, principal financial officer, principal accounting officer and controller (or persons performing similar functions) (collectively, the “Financial Officers”). In accordance with the rules and regulations of the Securities and Exchange Commission, a copy of the Code of Business Conduct and Ethics is publicly available on the website of the Company’s parent company, Laidlaw, at www.laidlaw.com. The Company intends to disclose any amendments to or waivers from the code of ethics applicable to any Financial Officer of the Company on Laidlaw’s website at www.laidlaw.com. The Company will provide, at no cost, a copy of the Code of Business Conduct and Ethics upon request in writing to P.O. Box 660362, Dallas, Texas 75266-0362, Attention: Investor Relations. The information on the Laidlaw website is not incorporated into, and is not part of, this report.

ITEM 2. PROPERTIES

Land and Buildings

     At December 31, 2003, the Company used 536 parcels of real property in its operations, of which it owned 161 properties and leased 375 properties. Of those properties, 388 are bus terminals, 32 are maintenance facilities, 28 are terminal/maintenance facilities, and the remaining properties consist of driver dormitories, parking/storage lots, office/storage/warehouse buildings and telephone information centers. These properties are located throughout the United States and in select locations in Canada and Mexico. Where practical, the Company attempts to locate its terminals in state or federally funded intermodal facilities. The Company currently operates in approximately 100 of such facilities.

     The Company believes the current makeup of its properties is adequate for its operations. However, the Company must occasionally relocate its facilities, permanently or temporarily, when it sells a parcel, when leases are not renewed or are terminated, or when owned or leased properties are taken through eminent domain proceedings by government authorities. The Company is also subject to local zoning restrictions that can limit the Company’s ability to expand a location or relocate to a new facility. In the case of publicly funded facilities, the relocation can be affected by funding availability and site selection and urban planning considerations. Although there can be no assurance, based on its recent experience, the Company believes that it will be able to find suitable replacement properties on acceptable terms for any properties the Company chooses to replace or expand, or which are condemned, or for which leases are not renewed or are otherwise terminated.

     The Company operates out of its largest sales location, the Port Authority Bus Terminal of New York (the “Port Authority”), on a month-to-month basis pursuant to several lease agreements and a license agreement. The Port Authority has been in discussions to develop the air rights above the terminal and should an agreement on the development be reached the Company would likely be required to temporarily relocate its operations within the Port Authority. Such relocation, if required, could result in an increase in the costs to operate out of the Port Authority and potentially impact ticket and food service revenues. See Note 16 to the Consolidated Financial Statements.

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Fleet Composition and Bus Acquisitions

     During 2003, the Company took delivery of 17 new and used buses, and retired 137 buses, resulting in a fleet of 2,806 buses at December 31, 2003, of which the Company owned 1,222 buses and leased an additional 1,584 buses. The average age of the Company’s bus fleet increased to 7.2 years at December 31, 2003, compared to 6.6 years at December 31, 2002 and 6.2 years at December 31, 2001. Although the Company believes the current fleet size and fleet age are adequate for its operations, the Company’s experience indicates that older buses are less reliable and more costly to operate than newer buses. For example, over the last two years the cost per mile to maintain the Company’s fleet has increased well above the rate of wage and material inflation. Additionally, older buses with older engines are generally less fuel-efficient than newer buses and, because older buses require maintenance on a more frequent basis, an older fleet results in an increase in the number of buses required to operate the business.

     Motor Coach Industries, Inc. or its affiliate, Motor Coach Industries Mexico, S.A. de C.V., hereafter referred to collectively as “MCI”, produced all but 54 of these buses. The Company is party to a long-term supply agreement with MCI. The agreement extends through 2007, but may be canceled at the end of any year upon six months notice. If the Company decides to acquire new buses, the Company and its affiliates must purchase at least 80% of its new bus requirements from MCI pursuant to the agreement.

ITEM 3. LEGAL PROCEEDINGS

     Greyhound Lines is the sole shareholder of Sistema Internacional de Transporte de Autobuses, Inc. (“SITA”). SITA owns 51% of Gonzalez, Inc., d/b/a Golden State Transportation (“Golden State”). On November 28, 2001 and subsequently, Golden State and numerous individual employees, including its senior management, were indicted by a federal grand jury for felony criminal offenses for allegedly transporting and harboring illegal aliens and money laundering. The case, filed before the United States District Court for the District of Arizona, is styled U.S. v. Gonzalez, Inc, et al., Case No. CR 01-1696-TUC-RCC. The indictment also sought forfeiture to the Government of all the property owned by Golden State, which involves Golden State, SITA and Greyhound Lines since they were claimants to the property. Neither Greyhound Lines nor SITA were charged with any crime.

     In August 2002, the Government filed a civil forfeiture action against certain Golden State assets based on allegations similar to those described in the indictment of Golden State. The case, filed before the United States District Court for the District of Arizona, is styled U.S. v. 130 North 35th Avenue, Phoenix, Arizona, et al., Case No. CV 02-409-TUC-RCC. Neither SITA nor Greyhound Lines were a defendant in the forfeiture action; however, Greyhound Lines and SITA were claimants to the property.

     Golden State ceased operations effective August 30, 2002 and filed a voluntary petition for bankruptcy on September 30, 2002 in the United States Bankruptcy Court for the District of Arizona in a case styled In re: Gonzalez, Inc. d/b/a Golden State Transportation, Case No. 02-15508-PHX-GBN. In September 2003, Golden State entered into a settlement agreement with the Government regarding the criminal and civil forfeiture cases brought by the Government. In September 2003, SITA and Greyhound Lines also entered into stipulations with the Government to settle SITA and Greyhound Lines’ claims to the subject property of the forfeiture action. Pursuant to these stipulations, Greyhound Lines and SITA agreed to withdraw their claims to certain Golden State property and cooperate in the Government’s ongoing criminal proceedings. In return, the Government dropped its forfeiture allegations against the remaining property originally sought for forfeiture and agreed not to pursue criminal or civil charges against SITA, Greyhound Lines and their employees arising out of the events described in the criminal indictment. The bankruptcy court overseeing the Golden State bankruptcy approved the settlement on November 6, 2003 and authorized Golden State to conclude the criminal proceedings by pleading guilty.

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     The Company is also a defendant in various lawsuits arising in the ordinary course of business, primarily cases involving personal injury and property damage claims and employment-related claims. Although these lawsuits involve a variety of different facts and theories of recovery, the majority arise from traffic accidents involving buses operated by the Company. The vast majority of these claims are covered by insurance for amounts in excess of the deductible portion of the policies. Management believes that there are no proceedings either threatened or pending against the Company relating to such personal injury, property damage and employment-related claims that, if resolved against the Company, would materially exceed the amounts recorded as estimated liabilities by the Company.

     For information relating to certain environmental matters relating to the Company, see “Item 1. Business - Environmental Matters.”

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PART II

ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     All of the Company’s outstanding common stock is held by a subsidiary of Laidlaw and, therefore, the common stock is not traded on any established public trading market. The Company has not paid dividends in the past and, furthermore, the indenture governing the Company’s 11½% Senior Notes and the agreement governing the Company’s revolving credit facility limit the ability of the Company to pay dividends. At December 31, 2003, under the most restrictive of the agreements, no dividends could be paid by the Company.

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Business Overview

     Greyhound is the only nationwide provider of scheduled intercity bus transportation services in the United States. The Company operates as one business segment with the primary business consisting of scheduled passenger service, package express service and food service at certain terminals, which accounted for 85.2%, 4.0% and 4.1%, respectively, of the Company’s total operating revenues for 2003. The Company’s operations include a nationwide network of terminal and maintenance facilities utilizing a current fleet of approximately 2,800 buses. The Company operates on a capacity flexible basis whereby the Company will supplement its scheduled service offerings with additional departures when demand is high. The Company uses a network of approximately 1,700 sales locations, which offers the customer the ability to travel to more than 2,600 destinations in North America. The Company’s business is seasonal in nature and generally follows the travel industry as a whole, with peaks during the summer months and the Thanksgiving and Christmas holiday periods.

     The following discussion and analysis presents factors which affected the Company’s consolidated results of operations for the year ended December 31, 2003 and the Company’s consolidated financial position at December 31, 2003. The following information should be read in conjunction with the Consolidated Financial Statements and Notes thereto.

2003 Overview

     Since the third quarter of 2001, the Company has experienced declines in revenue, averaging 2.2% per year, from $1 billion in 2001, to $976 million in 2003. The revenue declines were first triggered by the events of September 11, 2001 and have continued through 2003 as a result of soft economic conditions and the effects of higher terror alert levels on consumer travel. Concurrently, the Company also experienced significant increases in fuel, security, insurance, pension and employee health and welfare costs. The revenue declines coupled with the cost increases culminated in an operating loss of $3.5 million in 2003, compared to operating income of $4.4 million and $29.9 million in 2002 and 2001, respectively.

     To mitigate the earnings decline, Greyhound implemented a series of initiatives during the latter part of the second quarter of 2003 to enhance its operating income by improving revenue per mile and reducing operating costs. Just prior to the peak summer travel period, the Company restricted advance purchase discount fares, eliminated the “companion rides free” program and increased prices principally in its lower-yielding, long distance trips greater than 1,000 miles. Historically, long distance travel has been very price elastic, such that any noticeable price increase dampens demand and as a result, decreases passenger miles. When declines in passenger miles are predominantly due to reduced long distance trips, there is an increase in system wide yield as the mix shifts to a greater proportion of higher yielding, short distance trips. Furthermore, when the decrease in passenger miles is accompanied by a comparable reduction in bus miles so that system wide load is maintained, profitability can be sustained or improved even though revenue may decline. In conjunction with the price increases, the Company reduced scheduled service in certain markets, principally by reducing frequencies on particular routes, and to a lesser extent by abandoning some routes in limited rural areas. As a result, during the second half of 2003, bus miles were reduced by 9%, which was comparable to the decline in passenger miles, while revenue per mile improved by 9.1%.

     The Company also implemented a number of cost reduction initiatives and productivity improvements during 2003. Because bus and passenger miles drive 76% of the Company’s wages, the Company reduced its terminal employees, drivers, mechanics and telephone information center agents as the miles declined. Additionally, the Company initiated a reduction in its headquarters and administrative workforce of approximately 14% or 294 employees. The reduction in workforce generated savings of $2.3 million in 2003, net of severance costs of $2.9 million, and is expected to generate $12 million to $15 million in total annualized savings. In addition to the workforce reduction, the Company gained productivity improvements in its telephone information centers and accounting area, announced its intention to close the telephone information center located in Omaha in early 2004, improved utilization of its equipment and drivers and improved on-time performance.

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     As a result of these initiatives, during the second half of 2003, the percentage increase in revenue per mile exceeded the percentage increase in operating cost per mile, thus resulting in an improvement in operating income of $10.3 million compared to the prior year, despite the decline in revenue. Although the earnings improvement during the second half of the year is encouraging, substantial needs for capital expenditures and debt service requirements mandate that the Company continue to significantly improve operations and financial results.

Results of Operations

     The following table sets forth the Company’s results of operations as a percentage of total operating revenues for 2003, 2002 and 2001:

	Years Ended December 31,
	2003			2002			2001
Operating Revenues
Passenger services		85.2	%		85.7	%		85.8	%
Package express		4.0			4.0			4.0
Food services		4.1			4.3			4.3
Other operating revenues		6.7			6.0			5.9
Total Operating Revenues		100.0			100.0			100.0
Operating Expenses
Maintenance		10.9			10.2			9.9
Transportation		25.1			24.7			25.1
Agents’ commissions and station costs		18.2			18.5			18.6
Marketing, advertising and traffic		2.7			2.8			3.5
Insurance and safety		7.5			7.8			5.9
General and administrative		12.9			12.7			12.7
Depreciation and amortization		5.6			5.1			4.8
Operating taxes and licenses		6.1			6.2			6.2
Operating rents		8.2			8.1			7.1
Cost of goods sold – food services		2.6			2.8			2.9
Other operating expenses		0.6			0.7			0.4
Total Operating Expenses		100.4			99.6			97.1
Operating Income (loss)		(0.4	)		0.4			2.9
Interest Expense		2.5			2.6			2.8
Income Tax Provision (Benefit)		0.1			5.3			(0.1	)
Minority Interests		0.0			(0.2	)		0.0
Cumulative Effect of Change in Accounting for Goodwill		0.0			4.0			0.0
Net Income (Loss)		(3.0	)%		(11.3	)%		0.2	%

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     The following table sets forth certain key operating data used by management in assessing the Company’s performance for 2003, 2002 and 2001. Certain statistics have been adjusted and restated from those previously published to provide consistent comparisons.

	Years Ended December 31,
	2003			2002			2001
Regular Service Miles (000’s)		304,828			333,154			349,978
Total Bus Miles (000’s)		313,337			341,071			358,502
Passenger Miles (000’s)		7,963,086			8,739,581			9,191,173
Passengers Carried (000’s)		21,920			23,283			25,167
Average Trip Length (passenger miles ÷ passengers carried)		363			375			365
Load (avg. number of passengers per regular service mile)		26.1			26.2			26.3
Load Factor (% of available seats filled)		51.5	%		52.1	%		52.5	%
Yield (passenger services revenue ÷ passenger miles)	$	0.1043		$	0.0972		$	0.0954
Average Ticket Price	$	37.89		$	36.50		$	34.84
Total Revenue Per Total Bus Mile	$	3.11		$	2.91		$	2.85
Operating Income (Loss) Per Total Bus Mile	$	(0.01	)	$	0.01		$	0.08
Cost per Total Bus Mile:
Maintenance	$	0.339		$	0.296		$	0.284
Transportation	$	0.781		$	0.719		$	0.716

Year ended December 31, 2003 Compared to Year ended December 31, 2002

     Operating Revenues. Total operating revenues decreased $16.4 million, down 1.7% for the year ended December 31, 2003 compared to the same period in 2002.

     Passenger services revenues decreased $19.1 million, or 2.3%, in 2003 compared to 2002 as a decline in passengers of 5.9% was only partially offset by increases in ticket prices of 3.8%. A significant portion of the decline, $14.3 million, was due to reduced revenue in the Hispanic passenger markets due to the shutdown of operations at Golden State Transportation during the third quarter of 2002. Additionally, during the first half of 2003, passenger revenues were adversely affected by severe winter weather in February in the Northeast and the war in Iraq and the resulting increases in the terror alert levels during the Easter and Memorial Day holidays.

     During the first half of 2003, an 8.2% decline in passengers miles was only partially offset by a 5.2% increase in yield resulting in a 3.3% passenger revenue decline. The passenger mile decline was moderated somewhat as the Company reduced restrictions on advance purchase discount tickets to stimulate demand. Entering into the peak summer travel period, the Company replaced and increased the restrictions on advance purchase discount tickets and raised ticket prices on long distance trips. While the increase in ticket prices caused a further decline in passenger miles, down 9.6%, the 9.2% increase in yield largely offset these declines, resulting in only a 1.3% decline in passenger revenue in the second half of 2003.

     Package express revenues decreased $0.5 million, down 1.2% in 2003 compared to 2002. The Company continues to experience reduced standard product deliveries (the traditional, low value, terminal to terminal market segment) as a result of continued competition, as well as expanded and improved product offerings from larger package delivery companies. In response, the Company continues to increase its focus on the same day delivery market niche through the selling of Daily Direct, a guaranteed same day or early next morning service.

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     Food services revenues decreased $2.5 million, down 5.9% for the year ended December 31, 2003 compared to the same period in 2002. The Company attributes the decline in food services revenues primarily to the decline in the number of passengers.

     Other operating revenues, consisting primarily of revenue from travel services, in-terminal sales and other services, as well as interest income on deposits and investments, increased $5.7 million, up 9.4% in 2003 compared to 2002. The increase is primarily due to increased charter services and increases in “meet and greet” services provided to cruise lines.

     Operating Expenses. Total operating expenses decreased $8.6 million, down 0.9% for the year ended December 31, 2003 compared to the same period in 2002.

     Maintenance costs increased $5.2 million, or 5.2% in 2003 compared to 2002. On a per mile basis, maintenance costs increased 14.5% due in part, to a higher average fleet age, inflationary wage rate increases for mechanics and increased material costs as a result of fewer bus engines and transmissions under warranty. Additionally, regular service bus miles were down significantly, 8.5% for the year ended December 31, 2003, and as a result, the fixed cost component of maintenance, principally real estate and related costs as well as supervision, increased on a per mile basis.

     Transportation expenses, which consist primarily of fuel costs and driver wages, decreased $0.5 million, or 0.2% for the year ended December 31, 2003 compared to the same period in 2002, as the effects of decreases in bus miles were largely offset by increases in fuel, contractual driver wage increases and increased driver hiring costs. During 2003, the average cost per gallon of fuel increased to $0.91 from $0.75 in 2002 resulting in increased costs of $8.1 million. Additionally, driver hiring and training costs were $0.8 million higher in 2003 due to increases in the number of drivers hired during the first quarter of 2003. On a per-mile basis, excluding the effects of fuel price changes and driver hiring costs, transportation expenses increased by 4.7% for the year ended December 31, 2003, due mainly to contractual driver wage increases and fewer miles operated in the Company’s subsidiaries which generally operate at a lower driver wage rate per mile than in the Greyhound Lines unit.

     Agents’ commissions and station costs decreased $5.4 million, down 3.0% in 2003 compared to 2002. The decrease is primarily due to lower commissions and terminal and call center wages as a result of decreased ticket sales and lower passenger volumes.

     Marketing, advertising and traffic expenses decreased $1.2 million, or 4.4%, in 2003 compared to 2002. As leisure or discretionary travel has remained soft, management continues to reduce advertising and departmental staffing when compared to the prior year.

     Insurance and safety costs decreased $4.4 million, down 5.7% in 2003 compared to 2002. The decline is due primarily to a one-time charge in the prior year of $3.1 million resulting from a change in reserving methodology from the mid-point of the actuarial range to the high point. Additional declines were due to the reduction in bus miles operated and in the number of severe accidents, offset somewhat by an increase in the cost of excess insurance coverage and growth in the average cost per claim due principally to medical cost inflation.

     General and administrative expenses decreased $1.3 million, down 1.0% for the year ended December 31, 2003 compared to the same period in 2002. During the year higher pension costs of $6.9 million were more than offset by decreased wages of $3.2 million resulting from a reduction in workforce, reduced health and welfare costs of $1.9 million and decreased travel and other costs due to lower business volumes.

     Depreciation and amortization increased $4.1 million, or 8.2% for the year ended December 31, 2003 compared to the same period in 2002. The increases are primarily due to inflationary increases in the cost of recent capital expenditures for buses, structures and capitalized software, which due to the long-lived nature of the Company’s assets, significantly exceeds the historical cost basis of asset disposals.

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     Operating taxes and licenses expense decreased $2.1 million, or 3.4% in 2003 compared to 2002. The decrease is due principally to lower payroll and fuel taxes resulting from lower bus miles and business volumes.

     Food services cost of goods sold decreased $2.3 million, or 8.1% in 2003 compared to 2002 primarily due to the decrease in food services revenues related to the decline in the number of passengers.

     Other operating expenses decreased $0.7 million, down 11.3% for the year ended December 31, 2003 compared to the same period in 2002. During 2003, the Company incurred severance costs associated with a reduction in workforce and the departure of the Company’s Chief Executive Officer partially offset by a gain recorded on the sale of investment. These were less than the $4.0 million charge recorded in the prior year related to the write-off of the investment in and accounts receivable due from Golden State Transportation.

     Interest expense decreased $0.6 million, down 2.5% for the year ended December 31, 2003 compared to the same period in 2002, due to a decrease in the average debt outstanding and a decrease in overall interest rates.

     During the third quarter of 2002, the Company established a full valuation allowance for its deferred tax assets, and as a result the Company’s current year tax expense for the year ended December 31, 2003 principally represents state tax expense related to certain of the Company’s subsidiaries. See Note 12 to the Consolidated Financial Statements for further discussion.

     Minority interests for the year ended December 31, 2003, reflects the minority partners share of current year income in the Company’s Hispanic ventures. The ventures were profitable in the current year as compared to the prior year.

     During the first quarter of 2002, the Company adopted Statement of Financial Accounting Standards No. 142 “Accounting for Goodwill and Other Intangible Assets” (“SFAS 142”) and, as a result, recorded a non-cash charge as a cumulative effect of a change in accounting principle. See Note 8 to the Consolidated Financial Statements for further discussion.

Critical Accounting Policies

     The preparation of financial statements requires management to make estimates and assumptions relating to the reporting of results of operations, financial condition and related disclosure of contingent assets and liabilities at the date of the financial statements. Actual results may differ from those estimates under different assumptions or conditions. The following are the Company’s most critical accounting policies, which are those that require management’s most difficult, subjective and complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods.

     Insurance Reserves. The Company is self-insured up to certain limits for costs associated with workers’ compensation claims, vehicle accidents and general business liabilities. Reserves are established for estimates of the loss that Greyhound will ultimately incur on claims that have been reported but not paid and claims that have been incurred but not reported. These reserves are based upon actuarial valuations that are prepared quarterly by outside actuaries. The actuarial valuations consider a number of factors, including historical claim payment patterns and changes in case reserves, the assumed rate of increase in healthcare costs and property damage repairs, ultimate court awards and the discount rate. Historical experience and recent trends in the historical experience are the most significant factors in the determination of the reserves. Management believes that the use of actuarial methods to account for these reserves provides a consistent and effective way to measure these highly subjective accruals. However, given the magnitude of the claims involved and the length of time until the ultimate cost is known, the use of any estimation technique in this area is inherently sensitive. Accordingly, the amount of recorded reserves could differ from the Company’s ultimate costs related to these claims due to changes in the Company’s accident reporting, claims payment and settlement practices or claims reserve practices, as well as differences between assumed and future cost increases and discount rates.

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     Valuation of Long-lived Assets. The Company’s long-lived assets include property and equipment (principally buses and real estate), investments in affiliates, goodwill and other intangible assets (principally software). At December 31, 2003, the Company’s Consolidated Statements of Financial Position reflects $376.0 million of net property and equipment and $48.1 million in investments in affiliates, goodwill and other net intangible assets, accounting for over 78% of the Company’s total assets. Long-lived assets are assessed for impairment at least annually or whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Important factors which could trigger an impairment review include significant underperformance relative to historical or projected future operating results, significant changes in the use of the acquired assets or the strategy for the overall business, and significant negative industry or economic trends. An impairment loss is recognized on property and equipment and other intangible assets when the undiscounted cash flows estimated to be generated by those assets are less than their carrying amount. An impairment loss is recognized on investments in affiliates and goodwill when the fair value of the investee or reporting unit is less than their carrying amount. The net carrying value of assets not deemed recoverable are reduced to fair value. Estimates of fair value represent our best estimate based on industry trends and reference to market rates and transactions. The determination of fair value can be highly subjective, especially for assets that are not actively traded or when market-based prices are not available.

     In assessing the recoverability of the Company’s long-lived assets the Company must make assumptions regarding estimated future cash flows and other factors to determine whether impairment exists. Cash flow estimates are based on historical results adjusted to reflect our best estimate of future market and operating conditions. If these estimates or their related assumptions change in the future, or if actual results are materially different than those previously estimated, the Company may be required to record impairment charges for these assets not previously recorded. During 2002, the Company adopted SFAS 142 and determined that the carrying value of its Bus Operations reporting unit exceeded that unit’s fair value. As a result, effective January 1, 2002, the Company recorded a non-cash charge of $40.0 million as a cumulative effect of a change in accounting for goodwill. The Company’s remaining goodwill ($3.0 million) relates to the Courier Services reporting unit where fair value exceeds carrying value.

     Pension. The Company’s obligation and expense for pension benefits are determined using actuarial methods that are dependent on the selection of certain assumptions and factors. These include assumptions about the discount rate, expected return on plan assets and rate of future compensation increases as determined by management. The Company determines the discount rate based upon yields available on quality long-term corporate bonds (generally by reference to the Moody’s Aa bond index and similar U.S. bond indices). The expected return on plan assets is based on plan-specific historical long-term portfolio performance, asset allocations and investment strategies and the views of the plans’ investment advisors. The rate of increase in future compensation levels is based primarily on labor contracts currently in effect with employees under collective bargaining agreements and expected future pay rate increases for other employees. In addition, the Company’s actuarial consultants also use factors to estimate such items as retirement age and mortality rates, which are primarily based upon historical plan experience. The assumptions and factors used by the Company may differ materially from actual results due to changing market and economic conditions, earlier or later retirement ages or longer or shorter life spans of participants. These differences may result in a significant impact to the amount of pension obligation or expense recorded by the Company.

     The Company records an additional minimum pension liability when its accumulated benefit obligation exceeds the fair value of the pension plans’ assets in excess of the amounts previously accrued for pension costs. As of December 31, 2003, the Company’s additional minimum pension liability included in other comprehensive loss was $252 million, down from $274 million as of December 31, 2002, primarily as a result of improved asset performance offset somewhat by an increase in the benefit obligation due to a decline in the discount rate. The decrease in the Company’s minimum pension liability resulted in a decrease to other comprehensive loss of approximately $22 million in 2003. See Note 10 to the Consolidated Financial Statements for further discussion.

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     Accounting for Income Taxes. The Consolidated Statements of Financial Position reflects net deferred tax assets as of December 31, 2003 of $176.3 million, resulting from operating losses and other deductible temporary differences that will reduce taxable income in future periods. Statement of Financial Accounting Standards No. 109 “Accounting for Income Taxes” requires that a valuation allowance be established when it is “more likely than not” that all or a portion of net deferred tax assets will not be realized. A review of all available positive and negative evidence needs to be considered, including expected reversals of significant deductible temporary differences, a company’s recent financial performance, the market environment in which a company operates and the length of operating loss carryforward periods. Furthermore, the weight given to the potential effect of negative and positive evidence should be commensurate with the extent to which it can be objectively verified. Therefore, current operating losses and the reasonable likelihood of significant near-term reversals of deductible temporary differences carry more weight than forecasted future operating profits. As a result of book losses incurred in 2002 and 2003, as well as the significant pension funding required by the agreement with the Pension Benefit Guaranty Corporation (“PBGC”) (which gives rise to tax deductions when made), the Company concluded that it was appropriate to establish and maintain a full valuation allowance for its net deferred tax assets. Additionally, the Company expects to continue to provide a full valuation allowance on future tax benefits until it can achieve an appropriate level of profitability that demonstrates its ability to utilize existing operating loss carryforwards. The valuation allowance increased from $173.1 million at December 31, 2002, to $176.3 million at December 31, 2003.

New Accounting Pronouncements

     There are no recent accounting pronouncements that would have a material effect on the Company’s results or financial position if they were presently applicable.

Liquidity and Capital Resources

     The Company requires significant cash flows to finance capital expenditures, including bus acquisitions, and to meet its debt service and other continuing obligations. As of December 31, 2003, the Company had $205.7 million of outstanding debt, implicit debt equivalent of $263.6 million for off-balance sheet bus operating leases and $56.8 million of outstanding letters of credit (which principally support recorded claims liabilities). Additionally, as of December 31, 2003, the Company had availability of $57.1 million under its Revolving Credit Facility and cash and cash equivalents of $19.8 million. The Company’s principal sources of liquidity are expected to be cash flow from operations (which is net of cash charges for interest expense and lease payments under the Company’s bus operating leases), proceeds from operating lease or other equipment financing for new bus purchases and borrowings under the Revolving Credit Facility. The Company, however, has no right to access the Revolving Credit Facility for borrowings or letters of credit if an event of default exists or an event, which with notice or passage of time or both would give rise to an event of default, has occurred. See Note 11 to the Consolidated Financial Statements. Management assesses the Company’s liquidity in terms of its ability to generate cash to fund operations, finance the purchase of buses and debt servicing. Generally new term financing (including bus operating lease financing) must be obtained to support the Company’s annual capital expenditure needs. If new bus financing cannot be obtained in the future, the Company would have to reduce capital expenditures, resulting in an increase in fleet age and costs to operate the fleet.

22

     Net cash provided by operating activities was $39.8 million, $98.1 million and $51.0 million for the years ended December 31, 2003, 2002 and 2001, respectively. Net cash provided by operating activities contains two components, cash provided by the Company’s operating results (defined as the sum of net income (loss), cumulative effect of accounting change and non-cash expenses and gains included in net income (loss)) and cash provided by (or used by) changes in operating assets and liabilities. Cash provided by the Company’s operating results was $37.8 million, $43.5 million and $60.0 million for the years ended December 31, 2003, 2002 and 2001, respectively. The decline in cash provided by operating results in 2003 is principally due to a reduction in operating income offset somewhat by lower interest expense. Changes in operating assets and liabilities provided cash of $2.0 million for the year ended December 31, 2003 compared to $54.6 million in 2002 and uses of cash of $9.0 million in 2001. During 2003, cash provided by changes in operating assets and liabilities was principally due to an increase in the Company’s claims liabilities, which are largely comprised of insurance reserves, partially offset by increases in intangible assets due to spending on software and decreases in accrued liabilities and rents due to payments on an operating lease. To support the increases in insurance reserves, the Company’s primary insurance carrier required the Company to issue an additional $14.2 million in letters of credit during 2003. In 2002, cash provided by changes in operating assets and liabilities was principally due to the increase in the Company’s claims liabilities, and reductions in accounts receivable. To support the increases in insurance reserves, the Company’s primary insurance carrier required the Company to issue $35.0 million in letters of credit as collateral through December 31, 2002. The decrease in accounts receivable during 2002 was principally due to the year ending on a Tuesday, thus resulting in the Company receiving all weekend receipts prior to the year-end and, therefore, reducing receivables from agents. In 2001, net cash used by changes in operating assets and liabilities of $9.0 million was principally due to spending on software.

     Net cash used for investing activities was $14.9 million, $56.1 million and $33.7 million for 2003, 2002 and 2001, respectively, principally due to capital expenditures, consisting primarily of acquisitions of buses and real estate and facility improvements, totaling $22.7 million, $65.0 million and $36.0 million for 2003, 2002 and 2001, respectively. During 2003 capital expenditures were partially offset by proceeds from the sales of assets and investments.

     Net cash used by financing activities was $11.1 million, $57.0 million and $6.6 million for 2003, 2002 and 2001, respectively. The decrease in cash used by financing activities in 2003 is principally due to paydowns on the Revolving Credit Facility and lower payments on debt and capital lease obligations.

     The Company is party to a $125 million revolving credit facility, with a $70 million letter of credit sub facility (“Revolving Credit Facility”). Letters of credit or borrowings are available under the Revolving Credit Facility based upon the total of 80% of the appraised wholesale value of bus collateral, plus 65% of the quick sale value of certain real property collateral, minus $20 million. Under this formula, at December 31, 2003, the Company had aggregate availability of $113.9 million. As of December 31, 2003, the Company had no outstanding borrowings under its Revolving Credit Facility, issued letters of credit $56.8 million and availability of $57.1 million. As noted earlier, however, the Company may not be able to access such availability if an event of default or default exists.

     Borrowings under the Revolving Credit Facility are available to the Company at a rate equal to Wells Fargo Bank’s prime rate plus 1.5% per annum or LIBOR plus 3.5% per annum as selected by the Company. Letter of credit fees are 3.5% per annum. Borrowings under the Revolving Credit Facility mature on October 24, 2004. The Revolving Credit Facility is secured by liens on substantially all of the assets of the Company and the stock and assets of certain of its subsidiaries. Under the Revolving Credit Facility, the Company is subject to certain financial covenants, including maximum total debt to cash flow ratio, minimum cash flow to interest expense ratio and minimum cash flow test. The Revolving Credit Facility is also subject to certain affirmative and negative operating covenants, including limitation on non-bus capital expenditures; limitations on additional liens, indebtedness, guarantees, asset disposals, advances, investments and loans; and restrictions on the redemption or retirement of certain subordinated indebtedness or equity interests, payment of dividends and transactions with affiliates, including Laidlaw. As of December 31, 2003, the Company was in compliance with all such covenants. If an event of default occurs and is continuing, the lenders may seek to enforce remedies under the Revolving Credit Facility, including terminating the commitment to make loans or issue letters of credit, holding cash collateral for payment of the Company’s obligations under the Revolving Credit Facility and selling the collateral. In addition, an event of default under the Revolving Credit Facility may result in cross-defaults under other debt instruments of the Company and its subsidiaries.

23

     In accordance with the terms of the Revolving Credit Facility the Company submitted a financial forecast for 2004 to the agent bank. Based upon this forecast management is unable to predict with reasonable assurance whether the Company will remain in compliance with all of the covenants under the Revolving Credit Facility. Additionally, there is less than one year until the expiration of the Revolving Credit Facility. The Company intends to enter into discussions to extend the maturity and to modify certain of the other terms of the agreement. Although the Company has been successful in obtaining necessary extensions and modifications to the Revolving Credit Facility in the past, there can be no assurances that the Company will obtain them in the future or that the cost of any future extensions, modifications or other changes in the terms of the Revolving Credit Facility would not have a material effect on the Company. In the event that the parties are unable to agree on an extension of the facility beyond its current maturity date, and that modifications suitable to the parties are not obtained, the Company will be required to seek a replacement for the Revolving Credit Facility from other financing sources. Should alternate sources of financing not be available, then the Company may not be able to satisfy its obligations as they become due and may not be able to continue as a going concern. As a result, the Company may not be able to realize its assets and settle its liabilities in the normal course of operations.

Bus Operating Leases

     The Company generally uses lease financing with purchase options (residual values) as the principal source of bus financing in order to achieve the lowest net cost of bus financing. These leases typically have terms of seven years and contain set residual values and residual value guarantees; although some leases are for terms as long as twelve years and contain no residual values or residual value guarantees. Because the Company generally retires buses after twelve to fourteen years of operation, buses are typically purchased at lease expiration at the residual value, or fair market value for those leases that do not contain residual values.

     Most of the leases are designed to qualify as operating leases for accounting purposes and, as such, only the monthly lease payment is recorded in the statement of operations and the liability and value of the underlying buses are not recorded on the statement of financial position. Additionally, buses acquired and financed with operating leases are not included as capital expenditures on the statement of cash flows (except for certain sale-leaseback transactions). At December 31, 2003, the net present value of future operating lease payments, plus the residual value or estimated fair market value for those leases that do not contain residual values, discounted at the rate implicit in the lease was $263.6 million.

     Of those operating leases that contain residual value guarantees, the aggregate residual value at lease expiration is $140.6 million, of which the Company has guaranteed $88.3 million. To date, the Company has always purchased the buses at lease maturity at the stated residual value and therefore has never incurred any loss as a result of residual value guarantees. See Note 14 to the Consolidated Financial Statements.

     At December 31, 2003, the scheduled future lease payments, residual value at lease expiration and estimated fair market value at lease expiration for those leases which do not contain residual values under the Company’s bus operating leases are as follows (in thousands):

					Fair
	Lease		Residual		Market
	Payments		Value		Value
2004	$	53,679	$	9,173	$	—
2005		42,839		17,930		13,342
2006		23,865		28,599		4,335
2007		14,389		36,670		—
2008		8,100		26,954		—
Thereafter		2,342		21,275		—
Total	$	145,214	$	140,601	$	17,677

24

Off-balance Sheet Arrangements

     In addition to the bus operating leases described above, the Company has entered into operating leases for certain bus terminal space, headquarters space and for computers and other equipment. In 2003, the Company made $85.3 million in payments on its operating leases including its bus operating leases.

     The Company guarantees residual values on certain of its bus operating leases. Of those operating leases that contain residual value guarantees, the aggregate residual value at lease expiration is $140.6 million, of which the Company has guaranteed $88.3 million. See further discussion above in “Bus Operating Leases.”

     Under its Revolving Credit Facility, the Company has a letter of credit sub facility whereby the Company can issue up to a maximum of $70 million in letters of credit. At December 31, 2003, the Company had $56.8 million in letters of credit outstanding. See further discussion above in “Liquidity and Capital Resources.”

Contractual Obligations

     The Company has entered into certain contractual obligations that will require various payments over future periods as follows (in thousands):

	Scheduled Payments in Calendar Years
	Total		2004		2005-2006		2007-2008		Thereafter
Long-term debt (1)	$	199,327	$	2,193	$	38,238	$	156,605	$	2,291
Capital lease obligations (2)		8,081		1,769		5,493		516		303
Operating lease obligations (2)		245,824		72,245		97,856		45,176		30,547
Other long-term obligations (3)		8,250		1,100		2,200		2,200		2,750
Total	$	461,482	$	77,307	$	143,787	$	204,497	$	35,891

(1)	See Note 11 to Consolidated Financial Statements for additional information. Amount is principal only and excludes capital lease obligations.
(2)	See Note 14 to Consolidated Financial Statements for additional information.
(3)	Amount represents an arrearage agreement between the Port Authority of New York and the Company. See Note 16 to Consolidated Financial Statements for additional information. Pension funding obligations are described below.

Capital Expenditures

     The following table summarizes the number of new and used buses acquired (including those buses acquired and financed using operating leases, capital leases or vendor provided loans) and used buses disposed of for cash by the Company during each of the last three years:

	Year Ended December 31,
	2003		2002		2001
Total new and used buses acquired		17		177		154
Used buses disposed of for cash		123		90		77

25

     Under U.S. generally accepted accounting principals, long-lived assets acquired that are financed with operating leases, capital leases or vendor provided loans are considered non-cash transactions and, therefore, are not reflected as capital expenditures in the statement of cash flows. The following table reconciles the aggregate value of assets acquired by the Company, including the value of assets financed with operating leases, capital leases and vendor provided loans, to capital expenditures as reported in the Company’s Consolidated Statements of Cash Flows for the last three years (in thousands):

	Year Ended December 31,
	2003			2002			2001
New and used buses acquired	$	4,852		$	58,082		$	53,272
Disposals and government subsidies		(5,040	)		(7,203	)		(1,453	)
Real estate, technology and other, net of disposals		14,155			18,548			26,501
Aggregate value of net assets acquired		13,967			69,427			78,320
Proceeds from operating lease financing		(4,268	)		(12,760	)		(37,155	)
Proceeds from capital lease or vendor provided financing		—			(486	)		(7,189	)
Buses purchased at operating lease expiration		8,070			—			—
Capital expenditures, net of proceeds on disposals	$	17,769		$	56,181		$	33,976

Potential Pension Plan Funding Requirements

     The Company maintains nine defined benefit pension plans (the “Pension Plans”) that as of December 31, 2003 had a combined projected benefit obligation (“PBO”), discounted at 6.0%, of $767.5 million. Over the last two years the PBO has increased $54.0 million as interest accretion on the obligation and the effect of a decrease in the discount rate of 1.3% have more than offset reductions due to benefit payments. Plan assets, however, have declined $73.4 million over the last two years as benefit payments have exceeded net investment gains on plan assets and plan contributions. As a result, the PBO exceeds plan assets resulting in the plans being underfunded by $184.0 million at December 31, 2003.

     Laidlaw, collectively with all of its wholly-owned U.S. subsidiaries, including Greyhound (the “Laidlaw Group”), are party to an agreement with the PBGC regarding the funding levels of the Company’s pension plans (the “PBGC Agreement”). Under the PBGC Agreement the Laidlaw Group contributed $50 million in cash to the pension plans during June 2003. Additionally, 3.8 million shares of common stock of Laidlaw were issued to a trust formed for the benefit of the pension plans (the “Pension Plan Trust”). The fair value of the Laidlaw common stock was estimated to be $50 million at the time of bankruptcy emergence based upon third party valuations provided to Laidlaw in connection with their bankruptcy proceedings. The trustee of the Pension Plan Trust will sell the stock at Laidlaw’s direction, but in no event later than the end of 2004. All proceeds from the stock sales will be contributed directly to the pension plans. If the proceeds from the stock sales exceed $50 million, the excess amount may be credited against any future required minimum funding obligations. If the proceeds from the stock sales are less than $50 million, the Laidlaw Group will be required to contribute the amount of the shortfall in cash to the pension plans at the end of 2004. Further, the Laidlaw Group must contribute an additional $50 million in cash to the pension plans in June 2004. These contributions and transfers will be in addition to the minimum funding obligations to the pension plans, if any, required under current regulations.

     The first $50 million cash contribution has been designated by Laidlaw as a capital contribution to the Company and, accordingly, in June 2003 the Company recorded a $50 million increase in additional paid in capital and a $50 million reduction in pension obligations. At December 31, 2003, all 3.8 million shares of Laidlaw common stock remained in the Pension Plan Trust and no dividends had been received from Laidlaw on these shares. Based upon the closing price of the Laidlaw stock on the New York stock exchange, the shares had an aggregate market value of $54.8 million at March 11, 2004.

26

     The most significant of the pension plans, the ATU Plan, represents approximately 90% of the total obligations of the pension plans. Based upon current regulations and plan asset values at December 31, 2003, and assuming annual investment returns exceed 3% and that the contributions required under the PBGC Agreement are made along the timeframe outlined above, the Company does not anticipate any significant additional minimum funding requirements for the ATU Plan until 2007. However, there is no assurance that the ATU Plan will be able to earn the assumed rate of return, that new regulations may not result in changes in the prescribed actuarial mortality table and discount rates, or that there will be market driven changes in the discount rates, which would result in the Company being required to make contributions in the future that differ significantly from the estimates above.

Self Insurance

     The predecessor agency to the Surface Transportation Board granted the Company authority to self-insure its automobile liability exposure for interstate passenger service up to a maximum level of $5.0 million per occurrence, which has been continued by the Department of Transportation (“DOT”). To maintain self-insurance authority, the Company is required to provide periodic financial information and claims reports, maintain a satisfactory safety rating by the DOT, a tangible net worth of $10.0 million and a $15.0 million trust fund to provide security for payment of claims. At December 31, 2002, and continuing to date, the Company’s tangible net worth has fallen below the minimum required by the DOT to maintain self-insurance authority. In March 2003, the Company sought a waiver from DOT of this tangible net worth requirement. On July 25, 2003, the DOT granted the waiver of this requirement through December 31, 2004. As a condition of the waiver, the Company was required to increase the self-insurance trust fund by $2.7 million. As of December 31, 2003, the trust was funded in the amount of $17.7 million. The DOT will also require the Company to make additional trust fund contributions to the extent that self-insured reserves exceed (as measured semi-annually) the then balance in the trust fund. During the waiver period, the Company’s self-insurance authority will be subject to periodic review by the DOT.

     Insurance coverage and related administrative expenses are key components of the Company’s cost structure. Additionally, the Company is required by the DOT, some states and some of its insurance carriers to maintain collateral deposits or provide other security pursuant to its insurance program. At December 31, 2003, the Company maintained $25.7 million of collateral deposits including the above $17.7 million trust fund and had issued $49.2 million of letters of credit in support of these programs. See Note 7 to the Consolidated Financial Statements. The loss or further modification of self-insurance authority from the DOT or a decision by the Company’s insurers to modify the Company’s program substantially, by either increasing cost, reducing availability or increasing collateral, could have a material adverse effect on the Company’s liquidity, financial condition and results of operations.

New York Port Authority

     The Company operates out of its largest sales location, the Port Authority, on a month-to-month basis pursuant to several lease agreements and a license agreement. The Port Authority has been in discussions to develop the air rights above the terminal and should an agreement on the development be reached the Company would likely be required to temporarily relocate its operations within the Port Authority. Such relocation, if required, could result in an increase in the costs to operate out of the Port Authority and potentially impact ticket and food service revenues. See Note 16 to the Consolidated Financial Statements for further discussion.

27

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The following discussion about the Company’s market risk includes “forward-looking statements” that involve risk and uncertainties. Actual results could differ materially from these projections. The Company is currently exposed to market risk from changes in commodity prices for fuel, investment prices and interest rates. The Company does not use derivative instruments to mitigate market risk, nor does the Company use market risk sensitive instruments for speculative or trading purposes.

Commodity Prices. The Company currently has exposure to commodity risk from its fuel inventory and historically with advance purchase commitments for fuel. The Company has fuel inventory at December 31, 2003, at a carrying value of $1.1 million. The Company’s fuel inventory is used in operations before a change in the market price of fuel could have a material effect on the Company’s results of operations. Additionally, the Company has historically entered into advance purchase commitments for fuel whereby the Company would take delivery of a set amount of gallons at a fixed price. Currently the Company has no such arrangements outstanding. For the year ended December 31, 2003, the Company recorded $46.3 million in fuel expense (exclusive of fuel taxes). While a 10% increase or decrease in the cost of fuel would have a material effect on the Company’s operating expenses, generally periods of rising fuel costs have allowed the Company to increase average ticket prices and periods of declining fuel costs have required the Company to lower ticket costs, thus providing some hedge against fuel price fluctuations. However, due to the competitive nature of the transportation industry, there can be no assurance that the Company will be able to pass on increased fuel prices to its customers by increasing its fares or that the timing of price increases will coincide with the timing of the fuel cost increase. Likewise, increased price competition and lower demand because of a decline in out-of-pocket costs for automobile use may offset any potential benefit of lower fuel prices.

Investment Prices. The Company currently has exposure in the market price of investments in its available for sale securities. At December 31, 2003, the Company has approximately $6.0 million of investments classified as available for sale and a 10% decrease in the market price would not have a material effect on the Company’s financial position. As required by generally accepted accounting principles, the Company has reported these investments at fair value, with any unrecognized gains or losses excluded from earnings and reported in a separate component of stockholder’s equity.

Interest Rate Sensitivity. The Company currently has exposure to interest rates from its long-term debt as it relates to the Company’s Revolving Credit Facility and the Laidlaw subordinated debt. The Revolving Credit Facility utilizes a variable rate based on prime and LIBOR. As of December 31, 2003, the Revolving Credit Facility utilized prime plus 1.5% and LIBOR plus 3.5% with no outstanding borrowings. Borrowings under the Revolving Credit Facility mature on October 24, 2004.

The Laidlaw subordinated debt matures 91 days after the maturity of the Revolving Credit Facility. Interest on the debt accrues at the Applicable Federal Rate (1.7% at December 31, 2003) and is payable at maturity. The outstanding balance as of December 31, 2003 was $36.5 million.

A 10% increase or decrease in variable interest rates would not have a material effect on the Company’s results of operations or cash flows.

The table below presents scheduled payments of principal and related weighted average interest rates by contractual maturity dates for fixed rate debt as of December 31, 2003:

Long Term Debt:

	2004			2005			2006			2007			2008			Thereafter			Total			Fair Value
Fixed Rate Debt (in thousands)	$	2,991		$	1,966		$	3,909		$	156,195		$	859		$	2,363		$	168,283		$	160,306
Average Interest Rate			8.3%			9.4%			9.5%			11.4%			11.0%			7.6%			11.3%		—

28

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Index to Consolidated Financial Statements

	Page No.
Report of Independent Auditors		30
Consolidated Statements of Financial Position as of December 31, 2003 and 2002		31
Consolidated Statements of Operations for the Years Ended December 31, 2003, 2002 and 2001		32
Consolidated Statements of Stockholder’s Equity (Deficit) for the Years Ended December 31, 2003, 2002 and 2001		33
Consolidated Statements of Cash Flows for the Years Ended December 31, 2003, 2002 and 2001		34
Notes to Consolidated Financial Statements		35
Schedule II - - Valuation and Qualifying Accounts - For the Years Ended December 31, 2003, 2002 and 2001		56

29

REPORT OF INDEPENDENT AUDITORS

To the Stockholder of Greyhound Lines, Inc:

     In our opinion, the accompanying consolidated financial statements listed in the accompanying index, present fairly, in all material respects, the financial position of Greyhound Lines, Inc. and its subsidiaries at December 31, 2003 and 2002, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2003 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the accompanying index presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and the financial statement schedule are the responsibility of the Company’s management; our responsibility is to express an opinion on these financial statements and the financial statement schedule based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

     As discussed in Notes 2 and 8 to the consolidated financial statements, the Company adopted Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets”, as of January 1, 2002. As discussed in Note 11 to the financial statements, the Company restated its December 31, 2002 statement of financial position to reclassify as a current liability amounts outstanding under its revolving credit facility.

     The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 11 to the financial statements, the Company may not remain in compliance with the financial covenants of its revolving credit facility in 2004. The revolving credit facility matures in October 2004 and will need to be extended or refinanced. Management’s financing plans are also described in Note 11. This matter raises substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.

/s/ PRICEWATERHOUSECOOPERS LLP PricewaterhouseCoopers LLP
Dallas, Texas
March 26, 2004

30

GREYHOUND LINES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(in thousands, except share amounts)

	December 31,
	2003			2002
				Restated
				See Note 11
Current Assets
Cash and cash equivalents	$	19,806		$	5,946
Accounts receivable, less allowance for doubtful accounts of $1,364 and $813		39,170			47,255
Inventories, less allowance for shrinkage of $309 and $271		9,428			9,530
Prepaid expenses		10,687			8,456
Other current assets		2,591			3,364
Total Current Assets		81,682			74,551
Property, plant and equipment, net of accumulated depreciation of $273,732 and $244,485		376,021			407,816
Investments in unconsolidated affiliates		15,624			17,679
Insurance and security deposits		32,393			30,357
Goodwill		3,040			3,040
Intangible assets, net of accumulated amortization of $39,703 and $37,983		29,439			27,880
Total Assets	$	538,199		$	561,323
Current Liabilities
Accounts payable	$	25,379		$	26,422
Accrued liabilities		59,947			62,758
Rents payable		12,852			19,423
Unredeemed tickets		12,396			13,119
Current portion of claims liability		26,579			19,578
Current portion of debt		3,344			12,146
Total Current Liabilities		140,497			153,446
Pension obligation		180,959			242,103
Claims liability		57,697			42,880
Long-term debt		202,349			204,057
Minority interests		3,625			3,300
Other liabilities		24,814			29,049
Total Liabilities		609,941			674,835
Commitments and Contingencies (Notes 2, 10, 11, 14, 15 and 16)
Stockholder’s Deficit
Common stock (1,000 shares authorized; par value $.01; 587 shares issued)		—			—
Capital in excess of par value		370,391			320,391
Retained deficit		(219,485	)		(190,599	)
Accumulated other comprehensive loss, net of tax benefit of $28,880 and $28,791		(222,648	)		(243,304	)
Total Stockholder’s Deficit		(71,742	)		(113,512	)
Total Liabilities and Stockholder’s Deficit	$	538,199		$	561,323

The accompanying notes are an integral part of these statements.

31

GREYHOUND LINES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands)

	Years Ended December 31,
	2003			2002			2001
Operating Revenues
Passenger services	$	830,648		$	849,771		$	876,921
Package express		39,506			39,966			41,222
Food services		39,679			42,164			43,673
Other operating revenues		65,674			60,013			60,604
Total Operating Revenues		975,507			991,914			1,022,420
Operating Expenses
Maintenance		106,084			100,845			101,819
Transportation		244,820			245,273			256,701
Agents’ commissions and station costs		177,723			183,151			190,445
Marketing, advertising and traffic		26,594			27,819			35,536
Insurance and safety		72,577			76,994			59,868
General and administrative		125,045			126,319			129,703
Depreciation and amortization		54,778			50,635			48,911
Operating taxes and licenses		59,594			61,718			63,161
Operating rents		80,262			80,262			72,527
Cost of goods sold – food services		25,664			27,937			29,275
Other operating expenses		5,836			6,580			4,562
Total Operating Expenses		978,977			987,533			992,508
Operating Income(Loss)		(3,470	)		4,381			29,912
Interest Expense		24,784			25,409			28,963
Income (Loss) Before Income Taxes, Minority Interest and Cumulative Effect of Accounting Change		(28,254	)		(21,028	)		949
Income Tax Provision (Benefit)		271			52,621			(1,092	)
Minority Interests		361			(2,100	)		55
Income (Loss) Before Cumulative Effect of Accounting Change		(28,886	)		(71,549	)		1,986
Cumulative Effect of a Change in Accounting for Goodwill (Note 8)		—			40,047			—
Net Income (Loss)	$	(28,886	)	$	(111,596	)	$	1,986

The accompanying notes are an integral part of these statements.

32

GREYHOUND LINES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDER’S EQUITY (DEFICIT)
(in thousands, except share information)

											Accumulated
					Capital in						Other			Total
	Common Stock				Excess of			Retained			Comprehensive			Comprehensive
	Shares		Amount		Par Value			Deficit			Loss			Loss
Balance, January 1, 2001		587	$	—	$	321,237		$	(80,945	)	$	(5,118	)
Dividends on preferred stock		—		—		—			(44	)		—
Redemption of preferred stock		—		—		(846	)		—			—
Comprehensive Loss:
Market value adjustment for securities held, net of tax of $89		—		—		—			—			166		$	166
Adjustment for minimum pension obligation, net of tax of $26,124		—		—		—			—			(48,517	)		(48,517	)
Net Income		—		—		—			1,986			—			1,986
Total Comprehensive Loss														$	(46,365	)
Balance, December 31, 2001		587		—		320,391			(79,003	)		(53,469	)
Comprehensive Loss:
Market value adjustment for securities held		—		—		—			—			1,995		$	1,995
Adjustment for minimum pension obligation		—		—		—			—			(191,830	)		(191,830	)
Net Loss		—		—		—			(111,596	)		—			(111,596	)
Total Comprehensive Loss														$	(301,431	)
Balance, December 31, 2002		587		—		320,391			(190,599	)		(243,304	)
Capital contribution by Laidlaw		—		—		50,000			—			—
Comprehensive Loss:
Market value adjustment for securities held		—		—		—			—			(1,520	)	$	(1,520	)
Adjustment for minimum pension obligation		—		—		—			—			22,176			22,176
Net Loss		—		—		—			(28,886	)		—			(28,886	)
Total Comprehensive Loss														$	(8,230	)
Balance, December 31, 2003		587	$	—	$	370,391		$	(219,485	)	$	(222,648	)

The accompanying notes are an integral part of these statements.

33

GREYHOUND LINES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

	Years Ended December 31,
	2003			2002			2001
Cash Flows From Operating Activities
Net Income (Loss)	$	(28,886	)	$	(111,596	)	$	1,986
Cumulative effect of accounting change		—			40,047			—
Non-cash expenses and gains included in net income (loss) Depreciation and amortization		54,778			50,635			48,911
Other non-cash expenses and gains, net		11,869			64,368			9,087
Net Change in Certain Operating Assets and Liabilities
Accounts receivable		8,085			10,777			(2,045	)
Inventories		102			(1,283	)		(621	)
Prepaid expenses		(2,231	)		(1,675	)		(2,311	)
Other current assets		380			(1,013	)		783
Insurance and security deposits		(2,198	)		(445	)		(4,450	)
Intangible assets		(8,165	)		(5,340	)		(7,082	)
Accounts payable		2,059			1,393			(85	)
Due to Laidlaw		(3,100	)		4,025			—
Accrued liabilities and rents payable		(9,287	)		8,646			(15,232	)
Claims liability		21,818			40,908			13,256
Unredeemed tickets		(723	)		1,118			251
Other liabilities		(4,690	)		(2,461	)		8,557
Net Cash Provided by Operating Activities		39,811			98,104			51,005
Cash Flows From Investing Activities
Capital expenditures		(22,709	)		(64,994	)		(36,011	)
Proceeds from assets sold		4,940			8,813			2,035
Payments for business acquisitions, net of cash acquired		—			—			(1,320	)
Other investing activities		2,888			99			1,548
Net Cash Used for Investing Activities		(14,881	)		(56,082	)		(33,748	)
Cash Flows From Financing Activities
Payments on debt and capital lease obligations		(3,973	)		(7,534	)		(5,797	)
Redemption of Preferred Stock		—			—			(3,541	)
Net change in revolving credit facility		(7,782	)		(50,218	)		(4,148	)
Proceeds from equipment and other borrowings		1,420			1,240			7,850
Other financing activities		(735	)		(477	)		(914	)
Net Cash Used by Financing Activities		(11,070	)		(56,989	)		(6,550	)
Net Increase (Decrease) in Cash and Cash Equivalents		13,860			(14,967	)		10,707
Cash and Cash Equivalents, Beginning of Year		5,946			20,913			10,206
Cash and Cash Equivalents, End of Year	$	19,806		$	5,946		$	20,913

The accompanying notes are an integral part of these statements.

34

GREYHOUND LINES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2003

1. BACKGROUND AND OPERATING ENVIRONMENT

     Greyhound Lines, Inc. and subsidiaries (“Greyhound” or the “Company”) is the only nationwide provider of scheduled intercity bus service in the United States. The Company provides various services including scheduled passenger service, package express service, travel services and food service at some terminals. The Company’s operations include a nationwide network of terminal and maintenance facilities, a fleet of approximately 2,800 buses and approximately 1,700 sales outlets. The Company’s wholly-owned operating subsidiaries include Texas, New Mexico & Oklahoma Coaches, Inc. (“TNM&O”), Vermont Transit Co., Inc. (“Vermont Transit”), Carolina Coach Company (“Carolina Coach”), Valley Transit Co., Inc., On Time Delivery Service, Inc., LSX Delivery, L.L.C., Greyhound Xpress Delivery, L.L.C., Greyhound Shore Services, L.L.C., and Rockford Coach Lines, L.L.C. Additionally, the Company maintains investments in several other companies, principally ventures with Mexico-based bus carriers and U.S.-based carriers that primarily serve Spanish-speaking markets. The Company is subject to regulation by the Department of Transportation (the “DOT”) and certain states.

     On March 16, 1999, the Company’s stockholders approved the Agreement and Plan of Merger with Laidlaw Inc. pursuant to which the Company became a wholly owned subsidiary of Laidlaw Inc. (the “Merger). The consolidated financial statements of the Company do not reflect any purchase accounting adjustments relating to the Merger.

     On June 28, 2001, as part of a financial restructuring, Laidlaw Inc., Laidlaw USA, Inc., Laidlaw International Finance Corporation, Laidlaw Investments Ltd., Laidlaw One, Inc. and Laidlaw Transportation, Inc. filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the Western District of New York, under a jointly administered case captioned, In re: Laidlaw USA, Inc., et al, Case No. 01-14099. On that date, Laidlaw Inc. and Laidlaw Investments Ltd. also filed cases under the Canada Companies’ Creditors Arrangement Act in the Ontario Superior Court of Justice in Toronto, Canada, court file no. 01-CL-4178. Neither Greyhound, nor any of its subsidiaries were included in, or made party to, these reorganization filings and proceedings.

     Effective June 23, 2003, Laidlaw Inc. emerged from the court-supervised reorganization process after completing all required actions and satisfying or reaching agreement with its creditor constituencies on all remaining conditions to its Third Amended Plan of Reorganization. This Plan was confirmed by the U. S. Bankruptcy Court for the Western District of New York by order dated February 27, 2003. In accordance with the Plan of Reorganization, Laidlaw Inc. completed an internal corporate restructuring, in which Laidlaw International, Inc. acquired all of the assets of Laidlaw Inc., a Canadian corporation. Additionally, pursuant to the Plan, Laidlaw International, Inc. domesticated into the United States as a Delaware corporation. Laidlaw International, Inc. and its predecessor Laidlaw Inc. are referred to as “Laidlaw”. The consolidated financial statements of the Company do not reflect any fresh start accounting adjustments relating to the reorganization of Laidlaw.

2. SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

     The accompanying consolidated financial statements include the accounts of the Company. Investments in companies that are 20% to 50% owned (“affiliates”) are accounted for using the equity method. All significant intercompany transactions and balances have been eliminated.

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Certain Reclassifications

     Certain reclassifications have been made to the prior period statements to conform them to the current year presentation.

Cash and Cash Equivalents

     Cash and cash equivalents include short-term investments that are part of the Company’s cash management portfolio. These investments are highly liquid and have original maturities of three months or less.

Inventories

     Inventories are stated at the lower of cost or market, with costs determined using the weighted average method.

Property, Plant and Equipment

     Property, plant and equipment, including capitalized leases, are recorded at cost, including interest during construction, if any. Depreciation is recorded over the estimated useful lives or lease terms and range from three to twenty years for structures and improvements, four to eighteen years for revenue equipment, and five to ten years for all other items. The Company principally uses the straight-line method of depreciation for financial reporting purposes and accelerated methods for tax reporting purposes. Maintenance costs are expensed as incurred, and renewals and betterments are capitalized.

Investments in Equity and Debt Securities

     At December 31, 2003, the Company held several debt securities which are classified as “available-for-sale” securities and reported at fair value. Any temporary gains and losses associated with changes in market value of the securities are excluded from operating results and are recognized as a separate component of stockholder’s equity until realized. Fair value of securities is determined based on market prices and gains and losses are determined using the securities’ cost.

Goodwill

     Effective January 1, 2002, the Company adopted Statement of Financial Accounting Standards No. 142 (“SFAS 142”) “Accounting for Goodwill and Other Intangible Assets” and, as a result, the Company ceased to amortize goodwill. In lieu of amortization, SFAS 142 requires that goodwill be reviewed for impairment at least annually or whenever events or changes in circumstances indicate the carrying value may not be recoverable. Under SFAS 142, goodwill impairment is deemed to exist if the net book value of a reporting unit exceeds its estimated fair value. To determine estimated fair value of the reporting units the Company utilizes both a discounted cash flow methodology as well as the implied values of comparable companies.

Debt Issuance Costs

     Costs incurred related to the issuance of debt are deferred, and such costs are amortized to interest expense over the life of the related debt.

Software Development Costs

     Direct costs of materials and services consumed in developing or obtaining internal use software and certain payroll costs for employees directly associated with internal use software projects are capitalized. Amortization of these costs begins when the software is available for its intended use and is recognized on a straight-line basis over the estimated useful life which generally range from five to ten years.

36

Claims Liability

     The Company maintains comprehensive automobile liability, general liability, worker’s compensation and property insurance to insure its assets and operations. The Company had previously purchased insurance through Laidlaw with coverage subject to a $50,000 per occurrence deductible for physical damage to Company property and no deductible for all other claims. Effective September 1, 2001, the Company began purchasing coverage from third-party insurers for claims up to $5.0 million subject to a $3.0 million per occurrence deductible or self insured retention for automobile liability and $1.0 million per occurrence deductible or self insured retention for workers’ compensation and general liability. As of September 1, 2003, the coverage for all claims is subject to a $3.0 million per occurrence deductible or self insured retention. The Company purchases excess coverage for automobile liability, general liability and workers’ compensation insurance through Laidlaw for claims which exceed $5.0 million. The Company also continues to purchase from Laidlaw coverage for physical damage to Company property and business interruption subject to a $100,000 per occurrence deductible.

     Claims resolved against the Company, which do not exceed the deductible, are paid out of operating cash flows. A claims liability has been established for these claims payments and is based on an assessment of actual claims and claims incurred but not reported, discounted at 5.5%. This liability also includes an estimate of environmental liabilities. The environmental liability includes all sites identified for potential clean-up and/or remediation and represents the present value of estimated cash flows discounted at 8.0%.

Revenue Recognition

     Passenger services revenue is recognized when transportation is provided rather than when a ticket is sold. The amount of passenger ticket sales not yet recognized as revenue is reflected as unredeemed tickets on the Consolidated Statements of Financial Position. Evaluations of this estimated liability are performed periodically and any adjustments are included in results of operations during the periods in which the evaluations are completed. These adjustments relate primarily to differences between the Company’s statistical estimation of refunds, travel dates, interline transactions, and sales from manual locations, for which the final settlement or travel occurs in periods subsequent to the sale of the related tickets at amounts or for travel dates other than as originally estimated. Because the majority of the Company’s customers purchase their tickets on the day of departure, the liability for unredeemed tickets, and any related adjustments, have been materially consistent from year to year.

Use of Estimates

     The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

Long-Lived Assets

     Identifiable intangibles and long-lived assets are assessed for impairment at least annually and whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Important factors which could trigger an impairment review include significant underperformance relative to historical or projected future operating results, significant changes in the use of the acquired assets or the strategy for the overall business, and significant negative industry or economic trends. If indicators of impairment are present, management evaluates the carrying value of property and equipment and intangibles in relation to the projection of future undiscounted cash flows of the underlying assets. Projected cash flows are based on historical results adjusted to reflect management’s best estimate of future market and operating conditions, which may differ from actual cash flow.

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Guarantees

     The Company generally uses operating lease financing with residual value guarantees as the principal source of bus financing. For leases entered into prior to January 1 2003, the Company will record a liability for the residual value guarantee only when it is probable that the guarantee will exceed the estimated value of the buses at lease expiration. For leases entered into after December 31, 2002, the Company is required to estimate the fair value of the residual value guarantees at lease inception. The fair value of the guarantee is recorded as a liability, with the offsetting entry being recorded as prepaid rent (representing a payment in kind made by the lessee when entering into the operating lease). The prepaid rent is amortized to operating rent expense over the lease term. The liability for the guarantee will only be increased if, during the lease term, it becomes probable that the guarantee will exceed the estimated value of the buses at lease expiration by an amount that exceeds the recorded liability. If at lease expiration the Company is not required to perform under the residual value guarantee, the entire initial liability is then reversed as a reduction of operating rent expense.

New Accounting Pronouncements

     There are no recent accounting pronouncements that would have a material effect on the Company’s results or financial position if they were presently applicable.

3. STATEMENTS OF CASH FLOWS SUPPLEMENTARY DISCLOSURES

     Cash paid for interest was $24.1 million, $24.7 million and $27.4 million for the years ended December 31, 2003, 2002 and 2001, respectively. There were no cash payments for federal income taxes for the years ended December 31, 2003, 2002 and 2001.

     In 2003, non-cash investing and financing activities included a $50 million direct contribution from Laidlaw to the Company’s pension plans in accordance with the Pension Benefit Guaranty Corporation (“PBGC”) agreement. See Note 10 for further information. In 2002, non-cash investing and financing activities included $0.5 million of equipment acquired with seller provided financing. In 2001, non-cash investing and financing activities included $7.2 million of buses acquired with seller provided financing.

4. INVENTORIES

     Inventories consisted of the following (in thousands):

	December 31,
	2003			2002
Service parts	$	6,834		$	6,745
Fuel		1,072			1,056
Food service operations		1,831			2,000
Total Inventories		9,737			9,801
Less: Allowance for shrinkage		(309	)		(271	)
Inventories, net	$	9,428		$	9,530

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5. PREPAID EXPENSES

     Prepaid expenses consisted of the following (in thousands):

	December 31,
	2003		2002
Taxes and licenses	$	2,883	$	1,007
Insurance		4,358		4,352
Rents		2,167		2,114
Other		1,279		983
Prepaid expenses	$	10,687	$	8,456

     6. PROPERTY, PLANT AND EQUIPMENT

     Property, plant and equipment consisted of the following (in thousands):

	December 31,
	2003			2002
Land and improvements	$	87,996		$	88,206
Structures and improvements
Owned		149,659			142,447
Capitalized leased assets		1,010			1,013
Lease interests		4,376			4,376
Leasehold improvements		48,070			45,932
Revenue equipment
Owned		262,739			273,806
Capitalized leased assets		13,242			13,242
Leasehold improvements		7,707			6,827
Furniture and fixtures		56,933			59,282
Vehicles, machinery and equipment		18,021			17,170
Property, plant and equipment		649,753			652,301
Accumulated depreciation		(273,732	)		(244,485	)
Property, plant and equipment, net	$	376,021		$	407,816

     Accumulated depreciation of capitalized leased revenue equipment amounted to $5.5 million and $4.7 million at December 31, 2003, and 2002, respectively.

7. INSURANCE AND SECURITY DEPOSITS

     Insurance and security deposits consisted of the following (in thousands):

	December 31,
	2003		2002
Insurance deposits	$	25,739	$	22,906
Security deposits		5,970		6,533
Other		684		918
Insurance and security deposits	$	32,393	$	30,357

     The Company is required by the DOT, some states and some of its insurance carriers to maintain collateral deposits or provide other security pursuant to its insurance program. In addition to the collateral deposits reflected in the table above, at December 31, 2003 and 2002, the Company has also issued $49.2 million and $35.0 million, respectively, of letters of credit in support of these programs.

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8. GOODWILL AND INTANGIBLE ASSETS

     During 2002, the Company completed the initial impairment assessment as required by SFAS 142 and determined that the carrying value of its Bus Operations reporting unit exceeded that unit’s fair value. As a result, effective January 1, 2002, the Company recorded a non-cash charge of $40.0 million as a cumulative effect of a change in accounting for goodwill. The Company’s remaining goodwill ($3.0 million) relates to the Courier Services reporting unit where fair value exceeds carrying value.

     In connection with adopting SFAS 142 the Company reassessed the useful lives and classification of its identifiable intangible assets and, with the exception of the useful life of trademarks, determined that the useful lives and classifications continue to be appropriate. Trademarks, which had previously been amortized over a fifteen year life, are now considered to have an indefinite life and are no longer amortized.

     The following table provides information relating to the Company’s amortized and unamortized intangible assets as of December 31, 2003 and December 31, 2002 (in thousands):

	December 31, 2003				December 31, 2002
			Accumulated				Accumulated
	Cost		Amortization		Cost		Amortization
Long-lived intangible assets:
Software	$	55,910	$	33,010	$	50,998	$	31,008
Debt issuance costs		7,456		4,723		7,428		3,895
Deferred lease costs		2,196		1,736		3,847		2,904
Other		267		234		277		176
Total	$	65,829	$	39,703	$	62,550	$	37,983
Indefinite-lived intangible assets:
Trademark	$	3,313			$	3,313

     Amortization expense for intangible assets for the years ended December 31, 2003, 2002 and 2001 was $7.3 million, $6.8 million and $6.4 million, respectively. Estimated amortization expense, excluding the effect of costs that may be capitalized in future periods, for the year ended December 31, 2004 and the four succeeding years are as follows: $6.9 million (2004); $5.9 million (2005); $4.8 million (2006); $3.3 million (2007) and $2.6 million (2008).

     Actual and adjusted results of operations for the year ended December 31, 2001 had the Company applied the provisions of SFAS 142 in that period are as follows (in thousands):

	December 31,
	2001
Reported net income	$	1,986
Add: goodwill and trademark amortization, net of tax		2,111
Adjusted net income	$	4,097

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9. ACCRUED LIABILITIES

     Accrued liabilities consisted of the following (in thousands):

	December 31,
	2003		2002
Compensation, benefits and payroll-related taxes	$	27,634	$	28,109
Unvouchered invoices		9,827		10,984
Interest		4,045		3,937
Operating, property and income taxes		5,053		6,437
Other expenses		13,388		13,291
Accrued liabilities	$	59,947	$	62,758

10. BENEFIT PLANS

Pension Plans

     The Company has nine defined benefit pension plans. The first plan (the “ATU Plan”) covers approximately 13,500 current and former employees, fewer than 900 of which are active employees of the Company. The ATU Plan was closed to new participants on October 31, 1983 and service and wage accruals were frozen for active employees effective March 15, 2002. The second plan covered salaried employees through May 7, 1990, when the plan was curtailed. The third plan is a multi-employer pension plan, instituted in 1992, to cover certain union mechanics represented by the International Association of Machinists and Aerospace Workers. The fourth plan covered substantially all employees at Vermont Transit through June 30, 2000, when the plan was curtailed. The remaining plans are held by TNM&O and Carolina Coach and cover substantially all of their salaried and hourly personnel. Except for funding required by the agreement with the PBGC it is the Company’s policy to fund the minimum required contribution under existing laws.

     The Company uses a December 31 measurement date for its pension plans.

	Years ended December 31,
	2003			2002			2001
				(in thousands)
Components of Net Periodic Pension Cost:
Service Cost	$	1,422		$	1,680		$	4,828
Interest Cost		45,921			50,097			51,405
Expected Return on Assets		(40,010	)		(46,827	)		(53,191	)
Amortization of Actuarial Loss		5,670			1,120			692
Net Periodic Pension Expense	$	13,003		$	6,070		$	3,734

41

	Years ended December 31,
	2003			2002
	(in thousands)
Change in Benefit Obligation:
Benefit Obligation at Beginning of Year	$	767,978		$	713,505
Service Cost		1,422			1,680
Interest Cost		45,921			50,097
Plan Participants’ Contributions		323			250
Actuarial Loss		31,447			77,719
Benefits Paid		(79,613	)		(75,273	)
Benefit Obligation at End of Year	$	767,478		$	767,978
Change in Plan Assets:
Fair Value of Plan Assets at Beginning of Year	$	523,956		$	656,888
Actual Return on Plan Assets		86,875			(60,137	)
Employer Contributions		51,970			2,228
Plan Participants’ Contributions		323			250
Benefits Paid		(79,613	)		(75,273	)
Fair Value of Plan Assets at End of Year	$	583,511		$	523,956
Funded Status	$	(183,967	)	$	(244,022	)
Unrecognized Prior Service Cost		(7,332	)		(7,862	)
Unrecognized Net Loss		262,509			284,126
Prepaid Benefit Cost (Net Amount Recognized)	$	71,210		$	32,242
Amounts Recognized in the Statements of Financial Position:
Accrued Benefit Liability	$	(180,959	)	$	(242,103	)
Accumulated Other Comprehensive Loss		252,169			274,345
Prepaid Benefit Cost (Net Amount Recognized)	$	71,210		$	32,242
Increase (Decrease) in Minimum Pension Liability reflected in Other Comprehensive Loss	$	(22,176	)	$	191,830

     As of December 31, 2003 and 2002, seven of the Company’s pension plans have accumulated benefit obligations in excess of plan assets. As of December 31, 2003 and 2002, eight and seven of the Company’s pension plans, respectively have projected benefit obligations in excess of plan assets. The accumulated benefit obligations in excess of plan assets, projected benefit obligations in excess of plan assets and total accumulated benefit obligation are as follows (in thousands):

	Year ended December 31,
	2003		2002
Accumulated Obligations in Excess of Plan Assets
Projected Benefit Obligations	$	760,529	$	767,787
Accumulated Benefit Obligation		759,618		765,774
Fair Value of Assets		577,370		523,748
Projected Benefit Obligations in Excess of Plan Assets
Projected Benefit Obligations	$	767,478	$	767,787
Accumulated Benefit Obligation		765,218		765,774
Fair Value of Assets		583,511		523,748
Total Accumulated Benefit Obligation	$	765,218	$	765,965

42

     The weighted-average assumptions used to determine the pension plans benefit obligations and net periodic costs are as follows:

	Benefit Obligation						Net Periodic Costs
	Years ended December 31,						Years ended December 31,
	2003			2002			2003			2002			2001
Discount Rate		6.00	%		6.50	%		6.50	%		7.25	%		7.76	%
Rate of Salary Progression		3.67	%		4.51	%		4.51	%		4.10	%		4.10	%
Expected Long-Term Rate of Return on Plan Assets		—			—			7.10	%		7.28	%		7.52	%

     The expected return on plan assets is based on plan specific, historical long-term portfolio performance, asset allocations and investment strategies, and the views of the plans’ investment advisors along with economic and other indicators of future performance.

Plan Assets

     Plan assets generally consist of equity and fixed income securities of U.S. and foreign issuers. Furthermore, equity investments are diversified across large and small capitalizations. The plan assets at December 31, 2003 and 2002 contain no investments in debt securities of the Company and contain no investments in equity securities of Laidlaw.

     Asset management objectives are to maximize plan returns at an acceptable level of risk such that the plan will be able to pay retirement benefits to plan participants while minimizing cash contributions from the Company over the life of the plan. Investment risk is measured and monitored on an ongoing basis through quarterly investment reviews. Additionally, the asset allocations are reviewed annually using projected benefit payments and long-term historical returns by asset class to determine the optimal allocation for meeting the long-term strategy. The reviews are generally conducted by the plans’ investment advisors and are reviewed by the plans’ actuaries and other experts. The investment and asset allocation policies of the plans prohibit concentrations greater than 10% in any single equity security, prohibit the use of derivative instruments and do not allow investments in hedge funds.

     Target investment allocations, along with the actual weighted-average asset allocations of the collective pension plans are as follows:

				Percentage of Plan Assets
	Target Allocation			December 31,
	As of December 31, 2003			2003			2002
Equity securities		53	%		56	%		60	%
Debt securities		47	%		44	%		40	%
Total		100	%		100	%		100	%

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Plan Contributions and Potential Funding Requirements

     Laidlaw, collectively with all of its wholly-owned U.S. subsidiaries, including Greyhound (the “Laidlaw Group”), are party to an agreement with the PBGC regarding the funding levels of the Company’s pension plans (the “PBGC Agreement”). Under the PBGC Agreement the Laidlaw Group contributed $50 million in cash to the pension plans during June 2003. Additionally, 3.8 million shares of common stock of Laidlaw were issued to a trust formed for the benefit of the pension plans (the “Pension Plan Trust”). The fair value of the Laidlaw common stock was estimated to be $50 million at the time of bankruptcy emergence based upon third party valuations provided to Laidlaw in connection with their bankruptcy proceedings. The trustee of the Pension Plan Trust will sell the stock at Laidlaw’s direction, but in no event later than the end of 2004. All proceeds from the stock sales will be contributed directly to the pension plans. If the proceeds from the stock sales exceed $50 million, the excess amount may be credited against any future required minimum funding obligations. If the proceeds from the stock sales are less than $50 million, the Laidlaw Group will be required to contribute the amount of the shortfall in cash to the pension plans at the end of 2004. Further, the Laidlaw Group must contribute an additional $50 million in cash to the pension plans in June 2004. These contributions and transfers will be in addition to the minimum funding obligations to the pension plans, if any, required under current regulations.

     The first $50 million cash contribution has been designated by Laidlaw as a capital contribution to the Company and, accordingly, in June 2003 the Company recorded a $50 million increase in additional paid in capital and a $50 million reduction in pension obligations. At December 31, 2003, all 3.8 million shares of Laidlaw common stock remained in the Pension Plan Trust and no dividends had been received from Laidlaw on these shares. Based upon the closing price of the Laidlaw stock on the New York stock exchange, the shares had an aggregate market value of $54.8 million at March 11, 2004.

     In addition to the contributions to the pension plans pursuant to the PBGC agreement described above, the Company expects to contribute $3.3 million to all plans other than the ATU Plan (which will require none) in 2004.

     The most significant of the pension plans, the ATU Plan, represents approximately 90% of the total obligations of the pension plans. Based upon current regulations and plan asset values at December 31, 2003, and assuming annual investment returns exceed 3% and that the contributions required under the PBGC Agreement are made along the timeframe outlined above, the Company does not anticipate any significant additional minimum funding requirements for the ATU Plan until 2007. However, there is no assurance that the ATU Plan will be able to earn the assumed rate of return, that new regulations may not result in changes in the prescribed actuarial mortality table and discount rates, or that there will be market driven changes in the discount rates, which would result in the Company being required to make contributions in the future that differ significantly from the estimates above.

Multi-employer Plans

     Included in the pension plans is a multi-employer pension plan, instituted in 1992 to cover certain union mechanics, for which the Company made contributions of $0.9 million and $0.8 million for the years ended December 31, 2003 and 2002, respectively.

Cash or Deferred Retirement Plans

     The Company sponsors 401(k) cash or deferred retirement plans that are available to substantially all of its ongoing salaried, hourly and represented employees. Costs to the Company related to these plans were $2.6 million, $3.3 million, and $3.1 million for the years ended December 31, 2003, 2002 and 2001, respectively.

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Other Plans

     A contributory trusteed health and welfare plan has been established for all active hourly employees represented by the ATU National Local 1700 for drivers, mechanics, and the Omaha Ticket Information Center. Other employees who are represented by a collective bargaining agreement may be under a Greyhound contributory health and welfare plan or a multi-employer plan established by the respective union. A contributory health and welfare plan has been established for salaried employees and all other hourly employees who are not represented by collective bargaining agreements. For the years ended December 31, 2003, 2002 and 2001, the Company incurred costs of $30.1 million, $32.3 million, and $28.5 million, respectively, related to these plans. No post-retirement health and welfare plans exist.

     The Company also has a defined contribution Supplemental Executive Retirement Plan (the “SERP”), which covers only key executives of the Company. For the years ended December 31, 2003, 2002 and 2001, the Company incurred costs of $0.6 million, $0.8 million and $0.8 million, respectively, related to the SERP.

11. INDEBTEDNESS

     Short-term and long-term debt consisted of the following (in thousands):

	December 31,
	2003			2002
Secured Indebtedness
Revolving bank loan, prime plus 1.5% or LIBOR plus 3.5% (weighted average 4.5% at December 31, 2002) due 2004	$	—		$	7,782
Capital lease obligations (weighted average 10.5% at December 31, 2003 and 10.0% at December 31, 2002) due through 2033		6,366			8,695
Real estate and equipment notes (weighted average 8.6% at December 31, 2003 and 8.5% at December 31, 2002) due through 2010		6,316			7,173
Unsecured Indebtedness
11½% Senior notes, due 2007		150,000			150,000
Laidlaw subordinated debt (1.7% at December 31, 2003 and 1.8% at December 31, 2002) due 2005		36,469			35,920
8½% Convertible debentures, due 2007		5,164			5,383
Other long-term debt (weighted average 7.1% at December 31, 2003 and 7.8% at December 31, 2002) due through 2013		1,378			1,250
Total indebtedness		205,693			216,203
Less current portion of debt, including revolving bank loan		(3,344	)		(12,146	)
Long-term debt, net	$	202,349		$	204,057

     At December 31, 2003, maturities of long-term debt for the next five years ending December 31 and all years thereafter, are as follows (in thousands):

2004	$	3,344
2005		38,791
2006		4,162
2007		156,174
2008		859
Thereafter		2,363
	$	205,693

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Revolving Credit Facility

     The Company is party to a $125 million revolving credit facility, with a $70 million letter of credit sub facility (“Revolving Credit Facility”). Letters of credit or borrowings are available under the Revolving Credit Facility based upon the total of 80% of the appraised wholesale value of bus collateral, plus 65% of the quick sale value of certain real property collateral, minus $20 million. Under this formula, at December 31, 2003, the Company had aggregate availability of $113.9 million. As of December 31, 2003, the Company had no outstanding borrowings under its Revolving Credit Facility, issued letters of credit $56.8 million and availability of $57.1 million. However, the Company may not be able to access such availability if an event of default or default exists.

     Borrowings under the Revolving Credit Facility are available to the Company at a rate equal to Wells Fargo Bank’s prime rate plus 1.5% per annum or LIBOR plus 3.5% per annum as selected by the Company. Letter of credit fees are 3.5% per annum. Borrowings under the Revolving Credit Facility mature on October 24, 2004. The Revolving Credit Facility is secured by liens on substantially all of the assets of the Company and the stock and assets of certain of its subsidiaries. Under the Revolving Credit Facility, the Company is subject to certain financial covenants, including maximum total debt to cash flow ratio, minimum cash flow to interest expense ratio and minimum cash flow test. The Revolving Credit Facility is also subject to certain affirmative and negative operating covenants, including limitation on non-bus capital expenditures; limitations on additional liens, indebtedness, guarantees, asset disposals, advances, investments and loans; and restrictions on the redemption or retirement of certain subordinated indebtedness or equity interests, payment of dividends and transactions with affiliates, including Laidlaw. As of December 31, 2003, the Company was in compliance with all such covenants. If an event of default occurs and is continuing, the lenders may seek to enforce remedies under the Revolving Credit Facility, including terminating the commitment to make loans or issue letters of credits, holding cash collateral for payment of the Company’s obligations under the Revolving Credit Facility and selling the collateral. In addition, an event of default under the Revolving Credit Facility may result in cross-defaults under other debt instruments of the Company and its subsidiaries.

     In accordance with the terms of the Revolving Credit Facility the Company submitted a financial forecast for 2004 to the agent bank. Based upon this forecast management is unable to predict with reasonable assurance whether the Company will remain in compliance with all of the covenants under the Revolving Credit Facility. Additionally, there is less than one year until the expiration of the Revolving Credit Facility. The Company intends to enter into discussions to extend the maturity and to modify certain of the other terms of the agreement. Although the Company has been successful in obtaining necessary extensions and modifications to the Revolving Credit Facility in the past, there can be no assurances that the Company will obtain them in the future or that the cost of any future extensions, modifications or other changes in the terms of the Revolving Credit Facility would not have a material effect on the Company. In the event that the parties are unable to agree on an extension of the facility beyond its current maturity date, and that modifications suitable to the parties are not obtained, the Company will be required to seek a replacement for the Revolving Credit Facility from other financing sources. Should alternate sources of financing not be available, then the Company may not be able to satisfy its obligations as they become due and may not be able to continue as a going concern. As a result, the Company may not be able to realize its assets and settle its liabilities in the normal course of operations.

     At December 31, 2002, the amount outstanding under the Revolving Credit Facility was $7.8 million, the maturity extended beyond one year and the Company classified the outstanding obligation as a long-term liability. The Revolving Credit Facility provides that a material adverse change at the Company could be considered an event of default and requires automatic remittances of the Company’s cash receipts to a lockbox. During the first quarter of 2004 the Company determined that because of the lockbox provision and material adverse change clause, generally accepted accounting principles require that the borrowings under the Revolving Credit Facility be classified as short-term obligations. Accordingly, the December 31, 2002 Revolving Credit Facility balance has been reclassified as a current liability in the Statement of Financial Position. There were no other changes to the Statement of Financial Position and no changes to the Company’s results of operations.

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11½% Senior Notes

     The Company’s 11½% Senior Notes due 2007 (the “11½% Senior Notes”) bear interest at the rate of 11½% per annum, payable each April 15 and October 15. The 11½% Senior Notes are redeemable at the option of the Company in whole or in part, at any time on or after April 15 of the year indicated, at redemption prices of 101.917% in 2004 and 100% in 2005 and thereafter plus any accrued but unpaid interest. The 11½% Senior Note indenture contains certain covenants that, among other things, limit the ability of the Company to incur additional indebtedness, pay dividends or make other distributions, repurchase equity interests or subordinated indebtedness, create certain liens, sell assets or enter into certain mergers or consolidations. As of December 31, 2003, the Company was in compliance with all such covenants.

Laidlaw International, Inc. Subordinated Debt

     The intercompany loan is subordinate to the Revolving Credit Facility and matures 91 days after the maturity of the Revolving Credit Facility. Interest on the loan accrues at the Applicable Federal Rate and is payable at maturity.

8½% Convertible Debentures

     Interest on the 8½% Convertible Subordinated Debentures due 2007 (“Convertible Debentures”) is payable semiannually (each March 31 and September 30). The Convertible Debentures may be converted into $525.27 in cash per $1,000 principal amount of Convertible Debentures.

12. INCOME TAXES

Tax Allocation Agreement

     The Company is a member of Laidlaw’s U.S. consolidated tax return group (“U.S. Group”) and subject to a tax allocation agreement. The Company is allocated its share of the tax liability of the U.S. Group or receives a benefit for any losses used by the U.S. Group based on its separate taxable income or loss.

Income Tax Provision

     The income tax provision (benefit) consisted of the following (in thousands):

	Years Ended December 31,
	2003			2002			2001
Current
Federal	$	(459	)	$	(8,990	)	$	(5,908	)
State		730			764			1,487
Total Current		271			(8,226	)		(4,421	)
Deferred
Federal		—			60,961			4,544
State		—			(114	)		(1,215	)
Total Deferred		—			60,847			3,329
Income tax provision (benefit)	$	271		$	52,621		$	(1,092	)

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Effective Tax Rate

     The difference between the actual income tax provision (benefit) and the tax provision (benefit) computed by applying the statutory federal income tax rate to earnings before taxes is attributable to the following (in thousands):

	Years Ended December 31,
	2003			2002			2001
Tax at statutory tax rate	$	(9,889	)	$	(7,360	)	$	332
State income taxes, net of federal benefit		475			423			177
Change in valuation allowance except for items included in other comprehensive loss		10,933			60,847			2,450
Other		(1,248	)		(1,289	)		(4,051	)
Income tax provision (benefit)	$	271		$	52,621		$	(1,092	)

Deferred Tax Assets

     Significant components of deferred income taxes were as follows (in thousands):

	December 31,
	2003			2002
Deferred Tax Assets
Federal and state NOL carryforwards	$	82,773		$	69,977
Claims liabilities		29,279			21,878
Other accrued expenses and liabilities		10,797			10,564
Pension liabilities		64,682			86,186
Other deferred tax assets		438			762
Total deferred tax assets		187,969			189,367
Deferred Tax Liabilities
Tax over book depreciation and amortization		11,502			16,074
Other deferred tax liabilities		148			145
Total deferred tax liabilities		11,650			16,219
Net deferred tax assets		176,319			173,148
Valuation allowance		(176,319	)		(173,148	)
Net deferred tax assets, net of valuation allowance	$	—		$	—

     The Company has significant net deferred tax assets resulting from operating losses and other deductible temporary differences that will reduce taxable income in future periods. Statement of Financial Accounting Standards No. 109 “Accounting for Income Taxes” requires that a valuation allowance be established when it is “more likely than not” that all or a portion of net deferred tax assets will not be realized. A review of all available positive and negative evidence needs to be considered, including expected reversals of significant deductible temporary differences, a company’s recent financial performance, the market environment in which a company operates and the length of operating loss carryforward periods. Furthermore, the weight given to the potential effect of negative and positive evidence should be commensurate with the extent to which it can be objectively verified. Therefore, current operating losses and the reasonable likelihood of significant near-term reversals of deductible temporary differences carry more weight than forecasted future operating profits. As a result of book losses incurred in 2002 and 2003, as well as the significant pension funding required by the PBGC agreement (which gives rise to tax deductions when made), the Company concluded that it was appropriate to establish and maintain a full valuation allowance for its net deferred tax assets. Additionally, the Company expects to continue to provide a full valuation allowance on future tax benefits until it can achieve an appropriate level of profitability that demonstrates its ability to utilize existing operating loss carryforwards. The valuation allowance increased from $173.1 million at December 31, 2002, to $176.3 million at December 31, 2003. The increase in the valuation reserve is net of a $7.7 million charge to other comprehensive loss related to the decrease in minimum pension liability.

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Availability and Amount of NOL’s

     As a result of the ownership changes in 1992 and 1999, Section 382 of the Internal Revenue Code places an annual limitation on the amount of federal net operating loss (“NOL”) carryforwards which the Company and the U.S. Group may utilize. Consequently, $30.4 million and $144.9 million of the Company’s NOL carryforwards are subject to annual limitations of $6.3 million and $22.2 million respectively. The total NOL carryforwards of $211.1 million expire in the years 2005-2024. Additionally, the Company has a $2.1 million capital loss carryforward which expires August 2007.

13. FAIR VALUES OF FINANCIAL INSTRUMENTS

     The following methods and assumptions were used by the Company in estimating the fair value disclosures for its financial instruments. For cash and cash equivalents, accounts receivable and revolving bank loans, the carrying amounts reported in the Consolidated Statements of Financial Position approximate fair value. The fair values of the short-term deposits and long-term insurance deposits and security deposits are based upon quoted market prices at December 31, 2003 and 2002, where available. For the portion of short-term deposits and long-term insurance deposits where no quoted market price is available, the carrying amounts are believed to approximate fair value. For the Laidlaw indebtedness and other long-term debt, the fair values are estimated using discounted cash flow analysis, based upon the Company’s incremental borrowing rates for similar types of borrowing arrangements. The fair values of the Senior Notes and the Convertible Debentures were based upon quoted market prices at December 31, 2003 and 2002.

     The carrying amounts and fair values of the Company’s financial instruments are as follows (in thousands):

	December 31, 2003						December 31, 2002
	Carrying			Fair			Carrying			Fair
	Amount			Value			Amount			Value
Other Current Assets
Other Deposits	$	167		$	167		$	167		$	167
Investment in Equity Securities		—			—			2,010			2,010
Insurance and Security Deposits
Insurance Deposits		25,739			25,739			22,906			22,906
Security Deposits		5,970			5,970			6,533			6,533
Long-Term Debt
Laidlaw subordinated debt		(36,469	)		(34,739	)		(35,920	)		(30,006	)
11½% Senior Notes		(150,000	)		(144,000	)		(150,000	)		(101,535	)
8½% Convertible Subordinated Debentures		(5,164	)		(2,712	)		(5,383	)		(2,827	)
Other Long-term Debt		(14,060	)		(14,447	)		(17,118	)		(17,421	)

14. LEASE COMMITMENTS

     The Company leases certain vehicles, bus terminals, office space and other equipment from various parties pursuant to capital and operating lease agreements expiring at various dates through 2033. The leases on most of the vehicles contain certain purchase provisions or residual value guarantees and have terms of typically seven years. Of those leases that contain residual value guarantees, the aggregate residual value at lease expiration is $140.6 million, of which the Company has guaranteed $88.3 million. To date, the Company always purchased the buses at lease maturity at the stated residual value and therefore has never incurred any loss as a result of residual value guarantees.

     The Company generally uses lease financing as the principal source of bus financing in order to achieve the lowest net cost of bus financing. Most of the leases are designed to qualify as operating leases for accounting purposes and, as such, only the monthly lease payment is recorded in the Consolidated Statements of Operations and the liability and value of the underlying buses are not recorded on the Consolidated Statements of Financial Position.

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     In January 2003, the Company entered into a seven year operating lease covering 10 buses. The lease has an aggregate residual value at lease expiration of $1.4 million of which the Company has guaranteed $0.8 million. As required under Financial Accounting Standards Board Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others”, the Company recorded a liability, in an insignificant amount, for the estimated fair value of the residual value guarantee imbedded in this lease.

     For the years ended December 31, 2003, 2002 and 2001, rental expenses for all operating leases (net of sublease rental income of approximately $2.9 million, $3.3 million and $3.5 million, respectively) amounted to $73.9 million, $76.0 million and $61.5 million, respectively. Rental expenses for bus operating leases, excluding casual rents and other short term leases during peak periods, amounted to $52.9 million, $54.0 million and $49.5 million in 2003, 2002 and 2001, respectively.

     At December 31, 2003, scheduled future minimum payments (excluding any payment related to the residual value guarantee which may be due upon termination of the lease) for the next five years ending December 31, under capital leases and non-cancelable operating leases are as follows (in thousands):

	Capital		Operating
	Leases		Leases
2004	$	1,769	$	72,245
2005		1,769		59,532
2006		3,724		38,324
2007		332		26,767
2008		184		18,409
Thereafter		303		30,547
Total minimum lease payments		8,081	$	245,824
Amounts representing interest		1,715
Present value of minimum lease payments	$	6,366

15. LEGAL MATTERS

     Greyhound Lines is the sole shareholder of Sistema Internacional de Transporte de Autobuses, Inc. (“SITA”). SITA owns 51% of Gonzalez, Inc., d/b/a Golden State Transportation (“Golden State”). On November 28, 2001 and subsequently, Golden State and numerous individual employees, including its senior management, were indicted by a federal grand jury for felony criminal offenses for allegedly transporting and harboring illegal aliens and money laundering. The case, filed before the United States District Court for the District of Arizona, is styled U.S. v. Gonzalez, Inc, et al., Case No. CR 01-1696-TUC-RCC. The indictment also sought forfeiture to the Government of all the property owned by Golden State, which involves Golden State, SITA and Greyhound Lines since they were claimants to the property. Neither Greyhound Lines nor SITA were charged with any crime.

     In August 2002, the Government filed a civil forfeiture action against certain Golden State assets based on allegations similar to those described in the indictment of Golden State. The case, filed before the United States District Court for the District of Arizona, is styled U.S. v. 130 North 35th Avenue, Phoenix, Arizona, et al., Case No. CV 02-409-TUC-RCC. Neither SITA nor Greyhound Lines were a defendant in the forfeiture action; however, Greyhound Lines and SITA were claimants to the property.

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     Golden State ceased operations effective August 30, 2002 and filed a voluntary petition for bankruptcy on September 30, 2002 in the United States Bankruptcy Court for the District of Arizona in a case styled In re: Gonzalez, Inc. d/b/a Golden State Transportation, Case No. 02-15508-PHX-GBN. In September 2003, Golden State entered into a settlement agreement with the Government regarding the criminal and civil forfeiture cases brought by the Government. In September 2003, SITA and Greyhound Lines also entered into stipulations with the Government to settle SITA and Greyhound Lines’ claims to the subject property of the forfeiture action. Pursuant to these stipulations, Greyhound Lines and SITA agreed to withdraw their claims to certain Golden State property and cooperate in the Government’s ongoing criminal proceedings. In return, the Government dropped its forfeiture allegations against the remaining property originally sought for forfeiture and agreed not to pursue criminal or civil charges against SITA, Greyhound Lines and their employees arising out of the events described in the criminal indictment. The bankruptcy court overseeing the Golden State bankruptcy approved the settlement on November 6, 2003 and authorized Golden State to conclude the criminal proceedings by pleading guilty.

     The Company is also a defendant in various lawsuits arising in the ordinary course of business, primarily cases involving personal injury and property damage claims and employment-related claims. Although these lawsuits involve a variety of different facts and theories of recovery, the majority arise from traffic accidents involving buses operated by the Company. The vast majority of these claims are covered by insurance for amounts in excess of the deductible portion of the policies. Management believes that there are no proceedings either threatened or pending against the Company relating to such personal injury, property damage and employment-related claims that, if resolved against the Company, would materially exceed the amounts recorded as estimated liabilities by the Company.

     For information relating to certain environmental matters relating to the Company, see Note 16 below under “Environmental Matters.”

16. COMMITMENTS AND CONTINGENCIES

Insurance Coverage

     The predecessor agency to the Surface Transportation Board granted the Company authority to self-insure its automobile liability exposure for interstate passenger service up to a maximum level of $5.0 million per occurrence, which has been continued by the Department of Transportation (“DOT”). To maintain self-insurance authority, the Company is required to provide periodic financial information and claims reports, maintain a satisfactory safety rating by the DOT, a tangible net worth of $10.0 million and a $15.0 million trust fund to provide security for payment of claims. At December 31, 2002, and continuing to date, the Company’s tangible net worth has fallen below the minimum required by the DOT to maintain self-insurance authority. In March 2003, the Company sought a waiver from DOT of this tangible net worth requirement. On July 25, 2003, the DOT granted the waiver of this requirement through December 31, 2004. As a condition of the waiver, the Company was required to increase the self-insurance trust fund by $2.7 million. As of December 31, 2003, the trust was funded in the amount of $17.7 million. The DOT will also require the Company to make additional trust fund contributions to the extent that self-insured reserves exceed (as measured semi-annually) the then balance in the trust fund. During the waiver period, the Company’s self-insurance authority will be subject to periodic review by the DOT.

     Insurance coverage and related administrative expenses are key components of the Company’s cost structure. Additionally, the Company is required by the DOT, some states and some of its insurance carriers to maintain collateral deposits or provide other security pursuant to its insurance program. At December 31, 2003, the Company maintained $25.7 million of collateral deposits including the above $17.7 million trust fund and had issued $49.2 million of letters of credit in support of these programs. The loss or further modification of self-insurance authority from the DOT or a decision by the Company’s insurers to modify the Company’s program substantially, by either increasing cost, reducing availability or increasing collateral, could have a material adverse effect on the Company’s liquidity, financial condition and results of operations.

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Environmental Matters

     The Company may be liable for certain environmental liabilities and clean-up costs at the various facilities presently or formerly owned or leased by the Company. Based upon surveys conducted solely by Company personnel or its experts, 30 active and 11 inactive locations have been identified as sites requiring potential clean up and/or remediation as of December 31, 2003. Additionally, the Company is potentially liable with respect to four active and seven inactive locations which the Environmental Protection Agency (“EPA”) has designated as Superfund sites. The Company, as well as other parties designated by the EPA as potentially responsible parties, face exposure for costs related to the clean-up of those sites. Based on the EPA’s enforcement activities to date, the Company believes its liability at these sites will not be material because its involvement was as a de minimis generator of wastes disposed of at the sites. In light of its minimal involvement, the Company has been negotiating to be released from liability in return for the payment of nominal settlement amounts.

     The Company has recorded a total environmental liability of $5.5 million at December 31, 2003 of which approximately $0.7 million is indemnifiable by the predecessor owner of the Company’s domestic bus operations, now known as Viad Corp. The environmental liability relates to sites identified for potential clean up and/or remediation and represents the present value of estimated cash flows discounted at 8.0%. The Company expects the majority of this environmental liability to be paid over the next five to ten years. As of the date of this report, the Company is not aware of any additional sites to be identified, and management believes that adequate accruals have been made related to all known environmental matters.

New York Port Authority

     The Company operates out of its largest sales location, the Port Authority Bus Terminal of New York (the “Port Authority”), on a month-to-month basis pursuant to a license agreement which expired in 1994. The Company’s fee was based upon a fixed charge for dedicated space, a fixed charge for each departing bus and a percentage of certain ticket sales. Because the majority of the other bus operators utilizing the Port Authority are principally commuter or local transit operators which are exempt from paying license fees on their sales, the Company had paid a disproportionate share of the total fees received from bus operators that use the Port Authority relative to the Company’s share of bus departures, passengers, bus gates or square footage utilized. The Company had been negotiating with the Port Authority for several years to structure a market-based fee for the renewal of the license agreement and, beginning in June 1999, without Port Authority concurrence, began paying a lower fixed fee in lieu of a percentage of sales. The lower fee payment was based on the Company’s research of the local real estate market in Midtown Manhattan and transportation facilities nationwide, both of which demonstrated that this fee reflected fair market value. Nevertheless, because the Company did not yet have Port Authority concurrence for the new fee structure, the Company continued to accrue for the license fee based upon the 1994 agreement.

     In May 2001, the Port Authority and the Company reached an agreement in principle related to fees for the periods June 1999 through March 31, 2001 (the “arrearage”), as well as on the form of the ongoing license fees. In August 2001, the Company and the Port Authority executed the arrearage agreement. The agreement on the arrearage calls for payment to the Port Authority of $12 million over a 10-year period, interest free. The terms of the agreement required an initial lump sum payment of $1 million and equal monthly installments of $91,667 thereafter. In the second quarter of 2001, the Company recorded a reduction in operating rents of approximately $7.5 million which represented the accrued rent outstanding to the Port Authority at March 31, 2001 less the present value, using a discount rate of 11%, of the $12 million payback agreement. The present value of the payback agreement, less the current portion, is classified as part of other liabilities while the current portion is classified as part of rents payable on the Consolidated Statements of Financial Position. Additionally, effective April 1, 2001, with Port Authority concurrence, the Company began paying the monthly license fee based upon a flat fee per gate utilized and bus departure. The license fee expense recorded by the Company utilizing this new methodology is significantly lower than the fee as calculated under the expired agreement. The Company and the Port Authority are currently negotiating the final details of the license agreement.

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     The Port Authority has been in discussions to develop the air rights above the terminal and should an agreement on the development be reached the Company would likely be required to temporarily relocate its operations within the Port Authority. Such relocation, if required, could result in an increase in the costs to operate out of the Port Authority and potentially impact ticket and food service revenues.

17. RELATED PARTY TRANSACTIONS

     Following the Merger and through August 31, 2001, the Company had purchased its insurance through Laidlaw subject to a $50,000 deductible for property damage claims and no deductible for all other claims. Effective September 1, 2001, the Company purchased excess coverage for automobile liability, general liability and workers’ compensation insurance through Laidlaw for claims which exceed $5.0 million and continues to purchase from Laidlaw coverage for physical damage to Company property and business interruption subject to a $100,000 deductible. For the years ended December 31, 2003, 2002 and 2001, the Company has recorded $9.7 million, $5.9 million and $33.3 million in insurance expense under these programs, respectively, which the Company believes is comparable to the cost under its previous and current third-party insurance programs.

     During the years ended December 31, 2002 and 2001, the Company received a refund of $3.3 million and $4.7 million, respectively, from Laidlaw for the Company’s share of federal income taxes, based upon the Company’s separate taxable loss, utilized by Laidlaw on its U.S. consolidated tax return.

     During 2000, the Company issued $33.3 million of subordinated debt to Laidlaw in satisfaction of accounts payable due from the Company to Laidlaw. Additionally, during the years ended December 31, 2003 and 2002 the Company accrued interest on this note of $0.6 million and $0.9 million, respectively. At December 31, 2003 and 2002, the outstanding balance on this note, including accrued interest was $36.5 million and $35.9 million, respectively.

     Laidlaw provides certain management services to the Company including risk management, income tax and treasury services. During the years ended December 31, 2003, 2002 and 2001, Laidlaw charged the Company $1.6 million, $1.6 million and $3.8 million for these services, respectively.

     Laidlaw has provided credit support in the form of corporate guarantees and letters of credit for certain of the Company’s operating leases. As of December 31, 2003, Laidlaw has guaranteed $93.2 million of future minimum lease payments on buses under lease by the Company, and has provided $19.1 million in letters of credit.

     The Company’s SERP has been funded, through a rabbi trust, with a $3.0 million letter of credit issued by Laidlaw.

     Management of the Company is responsible for managing Greyhound Canada Transportation Corp. and affiliated companies (“GCTC”), an affiliated company owned by Laidlaw. GCTC’s primary business consists of scheduled passenger service, package express service and travel services in Canada. Management services provided to GCTC include oversight of the accounting and finance, strategic planning, real estate, telephone information center, information technology, travel services, marketing and pricing, internal audit and maintenance functions along with supplying technology support services. During the years ended December 31, 2003 and 2002, the Company charged GCTC $2.0 million and $1.4 million, respectively for these services. Additionally, during 2002, the Company sold buses to GCTC, which resulted in a recorded gain of $0.3 million on gross proceeds from the sale of approximately $5.7 million.

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     The Company makes available to Hotard Coaches, Inc. (“Hotard”), an affiliated company engaged in the travel services business in the U.S., a revolving credit line subject to a maximum availability of $4.0 million. Borrowings are available at a rate equal to the prime rate plus 2.5%, and mature the earlier of October 23, 2004 or upon 30 days notice by the Company. The revolving credit line is secured by liens on substantially all of the assets of Hotard. At December 31, 2003 and 2002, outstanding borrowings were $3.2 million and $3.4 million, respectively. During the year ended December 31, 2003, 2002 and 2001, the Company received $0.3 million, $0.2 million and $0.1 million, respectively of interest income pursuant to this revolving credit line.

     During 2003, the Company purchased six buses from Interstate Leasing, Inc., an affiliated company owned by Laidlaw engaged in the travel services business in the U.S. Greyhound paid approximately $1.5 million for these buses, which approximates the price it would have paid to an independent third party.

     The Company provides 22 buses, subject to intermediate term operating leases, and insurance coverage to Hotard. Additionally, the Company purchases charter services from Hotard, principally for transport of cruise ship passengers in connection with the Company’s travel services business. During the year ended December 31, 2003 and 2002, the Company received lease and insurance income of $0.6 million and $0.4 million, respectively, and purchased $0.7 million and $0.3 million, respectively of charter services from Hotard.

     The Company provides 17 buses, subject to intermediate term operating leases, to Roesch Lines, a division of Laidlaw Transit Services, Inc., an affiliated company owned by Laidlaw. Roesch Lines is primarily engaged in providing charter services in the U.S. Additionally, the Company will purchase charter services from Roesch Lines, principally for transport of cruise ship passengers in connection with the Company’s travel services business. During the years ended December 31, 2003, 2002 and 2001, the Company received lease and insurance income of $0.6 million, $0.3 million and $0.1 million, respectively, and purchased $1.0 million, $0.9 million and $2.2 million, respectively, of charter services from Roesch Lines.

     Included in accounts receivable on the Company’s Consolidated Statements of Financial Position at December 31, 2003 and 2002 are amounts due from Laidlaw, GCTC, Hotard and Roesch of $3.6 million and $3.9 million, respectively. Included in accounts payable on the Company’s Consolidated Statements of Financial Position at December 31, 2003 and 2002 are amounts payable to Laidlaw, Hotard and Roesch of $1.1 million and $4.1 million, respectively.

54

18. QUARTERLY FINANCIAL DATA (Unaudited)

     Selected unaudited quarterly financial data for the years ended December 31, 2003 and 2002 are as follows (in thousands):

	First			Second			Third		Fourth
Year Ended December 31, 2003	Quarter			Quarter			Quarter		Quarter
Operating revenues	$	217,731		$	241,818		$	276,640	$	239,318
Operating expenses		240,162			245,726			254,946		238,143
Operating income (loss)		(22,431	)		(3,908	)		21,694		1,175
Interest expense		5,895			6,244			6,352		6,293
Income tax provision (benefit)		35			934			96		(794	)
Minority interest		(306	)		(167	)		132		702
Net income (loss)	$	(28,055	)	$	(10,919	)	$	15,114	$	(5,026	)

	First			Second			Third			Fourth
Year Ended December 31, 2002	Quarter			Quarter			Quarter			Quarter
Operating revenues	$	222,334		$	249,964		$	280,770		$	238,846
Operating expenses		231,324			249,154			263,633			243,422
Operating income (loss)		(8,990	)		810			17,137			(4,576	)
Interest expense		6,809			6,702			6,122			5,776
Income tax provision (benefit)		(9,480	)		804			66,155			(4,858	)
Minority interest		(1,094	)		(465	)		(271	)		(270	)
Cumulative effect of a change in accounting for goodwill		(37,564	)		—			(2,483	)		—
Net loss	$	(42,789	)	$	(6,231	)	$	(57,352	)	$	(5,224	)

55

SCHEDULE II
GREYHOUND LINES, INC. AND SUBSIDIARIES (a)
VALUATION AND QUALIFYING ACCOUNTS
(in thousands)

			Additions		Additions
	Balance at		Charged to		Charged to								Balance
	Beginning		Costs and		Other								at End
Classification	of Year		Expenses		Accounts			Deductions					of Year
December 31, 2001:
Allowance for Doubtful Accounts	$	398	$	1,064	$	—		$	(547	)	(b	)	$	915
Inventory Reserves		29		158		—			(10	)	(e	)		177
Accumulated Amortization of Intangible Assets		37,571		7,052		—			(10,136	)	(c	)		34,487
Claims Liability		8,294		14,327		—			(1,071	)	(d	)		21,550
Total Reserves and Allowances	$	46,292	$	22,601	$	—		$	(11,764	)			$	57,129
December 31, 2002:
Allowance for Doubtful Accounts	$	915	$	773	$	32		$	(907	)	(b	)	$	813
Inventory Reserves		177		80		41			(27	)	(e	)		271
Accumulated Amortization of Intangible Assets		34,487		6,807		—			(3,311	)	(c	)		37,983
Claims Liability		21,550		55,130		—			(14,222	)	(d	)		62,458
Total Reserves and Allowances	$	57,129	$	62,790	$	73		$	(18,467	)			$	101,525
December 31, 2003:
Allowance for Doubtful Accounts	$	813	$	705	$	—		$	(154	)	(b	)	$	1,364
Inventory Reserves		271		70		—			(32	)	(e	)		309
Accumulated Amortization of Intangible Assets		37,983		6,889		—			(5,169	)	(c	)		39,703
Claims Liability		62,458		50,155		(135	)		(28,202	)	(d	)		84,276
Total Reserves and Allowances	$	101,525	$	57,819	$	(135	)	$	(33,557	)			$	125,652

(a)	This schedule should be read in conjunction with the Company’s audited consolidated financial statements and related notes thereto.
(b)	Write-off of uncollectible receivables, net of recovery of receivables previously written-off.
(c)	Write-off or amortization of other assets and deferred costs.
(d)	Payments of settled claims.
(e)	Write-off of inventory shrinkage.

56

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

     None.

ITEM 9A. CONTROLS AND PROCEDURES

     The Company maintains a set of disclosure controls and procedures designed to ensure that information required to be disclosed by the Company in reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms. As of the end of the period covered by this report, an evaluation was carried out under the supervision and with the participation of the Company’s management, including its Principal Executive Officer and Principal Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures. Based on that evaluation, the Principal Executive Officer and Principal Financial Officer have concluded that the Company’s disclosure controls and procedures are effective.

     There has not been any change in the Company’s internal control over financial reporting that occurred during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

57

PART III

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

     Following is a summary of fees for professional services rendered by PricewaterhouseCoopers LLP for Greyhound for the years ended December 31, 2003 and 2002 (in thousands):

	2003		2002
Audit Fees	$	415	$	400
Audit-Related Fees		82		72
Tax Fees		—		—
All Other Fees		37		63
Total Fees	$	534	$	535

     Audit Fees: Consist of fees for the audit of the Company’s consolidated financial statements, for review of the interim condensed financial statements included in the Company’s quarterly reports on Form 10-Q and subsidiary audits.

     Audit Related Fees: Consist of fees for the audit of the Company’s benefit plans and attest services that are not required by statute or regulation.

     Tax Fees: None

     All Other Fees: Consist of fees for professional services other than those reported above. These services were for access to research software for the Company and for actuarial services performed for a pension plan of one of the Company’s subsidiaries. In 2004, the Company will replace PricewaterhouseCoopers LLP with respect to the actuarial services.

     In accordance with the Sarbanes-Oxley Act of 2002, the Audit Committee of the Company’s parent, Laidlaw, has established policies and procedures under which all audit and non-audit services performed by the Company’s principal accountants must be approved in advance by the Audit Committee of Laidlaw. As provided in the Sarbanes-Oxley Act, all audit and non-audit services to be provided after May 6, 2003 must be pre-approved by the Audit Committee in accordance with these policies and procedures. Based in part on consideration of the non-audit services provided by PricewaterhouseCoopers LLP during fiscal 2003, the Audit Committee determined that such non-audit services were compatible with maintaining the independence of PricewaterhouseCoopers LLP. Since May 6, 2003, all of the services described above were approved by the Audit Committee of Laidlaw. The Company believes that none of the time expended on PricewaterhouseCoopers LLP’s engagement to audit the Company’s financial statements for fiscal 2003 was attributable to work performed by persons other than PricewaterhouseCoopers LLP’s full-time, permanent employees.

58

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) Certain Documents Filed as Part of the Form 10-K

1. and 2. Financial Statements and Financial Statements Schedules

     The following financial statements and financial statement schedule are set forth in Item 8 of this report. Financial statement schedules not included in this report have been omitted because they are not applicable or the required information is shown in the financial statements or notes thereto. Financial statements for fifty percent or less owned companies accounted for by the equity method have been omitted because, considered in the aggregate, they have not been considered to constitute a significant subsidiary.

	Page No.
Report of Independent Auditors		30
Consolidated Statements of Financial Position at December 31, 2003 and 2002		31
Consolidated Statements of Operations for the Years ended December 31, 2003, 2002 and 2001		32
Consolidated Statements of Stockholder’s Equity (Deficit) for the Years Ended December 31, 2003, 2002 and 2001		33
Consolidated Statements of Cash Flows for the Years Ended December 31, 2003, 2002 and 2001		34
Notes to Consolidated Financial Statements		35
Schedule II - Valuation and Qualifying Accounts		56

3. Exhibits

3.1	—	Second Amended and Restated Certificate of Incorporation of Greyhound Lines, Inc. (12)
3.2	—	Bylaws of Greyhound Lines, Inc. (12)
4.1	—	Indenture governing the 8½% Convertible Subordinated Debentures due March 31, 2007, including the form of 8½% Convertible Subordinated Debentures due March 31, 2007. (1)
4.2	—	First Supplemental Indenture to the 8½% Convertible Subordinated Debentures Indenture between the Registrant and Shawmut Bank Connecticut, N.A., as Trustee. (2)
4.3	—	Second Supplemental Indenture to the 8½% Convertible Subordinated Debentures Indenture between the Registrant and State Street Bank and Trust Company, as trustee. (12)
4.4	—	Indenture, dated April 16, 1997, by and among the Company, the Guarantors and PNC Bank, N.A., as Trustee. (3)
4.5	—	First Supplemental Indenture dated as of July 9, 1997 between the Registrant and PNC Bank, N.A. as Trustee. (9)
4.6	—	Second Supplemental Indenture dated as of August 25, 1997 between the Registrant and PNC Bank, N.A. as Trustee. (9)
4.7	—	Third Supplemental Indenture dated as of February 1, 1999, between the Registrant and Chase Manhattan Trust Company as Trustee. (6)
4.8	—	Fourth Supplemental Indenture dated as of May 14, 1999, between the Registrant and Chase Manhattan Trust Company as Trustee. (6)
4.9	—	Form of 11½% Series A Senior Notes due 2007. (3)
4.10	—	Form of 11½% Series B Senior Notes due 2007. (5)
4.11	—	Form of Guarantee of 11½% Series A and B Senior Notes. (5)
4.12	—	Indenture dated April 16, 1997, by and between the Company and U.S. Trust of Texas, N.A., as Trustee. (4)
10.1	—	Greyhound Lines, Inc. Supplemental Executive Retirement Plan. (12)*
10.2	—	First Amendment to Supplemental Executive Retirement Plan. (12)*
10.3	—	Second Amendment to Supplemental Executive Retirement Plan. (12)*

59

10.4	—	Third Amendment to Supplemental Executive Retirement Plan (12)*
10.5	—	Supplemental Executive Retirement Plan Trust Agreement (12)*
10.6	—	Second Amended Employment Agreement dated March 16, 1999, between Registrant and John Werner Haugsland. (12)*
10.7	—	First Amendment to the Second Amended Executive Employment Agreement dated December 1999 between Registrant and John Warner Haugsland. (12)*
10.8	—	Affiliated Companies Demand Loan Agreement dated March 16, 1999, between the Registrant and Laidlaw Transportation Inc. (7)
10.9	—	Tax Allocation Agreement dated June 1, 1982, between the Registrant and Laidlaw Transportation Inc. (7)
10.10	—	Loss Portfolio Transfer Agreement dated December 31, 1999, between the Registrant and Laidlaw Transportation Inc. (7)
10.11	—	Memorandum of Agreement, dated September 30, 1998, between the Registrant and the Amalgamated Transit Union National Local 1700. (12)
10.12	—	Greyhound Lines, Inc. Change in Control Severance Pay Program. (12)*
10.13	—	Form of Change in Control Agreement between the Company and certain officers of the Company. (12)*
10.14	—	Intercompany Agreement dated as of October 24, 2000, between Registrant and Laidlaw Transportation, Inc. (8)
10.15	—	Letter of Separation between Greyhound Lines, Inc. and Craig R. Lentzsch dated June 25, 2003 (11)*
10.16	—	Amended and Restated Loan and Security Agreement among Greyhound Lines, Inc., as Borrower, the Financial Institutions named as lenders, and Foothill Capital Corporation as Agent dated as of May 14, 2003 (10)
21	—	Subsidiaries of the Registrant (12)
31.1	—	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (12)
31.2	—	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (12)
32.1	—	Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (12)

* Management contract or compensatory plan.

(1)	Incorporated by reference from the Company’s Registration Statement on Form S-1 (File No. 33-47908) regarding the Registrant’s Common Stock and 10% Senior Notes Due 2001 held by the Contested Claims Pool Trust.
(2)	Incorporated herein by reference from the Registrant’s Issuer Tender Offer Statement on Schedule 13E-4 (File No. 5-41800).
(3)	Incorporated by reference from the Company’s Registration Statement on Form S-4 regarding the Company’s 11½% Series B Senior Notes due 2007.
(4)	Incorporated by reference from the Company’s Registration Statement on Form S-3 regarding the Company’s 8½% Convertible Exchangeable preferred Stock, Common Stock and 8½% Convertible Subordinated Debentures due 2009.
(5)	Incorporated by reference from Amendment 1 to Form S-4 filed on June 27, 1997.
(6)	Incorporated by reference from the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1999.
(7)	Incorporated by reference from the Registrant’s Annual Report on Form 10-K for the year ended December 31, 1999.
(8)	Incorporated by reference from the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2000.

60

(9)	Incorporated by reference from the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2002.
(10)	Incorporated by reference from the Registrant’s Current Report on Form 8-K filed on May 21, 2003.
(11)	Incorporated by reference from the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2003.
(12)	Filed herewith.

     (b) Reports on Form 8-K

     On February 2, 2004, the Company filed a current report on Form 8-K with the Securities and Exchange Commission reporting Other Events. No financial statements were included.

     On March 26, 2004, the Company filed a current report on Form 8-K with the Securities and Exchange Commission reporting Other Events. No financial statements were included.

61

SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Dallas and the State of Texas, on March 30, 2004.

GREYHOUND LINES, INC.
By:	/s/ STEPHEN E. GORMAN
	Stephen E. Gorman
	President and Chief Executive Officer
	(Principal Executive Officer)

     Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ KEVIN E. BENSON Kevin E. Benson	Director	March 30, 2004
/s/ DOUGLAS A. CARTY Douglas A. Carty	Director	March 30, 2004
/s/ JEFFREY W. SANDERS Jeffrey W. Sanders	Director	March 30, 2004
/s/ STEPHEN E. GORMAN Stephen E. Gorman	Director, President and Chief Executive Officer (Principal Executive Officer)	March 30, 2004
/s/ CHERYL W. FARMER Cheryl W. Farmer	Vice President - Finance (Principal Financial Officer)	March 30, 2004

CO-REGISTRANTS

ATLANTIC GREYHOUND LINES OF VIRGINIA, INC.

By:

/s/ JACK W. HAUGSLAND Jack W. Haugsland	Director, Chairman of the Board, President and Chief Executive Officer (Principal Executive Officer)	March 30, 2004
/s/ STEPHEN E. GORMAN Stephen E. Gorman	Director	March 30, 2004
/s/ CHERYL W. FARMER Cheryl W. Farmer	Vice President - Finance (Principal Financial and Accounting Officer)	March 30, 2004

62

GLI HOLDING COMPANY

By:

/s/ STEPHEN E. GORMAN Stephen E. Gorman	Director, President and Chief Executive Officer (Principal Executive Officer)	March 30, 2004
/s/ JACK W. HAUGSLAND Jack W. Haugsland	Director	March 30, 2004
/s/ CHERYL W. FARMER Cheryl W. Farmer	Vice President - Finance (Principal Financial and Accounting Officer)	March 30, 2004

GREYHOUND de MEXICO, S.A. de C.V.

By:

/s/ STEPHEN E. GORMAN Stephen E. Gorman	Director and President (Principal Executive Officer)	March 30, 2004
/s/ JACK W. HAUGSLAND Jack W. Haugsland	Director	March 30, 2004
/s/ CHERYL W. FARMER Cheryl W. Farmer	Director	March 30, 2004
/s/ WILLIAM J. GIESEKER William J. Gieseker	Examiner (Principal Financial and Accounting Officer)	March 30, 2004

SISTEMA INTERNACIONAL de TRANSPORTE de AUTOBUSES, INC.

By:

/s/ STEPHEN E. GORMAN Stephen E. Gorman	Director, President, and Chief Executive Officer (Principal Executive Officer)	March 30, 2004
/s/ ALFONSO PENEDO Alfonso Penedo	Director	March 30, 2004
/s/ JACK W. HAUGSLAND Jack W. Haugsland	Director	March 30, 2004
/s/ CHERYL W. FARMER Cheryl W. Farmer	Vice President - Finance (Principal Financial and Accounting Officer)	March 30, 2004

63

TEXAS, NEW MEXICO & OKLAHOMA COACHES, INC.

By:

/s/ JACK W. HAUGSLAND Jack W. Haugsland	Director and Chief Executive Officer (Principal Executive Officer)	March 30, 2004
/s/ ROBERT D. GREENHILL Robert D. Greenhill	Director	March 30, 2004
/s/ GREGORY ALEXANDER Gregory Alexander	Director	March 30, 2004
/s/ CHERYL W. FARMER Cheryl W. Farmer	Vice President - Finance (Principal Financial and Accounting Officer)	March 30, 2004

T.N.M. & O. TOURS, INC.

By:

/s/ JACK W. HAUGSLAND Jack W. Haugsland	Director and Chief Executive Officer (Principal Executive Officer)	March 30, 2004
/s/ GREGORY ALEXANDER Gregory Alexander	Director	March 30, 2004
/s/ ROBERT D. GREENHILL Robert D. Greenhill	Director	March 30, 2004
/s/ RICHARD M. PORTWOOD Richard M. Portwood	Director	March 30, 2004
/s/ CHERYL W. FARMER Cheryl W. Farmer	Vice President - Finance (Principal Financial and Accounting Officer)	March 30, 2004

VERMONT TRANSIT CO., INC.

By:

/s/ JACK W. HAUGSLAND Jack W. Haugsland	Director Chief Executive Officer (Principal Executive Officer)	March 30, 2004
/s/ GREGORY ALEXANDER Gregory Alexander	Director	March 30, 2004
/s/ CHERYL W. FARMER Cheryl W. Farmer	Vice President - Finance (Principal Financial and Accounting Officer)	March 30, 2004

64

INDEX TO EXHIBITS

Exhibit No	Description
3.1	Second Amended and Restated Certification of Incorporation of Greyhound Lines, Inc.
3.2	Bylaws of Greyhound Lines, Inc.
4.3	Second Supplemental Indenture to the 8 1/2% Convertible Subordinated Debentures Indenture between the Registrant and State Street Bank and Trust Company, as Trustee.
10.1	Greyhound Lines, Inc. Supplemental Executive Retirement Plan.*
10.2	First Amendment to Supplemental Executive Retirement Plan.*
10.3	Second Amendment to Supplemental Executive Retirement Plan.*
10.4	Third Amendment to Supplemental Executive Retirement Plan.*
10.5	Supplemental Executive Retirement Plan Trust Agreement.*
10.6	Second Amended Employment Agreement dated March 16, 1999, between Registrant and John Werner Haugsland.*
10.7	First Amendment to Second Amended Executive Employment Agreement dated December 1999 between Registrant and John Werner Haugsland.*
10.11	Memorandum of Agreement dated September 30, 1998, between the Registrant and the Amalgamated Transit Union National Local 1700.
10.12	Greyhound Lines, Inc. Change in Control Severance Pay Program.*
10.13	Form of Change in Control Agreement between the Company and certain officers of the Company.*
21	Subsidiaries of the Registrant.
31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

* Management contract or compensatory plan.

65

EX-3.1

                                                                     EXHIBIT 3.1

            SECOND AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

                                       OF

                              GREYHOUND LINES, INC.

         The undersigned, being the President of Greyhound Lines, Inc., a
Delaware corporation, hereby certifies the following:

                           1.       The name of the corporation is Greyhound
Lines, Inc. (the "Corporation").

                           2.       The date of filing of the original
Certificate of Incorporation (the "Certificate of Incorporation") of the
Corporation was December 18, 1986 and the name under which the Corporation was
originally incorporated was GLI Operating Company. A Restated Certificate of
Incorporation of the Corporation was filed with the Delaware Secretary of State
on October 31, 1991. The Certificate of Incorporation was restated in its
entirety pursuant to that certain Restated Certificate of Incorporation (the
"Restated Certificate of Incorporation"), which was filed with the Delaware
Secretary of State on March 16, 1999. The Restated Certificate of Incorporation
was amended by that certain Certificate of Amendment to Restated Certificate of
Incorporation, which was filed with the Delaware Secretary of State on May 21,
2001.

                           3.       This Second Amended and Restated Certificate
of Incorporation amends and restates the Restated Certificate, as amended to
date, in its entirety.

                           4.       This Second Amended and Restated Certificate
of Incorporation has been duly adopted by the written consent of the sole member
of the Corporation's Board of Directors (the "Board of Directors") and by the
written consent of the sole stockholder of the Corporation, in accordance with
the provisions of Sections 141, 228, 242 and 245 of the General Corporation Law
of the State of Delaware ("DGCL"), as applicable.

                           5.       The Restated Certificate of Incorporation of
the Corporation, as amended and restated hereby, shall upon its filing with the
Secretary of State of the State of Delaware, read in its entirety as follows:

         FIRST. The name of the Corporation is Greyhound Lines, Inc.

         SECOND. The address of the Corporation's registered office in the State
of Delaware is 1209 Orange Street, in the City of Wilmington, County of New
Castle, Delaware 19801. The name of its registered agent at such address is The
Corporation Trust Company.

         THIRD. The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware, as amended.

                                       1


         FOURTH: The total number of shares of capital stock that the
Corporation shall have authority to issue is 1,000, classified as 1,000 shares
of common stock, par value $0.01 per share (the "Common Stock").

         The designations and the powers, preferences, rights, qualifications,
limitations, and restrictions of the Common Stock are as follows:

         I.       Provisions Relating to the Common Stock

                  (a)      General. Each share of Common Stock of the
Corporation shall have identical rights and privileges in every respect. The
holders of shares of Common Stock shall be entitled to vote upon all matters
submitted to a vote of the stockholders of the Corporation and shall be entitled
to one vote for each share held.

                  (b)      Dividends and Distributions. The holders of shares of
Common Stock shall be entitled to receive such dividends or other distributions,
payable in cash, property, stock, or otherwise, as may be declared thereon by
the Board of Directors at any time and from time to time out of any funds of the
Corporation legally available therefor.

                  (c)      Dissolution. In the event of any voluntary or
involuntary liquidation, dissolution, or winding-up of the affairs of the
Corporation, the holders of shares of Common Stock shall be entitled to receive
all of the assets of the Corporation available for distribution to its
stockholders, ratably in proportion to the number of shares of Common Stock held
by them. Neither the consolidation with nor the merger of the Corporation into
any other corporation or corporations or other entity or entities, nor the
merger of any other corporation or other entity into the Corporation, nor a
reorganization of the Corporation, nor the purchase or redemption of all or any
part of the outstanding shares of any class or classes of the capital stock of
the Corporation, nor a voluntary sale or transfer of the property and business
of the Corporation as, or substantially as, an entirety, shall be deemed a
liquidation, dissolution, or winding-up of the affairs of the Corporation within
the meaning of any of the provisions of this Section I.

         II.      General.

                  (a)      Subject to the foregoing provisions of this
Certificate of Incorporation, the Corporation may issue shares of its Common
Stock from time to time for such consideration (not less than the par value
thereof) as may be fixed by the Board of Directors, which is expressly
authorized to fix the same in its absolute and uncontrolled discretion subject
to the foregoing conditions. Shares so issued for which the consideration shall
have been paid or delivered to the Corporation shall be deemed fully paid stock
and shall not be liable to any further call or assessment thereon, and the
holders of such shares shall not be liable for any further payments in respect
of such shares.

                  (b)      The Corporation shall have authority to create and
issue rights and options entitling their holders to purchase shares of the
Corporation's capital stock of any class or series or other securities of the
Corporation, and such rights and options shall be evidenced by instrument(s)
approved by the Board of Directors. The Board of Directors shall be empowered to
set the exercise price, duration, times for exercise, and other terms of such
options or rights;

                                       2


provided, however, that the consideration to be received for any shares of
capital stock subject thereto shall not be less than the par value thereof.

         FIFTH. In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized:

                  (1)      To adopt, amend or repeal the by-laws of the
                           Corporation and

                  (2)      To provide for the indemnification of directors,
                           officers, management, employees and agents of the
                           Corporation, and of persons who serve other
                           enterprises in such or similar capacities at the
                           request of the Corporation, to the full extent
                           permitted by the General Corporation Law of the State
                           of Delaware, as amended, or any other applicable
                           laws, as may from time to time be in effect.

         SIXTH: The Corporation shall indemnify any person who was, is, or is
threatened to be made a party to a proceeding (as hereinafter defined) by reason
of the fact that he or she (i) is or was a director or officer of the
Corporation or (ii) while a director or officer of the Corporation, is or was
serving at the request of the Corporation as a director, officer, partner,
venturer, proprietor, trustee, employee, agent, or similar functionary of
another foreign or domestic corporation, partnership, joint venture, sole
proprietorship, trust, employee benefit plan, or other enterprise, to the
fullest extent permitted under the General Corporation Law of the State of
Delaware, as the same exists or may hereafter be amended. Such right shall be a
contract right and as such shall run to the benefit of any director or officer
who is elected and accepts the position of director or officer of the
Corporation or elects to continue to serve as a director or officer of the
Corporation while this Article Sixth is in effect. Any repeal or amendment of
this Article Sixth shall be prospective only and shall not limit the rights of
any such director or officer or the obligations of the Corporation with respect
to any claim arising from or related to the services of such director or officer
in any of the foregoing capacities prior to any such repeal or amendment to this
Article Sixth. Such right shall include the right to be paid by the Corporation
expenses incurred in defending any such proceeding in advance of its final
disposition to the maximum extent permitted under the General Corporation Law of
the State of Delaware, as the same exists or may hereafter be amended. If a
claim for indemnification or advancement of expenses hereunder is not paid in
full by the Corporation within sixty (60) days after a written claim has been
received by the Corporation, the claimant may at any time thereafter bring suit
against the Corporation to recover the unpaid amount of the claim, and if
successful in whole or in part, the claimant shall also be entitled to be paid
the expenses of prosecuting such claim. It shall be a defense to any such action
that such indemnification or advancement of costs of defense is not permitted
under the General Corporation Law of the State of Delaware, but the burden of
proving such defense shall be on the Corporation. Neither the failure of the
Corporation (including its Board of Directors or any committee thereof,
independent legal counsel, or stockholders) to have made its determination prior
to the commencement of such action that indemnification of, or advancement of
costs of defense to, the claimant is permissible in the circumstances nor an
actual determination by the Corporation (including its Board of Directors or any
committee thereof, independent legal counsel, or stockholders) that such
indemnification or advancement is not permissible shall be a defense to the
action or create a presumption that such indemnification or advancement is not
permissible.

                                       3


In the event of the death of any person having a right of indemnification under
the foregoing provisions, such right shall inure to the benefit of his or her
heirs, executors, administrators, and personal representatives. The rights
conferred above shall not be exclusive of any other right which any person may
have or hereafter acquire under any statute, bylaw, resolution of stockholders
or directors, agreement, or otherwise.

         The Corporation may additionally indemnify any employee or agent of the
Corporation to the fullest extent permitted by law.

         As used herein, the term "proceeding" means any threatened, pending, or
completed action, suit, or proceeding, whether civil, criminal, administrative,
arbitrative, or investigative, any appeal in such an action, suit, or
proceeding, and any inquiry or investigation that could lead to such an action,
suit, or proceeding.

         SEVENTH. A director of the Corporation shall not be personally liable
to the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the Corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or
knowing violation of law, (iii) under Section 174 of the General Corporation Law
of the State of Delaware, or (iv) for any transaction from which the director
derived an improper personal benefit. Any repeal or amendment of this Article
Seventh by the stockholders of the Corporation shall be prospective only, and
shall not adversely affect any limitation on the personal liability of a
director of the Corporation arising from an act or omission occurring prior to
the time of such repeal or amendment. In addition to the circumstances in which
a director of the Corporation is not personally liable as set forth in the
foregoing provisions of this Article Seventh, a director shall not be liable to
the Corporation or its stockholders to such further extent as permitted by any
law hereafter enacted, including without limitation any subsequent amendment to
the General Corporation Law of the State of Delaware.

         EIGHTH. Elections of directors need not be by written ballot unless the
by-laws of the Corporation shall so provide.

         NINTH. Action may be taken by the stockholders of the Corporation,
without a meeting, by written consent as and to the extent provided at the time
by the General Corporation Law of the State of Delaware, provided that the
matter to be acted upon by such written consent previously has been approved by
the Board of Directors of the Corporation and directed by such board to be
submitted to the stockholders for their action thereon by written consent.

         TENTH. Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this Corporation under the provisions of section 279 of Title 8 of the
Delaware Code order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this Corporation, as the case may
be, to be summoned in

                                       4


such manner as the said court directs. If a majority in number representing
three-fourths in value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of this Corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of this
Corporation as consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors and/or on all the stockholders or class of
stockholders, of this Corporation, as the case may be, and also on this
Corporation.

         ELEVENTH. The Corporation reserves the right to amend its certificate
of incorporation, and thereby to change or repeal any provision therein
contained, from time to time, in the manner prescribed at the time by statute,
and all rights conferred upon stockholders by such certificate of incorporation
are granted subject to this reservation.

         IN WITNESS WHEREOF, the undersigned has executed, signed and
acknowledged this Second Amended and Restated Certificate of Incorporation on
the 21st day of May, 2001.

                                       GREYHOUND LINES, INC.

                                       By:______________________________________
                                              Craig R. Lentzsch
                                       President and Chief Executive Officer

ATTESTED BY:

____________________________
     Mark E. Southerst
     Secretary

                                       5

EX-3.2

                                                                     EXHIBIT 3.2

                                     BY-LAWS

                                       OF

                              GREYHOUND LINES, INC.

                            (A Delaware corporation)

              (Effective March 16, 1999, as Amended April 7, 1999)

                                   ARTICLE 1

                            OFFICES; REGISTERED AGENT

ARTICLE 1.1       Registered Office And Agent. The corporation shall maintain in
the State of Delaware a registered office and a registered agent whose business
office is identical with such registered office.

ARTICLE 1.2       Principal Business Office. The corporation shall have its
principal business office at such location within or without the State of
Delaware as the board of directors may from time to time determine.

                                    ARTICLE 2

                                  STOCKHOLDERS

ARTICLE 2.1       Annual Meeting. The annual meeting of the stockholders shall
be held on the second Tuesday of April each year, at the hour of 10:00 a.m., for
the purpose of electing directors and for the transaction of such other business
as may properly come before the meeting. If the day fixed for the annual meeting
shall be a legal holiday, such meeting shall be held on the next succeeding
business day.

ARTICLE 2.2       Special Meetings. Special meetings of the stockholders of for
any purpose or purposes may be called by the Chairman, the Board of Directors or
by the President.

ARTICLE 2.3       Place Of Meetings. The board of directors may designate any
place, either within or without the State of Delaware, as the place of meeting
for any annual meeting or for any special meeting called by the board of
directors, but if no designation is made, or if a special meeting be otherwise
called, the place of meeting shall be the principal business office of the
corporation; provided, however, that for any meeting of the stockholders for
which a waiver of notice designating a place is signed by all of the
stockholders, then that shall be the place for the holding of such meeting.



ARTICLE 2.4       Notice Of Meetings. Written or printed notice stating the
place, date and hour of the meeting of the stockholders and, in the case of a
special meeting, the purpose or purposes for which the meeting is called, shall
be given to each stockholder of record entitled to vote at the meeting, not less
than 10 nor more than 60 days before the date of the meeting, or in the case of
a meeting called for the purpose of acting upon a merger or consolidation not
less than 20 nor more than 60 days before the meeting. Such notice shall be
given by or at the direction of the secretary. If mailed, such notice shall be
deemed to be given when deposited in the United States mail addressed to the
stockholder at his or her address as it appears on the records of the
corporation, with postage thereon prepaid. If delivered (rather than mailed) to
such address, such notice shall be deemed to be given when so delivered.

ARTICLE 2.5       Adjournments. When a meeting is adjourned to another time or
place, notice need not be given of the adjourned meeting if the time and place
thereof are announced at the meeting at which the adjournment is taken, unless
the adjournment is for more than 30 days or unless a new record date is fixed
for the adjourned meeting.

ARTICLE 2.6       Waiver Of Notice. A waiver of notice in writing signed by a
stockholder entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent to the giving of such notice. Attendance of
a stockholder in person or by proxy at a meeting of stockholders shall
constitute a waiver of notice of such meeting except when the stockholder or his
or her proxy attends the meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened.

ARTICLE 2.7       Meeting Of All Stockholders. If all of the stockholders shall
meet at any time and place, either within or without the State of Delaware, and
shall, in writing signed by all of the stockholders, waive notice of, and
consent to the holding of, a meeting at such time and place, such meeting shall
be valid without call or notice, and at such meeting any corporate action may be
taken.

ARTICLE 2.8       Record Dates.

(a)      In order that the corporation may determine the stockholders entitled
to notice of or to vote at any meeting of stockholders or any adjournment
thereof, the board of directors may fix a record date, which record date shall
not precede the date on which the resolution fixing the record date is adopted
by the board of directors, and which record date shall not be more than 60 nor
less than 10 days before the date of such meeting (or 20 days if a merger or
consolidation is to be acted upon at such meeting). If no record date is fixed
by the board of directors, the record date for determining stockholders entitled
to notice of or to vote at a meeting of stockholders shall be at the

                                      -2-



close of business on the next day preceding the day on which notice is given,
or, if notice is waived, at the close of business on the day next preceding the
day on which the meeting is held. A determination of stockholders of record
entitled to notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the board of directors may
fix a new record date for the adjourned meeting.

(b)      In order that the corporation may determine the stockholders entitled
to consent to corporate action in writing without a meeting, the board of
directors may fix a record date, which record date shall not precede the date on
which the resolution fixing the record date is adopted by the board of
directors, and which date shall not be more than 10 days after the date upon
which the resolution fixing the record date is adopted by the board of
directors. If no record date has been fixed by the board of directors, the
record date for determining stockholders entitled to consent to corporate action
in writing without a meeting, when no prior action by the board of directors is
required by the certificate of incorporation of the corporation or by statute,
shall be the first date on which a signed written consent setting forth the
action taken or proposed to be taken is delivered in the manner required by law
to the corporation at its registered office in the State of Delaware or at its
principal place of business or to an officer or agent of the corporation having
custody of the book in which proceedings of meetings of the corporation's
stockholders are recorded. If no record date has been fixed by the board of
directors and prior action by the board of directors is required by the
certificate of incorporation or by statute, the record date for determining
stockholders entitled to consent to corporate action in writing without a
meeting shall be at the close of business on the day on which the board of
directors adopts the resolution taking such prior action.

(c)      In order that the corporation may determine the stockholders entitled
to receive payment of any dividend or other distribution or allotment of any
rights or the stockholders entitled to exercise any rights in respect of any
change, conversion or exchange of stock, or for the purpose of any other lawful
action, the board of directors may fix a record date, which record date shall
not precede the date upon which the resolution fixing the record date is
adopted, and which record date shall not be more than 60 days prior to such
action. If no record date is fixed, the record date for determining stockholders
for any such purpose shall be at the close of business on the day on which the
board of directors adopts the resolution relating thereto.

(d)      Only those who shall be stockholders of record on the record date so
fixed as aforesaid shall be entitled to such notice of, and to vote at, such
meeting and any adjournment thereof, or to consent to such corporate action in
writing, or to receive payment of such dividend or other distribution, or to
receive such allotment of rights, or to exercise such rights, as the case may
be, notwithstanding the transfer of any stock on the books of the corporation
after the applicable record date.

                                      -3-


ARTICLE 2.9       Lists Of Stockholders. The officer who has charge of the stock
ledger of the corporation shall prepare and make, at least 10 days before each
meeting of stockholders, a complete list of the stockholders entitled to vote
thereat, arranged in alphabetical order, and showing the address of and the
number of shares registered in the name of each stockholder. Such list shall be
open to the examination of any stockholder, for any purpose germane to the
meeting, during ordinary business hours, for a period of at least 10 days prior
to the meeting, either at a place within the municipality where the meeting is
to be held, which place shall be specified in the notice of the meeting, or, if
not so specified, at the place where said meeting is to be held, and the list
shall be produced and kept at the time and place of meeting during the whole
time thereof, for inspection by any stockholder who may be present.

ARTICLE 2.10      Quorum and Vote Required For Action. Except as may otherwise
be provided in the certificate of incorporation of the corporation, the holders
of stock of the corporation having a majority of the total votes which all of
the outstanding stock of the corporation would be entitled to cast at the
meeting, when present in person or by proxy, shall constitute a quorum at any
meeting of the stockholders; provided, however, that where a separate vote by a
class or classes of stock is required, the holders of stock of such class or
classes having a majority of the total votes which all of the outstanding stock
of such class or classes would be entitled to cast at the meeting, when present
in person or by proxy, shall constitute a quorum entitled to take action with
respect to the vote on the matter. Unless a different number of votes is
required by statute or the certificate of incorporation of the corporation, (a)
if a quorum is present with respect to the election of directors, directors
shall be elected by a plurality of the votes cast by those stockholders present
in person or represented by proxy at the meeting and entitled to vote on the
election of directors, and (b) in all matters other than the election of
directors, if a quorum is present at any meeting of the stockholders, a majority
of the votes entitled to be cast by those stockholders present in person or by
proxy shall be the act of the stockholders except where a separate vote by class
or classes of stock is required, in which case, if a quorum of such class or
classes is present, a majority of the votes entitled to be cast by those
stockholders of such class or classes present in person or by proxy shall be the
act of the stockholders of such class or classes. If a quorum is not present at
any meeting of stockholders, then holders of stock of the corporation who are
present in person or by proxy representing a majority of the votes cast may
adjourn the meeting from time to time without further notice and, where a
separate vote by a class or classes of stock is required on any matter, then
holders of stock of such class or classes who are present in person or by proxy
representing a majority of the votes of such class or classes cast may adjourn
the meeting with respect to the vote on that matter from time to time without
further notice. At any adjourned meeting at which a quorum is present, any
business may be transacted which might have been transacted at the original
meeting. Withdrawal of stockholders from any meeting shall not cause failure of
a duly constituted quorum at that meeting.

                                      -4-


ARTICLE 2.11      Proxies. Each stockholder entitled to vote at a meeting of the
stockholders or to express consent to corporate action in writing without a
meeting may authorize another person or persons to act for him by proxy, but no
proxy shall be valid after three years from its date unless otherwise provided
in the proxy. Such proxy shall be in writing and shall be filed with the
secretary of the corporation before or at the time of the meeting or the giving
of such written consent, as the case may be.

ARTICLE 2.12      Voting Of Shares. Each stockholder of the corporation shall be
entitled to such vote (in person or by proxy) for each share of stock having
voting power held of record by such stockholder as shall be provided in the
certificate of incorporation of the corporation or, absent provision therein
fixing or denying voting rights, shall be entitled to one vote per share.

ARTICLE 2.13      Voting By Ballot. Any question or any election at a meeting of
the stockholders may be decided by voice vote unless the presiding officer shall
order that voting be by ballot or unless otherwise provided in the certificate
of incorporation of the corporation or required by statute.

ARTICLE 2.14      Inspectors. At any meeting of the stockholders the presiding
officer may, or upon the request of any stockholder shall, appoint one or more
persons as inspectors for such meeting. Such inspectors shall ascertain and
report the number of shares represented at the meeting, based upon their
determination of the validity and effect of proxies; count all votes and report
the results; and do such other acts as are proper to conduct the election and
voting with impartiality and fairness to all the stockholders. Each report of an
inspector shall be in writing and signed by him or a majority of them if there
is more than one inspector acting at such meeting. If there is more than one
inspector, the report of a majority shall be the report of the inspectors. The
report of the inspector or inspectors on the number of shares represented at the
meeting and the results of the voting shall be prima facie evidence thereof.

ARTICLE 2.15      Informal Action. Any corporate action upon which a vote of
stockholders is required or permitted may be taken without a meeting, without
prior notice and without a vote, if a consent in writing, setting forth the
action so taken, shall be signed by the holders of outstanding stock having not
less than the minimum number of votes that would be necessary to authorize or
take such action at a meeting at which all shares entitled to vote thereon were
present and voted and shall be delivered to the corporation in the manner
required by law at its registered office within the State of Delaware or at its
principal place of business or to an officer or agent of the corporation having
custody of the book in which proceedings of meetings of stockholders of the
corporation are recorded. Every written consent shall bear the date of signature
of each stockholder who signs the consent and no written consent shall be
effective to take the corporate action referred to therein unless, within 60
days of the earliest dated consent delivered, as aforesaid, written consents
signed by a sufficient

                                      -5-


number of holders to take action are delivered to the corporation in the manner
required by law at its registered office within the State of Delaware or at its
principal place of business or to an officer or agent of the corporation having
custody of the book in which proceedings of meetings of stockholders of the
corporation are recorded. Prompt notice of the taking of the corporate action
without a meeting by less than unanimous written consent shall be given to those
stockholders who have not so consented in writing.

                                    ARTICLE 3

                                    DIRECTORS

ARTICLE 3.1       Powers. The business and affairs of the corporation shall be
managed under the direction of its board of directors which may do all such
lawful acts and things as are not by statute or by the certificate of
incorporation of the corporation or by these by-laws directed or required to be
exercised or done by the stockholders.

ARTICLE 3.2       Number, Election, Term Of Office And Qualifications. The
number of directors of the Corporation shall be not less than one (1) and not
more than seven (7), the actual number of directors to be determined from time
to time by the board of directors. The directors shall be elected at the annual
meeting of the stockholders, except as provided in ss. 3.3, and each director
elected shall hold office until his or her successor is elected and qualified or
until his or her earlier death, resignation or removal in a manner permitted by
statute or these by-laws. Directors need not be stockholders.

ARTICLE 3.2       Vacancies. Vacancies occurring in the board of directors and
newly-created directorships resulting from any increase in the authorized number
of directors may be filled by a majority of the directors then in office,
although less than a quorum, or by a sole remaining director, and any director
so chosen shall hold office until the next annual election of directors and
until his or her successor is duly elected and qualified or until his or her
earlier death, resignation or removal in a manner permitted by statute or these
by-laws.

ARTICLE 3.3       Regular Meetings. A regular meeting of the board of directors
shall be held immediately following the close of, and at the same place as, each
annual meeting of stockholders. No notice of any such meeting, other than this
by-law, shall be necessary in order legally to constitute the meeting, provided
a quorum shall be present. In the event such meeting is not held at such time
and place, the meeting may be held at such time and place as shall be specified
in a notice given as hereinafter provided for special meetings of the board of
directors or as shall be specified in a written waiver signed by all of the
directors. The board of directors may provide, by

                                      -6-


resolution, the time and place for the holding of additional regular meetings
without notice other than such resolution.

ARTICLE 3.4       Special Meetings. Special meetings of the board may be called
by the president or any director. The person or persons calling a special
meeting of the board shall fix the time and place at which the meeting shall be
held and such time and place shall be specified in the notice of such meeting.

ARTICLE 3.5       Notice. Notice of any special meeting of the board of
directors shall be given at least 2 days previous thereto by written notice to
each director at his or her business address or such other address as he or she
may have advised the secretary of the corporation to use for such purpose. If
delivered, such notice shall be deemed to be given when delivered to such
address or to the person to be notified. If mailed, such notice shall be deemed
to be given two business days after deposit in the United States mail so
addressed, with postage thereon prepaid. If given by telegraph, such notice
shall be deemed to be given the next business day following the day the telegram
is given to the telegraph company. Such notice may also be given by telephone or
other means not specified herein, and in each such case shall be deemed to be
given when actually received by the director to be notified. Notice of any
meeting of the board of directors shall set forth the time and place of the
meeting. Neither the business to be transacted at, nor the purpose of, any
meeting of the board of directors (regular or special) need be specified in the
notice or waiver of notice of such meeting.

ARTICLE 3.6       Waiver Of Notice. A written waiver of notice, signed by a
director entitled to notice of a meeting of the board of directors or of a
committee of such board of which the director is a member, whether before or
after the time stated therein, shall be deemed equivalent to the giving of such
notice to that director. Attendance of a director at a meeting of the board of
directors or of a committee of such board of which the director is a member
shall constitute a waiver of notice of such meeting except when the director
attends the meeting for the express purpose of objecting, at the beginning of
the meeting, to the transaction of any business because the meeting is not
lawfully called or convened.

ARTICLE 3.7       Quorum And Vote Required For Action. At all meetings of the
board of directors, a majority of the number of directors fixed by these by-laws
shall constitute a quorum for the transaction of business and the act of a
majority of the directors present at any meeting at which there is a quorum
shall be the act of the board of directors except as may be otherwise
specifically provided by statute, the certificate of incorporation of the
corporation or these by-laws. If a quorum shall not be present at any meeting of
the board of directors, a majority of the directors present thereat may adjourn
the meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present.

                                      -7-


ARTICLE 3.8       Attendance By Conference Telephone. Members of the board of
directors or any committee designated by the board may participate in a meeting
of such board or committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and such participation in a meeting shall
constitute presence in person at such a meeting.

ARTICLE 3.9       Presumption Of Assent. A director of the corporation who is
present at a duly convened meeting of the board of directors at which action on
any corporate matter is taken shall be conclusively presumed to have assented to
the action taken unless his or her dissent shall be entered in the minutes of
the meeting or unless he or she shall file his or her written dissent to such
action with the person acting as the secretary of the meeting before the
adjournment thereof or shall forward such dissent by registered or certified
mail to the secretary of the corporation immediately after the adjournment of
the meeting. Such right to dissent shall not apply to a director who voted in
favor of such action.

ARTICLE 3.10      Informal Action. Unless otherwise restricted by statute, the
certificate of incorporation of the corporation or these by-laws, any action
required or permitted to be taken at any meeting of the board of directors or of
any committee thereof may be taken without a meeting, if a written consent
thereto is signed by all the directors or by all the members of such committee,
as the case may be, and such written consent is filed with the minutes of
proceedings of the board of directors or of such committee.

ARTICLE 3.11      Compensation. The directors may be paid their expenses, if
any, of attendance at each meeting of the board of directors and at each meeting
of a committee of the board of directors of which they are members. The board of
directors, irrespective of any personal interest of any of its members, shall
have authority to fix compensation of all directors for services to the
corporation as directors, officers or otherwise.

ARTICLE 3.12      Removal. Any director or the entire board of directors may be
removed by the stockholders, with or without cause, by a majority of the votes
entitled to be cast at an election of directors.

                                    ARTICLE 4

                                   COMMITTEES

         By resolution passed by a majority of the whole Board, the Board of
Directors may designate one or more committees, each such committee to consist
of two or more directors of the Corporation. The Board may designate one or more
directors as

                                      -8-


alternate members of any committee, who may replace any absent or disqualified
member of any meeting of the committee. Any such committee, to the extent
provided in the resolution or in these by-laws, shall have and may exercise the
powers of the Board of Directors in the management of the business and affairs
of the Corporation, and may authorize the seal of the Corporation to be affixed
to all papers which may require it. In the absence or disqualification of any
member of such committee or committees, the member or members thereof present at
the meeting and not disqualified from voting, whether or not he or they
constitute a quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in the place of such absent or disqualified
member.

                                    ARTICLE 5

                                    OFFICERS

ARTICLE 5.1       Designation; Number; Election. The board of directors, at its
initial meeting and thereafter at its first regular meeting after each annual
meeting of stockholders, shall choose the officers of the corporation. Such
officers shall be a chairman, a president, a secretary, and a treasurer, and
such vice presidents, assistant secretaries and assistant treasurers as the
board of directors may choose. The board of directors may appoint such other
officers and agents as it shall deem necessary who shall hold their offices for
such terms and shall exercise such powers and perform such duties as shall be
determined from time to time by the board. Any two or more offices may be held
by the same person. Except as provided in Article 6, election or appointment as
an officer shall not of itself create contract rights.

ARTICLE 5.2       Salaries. The salaries of all officers and agents of the
corporation chosen by the board of directors shall be fixed by the board of
directors, and no officer shall be prevented from receiving such salary by
reason of the fact that he is also a director of the corporation.

ARTICLE 5.3       Term Of Office; Removal; Vacancies. Each officer of the
corporation chosen by the board of directors shall hold office until the next
annual appointment of officers by the board of directors and until his or her
successor is appointed and qualified, or until his or her earlier death,
resignation or removal in the manner hereinafter provided. Any officer or agent
chosen by the board of directors may be removed at any time by the board of
directors whenever in its judgment the best interests of the corporation would
be served thereby, but such removal shall be without prejudice to the contract
rights, if any, of the person so removed. Any vacancy occurring in any office of
the corporation at any time or any new offices may be filled by the board of
directors for the unexpired portion of the term.

                                      -9-


ARTICLE 5.4       Chairman. The chairman of the board, if appointed, shall, if
present, preside at all meetings of the Board of Directors and exercise and
perform such other powers and duties as may be from time to time assigned to him
by the Board of Directors.

ARTICLE 5.5       President. The president shall be the chief executive officer
of the corporation and, subject to the direction and control of the board of
directors, shall be in charge of the business of the corporation. In general,
the president shall discharge all duties incident to the principal executive
office of the corporation and such other duties as may be prescribed by the
board of directors from time to time. Without limiting the generality of the
foregoing, the president shall see that the resolutions and directions of the
board of directors are carried into effect except in those instances in which
that responsibility is specifically assigned to some other person by the board
of directors; shall preside at all meetings of the stockholders and, if he or
she is a director of the corporation, of the board of directors; and, except in
those instances in which the authority to execute is expressly delegated to
another officer or agent of the corporation or a different mode of execution is
expressly prescribed by the board of directors, may execute for the corporation
certificates for its shares of stock (the issue of which shall have been
authorized by the board of directors), and any contracts, deeds, mortgages,
bonds, or other instruments which the board of directors has authorized, and may
(without previous authorization by the board of directors) execute such
contracts and other instruments as the conduct of the corporation's business in
its ordinary course requires, and may accomplish such execution in each case
either under or without the seal of the corporation and either individually or
with the secretary, any assistant secretary, or any other officer thereunto
authorized by the board of directors, according to the requirements of the form
of the instrument. The president may vote all securities which the corporation
is entitled to vote except as and to the extent such authority shall be vested
in a different officer or agent of the corporation by the board of directors.

ARTICLE 5.6       Vice Presidents. The vice president (and, in the event there
is more than one vice president, each of the vice presidents) shall render such
assistance to the president in the discharge of his or her duties as the
president may direct and shall perform such other duties as from time to time
may be assigned by the president or by the board of directors. In the absence of
the president or in the event of his or her inability or refusal to act, the
vice president (or in the event there may be more than one vice president, the
vice presidents in the order designated by the board of directors, or by the
president if the board of directors has not made such a designation, or in the
absence of any designation, then in the order of seniority of tenure as vice
president) shall perform the duties of the president, and when so acting, shall
have all the powers of and be subject to all the restrictions upon the
president. Except in those instances in which the authority to execute is
expressly delegated to another officer or agent of the corporation or a
different mode of execution is expressly prescribed by the board of directors or
these by-laws, the vice president (or each of them if there are more than one)
may execute for the corporation certificates for its shares of stock (the issue
of

                                      -10-


which shall have been authorized by the board of directors), and any contracts,
deeds, mortgages, bonds or other instruments which the board of directors has
authorized, and may (without previous authorization by the board of directors)
execute such contracts and other instruments as the conduct of the corporation's
business in its ordinary course requires, and may accomplish such execution in
each case either under or without the seal of the corporation and either
individually or with the secretary, any assistant secretary, or any other
officer thereunto authorized by the board of directors, according to the
requirements of the form of the instrument.

ARTICLE 5.7       Treasurer. The treasurer shall perform all the duties incident
to the office of treasurer and such other duties as from time to time may be
assigned by the board of directors or the president. Without limiting the
generality of the foregoing, the treasurer shall have charge of and be
responsible for the maintenance of adequate books of account for the corporation
and shall have charge and custody of all funds and securities of the corporation
and be responsible therefor and for the receipt and disbursement thereof. If
required by the board of directors, the treasurer shall give a bond for the
faithful discharge of his or her duties in such sum and with such surety or
sureties as the board of directors may determine.

ARTICLE 5.8       Secretary. The secretary shall perform all duties incident to
the office of secretary and such other duties as from time to time may be
assigned by the board of directors or president. Without limiting the generality
of the foregoing, the secretary shall (a) record the minutes of the meetings of
the stockholders and the board of directors in one or more books provided for
that purpose and shall include in such books the actions by written consent of
the stockholders and the board of directors; (b) see that all notices are duly
given in accordance with the provisions of these by-laws or as required by
statute; (c) be the custodian of the corporate records and the seal of the
corporation; (d) keep a register of the post office address of each stockholder
which shall be furnished to the secretary by such stockholder; (e) sign with the
president, or a vice president, or any other officer thereunto authorized by the
board of directors, certificates for shares of stock of the corporation (the
issue of which shall have been authorized by the board of directors), and any
contracts, deeds, mortgages, bonds, or other instruments which the board of
directors has authorized, and may (without previous authorization by the board
of directors) sign with such other officers as aforesaid such contracts and
other instruments as the conduct of the corporation's business in its ordinary
course requires, in each case according to the requirements of the form of the
instrument, except when a different mode of execution is expressly prescribed by
the board of directors; and (f) have general charge of the stock transfer books
of the corporation.

ARTICLE 5.9       Assistant Treasurers And Assistant Secretaries. The assistant
treasurers and assistant secretaries shall perform such duties as shall be
assigned to them by the treasurer, in the case of assistant treasurers, or the
secretary, in the case of assistant secretaries, or by the board of directors or
president in either case. Each

                                      -11-


assistant secretary may sign with the president, or a vice president, or any
other officer thereunto authorized by the board of directors, certificates for
shares of stock of the corporation (the issue of which shall have been
authorized by the board of directors), and any contracts, deeds, mortgages,
bonds, or other instruments which the board of directors has authorized, and may
(without previous authorization by the board of directors) sign with such other
officers as aforesaid such contracts and other instruments as the conduct of the
corporation's business in its ordinary course requires, in each case according
to the requirements of the form of the instrument, except when a different mode
of execution is expressly prescribed by the board of directors. The assistant
treasurers shall, if required by the board of directors, give bonds for the
faithful discharge of their duties in such sums and with such sureties as the
board of directors shall determine.

                                    ARTICLE 6

                                 INDEMNIFICATION

ARTICLE 6.1       Indemnification Of Directors And Officers. The corporation
shall, to the fullest extent to which it is empowered to do so by the General
Corporation Law of Delaware or any other applicable laws, as may from time to
time be in effect, indemnify any person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, by reason
of the fact that such person is or was a director or officer of the corporation,
or is or was serving at the request of the corporation as a director or officer
of another corporation, partnership, joint venture, trust or other enterprise,
against all expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by such person in connection
with such action, suit or proceeding.

ARTICLE 6.2       Advancement of Expenses. Expenses incurred by an officer or
director of the corporation in defending a civil or criminal action, suit or
proceeding shall be paid by the corporation in advance of the final disposition
of such action, suit or proceeding upon receipt of an undertaking by or on
behalf of such director or officer to repay such amount if it shall be
ultimately determined that he or she is not entitled to be indemnified as
authorized by the General Corporation Law of Delaware, as amended.

ARTICLE 6.3       Contract With The Corporation. The provisions of this Article
6 shall be deemed to be a contract between the corporation and each person who
serves as such officer or director in any such capacity at any time while this
Article and the relevant provisions of the General Corporation Law of Delaware,
as amended, or other applicable laws, if any, are in effect, and any repeal or
modification of any such law or of this Article 6 shall not affect any rights or
obligations then existing with respect to any

                                      -12-


state of facts then or theretofore existing or any action, suit or proceeding
theretofore or thereafter brought or threatened based in whole or in part upon
any such state of facts.

ARTICLE 6.4       Indemnification Of Employees And Agents. Persons who are not
covered by the foregoing provisions of this Article 6 and who are or were
employees or agents of the corporation, or are or were serving at the request of
the corporation as employees or agents of another corporation, partnership,
joint venture, trust or other enterprise, may be indemnified to the extent
authorized at any time or from time to time by the board of directors.

ARTICLE 6.5       Other Rights Of Indemnification. The indemnification and the
advancement of expenses provided or permitted by this Article 6 shall not be
deemed exclusive of any other rights to which those indemnified may be entitled
by law or otherwise, and shall continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such person.

                                    ARTICLE 7

                       LIMITATION ON DIRECTOR'S LIABILITY

         The personal liability for monetary damages to the corporation or its
stockholders of a person who serves as a director of the corporation shall be
limited if and to the extent provided at the time in the certificate of
incorporation of the corporation, as then amended.

                                    ARTICLE 8

                    CERTIFICATES OF STOCK AND THEIR TRANSFER

ARTICLE 8.1       Form And Execution Of Certificates. Every holder of stock in
the corporation shall be entitled to have a certificate signed by, or in the
name of, the corporation by the president or a vice president and by the
secretary or an assistant secretary of the corporation, certifying the number of
shares owned. Such certificates shall be in such form as may be determined by
the board of directors. During the period while more than one class of stock of
the corporation is authorized there will be set forth on the face or back of the
certificates which the corporation shall issue to represent each class or series
of stock a statement that the corporation will furnish, without charge to each
stockholder who so requests, the designations, preferences and relative,
participating, optional or other special rights of each class of stock or series
thereof and the qualifications, limitations or restrictions of such preferences
and/or rights. In case any officer, transfer agent or registrar of the
corporation who has signed,

                                      -13-


or whose facsimile signature has been placed upon, any such certificate shall
have ceased to be such officer, transfer agent or registrar of the corporation
before such certificate is issued by the corporation, such certificate may
nevertheless be issued and delivered by the corporation with the same effect as
if the officer, transfer agent or registrar who signed, or whose facsimile
signature was placed upon, such certificate had not ceased to be such officer,
transfer agent or registrar of the corporation.

ARTICLE 8.2       Replacement Certificates. The board of directors may direct a
new certificate to be issued in place of any certificate evidencing shares of
stock of the corporation theretofore issued by the corporation alleged to have
been lost, stolen or destroyed, upon the making of an affidavit of the fact by
the person claiming the certificate to be lost, stolen or destroyed. When
authorizing such issue of a new certificate, the board of directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate, or his legal
representative, to advertise the same in such manner as it shall require and may
require such owner to give the corporation a bond in such sum as it may direct
as indemnity against any claim that may be made against the corporation with
respect to the certificate alleged to have been lost, stolen or destroyed. The
board of directors may delegate its authority to direct the issuance of
replacement stock certificates to the transfer agent or agents of the
corporation upon such conditions precedent as may be prescribed by the board.

ARTICLE 8.3       Transfers Of Stock. Upon surrender to the corporation or the
transfer agent of the corporation of a certificate for shares of stock of the
corporation duly endorsed or accompanied by proper evidence of succession,
assignment, or other authority to transfer, it shall be the duty of the
corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate and record the transaction upon its books, provided the
corporation or a transfer agent of the corporation shall not have received a
notification of adverse interest and that the conditions of Section 8-401 of
Title 6 of the Delaware Code have been met.

ARTICLE 8.4       Registered Stockholders. The corporation shall be entitled to
treat the holder of record (according to the books of the corporation) of any
share or shares of its stock as the holder in fact thereof and shall not be
bound to recognize any equitable or other claim to or interest in such share or
shares on the part of any other party whether or not the corporation shall have
express or other notice thereof, except as expressly provided by the laws of the
State of Delaware.

                                    ARTICLE 9

                      CONTRACTS, LOANS, CHECKS AND DEPOSITS

ARTICLE 9.1       Contracts. The board of directors may authorize any officer or
officers, or agent or agents, to enter into any contract or execute and deliver
any

                                      -14-


instrument in the name of and on behalf of the corporation, and such authority
may be general or confined to specific instances; provided, however, that this
ss. 9.1 shall not be a limitation on the powers of office granted under Article
5 of these by-laws.

ARTICLE 9.2       Loans. No loans shall be contracted on behalf of the
corporation and no evidences of indebtedness shall be issued in its name unless
authorized by a resolution of the board of directors. Such authority may be
general or confined to specific instances.

ARTICLE 9.3       Checks, Drafts And Other Instruments. All checks, drafts or
other orders for the payment of money and all notes or other evidences of
indebtedness issued in the name of the corporation shall be signed by such
officer or officers or such agent or agents of the corporation and in such
manner as from time to time may be determined by the resolution of the board of
directors or by an officer or officers of the corporation designated by the
board of directors to make such determination.

ARTICLE 9.4       Deposits. All funds of the corporation not otherwise employed
shall be deposited from time to time to the credit of the corporation in such
banks, trust companies or other depositories as the board of directors, or an
officer or officers designated by the board of directors, may select.

                                   ARTICLE 10

                            MISCELLANEOUS PROVISIONS

ARTICLE 10.1      Dividends. Subject to any provisions of any applicable statute
or of the certificate of incorporation, dividends may be declared upon the
capital stock of the corporation by the board of directors at any regular or
special meeting thereof; and such dividends may be paid in cash, property or
shares of stock of the corporation.

ARTICLE 10.2      Reserves. Before payment of any dividends, there may be set
aside out of any funds of the corporation available for dividends such sum or
sums as the board of directors from time to time, in its discretion, determines
to be proper as a reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the corporation, or
for such other purpose as the board of directors shall determine to be conducive
to the interests of the corporation, and the directors may modify or abolish any
such reserve in the manner in which it was created.

ARTICLE 10.3      Voting Stock Of Other Corporations. In the absence of specific
action by the board of directors, the president shall have authority to
represent the

                                      -15-


corporation and to vote, on behalf of the corporation, the securities of other
corporations, both domestic and foreign, held by the corporation.

ARTICLE 10.4      Fiscal Year. The fiscal year of the corporation shall begin on
the first day of January in each year and end on the last day of the next
following December.

ARTICLE 10.5      Seal. The corporate seal shall have inscribed thereon the name
of the corporation and the words "Corporate Seal, Delaware". The seal may be
used by causing it or a facsimile thereof to be impressed or affixed or
reproduced or otherwise applied.

ARTICLE 10.6      Severability. If any provision of these by-laws, or its
application thereof to any person or circumstances, is held invalid, the
remainder of these by-laws and the application of such provision to other
persons or circumstances shall not be affected thereby.

ARTICLE 10.7      Amendment. These by-laws may be amended or repealed, or new
by-laws may be adopted, by the board of directors of the corporation. These
by-laws may also be amended or repealed, or new by-laws may be adopted, by
action taken by the stockholders of the corporation.

                                      -16-

EX-4.3

                                                                     EXHIBIT 4.3

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

                          SECOND SUPPLEMENTAL INDENTURE

                           DATED AS OF MARCH 16, 1999

                                       TO

                                    INDENTURE

                           DATED AS OF APRIL 10, 1992

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

                                     BETWEEN

                              GREYHOUND LINES, INC.

                                       AND

                 STATE STREET BANK AND TRUST COMPANY, AS TRUSTEE

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

                8-1/2% CONVERTIBLE DEBENTURES DUE MARCH 31, 2007

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



         SECOND SUPPLEMENTAL INDENTURE, dated as of March 16, 1999 (this "Second
Supplemental Indenture"), between GREYHOUND LINES, INC., a Delaware corporation
(the "Company"), and STATE STREET BANK AND TRUST COMPANY, as trustee (the
"Trustee").

         WHEREAS, the Company and the Trustee (as successor to Shawmut Bank
Connecticut, N.A., formerly The Connecticut National Bank) entered into an
Indenture, dated as of April 10, 1992 as supplemented by the First Supplemental
Indenture dated as of December 22, 1994 (the "Indenture"), pursuant to which the
Company issued its 8-1/2% Convertible Subordinated Debentures due March 31, 2007
(the "Debentures"); and

         WHEREAS, pursuant to Section 1301 of the Indenture, Holders of the
Debentures presently have the right prior to Maturity to convert any Debenture
or Debentures into shares of Common Stock of the Company at the rate of 80.81
shares of Common Stock for each $1,000 principal amount of Debentures; and

         WHEREAS, pursuant to Section 1306 of the Indenture, in the case of any
merger of another person into the Company, the Debentures will be convertible
only into the kind and amount of securities, cash and other property receivable
in such merger by a holder of the number of shares of Common Stock of the
Company into which such Debentures might have been converted immediately prior
to such merger; and

         WHEREAS, the Company, Laidlaw Inc., a Canadian corporation ("Laidlaw")
and Laidlaw Transit Acquisition Corp., a Delaware corporation and a wholly owned
subsidiary of Laidlaw ("Acquisition") have entered into the Amended and Restated
Agreement and Plan of Merger, dated as of November 5, 1998 (the "Merger
Agreement"), pursuant to which Acquisition will be merged with and into the
Company, with the Company being the surviving corporation ("Merger"); and

         WHEREAS, upon completion of the Merger, each share of Common Stock of
the Company will be converted into the right to receive $6.50 in cash; and

         WHEREAS, the Merger was completed on March 16, 1999; and

         WHEREAS, to establish the conversion rights of a Holder of Debentures
following the Merger and in accordance with Section 1306 of the Indenture, the
Company has agreed to execute and deliver this Second Supplemental Indenture;
and

         WHEREAS, the Company has complied with all the conditions and
requirements necessary under the Indenture to effect this Second Supplemental
Indenture, and the execution and delivery of this Second Supplemental Indenture
has been duly authorized in all respects by the Company;

         NOW, THEREFORE, in consideration of the above premises, the Company and
the Trustee agree, for the benefit of the other and for the equal and ratable
benefit of the Holders of the Debentures, as follows:



                                   ARTICLE I

                             AMENDMENT OF INDENTURE

         Section 1.01  Amendment.  The Indenture is hereby amended as follows:

                  (a)      Notwithstanding anything to the contrary contained in
the Indenture, including Article Thirteen thereof, from and after the date of
this Second Supplemental Indenture, a Holder of any Debenture or Debentures
shall have the right to receive, upon conversion of such Debenture or Debentures
in accordance with the Indenture, an amount in cash equal to $525.27 for each
$1,000 principal amount of Debentures so converted.

                                   ARTICLE II

                            MISCELLANEOUS PROVISIONS

         Section 2.01 Terms Defined. For all purposes of this Second
Supplemental Indenture, except as otherwise defined or unless the context
otherwise requires, terms used in capitalized form in this Second Supplemental
Indenture and defined in the Indenture have the meanings specified in the
Indenture.

         Section 2.02 Indenture. Except as amended by this Second Supplemental
Indenture, the Indenture and the Debentures are in all respects ratified and
confirmed and all the terms shall remain in full force and effect. The Trustee
has no responsibility for correctness of the recitals of facts herein contained
which shall be taken as the statements of the Company, and makes no
representations as to the validity or sufficiency of this Second Supplemental
Indenture and shall incur no liability or responsibility in respect of the
validity thereof.

         Section 2.03 Governing Law. THIS SECOND SUPPLEMENTAL INDENTURE SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT
REGARD TO PRINCIPLES OF CONFLICT OF LAWS.

         Section 2.04 Successors. All agreements of the Company in this Second
Supplemental Indenture shall bind it successors. All agreements of the Trustee
in this Second Supplemental Indenture shall bind its successors.

         Section 2.05 Multiple Counterparts. The parties may sign multiple
counterparts of this Second Supplemental Indenture. Each signed counterpart
shall be deemed an original, but all of them together represent the same
agreement.



                                   SIGNATURES

         IT WITNESS WHEREOF, the parties hereto have caused this Second
Supplemental Indenture to be duly executed as of the date first written above.

                                             GREYHOUND LINES, INC.

                                             /s/ Craig R. Lentzsch
                                             -----------------------------
ATTEST:                                      Craig R. Lentzsch, President and
                                             Chief Executive Officer

/s/ Mark E. Southerst
- -------------------------------------
Mark E. Southerst, Vice President and
General Counsel and Secretary

                                             STATE STREET BANK AND TRUST
                                             COMPANY, as Trustee

                                             By: /s/ Susan C. Merker
                                             -----------------------------------
ATTEST:                                      Name: Susan C. Merker
                                             Title: Vice President

By: /s/ Elizabeth C. Hammer
    ----------------------------------
Name: Elizabeth C. Hammer
Title: Vice President

EX-10.1

                                                                    EXHIBIT 10.1

                              GREYHOUND LINES, INC.
                     SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
                          (JANUARY 1, 1994 RESTATEMENT)



                              GREYHOUND LINES, INC.
                     SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
                          (JANUARY 1, 1994 RESTATEMENT)

                                TABLE OF CONTENTS



                                                                                                                   Page
                                                                                                                   ----
                                                                                                                
Article I.  Establishment and Purpose............................................................................    1

         1.1  Establishment......................................................................................    1
         1.2  Purpose............................................................................................    1

Article II.  Definitions and Construction........................................................................    1

         2.1  Definitions........................................................................................    1
         2.2  Gender and Number..................................................................................    3

Article III.  Participation......................................................................................    3

         3.1  Participants.......................................................................................    3
         3.2  Duration of Participation..........................................................................    4

Article IV.  Vesting.............................................................................................    4

         4.1  Determination of Vested Percentage.................................................................    4

Article V.  Benefits Eligibility.................................................................................    4

         5.1  Termination Benefit................................................................................    4
         5.2  Form and Timing of Payment.........................................................................    4
         5.3  Disability Benefit.................................................................................    5
         5.4  Pre-Retirement Death Benefit.......................................................................    5
         5.5  Termination for Cause..............................................................................    5
         5.6  Non-compete........................................................................................    5
         5.7  Change in Control Benefits.........................................................................    5

Article VI.  Amount of Benefits..................................................................................    6

         6.1  Calculation of Plan Benefit Credits................................................................    6
         6.2  Prior Plan Account Benefit.........................................................................    7
         6.3  Investment Earnings Credit.........................................................................    7

Article VII.  Administration of the Plan.........................................................................    7

         7.1  Administration.....................................................................................    7
         7.2  Compensation and Expenses..........................................................................    7
         7.3  Rules; Claims Review Procedures....................................................................    8
         7.4  Finality of Determinations.........................................................................    9
         7.5  Indemnification....................................................................................    9




                                                                                                                
Article VIII.  Trust Payments....................................................................................    9

         8.1  Trust Payments.....................................................................................    9

Article IX.  Amendment; Termination; Merger......................................................................   10

         9.1  Amendment and Termination..........................................................................   10
         9.2  Merger, Consolidation, or Acquisition..............................................................   10

Article X.  General Provisions...................................................................................   10

         10.1  Nonalienation.....................................................................................   10
         10.2  Incompetency......................................................................................   10
         10.3  Effect of Mistake.................................................................................   10
         10.4  Effect on other Plans.............................................................................   10
         10.5  Plan Not an Employment Contract...................................................................   11
         10.6  Severability......................................................................................   11
         10.7  Applicable Law....................................................................................   11

Signatures.......................................................................................................   11





                              GREYHOUND LINES, INC.
                     SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
                          (January 1, 1994 Restatement)

                      ARTICLE I. ESTABLISHMENT AND PURPOSE

         1.1      Establishment. Effective January 1, 1993, Greyhound Lines,
Inc. ("Sponsor") established the Greyhound Lines, Inc. Supplemental Executive
Retirement Plan (the "Prior Plan"). Effective January 1, 1994 with respect to
individuals who were Employees on or after February 1, 1995, the Sponsor hereby
restates the Prior Plan in its entirety, to provide as set forth herein (as
herein restated, hereafter referred to as the "Plan"). The restated Plan as
embodied herein shall not apply to any individual who was a participant in the
Prior Plan and whose employment with the Sponsor terminated prior to February 1,
1995; instead, the benefit, if any, payable to such an individual shall be
determined under the provisions of the Prior Plan.

         1.2      Purpose. The purpose of the Plan is to provide unfunded
deferred compensation benefits to a select group of management or highly
compensated employees within the meaning of Section 201(2) of the Employee
Retirement Income Security Act of 1974, as amended.

                    ARTICLE II. DEFINITIONS AND CONSTRUCTION

         2.1      Definitions. Whenever used in the Plan, the following words
and phrases shall have the meanings set forth below unless a different meaning
is plainly required by the context.

                  (a)      "Accounts" shall mean the separate accounts
maintained to record the contributions and earnings credits of Participants
under the Plan. The following terms designate the Accounts under the Plan and
are defined as provided below in this Section 2.1.

                           (i) "Employer Contribution Account" shall mean the
separate bookkeeping account of a Participant consisting of credits to reflect
the Employer Contributions credited by the Employer pursuant to Section 6.1.

                           (ii) "Prior Plan Account" shall mean the separate
bookkeeping account of a Participant reflecting credit for the accrued benefit
under the Prior Plan, together with income, gains and losses allocated thereto
and less distributions made therefrom.

                  (b)      "Annual Base Salary" shall mean a Participant's base
salary actually earned by a Participant for services performed for the Sponsor
or its affiliates for a calendar year. Base salary shall include any amounts
excluded from gross income of an Employee under Code Sections 125, 401(k),
402(a) (8), or 402(h). Base salary will not include bonuses, incentives, fringe
benefits or other perquisites.



                  (c)      "Beneficiary" or "Beneficiaries" means the person or
persons to whom a benefit is payable following the death of the Participant
pursuant to Section 5.4. Such person (including a trust or an estate) shall be
designated by the Participant, who may name contingent or successive
Beneficiaries. Each designation will revoke all prior designations by the
Participant. All designations shall be made in the form and manner prescribed by
the Committee. If no Beneficiary is designated or if no Beneficiary survives the
Participant, the death benefit shall be paid to the Participant's surviving
spouse. If the Participant is not survived by a spouse, the death benefit shall
be paid to the Participant's estate.

                  (d)      "Board of Directors" means the Board of Directors of
the Sponsor.

                  (e)      "Change in Control" means (i) the acquisition by any
person (defined for the purposes of this Section to mean any person within the
meaning of Section 13(d) of the Securities Exchange Act of 1934 and the rules
and regulations promulgated thereunder as from time to time amended (the
"Exchange Act"), other than the Sponsor or an employee benefit plan created by
the Board of Directors for the benefit of its Employees, either directly or
indirectly, of the beneficial ownership (determined under Rule 13d-3 of the
Regulations promulgated by the SEC under Section 13(d) of the Exchange Act) of
securities issued by the Sponsor having 50% or more of the voting power of all
the voting securities issued by the Sponsor in the election of directors at the
next meeting of the holders of voting securities to be held for such purpose,
(ii) the election of a majority of the directors elected at any meeting of the
holders of voting securities of the Sponsor who are persons who were not
nominated for such election by the Board of Directors or a duly constituted
committee of the Board of Directors having authority in such matters; or (iii)
the merger or consolidation with or transfer of substantially all of the assets
of the Sponsor to another person.

                  (f)      "Committee" means the Compensation Committee of the
Board of Directors, or such other committee as the Board of Directors shall
appoint to administer the Plan.

                  (g)      "Employee" means a person who is employed by the
Sponsor, its affiliates or subsidiaries.

                  (h)      "Normal Retirement Age" means age 60.

                  (i)      "Participant" means an Employee who has been
designated as a Participant under the Plan by the Committee.

                  (j)      "Plan" means the Greyhound Lines, Inc. Supplemental
Executive Retirement Plan, as restated effective January 1, 1994 with respect to
individuals who were Employees on or after February 1, 1995 and as set forth
herein, and as it may be amended from time to time.

                  (k)      "Plan Year" means the calendar year.

                                       2


                  (l)      "Service" means an Employee's employment with the
Sponsor or its affiliates or subsidiaries, measured in completed months from his
Service Start Date.

                  (m)      "Service Start Date" means a Participant's date of
hire or other date established by the Committee as the start date for computing
a Participant's Service. Each Participant's Service Start date shall be
reflected in Appendix A.

                  (n)      "Sponsor" means Greyhound Lines, Inc. or any
successor thereto.

                  (o)      "Trust" means one or more trusts which may be
established by the Sponsor for the purpose of meeting its obligations under the
Plan, but subject to the claims of general creditors of the Sponsor upon the
Sponsor's bankruptcy or insolvency.

                  (p)      "Trust Agreement" means any agreement in the nature
of a trust (or in the nature of a custodial agreement) between the Sponsor and
the Trustee that may be established to form part of the Plan to receive, hold,
invest, and dispose of Trust assets.

                  (q)      "Trustee" means the individuals or entity acting as
trustee or custodian under any Trust Agreement at any time of reference. Where
there is more than one Trustee serving at any time, the term "Trustee" shall
mean all such Trustees. The Trustee shall be a fiduciary under the Trust
Agreement.

                  (r)      "Valuation Date" shall mean the last day of each
calendar quarter.

                  (s)      "Year of Service" means 12 months of Service, whether
or not consecutive.

         2.2      Gender and Number. Except when otherwise indicated by the
context, any masculine terminology when used in the Plan shall also include the
feminine gender, and the definition of any term in the singular shall also
include the plural.

                           ARTICLE III. PARTICIPATION

         3.1      Participants. Participation in the Plan shall be extended to
such executives and other key management Employees as the Committee, in its
discretion, shall designate from time to time. The initial Participants in this
Plan, and their applicable Service Start Dates are set forth in Appendix A
hereto. The Committee shall designate, in writing, any other Employees who are
to become Participants in the Plan, and Appendix A shall be amended to reflect
the participation and Service Start Date of any such participants. The Committee
shall have the power to terminate future accrual of additional Plan benefit
credits; provided, however, that except as provided in Sections 5.5 and 5.6, no
such termination of future benefit credits shall reduce the amount already
credited to a Participant; and provided further, that except in cases where the
provisions of Section 5.5 or 5.6 apply, a Participant whose future benefit
credit accrual is terminated shall continue to earn Years of Service as long as
he continues to be an Employee.

                                        3


         3.2      Duration of Participation. Each Participant shall continue as
a Participant under the Plan until the final payment is made under the Plan.

                               ARTICLE IV. VESTING

         4.1      Determination of Vested Percentage. A Participant shall have a
vested interest in his Account under the Plan in accordance with the following
schedule:



Years of Service           Vested Percentage
- ----------------           -----------------
                        
  less than 5                       0%
   5 or more                      100%


Notwithstanding the foregoing, a Participant who is actively employed by the
Sponsor, an affiliate or subsidiary shall have a fully-vested interest in his
Account upon the earlier of (i) attainment of Normal Retirement Age while
actively employed by the Sponsor, an affiliate or a subsidiary, (ii)
qualification for a Disability Benefit as described in Section 5.3 of the Plan,
(iii) qualification for a Pre-Retirement Death Benefit as described in Section
5.4 of the Plan, (iv) entitlement to a Change in Control benefit pursuant to
Section 5.7, or (v) satisfaction prior to February, 1995 of the vesting
requirements under the Prior Plan. Subject to Sections 5.5 and 5.6 of the Plan,
once a Participant satisfies the vesting requirements of the Plan or the Prior
Plan, he shall always be considered vested under the Plan.

                         ARTICLE V. BENEFITS ELIGIBILITY

         5.1      Termination Benefit. Subject to the provisions of Sections 5.5
and 5.6 of the Plan, a Participant shall be entitled to the payment of a benefit
equal to the vested portion of his Account balance if his employment with the
Sponsor and its affiliates and subsidiaries is terminated, whether voluntarily
or involuntarily. Subject to the provisions of Sections 5.3, 5.4 and 5.7, if a
Participant's employment with the Sponsor or an affiliate or subsidiary is
terminated prior to the Participant becoming vested in his Plan Account, no
benefits shall be payable under the Plan.

         5.2      Form and Timing of Payment. All payments of benefits pursuant
to the Plan will made in the form of a single lump sum within 60 days following
entitlement to benefit payments under the Plan. The value of a Participant's
Account shall be determined as of the Valuation Date immediately preceding
payment to the Participant.

         5.3      Disability Benefit. A Participant who becomes permanently
disabled while actively employed by the Sponsor, an affiliate or a subsidiary,
as certified by the Social Security Administration, shall receive a distribution
of his Account balance.

                                        4


         5.4      Pre-Retirement Death Benefit. If a Participant dies before a
payment of benefits has been made under the Plan and while he is actively
employed by the Sponsor or an affiliate or subsidiary, his Account balance shall
be paid to his Beneficiary.

         5.5      Termination for Cause. Notwithstanding any other provision of
this Plan, if the Committee determines that the Participant engaged in any act
of fraud or dishonesty against the Sponsor or its affiliates or subsidiaries
which, in the opinion of the Committee, would constitute a felony involving a
breach of trust (such as theft or embezzlement) under the Federal law or the
laws of the State of Texas, or which, in the opinion of the Committee, is
injurious to the business or financial condition of the Sponsor, then all rights
which the Participant or his Beneficiaries have under this Plan, other than a
right to Change in Control Benefits under section 5.7, shall be forfeited, and
any liability of the Sponsor for payment of benefits hereunder shall terminate.

         5.6      Non-compete. Notwithstanding any other provision of this Plan,
if the Participant enters into a business or employment which the Committee in
its sole discretion determines to be detrimentally competitive to the Sponsor's
(or an affiliate's or a subsidiary's) business or substantially injurious to the
Sponsor's (or an affiliate's or a subsidiary's) financial interests, then all
rights which the Participant or his Beneficiaries have under this Plan, other
than a right to Change in Control Benefits under Sections 5.7, shall be
forfeited and any liability of the Sponsor for payment of benefits hereunder
shall terminate.

         5.7      Change in Control Benefits. Following a Change in Control, as
defined in Section 2.1 (e) of the Plan, a Participant whose benefits under the
Plan have not commenced as of the date of the Change in Control shall be
entitled to a fully vested and non-forfeitable Change in Control Benefit if (i)
the Participant's employment with the Sponsor or its affiliates or subsidiaries
is terminated involuntarily within the two year period following the Change in
Control, or (ii) the Participant's professional duties or authority are
substantially diminished (other than at the Participant's request) within the
two year period following the Change in Control, or (iii) the Participant's
total available compensation payable by the Sponsor and its affiliates or
subsidiaries to the Participant is reduced (other than with the written consent
of the Participant) within the two year period following the Change in Control
and the Participant at any time thereafter (either before or after the
expiration of such two year period) terminates employment (either voluntarily or
involuntarily) with the Sponsor and its affiliates. For purposes of (iii) above,
a Participant's total available compensation shall be considered to have been
reduced if:

                  (a)      the Participant's total available monthly
compensation falls below the level which was available to the Participant during
the last full calendar month immediately preceding the Change in Control;
provided, however, that (A) any previously deferred compensation that was
available for payment to the Participant during such calendar month shall be
disregarded, and provided further that (B) any bonus or other extraordinary item
of compensation that was available for payment to the Participant during such
calendar month shall be disregarded; or

                  (b)      the Participant's total compensation (exclusive of
previously deferred compensation but inclusive of bonuses and other
extraordinary items of income) available for

                                        5


payment to the Participant during the twelve month period immediately following
the Change in Control is less than such compensation (exclusive of previously
deferred compensation but inclusive of bonuses and other extraordinary items of
income) available for payment to the Participant during the twelve month period
immediately preceding the Change in Control.

         The amount of the Change in Control Benefit shall equal an amount
determined under Sections 6.1 and 6.2 of the Plan, as of the date of the Change
in Control.

         To the extent a Participant continues in employment with the Sponsor or
its affiliates following a Change in Control and subsequently becomes entitled
to a benefit under the provisions of the Plan other than this Section 5.7, such
Participant shall be entitled to the benefit which produces the greatest benefit
at the Participant's actual retirement or other separation from service.

                         ARTICLE VI. AMOUNT OF BENEFITS

         6.1      Calculation of Plan Benefit Credits. The annual amount
credited to the Employer Contribution Account of a Participant as of the last
day of each Plan Year shall equal the Participant's Annual Base Salary for such
Plan Year multiplied by a percentage, which percentage shall be:

         (a)      20 percent in the case of the President and Chief Executive
                  Officer, Chief Financial Officer, or Chief Operating Officer
                  of the Sponsor;

         (b)      20 percent for the individuals who, as of January 1, 1995,
                  held the positions of Senior Vice President Operations, Vice
                  President Customer Satisfaction, and Vice President Network
                  Operations of the Sponsor, but only for so long as such
                  individuals hold these specifically enumerated positions with
                  the Sponsor; and

         (c)      10 percent for all other Participants.

Notwithstanding the foregoing, prior to the beginning of each Plan Year, the
Committee may establish in writing minimum levels of financial or operating
performance that must be achieved for the Plan Year if a Participant is to be
credited with an amount for such Plan Year.

         6.2      Prior Plan Account Benefit. In addition to the benefit credits
described in Section 6.1, the amount credited to the Prior Plan Account of a
Participant shall equal:

         (a)      For a Participant in the Prior Plan who satisfied the
                  requirements under the Prior Plan for a vested benefit, an
                  amount equal to the greater of (i) the net present value as of
                  December 31, 1994 of the benefit accrued under the Prior Plan,
                  or (ii) the amount that would be credited to such
                  Participant's Account under the provisions of Section 6.1 of
                  this Plan, taking into account Annual Base Salary

                                        6


                  from the effective date of commencement of Participation in
                  the Prior Plan until December 31, 1994; and

         (b)      For a Participant who was a Participant in the Prior Plan but
                  who failed to satisfy the requirements under the Prior Plan
                  for a vested benefit on or prior to December 31, 1994, an
                  amount equal to the amount that would be credited to such
                  Participant's Account under the provisions of Section 6.1 of
                  this Plan, taking into account Annual Base Salary from the
                  effective date of commencement of Participation in the Prior
                  Plan until December 31, 1994.

         6.3      Investment Earnings Credit. In the event that a Trust is
established to assist the Sponsor in meeting its obligations to pay benefits
under the Plan, Accounts will be credited with an allocable portion of earnings
or losses of such Trust as of each Valuation Date. If or to the extent amounts
accrued as benefit credits under the Plan are not set aside in a Trust, Accounts
shall be credited as of each Valuation Date with an amount representing an
investment return rate on 10-year Treasury notes determined as of the Valuation
Date, or such other rate as is determined from time to time by the Sponsor.

                     ARTICLE VII. ADMINISTRATION OF THE PLAN

         7.1      Administration. The Plan shall be administered by the
Committee. A majority of the members of the Committee shall constitute a quorum
and the acts of a majority of the members present, or acts approved in writing
by a majority of the members without a meeting, shall be the acts of the
Committee. The Committee shall have that authority which is expressly stated in
the Plan as vested in the Committee, and authority to make rules to administer
and interpret the Plan to decide questions arising under the Plan, and to take
such other action as may be appropriate to carry out the purposes of the Plan.
The Committee shall be the "plan administrator" with respect to the Plan.

         7.2      Compensation and Expenses.

                  (a)      Compensation. No additional compensation shall be
paid to a member of the Committee for service on the Committee. Any member of
the Committee may receive reimbursement by the Sponsor of expenses properly and
actually incurred.

                  (b)      Expenses. All expenses of the Committee shall be paid
by the Sponsor. Such expenses shall include any expenses incident to the
functioning of the Committee, including but not limited to, fees of actuaries,
accountants, counsel, and other specialists, and other costs of administering
the Plan.

         7.3      Rules; Claims Review Procedures.

                  (a)      General. The Committee shall adopt and establish such
rules and regulations with respect to the administration of the Plan as it deems
necessary and appropriate.

                                        7


The Committee shall also prescribe such administrative forms as it deems
necessary to carry out the provisions of the Plan. All determinations with
respect to a Participant's right to any benefit under the Plan shall be made by
the Committee.

                  (b)      Denial of Claim. If a claim for benefits is wholly or
partially denied, the claimant shall be given notice in writing of the denial
within a reasonable time after the receipt of the claim, but not later the 90
days after the receipt of the claim. However if special circumstances require an
extension, written notice of the extension shall be furnished to the claimant
before the termination of the 90 day period. In no event shall the extension
exceed a period of 90 days after the expiration of the initial 90 day period.
The notice of the denial shall contain the following information:

                           (1) the specific reasons for the denial,

                           (2) specific reference to pertinent Plan provisions
on which the denial is based,

                           (3) a description of any additional material or
information necessary for the claimant to perfect his claim and an explanation
of why such material or Information is necessary.

                           (4) an explanation that a full and fair review by the
Committee of the denial may be requested by the claimant or his authorized
representative by filing a written request for a review with the Committee
within 60 days after the notice of the denial is received, and

                           (5) if a request for review is filed, the claimant or
his authorized representative may review pertinent documents and submit issues
and comments in writing within the 60- day period described in paragraph (4)
above.

                  (c)      Decision after review. The decision of the Committee
with the respect of the review of the denial shall be made promptly, but not
later than 60 days after the Committee receives the request for review. However,
if special circumstances require an extension of time, a decision shall be
rendered not later than 120 days after the receipt of the request for review. A
written notice of the extension shall be furnished to the claimant prior to the
expiration of the initial 60-day period. The claimant shall be given a copy of
the decision, which shall state, in a manner calculated to be understood by the
claimant, the specific reasons for the decision and specific references to the
pertinent Plan provisions on which the decision is based.

         7.4      Finality of Determinations. Subject to Section 7.3, all
determinations of the Committee as to any matter arising under the Plan,
including questions of construction and interpretation shall be final, binding
and conclusive upon all interested parties.

         7.5      Indemnification. To the extent permitted by law and the
Sponsor's by-laws, the members of the Committee, its agents, and the officers,
directors and employees of the Sponsor

                                        8


shall be indemnified and held harmless by the Sponsor against and from any and
all loss, cost, liability, or expense that may be imposed upon or may be
reasonably incurred by them in connection with or resulting from any claim,
action, suit, or proceeding to which they may be a party or in which they may be
involved by reason of any action taken or failure to act under the Plan and
against and from any and all amounts paid by them in settlement (with the
Sponsor's written approval) or paid by them in satisfaction of a judgment in any
such action, suit or preceding. The foregoing provision shall not be applicable
to any person if the loss, cost liability or expense is due to such person's
willful misconduct.

                          ARTICLE VIII. TRUST PAYMENTS

         8.1      Trust Payments.

                  (a)      General. Any obligation of the Sponsor to pay
benefits hereunder shall be an unsecured promise and any right to enforce such
obligation shall be solely as a general creditor of the Sponsor. For the
convenience and benefit of the Sponsor and to the extent not inconsistent with
the foregoing sentence, the Sponsor may establish one or more irrevocable trusts
to hold assets to meet its obligations under the Plan to Participants. However,
in the event of a Change in Control as defined in Section 2.1(e) of the Plan,
the Sponsor shall immediately transfer such amounts to a Trust as are necessary
to pay all Plan benefits, and shall continue to transfer such additional amounts
as become necessary to pay Plan benefits following the Change in Control.

                  (b)      Trust Assets. The property comprising the assets of a
Trust established under subsection (a) shall, at all times, remain the property
of the Trust. The Trustee shall distribute the assets comprising the Trust in
accordance with the provisions of the Plan and Trust as instructed by the
Committee, but in no event shall the Trustee distribute the assets of the Trust
to or for the benefit of the Sponsor, except as provided in the Trust in the
case of insolvency or bankruptcy of the Sponsor or after the satisfaction of all
the Sponsor's obligations under the Plan to the Participants.

                   ARTICLE IX. AMENDMENT; TERMINATION; MERGER

         9.1      Amendment and Termination. The Board of Directors or the
Committee acting on behalf of such Board, may amend, modify or terminate the
Plan at any time and in any manner; provided, however that, that no such
amendment, modification or termination shall, without the express written
consent of each affected Participant, eliminate, reduce or adversely affect the
form or timing of payment of any benefit which the Participant (or a
Beneficiary) was entitled to receive under the provisions of the Plan
immediately prior to the date of the amendment or termination. Any such
protected benefit shall continue to be an obligation of the Sponsor and shall be
paid as scheduled.

                                        9


         9.2      Merger, Consolidation, or Acquisition. In the event of a
merger, consolidation or acquisition where the Sponsor is not the surviving
corporation (and a Change in Control has not occurred), if the successor or
acquiring corporation elects to terminate the Plan, the provisions of Section
9.1 relating to Plan termination shall be applicable. In the event of a merger,
consolidation or acquisition that results in a Change in Control, the provisions
of Section 5.7 shall be applicable.

                          ARTICLE X. GENERAL PROVISIONS

         10.1     Nonalienation. Neither the Participant nor his Beneficiary may
sell, assign, pledge, transfer, or otherwise convey the right to receive any
payments under, or interest in, this Plan.

         10.2     Incompetency. Every person receiving or claiming benefits
under the Plan shall be conclusively presumed to be mentally competent until the
date on which the Committee receives a written notice, in a form and manner
acceptable to it, that such person is incompetent. In the event a guardian of
the estate of any person receiving or claiming benefits under the Plan shall be
appointed by a court of competent jurisdiction, benefit payments shall be made
to such guardian provided that proper proof of appointment and continuing
qualification is furnished in a form and manner acceptable to the Committee. Any
such payment so made shall be a complete discharge of any liability therefor
under the Plan.

         10.3     Effect of Mistake. In the event of a mistake or misstatement
as to the eligibility or compensation or participation of a Participant, or the
amount of benefit payments made or to be made to or with respect to a
Participant, the Committee shall cause an adjustment to be made so as to correct
such mistake and provide for the correct amount of benefit payments with respect
to such Participant, to the extent allowed by law.

         10.4     Effect on other Plans. Amounts accrued or paid under the Plan
shall not be considered as part of a Participant's compensation for the purpose
of any other benefit plan maintained by the Sponsor.

         10.5     Plan Not an Employment Contract. The Plan is not an employment
contract. It does not give to any person the right to be continued in
employment, and all Employees remain subject to change of salary, transfer,
change of job, discipline, layoff, discharge or any other change of employment
status.

         10.6     Severability. In the event any provision of the Plan shall be
held invalid or illegal for any reason, any illegality or invalidity shall not
affect the remaining parts of the Plan, but the Plan shall be construed and
enforced as if the illegal or invalid provision had never been inserted, and the
Sponsor shall have the privilege and opportunity to correct and remedy such
questions of illegality or invalidity by amendment as provided in the Plan.

                                       10


         10.7     Applicable Law. The Plan shall be governed and construed in
accordance with the laws of the State of Texas, except to the extent such laws
are preempted by an applicable Federal law.

         IN WITNESS WHEREOF, the Sponsor has caused this instrument to be
executed by its duly authorized officers effective as of January 1, 1994 with
respect to individuals who were Employees on or after January 1, 1995.

                                         GREYHOUND LINES, INC.

                                         By:____________________________________

                                         Title:_________________________________

ATTEST:

By:____________________________________

Title:___________________________________



                                       11

EX-10.2

                                                                    EXHIBIT 10.2

                                  AMENDMENT TO
                     SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

         This Amendment to the Greyhound Lines, Inc. (the "Company")
Supplemental Executive Retirement Plan is made as of December 9, 1996.

         WHEREAS, the Company previously adopted the Greyhound Lines, Inc.
Supplemental Executive Retirement Plan, as restated effective January 1, 1994
(the "Plan"); and

         WHEREAS, the Company, having sought the approval of the Compensation
and Organization Committee of the Board of Directors of the Company, desires to
amend the Plan and modify the listing of the Participants in the Plan.

NOW, THEREFORE, the Plan shall be amended as follows.

1.       Section 6.1(c) of the Plan shall be renumbered as Section 6.1(d) and
the following shall be added as Section 6.1(c):

         "(c)     20 percent for the Participants that: (i) hold the position of
         a Senior Vice President with Sponsor or (ii) any other Participants
         that, as of the first day of a Plan Year beginning on or after January
         1, 1996, have completed a minimum of 84 months of Service with Sponsor;
         and"

2.       The Participants in the Plan shall be those individuals listed on
Appendix A hereto; that the Service Start Date, contribution level and the
contribution effective date for each such Participant shall be as set forth on
Appendix A hereto.

3.       Capitalized terms used herein without definition shall have the meaning
ascribed to such terms as set forth in the Plan.

                                     GREYHOUND LINES, INC.

                                     By:_______________________________
                                              Daniel R. Weston
                                              Vice President - Human Resources

EX-10.3

                                                                    EXHIBIT 10.3

                               SECOND AMENDMENT TO
                     SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

         This Second Amendment to the Greyhound Lines, Inc. (the "Company")
Supplemental Executive Retirement Plan is made as of January 20, 1999.

         WHEREAS, the Company previously adopted the Greyhound Lines, Inc.
Supplemental Executive Retirement Plan, as restated effective January 1, 1994,
and as amended by the First Amendment dated as of December 9, 1996 (the "Plan");
and

         WHEREAS, the Company, having sought the approval of the Compensation
and Organization Committee of the Board of Directors of the Company, desires to
amend the Plan as set forth herein.

NOW, THEREFORE, the Plan shall be amended as follows.

1.       Section 6.3 of the Plan shall be deleted in its entirety and replaced
with the following:

                  "Section 6.3 Investment Earnings Credit. Accounts shall be
                  credited as of each Valuation Date with an allocable portion
                  of the earnings of the Trust or with an amount representing an
                  investment return rate on 10-year Treasury notes as of each
                  Valuation Date, plus 150 basis points, whichever is greater,
                  or such other rate as is determined from time to time by the
                  Sponsor."

2.       Sections 8.1 (a) and (b) of the Plan shall be deleted in their entirety
and replaced with the following:

                  "Section 8.1 Trust Payments.

                  (a)      General. Any obligation of the Sponsor to pay
                  benefits hereunder shall be an unsecured promise and any right
                  to enforce such obligation shall be solely as a general
                  creditor of the Sponsor. For the convenience and benefit of
                  the Sponsor and to the extent not inconsistent with the
                  foregoing sentence, the Sponsor may establish one or more
                  irrevocable trusts to hold assets to meet its obligations
                  under the Plan to Participants. However, in the event of a
                  Change in Control as defined in Section 2.1 (e) of the Plan,
                  the Sponsor shall immediately transfer

                                        1


                  or cause to be transferred such amounts and rights to a Trust
                  as are necessary to pay all Plan benefits, and shall continue
                  to transfer or cause to be transferred additional amounts and
                  rights as become necessary to pay Plan benefits following the
                  Change in Control.

                  (b)      Trust Assets. The property comprising the assets of a
                  Trust established under subsection (a) shall, at all times,
                  remain the property of the Trust. The Trustee shall distribute
                  the assets comprising the Trust in accordance with the
                  provisions of the Plan and Trust, but in no event shall the
                  Trustee distribute the assets of the Trust to or for the
                  benefit of the Sponsor, except as provided in the Trust.

3.       Capitalized terms used herein without definition shall have the meaning
ascribed to such terms as set forth in the Plan.

                                              GREYHOUND LINES, INC.

                                              By:_______________________________
                                                       Craig R. Lentzsch
                                                       President and CEO

                                        2

EX-10.4

                                                                    EXHIBIT 10.4

                               THIRD AMENDMENT TO
                     SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

         This Third Amendment to the Greyhound Lines, Inc. (the "Company")
Supplemental Executive Retirement Plan is made effective as of August 1, 2003.

         WHEREAS, the Company previously adopted the Greyhound Lines, Inc.
Supplemental Executive Retirement Plan, as restated effective January 1, 1994,
and as amended by the First Amendment dated as of December 9, 1996 and as
further amended by the Second Amendment dated as of January 20, 1999 (the
"Plan"); and

         WHEREAS, the Company, having sought the approval of the Board of
Directors of the Company, desires to amend the Plan as set forth herein.

         NOW THEREFORE, the Plan shall be amended as follows:

1.       Section 2.1(b) of the Plan shall be amended by deleting the first
sentence thereof and by replacing it with the following:

                  "'Annual Base Salary' shall mean a Participant's base salary
                  actually earned by a Participant for services performed for
                  the Sponsor for a calendar year and, to the extent
                  specifically designated by the Committee, for services
                  performed for an affiliate or a subsidiary of the Sponsor for
                  a calendar year."

2.       Section 5.1 of the Plan shall be amended by adding the following to the
end thereof:

                  "Notwithstanding the foregoing, if a Participant terminates
                  his employment with the Sponsor or an affiliate or subsidiary
                  and immediately thereafter commences new employment with an
                  affiliate or subsidiary of the Sponsor for which the
                  Participant's earnings are not considered Annual Base Salary
                  hereunder, then the Participant shall be entitled to the
                  payment of a benefit equal to the vested portion of his
                  Account balance as of the later of (i) the date of his
                  termination of employment with the Sponsor or its affiliate or
                  its subsidiary for which the Participant's earnings were
                  considered Annual Base Salary, or (ii) the date on which the
                  Participant will have 5 or more Years of

                                        1


                  Service or would otherwise be fully-vested in his Account
                  under Article IV. In such event:

                  (a)      the Participant's Account balance to be paid shall
                           include (i) immediate benefit credits for any partial
                           Plan Year ending as of the date the Participant
                           terminates employment, notwithstanding the
                           provisions of Section 6.1 of the Plan; and (ii)
                           investment earnings accruing through the date of
                           payment entitlement hereunder, notwithstanding the
                           provisions of Section 6.3 of the Plan; and

                  (b)      notwithstanding the provisions of Section 5.2 of the
                           Plan, the value of a Participant's Account shall be
                           determined as of the date of payment entitlement
                           hereunder, after the application of the provisions
                           set forth in (a) above.

3.       Capitalized terms used herein without definition shall have the meaning
ascribed to such terms as set forth in the Plan.

                                                    GREYHOUND LINES, INC.

                                                    By: ________________________
                                                             Stephen E. Gorman
                                                             President and CEO

                                        2

EX-10.5

                                                                    EXHIBIT 10.5

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

                                 TRUST AGREEMENT

                                     Between

                              GREYHOUND LINES, INC.

                                       and

                              LASALLE NATIONAL BANK

                                     -------

                                 March 12, 1999

                                     -------

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                                TABLE OF CONTENTS
                          (Not a part of the Agreement)



                                                                                                                Page
                                                                                                             
I.      TRUST FUND.........................................................................................       1

II.     PAYMENTS TO TRUST BENEFICIARIES....................................................................       4

III.    THE TRUSTEE'S RESPONSIBILITY REGARDING PAYMENTS TO TRUST
        BENEFICIARIES WHEN THE COMPANY IS INSOLVENT........................................................       5

IV.     PAYMENTS TO COMPANY................................................................................       6

V.      INVESTMENT OF TRUST FUND...........................................................................       6

VI.     INCOME OF THE TRUST................................................................................       6

VII.    ACCOUNTING BY TRUSTEE..............................................................................       6

VIII.   RESPONSIBILITY AND INDEMNIFICATION OF TRUSTEE......................................................       7

IX.     AMENDMENTS, ETC., TO PLAN AND EXHIBITS.............................................................      10

X.      REPLACEMENT OF TRUSTEE.............................................................................      10

XI.     AMENDMENT OR TERMINATION OF AGREEMENT..............................................................      11

XII.    SPECIAL DISTRIBUTIONS..............................................................................      12

XIII.   GENERAL PROVISIONS.................................................................................      13

XIV.    NOTICES............................................................................................      14


                                       i


                              TABLE OF DEFINITIONS
                          (Not a part of the Agreement)



                                                  Section
                                                  -------
                                             
"Agreement"                                     Introduction
"Bank"                                          1.4(d)
"Board"                                         3.1
"CEO"                                           3.1
"Change in Control"                             1.7
"Code"                                          1.6
"Company"                                       Introduction
"ERISA"                                         1.6
"Exhibit A"                                     Recitals
"Exhibit B"                                     1.5
"Exhibit C"                                     8.11
"Fiduciary"                                     8.11
"Insolvent"                                     Recitals
"Laidlaw"                                       1.7
"Letter of Credit"                              1.4(d)
"Participants"                                  Recitals
"Plan"                                          Recitals
"Plan Year"                                     1.4(c)
"President"                                     3.1
"Secured Amount"                                1.4(b)
"Successor"                                     9.2.1
"Supplemental Benefits"                         Recitals
"Trust Beneficiaries"                           Recitals
"Trust"                                         Recitals
"Trustee"                                       Introduction


                                       ii


                                 TRUST AGREEMENT

         This trust agreement ("Agreement") made as of this 12th day of March,
1999 by and between Greyhound Lines, Inc., a Delaware corporation (the
"Company"), and LaSalle National Bank, a national bank (the "Trustee").

                                   WITNESSETH:

         WHEREAS, the employees of the Company listed on an exhibit ("Exhibit
A") to this Agreement (the "Participants") and their beneficiaries are, or may
become, entitled to benefits under the provisions of the Greyhound Lines, Inc.
Supplemental Executive Retirement Plan, as the same may hereafter be amended or
restated, or any successor thereto (the "Plan");

         WHEREAS, the Plan provides for certain benefits, and the Company wishes
specifically to assure the payment to the Participants and their beneficiaries
(the Participants and their respective beneficiaries being collectively referred
to herein as the "Trust Beneficiaries") of amounts due thereunder (the amounts
so payable being collectively referred to herein as the "Supplemental
Benefits");

         WHEREAS, the Company wishes to establish a trust (the "Trust") and to
transfer to the Trust assets and rights which shall be held subject to the
claims of the creditors of the Company to the extent set forth in Article III
until (i) paid in full to all Trust Beneficiaries as Supplemental Benefits in
such manner and as specified in this Agreement unless the Company is Insolvent
(as that term is defined below) at the time that such Supplemental Benefits
become payable or (ii) otherwise disposed of pursuant to the terms of this
Agreement; and

         WHEREAS, the Company shall be considered "Insolvent" for purposes of
this Agreement at such time as the Company (i) is subject to a pending
proceeding as a debtor under the United States Bankruptcy Code, as heretofore or
hereafter amended, or (ii) is unable to pay its debts as they become due;

         NOW, THEREFORE, the parties do hereby establish the Trust and agree
that the Trust shall be comprised, held and disposed of as follows:

                                  I. TRUST FUND

         1.1      Subject to the claims of creditors to the extent set forth in
Article III, the Company shall deposit with the Trustee in trust One Hundred
Dollars ($100.00), which shall become the principal of this Trust, to be held,
administered and disposed of by the Trustee as provided in this Agreement.

         1.2      The Trust hereby established shall be revocable by the Company
at any time prior to the date on which occurs a Change in Control (as that term
is defined in Section 1.7); on or after such date, this Trust shall be
irrevocable. In the event that a Change in Control has



occurred, the Chief Executive Officer, President, Chief Financial Officer or
Treasurer of the Company shall so notify the Trustee promptly. The Trustee shall
be entitled to rely upon such notice as to whether and when a Change in Control
has occurred and shall not be required to make any independent verification of a
Change in Control.

         1.3      The principal of the Trust and any earnings shall be held in
trust separate and apart from other funds of the Company and shall be used
exclusively for the uses and purposes set forth in this Agreement. No Trust
Beneficiary shall have any preferred claim on, or any beneficial ownership
interest in, any assets of the Trust prior to the time that such assets are paid
to a Trust Beneficiary as Supplemental Benefits. Any rights created under the
Plan and this Agreement shall be mere unsecured contractual rights of Trust
Beneficiaries with respect to the Company. The obligation of the Trustee to pay
Supplemental Benefits pursuant to this Agreement constitutes merely an unfunded
and unsecured promise to pay such Benefits.

         1.4      (a)      The Company may at any time or from time to time make
additional deposits of cash or other property as may be acceptable to the
Trustee in the Trust, make provision for cash or other property as may be
acceptable to the Trustee to be transferred to the Trust or arrange for the
issuance of a letter of credit, to augment the principal to be held,
administered and disposed of by the Trustee as herein provided, but no payment
of all or any portion of the principal of the Trust or earnings thereon shall be
made to the Company or any other person or entity on behalf of the Company
except as herein expressly provided.

                  (b)      Prior to the first event constituting a Change in
Control, the Company shall make a contribution to the Trust that is sufficient
as of such date, taking into account the assets of the Trust prior to such
contribution, to provide for the payment of all Supplemental Benefits and any
other amounts payable or reimbursable pursuant to the terms of this Agreement
including, without limitation, the fees of the Trustee and the Fiduciary (as
that term is defined in Section 8.11) and other expenses of the Trust for a
period of at least two years (collectively, the "Secured Amount").

                  (c)      Within 30 days after the end of any Plan Year (as
that term is defined in the Plan) (a "Plan Year") ending after a Change in
Control, the Company shall make a contribution to the Trust that is sufficient
as of such date, taking into account the assets of the Trust prior to such
contribution, to provide for the payment of the Secured Amount.

                  (d)      Laidlaw (as that term is defined in Section 1.7) or
the Company may at any time cause to be issued to the Trust an irrevocable clean
letter of credit (the "Letter of Credit") in an initial aggregate amount of not
less than $2,500,000 for the benefit of the Trustee by a bank having combined
capital and surplus in excess of $500,000,000 (the "Bank"). The Letter of Credit
shall provide that Laidlaw must pay all fees associated therewith, and that the
amounts of the Supplemental Benefits and the Trust and Fiduciary expenses,
including the fees of the Trustee and the Fiduciary, shall be paid to the
Trustee on a regular, periodic basis upon presentation by the Trustee to the
Bank of a statement or statements satisfactory to the Bank and prepared by the
Trustee (the "Draw Documents"). Upon a Change in Control, or if later, the
issuance of the Letter of Credit to the Trust, to the extent that the assets of
the Trust, including

                                        2


the initial aggregate amount of the Letter of Credit, then exceed the Secured
Amount, such excess shall be paid to the Company by the Trustee from the assets
of the Trust. Before the twentieth day prior to the stated expiration date of
the Letter of Credit, the Company and/or Laidlaw shall take any actions it or
they deem appropriate to renew or replace the Letter of Credit and/or to
contribute additional assets to the Trust. On or after the twentieth day prior
to the stated expiration date of the Letter of Credit, the Trustee is
authorized, empowered and directed to sign and present the Draw Documents for an
amount of the Letter of Credit (and to hold and disburse the funds received
thereby pursuant to the terms of this Agreement) equal to the excess, if any, of
(i) the then applicable Secured Amount, over (ii) the sum of (a) the assets of
the Trust (excluding any Letter of Credit) and (b) the initial aggregate amount
of any renewal or replacement irrevocable clean letter of credit drawn upon a
commercial bank selected by Laidlaw or the Company, as the case may be, and
approved by the Fiduciary, in either case, upon substantially the same terms and
conditions as contained in the Letter of Credit that is due to expire. A letter
of credit that is renewed or provided in accordance with this Section 1.4(d)
shall thereafter be referred to as the "Letter of Credit."

         1.5      Within five business days after the date on which the Trust
has become irrevocable and within 30 days after the first day of each Plan Year
thereafter, the Company shall (a) specify the nature, amounts and timing of the
Supplemental Benefits to which each Trust Beneficiary may become entitled,
subject to Article IX hereof, in an exhibit ("Exhibit B") which shall become a
part of this Agreement and be incorporated herein by this reference, (b) provide
any corresponding revisions to Exhibit A that may be required and (c) provide
the Fiduciary with copies of the Plan and any amendments thereto.

         1.6      The Trust is intended to be a grantor trust, within the
meaning of section 671 of the Internal Revenue Code of 1986, as amended (the
"Code") and shall be construed accordingly. The purpose of the Trust is to
assure that the Company's obligations to the Participants pursuant to the Plan
are fulfilled. The Trust is neither intended nor designed to qualify under
section 401(a) of the Code or to be subject to the provisions of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"). The Trust
established under this Agreement does not fund and is not intended to fund the
Plan or any other employee benefit plan or program of the Company. Such Trust is
and is intended to be a depository arrangement with the Trustee for the setting
aside of cash and other assets of the Company for the meeting of part or all of
its future obligations with respect to Supplemental Benefits to some or all of
the Trust Beneficiaries under the Plan.

         1.7      As used in this Agreement, the term "Change in Control" shall
have the same meaning assigned to that term in the Plan; provided, however, that
the term "Change in Control" shall include the merger to be effected pursuant to
the Amended and Restated Agreement and Plan of Merger dated as of October 16,
1998, and amended and restated as of November 5, 1998, by and among Laidlaw,
Inc., a Canadian corporation ("Laidlaw"), Laidlaw Transit Acquisition Corp., a
Delaware corporation and a wholly-owned subsidiary of Laidlaw, and the Company,
pursuant to which Laidlaw Transit Acquisition Corp. will be merged with and into
the Company, with the Company as the surviving entity.

                                        3


                       II. PAYMENTS TO TRUST BENEFICIARIES

         2.1      Provided that the Company is not Insolvent and commencing with
the earlier to occur of (a) appropriate notice to the Trustee by the Company, or
(b) the date on which the Trustee has been notified in accordance with Section
1.2 that the Trust has become irrevocable, the Trustee shall make payments of
Supplemental Benefits to each Trust Beneficiary when and as due under the Plan
from the assets of the Trust as it shall be directed in writing by the
Fiduciary.

         2.2      The Trustee shall continue to pay Supplemental Benefits to the
Trust Beneficiaries when and as due under the Plan until the assets of the Trust
are depleted, subject to Section 11.2. If any current payment by the Trustee
under the terms of this Agreement would deplete the assets of the Trust below
the amount necessary to provide adequately for Supplemental Benefits known to
the Trustee to be due and payable in the future, the Trustee shall nevertheless
make the current payment when due. If, after application of the preceding
sentence, amounts in the Trust are not sufficient to provide for full payment of
the Supplemental Benefits to which any Trust Beneficiary is entitled as provided
in this Agreement, the Company shall make the balance of each such payment
directly to the Trust Beneficiary as it becomes due.

         2.3      Notwithstanding Sections 2.1 and 2.2, the Company may make
payments of Supplemental Benefits to each Trust Beneficiary when and as due
under the Plan. The Company shall notify the Trustee in writing of its decision
to pay Supplemental Benefits directly at least 30 days prior to the time amounts
are due to be paid to a Trust Beneficiary and shall provide the Trustee promptly
after the due date of each payment written confirmation as specified by the
Trustee that such payment has been made.

         2.4      Nothing in this Agreement shall in any way diminish any rights
of any Trust Beneficiary to pursue such Trust Beneficiary's rights as a general
creditor of the Company with respect to Supplemental Benefits or otherwise, and
the rights of each Trust Beneficiary under the Plan shall in no way be affected
or diminished by any provision of this Agreement or action taken pursuant to
this Agreement, except that any payment actually received by any Trust
Beneficiary hereunder shall reduce dollar-per-dollar amounts otherwise due to
such Trust Beneficiary pursuant to the Plan.

         2.5      The Trustee shall withhold from any payment to a Trust
Beneficiary the amount required by law to be so withheld under federal, state
and local tax withholding requirements as it shall be directed in writing by the
Fiduciary, and shall pay over the amounts withheld to the Company to forward to
the appropriate government authority. The Company shall have sole responsibility
for all related reporting requirements.

                                        4


             III. THE TRUSTEE'S RESPONSIBILITY REGARDING PAYMENTS TO
                  TRUST BENEFICIARIES WHEN THE COMPANY IS INSOLVENT

         3.1      At all times during the continuance of this Trust, the
principal and income of the Trust shall be subject to claims of creditors of the
Company as set forth in this Section 3.1. The Board of Directors of the Company
(the "Board"), the Chief Executive Officer of the Company (the "CEO") and the
President of the Company (the "President") shall have the duty to inform the
Trustee in writing if either the Board, the CEO or the President believes that
the Company is Insolvent. If the Trustee receives a notice in writing from the
Board, the CEO or the President stating that the Company is Insolvent or if a
person claiming to be a creditor of the Company alleges in writing to the
Trustee that the Company has become Insolvent, the Trustee shall request that
the Company's independent accountants determine within 30 days after receipt of
such notice whether the Company is Insolvent. The Trustee shall be fully
protected under Section 8.7 in relying upon the opinion and advice of such
independent accountants. The Company shall provide its independent accountants
with any information reasonably requested, and otherwise cooperate with the
accountants in making the determination. Pending such determination, or if the
Trustee has actual knowledge that the Company is Insolvent, the Trustee shall
discontinue or refrain from making payments to any Trust Beneficiary and hold
the Trust assets for the benefit of the general creditors of the Company. The
Trustee shall pay any undistributed principal and income in the Trust to the
extent necessary to satisfy the claims of the creditors of the Company as a
court of competent jurisdiction may direct in writing. If the Trustee has
discontinued or refrained from making payments to any Trust Beneficiary pursuant
to this Section 3.1, the Trustee shall pay or resume payments to such Trust
Beneficiary in accordance with this Agreement if the Company's independent
accountants have determined that the Company is not Insolvent, or is no longer
Insolvent (if the Trustee initially determined the Company to be Insolvent), or
pursuant to the order of a court of competent jurisdiction. Unless the Trustee
has actual knowledge of Insolvency, or has received notice from the Board, the
President, the CEO or a person claiming to be a creditor of the Company alleging
that the Company is Insolvent, the Trustee shall have no duty to inquire as to
whether the Company is Insolvent and may rely on information concerning the
Insolvency of the Company that has been furnished to the Trustee by any creditor
of the Company or by any person (other than an employee or director of the
Company) acting with apparent or actual authority with respect to the Company.

         3.2      If the Trustee is precluded from paying Supplemental Benefits
from the Trust assets pursuant to Section 3.1 and such prohibition is
subsequently removed, the Trustee shall pay the aggregate amount of all
Supplemental Benefits that would have been paid to the Trust Beneficiaries in
accordance with this Agreement during the period of such prohibition, less the
aggregate amount of Supplemental Benefits otherwise paid to any Trust
Beneficiary directly by the Company during any such period, together with
interest on the delayed amount determined at a rate equal to the rate actually
earned (including, without limitation, market appreciation or depreciation, plus
receipt of interest and dividends) during such period with respect to the assets
of the Trust corresponding to such net amount delayed.

                                        5


                             IV. PAYMENTS TO COMPANY

         4.1      Except to the extent expressly contemplated by Sections 1.2,
1.4(d) and 2.5 and this Article IV, the Company shall have no right or power to
direct the Trustee to return any of the Trust assets to the Company before all
payments of Supplemental Benefits have been made to all Trust Beneficiaries as
provided in this Agreement. Upon the written request of the Company made prior
to the date on which the Trust becomes irrevocable, the Trustee shall return to
the Company any Trust assets in excess of One Hundred Dollars ($100.00) as may
be specified in such request by the Company.

                           V. INVESTMENT OF TRUST FUND

         5.1      Prior to the date on which the Trust becomes irrevocable, the
Trustee shall invest and reinvest the assets of the Trust as the Company or its
designee shall prescribe in writing from time to time.

         5.2      On or after the date on which the Trust becomes irrevocable,
or in the absence of the instructions from the Company specified in Section 5.1,
the provisions of this Section 5.2 shall apply to the investment of the Trust
assets. The investment objective of the Trustee shall be to preserve the
principal of the Trust while obtaining a reasonable total rate of return,
measurement of which shall include, without limitation, market appreciation or
depreciation plus receipt of interest and dividends. The Trustee shall be
mindful, in the course of its management of the Trust, of the liquidity demands
on the Trust.

         5.3      The Trustee shall have the sole power to invest the assets of
the Trust, in accordance with the provisions of Sections 5.1 and 5.2. The
Trustee shall not be liable for any failure to maximize income on such portion
of the Trust assets as may be from time to time invested or reinvested as set
forth above, nor for any loss of principal or income due to the liquidation of
any investment that the Trustee, in its sole discretion, believes necessary to
make payments or to reimburse expenses under the terms of this Agreement. The
Trustee shall have the right to invest assets of the Trust for short-term
investment periods, pending distribution or long-term investment of such assets,
as the Trustee may deem proper in the circumstances.

                             VI. INCOME OF THE TRUST

         6.1      Except as provided in Articles III and IV, during the
continuance of this Trust all net income of the Trust shall be retained in the
Trust.

                           VII. ACCOUNTING BY TRUSTEE

         7.1      The Trustee shall maintain such books, records and accounts as
may be necessary for the proper administration of the Trust assets, including
such specific records as shall be agreed upon in writing by the Company and the
Trustee. Within 60 days following the close of each Plan Year that includes or
commences after the date of this Trust until the termination of this Trust or
the removal or resignation of the Trustee (and within 60 days after

                                        6


the date of such termination, removal or resignation), the Trustee shall render
to the Company an accounting with respect to the Trust assets as of the end of
the then most recent Plan Year (and as of the date of such termination, removal
or resignation, as the case may be). The Trustee shall furnish to the Company on
a quarterly basis and in a timely manner such information regarding the Trust as
the Company shall require for purposes of preparing its statements of financial
condition. Upon the written request of the Company or, on or after the date on
which the Trust has become irrevocable, the Fiduciary, the Trustee shall deliver
to the Fiduciary or the Company, as the case may be, a written report setting
forth the amount held in the Trust and a record of the deposits made with
respect thereto by the Company. Unless the Company or the Fiduciary shall have
filed with the Trustee written exception or objection to the statement and
account furnished by the Trustee within 90 days after receipt thereof, the
Company and the Trust Beneficiaries shall be deemed to have approved such
statement and account, and in such case the Trustee shall be forever released
and discharged with respect to all matters and things reported in such statement
and account as though it had been settled by a decree of a court of competent
jurisdiction in an action or proceeding to which the Company and the
Participants were parties.

         7.2      Nothing in this Article VII shall preclude the commingling of
Trust assets for investment.

               VIII. RESPONSIBILITY AND INDEMNIFICATION OF TRUSTEE

         8.1      The duties and responsibilities of the Trustee shall be
limited to those expressly set forth in this Agreement, and no implied covenants
or obligations shall be read into this Agreement against the Trustee.

         8.2      In addition to and without limiting any other provision of
this Agreement, on or after the date on which the Trust has become irrevocable,
the Trustee shall, based upon the written direction of the Fiduciary and any
payment schedules attached to this Agreement as Exhibits, carry out the duties
allocated to it by this Agreement in accordance with the terms of Section 8.4.
The Company hereby agrees that it will not contest, dispute or otherwise
challenge any decision made by the Trustee pursuant to the terms of this
Agreement.

         8.3      If all or any part of the Trust assets are at any time
attached, garnished, or levied upon by any court order, or in case the payment,
assignment, transfer, conveyance or delivery of any such property shall be
stayed or enjoined by any court order, or in case any order, judgment or decree
shall be made or entered by a court affecting such property or any part of such
property, then and in any of such events the Trustee shall rely upon and comply
with any such order, judgment or decree, and it shall not be liable to the
Company or any Trust Beneficiary by reason of such compliance even though such
order, judgment or decree subsequently may be reversed, modified, annulled, set
aside or vacated.

         8.4      The Trustee shall act with the care, skill, prudence and
diligence under the circumstances then prevailing that a prudent man acting in a
like capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims; provided, however, that the
Trustee shall incur no liability to anyone for any action taken pursuant to a

                                        7


direction, request, or approval given by the Company, the Fiduciary or any Trust
Beneficiary contemplated by and complying with the terms of this Agreement. The
Trustee shall discharge its responsibility for the investment, management and
control of the Trust assets solely in the interest of the Trust Beneficiaries
and for the exclusive purpose of assuring that, to the extent of available Trust
assets, and in accordance with the terms of this Agreement, all payments of
Supplemental Benefits are made when due to the Trust Beneficiaries.

         8.5      The Trustee may consult with legal counsel (who may be counsel
for the Company) to be selected by it, and the Trustee shall not be liable for
any action taken or suffered by it in accordance with the advice of such
counsel.

         8.6      The Trustee shall be reimbursed by the Company for its
reasonable expenses incurred in connection with the performance of its duties
(including, but not limited to, the fees and expenses of counsel, accountants
and others incurred pursuant to Section 8.5, 8.11 or 12.2) and shall be paid
reasonable fees for the performance of such duties in the manner provided by
Section 8.7.

         8.7      The Company agrees to indemnify and hold harmless the Trustee
from and against any and all damages, losses, claims or expenses as incurred
(including expenses of investigation and fees and disbursements of counsel to
the Trustee, the fees and expenses of the Fiduciary and any taxes imposed on the
Trust assets or income of the Trust) arising out of or in connection with the
performance by the Trustee of its duties, other than such damages, losses,
claims or expenses arising out of the Trustee's gross negligence or willful
misconduct. The Trustee shall not be required to undertake or to defend any
litigation arising in connection with this Agreement unless it be first
indemnified by the Company against its prospective costs, expenses and
liabilities (including, without limitation, attorneys' fees and expenses), and
the Company agrees to indemnify the Trustee and be primarily liable for such
costs, expenses, and liabilities. Any amount payable to the Trustee under
Section 8.6 or this Section 8.7 or payable to the Fiduciary pursuant to Section
8.11 shall be paid by the Company promptly upon demand by the Trustee or, in the
event that the Company fails to make such payment within 30 days of such demand,
from the Trust assets. In the event that payment is made to the Trustee or the
Fiduciary from the Trust assets, the Trustee shall promptly notify the Company
in writing of the amount of such payment. The Company agrees that, upon receipt
of such notice, it will deliver to the Trustee to be held in the Trust an amount
in cash equal to any payments made from the Trust assets to the Trustee pursuant
to Section 8.6, 8.11 or this Section 8.7. The failure of the Company to transfer
any such amount shall not in any way impair the Trustee's right to
indemnification, reimbursement and payment pursuant to Section 8.6 or this
Section 8.7.

         8.8      The Trustee may vote any stock or other securities and
exercise any right appurtenant to any stock, other securities or other property
held hereunder, either in person or by general or limited proxy, power of
attorney or other instrument.

         8.9      The Trustee may hold securities in bearer form and may
register securities and other property held in the Trust fund in its own name or
in the name of a nominee, combine certificates representing securities with
certificates of the same issue held by the Trustee in other

                                        8


fiduciary capacities, and deposit, or arrange for deposit of, property with any
depository; provided that the books and records of the Trustee shall at all
times show that all such securities are part of the assets of the Trust.

         8.10     The Trustee may exercise all rights appurtenant to any letter
of credit made payable to the Trustee of the Trust for the benefit of the Trust
in accordance with the terms of such letter of credit.

         8.11     (a)      The Trustee may hire agents, accountants, actuaries,
investment advisors, financial consultants or other professionals, who may be
agents, accountants, actuaries, investment advisors, financial consultants, or
otherwise act in a professional capacity, as the case may be, for the Company or
with respect to the Plan, to assist the Trustee in performing any of its duties.

                  (b)      Without limiting the foregoing, the Trustee shall
retain an independent third party (the "Fiduciary") to provide services, as
described in a separate fiduciary services agreement, to the Trustee in
connection with the administration of the Trustee's obligations under this
Agreement. The duties, responsibilities and obligations of the Fiduciary shall
be set forth in a separate fiduciary services agreement between the Fiduciary
and the Trustee as set forth in an exhibit ("Exhibit C") hereto or as
subsequently agreed to by the Fiduciary, the Trustee and the Company. The
initial Fiduciary will be CRG Fiduciary Services, Inc., a California
corporation. Any successor Fiduciary shall be appointed by the Trustee, as
directed by a majority of the Participants. The Fiduciary shall be reimbursed by
the Company for its reasonable expenses incurred in connection with the
performance of its services pursuant to the fiduciary services agreement and
shall be paid such fees by the Company as may be prescribed by such agreement.
See Section 13.11, regarding the effectiveness of the Fiduciary's services.

         8.12     The Trustee shall have, without exclusion, all powers
conferred on trustees by applicable law unless expressly provided otherwise in
this Agreement.

         8.13     Notwithstanding any other provision of this Agreement, in the
event of the termination of the Trust, or the resignation or discharge of the
Trustee, the Trustee shall have the right to a settlement of its accounts in
accordance with the procedures set forth in Section 7.1, which may be made, at
the option of the Trustee, either (a) by a judicial settlement in a court of
competent jurisdiction, or (b) by agreement of settlement, release and indemnity
from the Company to the Trustee.

         8.14     Notwithstanding any powers granted to the Trustee pursuant to
this Agreement or applicable law, the Trustee shall not have any power that
could give this Trust the objective of carrying on a business and dividing the
gains therefrom, within the meaning of Treasury Regulation ss. 301.7701-2.

                                        9


                   IX. AMENDMENTS, ETC., TO PLAN AND EXHIBITS

         9.1      The Company shall furnish the Trustee and the Fiduciary with
any amendments, restatements, or other changes in the Plan, and the Company
shall from time to time prescribe or amend, as the case may be, Exhibit B hereto
to reflect any such amendment, restatement, or other change, or any changes in
the compensation of the Participants, or otherwise.

         9.2      The Company shall furnish to the Trustee any amendment to
Exhibit A and any corresponding amendment to Exhibit B required as a result of
such amendment to Exhibit A; provided, however, that on or after the date on
which the Trust becomes irrevocable, any amendment to Exhibit A must be (a)
approved by the Fiduciary, and (b) in the case of an amendment that adds a new
Participant as a Trust Beneficiary, accompanied by the deposit into the Trust by
the Company, on or before the effective date on which the new Participant would
become a Trust Beneficiary, an amount sufficient to pay such new Participant's
Supplemental Benefits hereunder (with such sufficiency determined on the same
actuarial basis as that used to determine sufficiency with respect to the
Supplemental Benefits as in effect hereunder immediately prior to the addition
of such new Participant).

         9.3      Notwithstanding the foregoing provisions of this Article IX,
any amendment, restatement, successor or other change in the Plan or the
addition of a new Plan that would materially increase the responsibilities or
liabilities of the Trustee or materially change its duties shall also require
the consent of the Trustee, which consent shall not be unreasonably withheld.

                            X. REPLACEMENT OF TRUSTEE

         10.1     The Trustee may resign and be discharged from its duties
hereunder after providing not less than 90 days' notice in writing to the
Company. On or after the date on which the Trust becomes irrevocable, the
Trustee shall also provide notice of its resignation to the Fiduciary. Prior to
the date on which the Trust becomes irrevocable, the Trustee may be removed at
any time upon notice in writing by the Company. On or after such date, such
removal shall also require the approval of the Fiduciary. Prior to the date on
which the Trust becomes irrevocable, a replacement or successor trustee shall be
appointed by the Company. On or after such date, such appointment shall also
require the approval of the Fiduciary. No such removal or resignation shall
become effective until the effectiveness of the acceptance of the trust by a
successor trustee designated in accordance with this Article X. If the Trustee
should resign, and within 45 days of the notice of such resignation the Company
and, if required, the Fiduciary shall not have notified the Trustee of an
agreement as to a replacement trustee, the Trustee shall petition a court of
competent jurisdiction to appoint a successor trustee. Upon the acceptance of
the trust by a successor trustee, the Trustee shall release all of the moneys
and other property in the Trust to its successor, who shall thereafter for all
purposes of this Agreement be considered to be the "Trustee." In the event of
its removal or resignation, the Trustee shall duly file with the Company and,
after the Trust becomes irrevocable, the Fiduciary, a written statement or
statements of accounts and proceedings as provided in Section 7.1 for the period
since the last previous annual accounting of the Trust, and if written objection
to such account is not filed as provided in Section 7.1, the Trustee shall to
the maximum extent permitted

                                       10


by applicable law be forever released and discharged from all liability and
accountability with respect to the propriety of its acts and transactions shown
in such account. The successor trustee shall not be responsible for, and the
Company shall indemnify and defend the successor trustee from any claim or
liability resulting from any action or inaction of any prior trustee or from any
other past event, or any condition existing at the time it becomes successor
trustee. In the event that no party is then serving as a Fiduciary, this Section
10.1 shall be applied by substituting the Participants for the Fiduciary and
approval by a majority of the Participants for approval by the Fiduciary.

                    XI. AMENDMENT OR TERMINATION OF AGREEMENT

         11.1     This Agreement may be amended at any time and to any extent by
a written instrument executed by the Trustee and the Company and, after the
Trust has become irrevocable, approved by the Fiduciary; provided, however, that
no amendment shall have the effect of (a) making the Trust revocable after it
has become irrevocable in accordance with Section 1.2 or (b) altering Section
11.2. Notwithstanding the previous sentence, amendments contemplated by Article
IX shall be made as therein provided.

         11.2     The Trust shall terminate (a) prior to the date on which the
Trust has become irrevocable, upon the written request of the Company, and (b)
on or after such date, upon the earliest to occur of (i) a determination by the
Fiduciary that no Trust Beneficiary is or will be entitled to any further
payment of Supplemental Benefits; (ii) such time as the Trust no longer contains
any assets, or contains assets that, in the sole judgment of the Trustee, are
insubstantial in relation to the actual and potential liabilities of the Trustee
to pay Supplemental Benefits under the terms of this Agreement and any other
amounts to be paid from the assets of the Trust, including, without limitation,
the fees and expenses of the Trustee, the Fiduciary and counsel; or (iii)
notwithstanding anything to the contrary contained in the Plan, such time as the
Trustee shall have received consents from the Fiduciary and a majority of the
Participants to the termination of this Agreement. Notwithstanding the previous
sentence (other than clause (ii) thereof), if payments under the Plan with
respect to a Trust Beneficiary are the subject of litigation or arbitration, the
Trust shall not terminate and the funds held in the Trust with respect to such
Trust Beneficiary shall continue to be held by the Trustee until the final
resolution of such litigation or arbitration. The Trustee may assume that the
Plan is not the subject of such litigation or arbitration unless the Trustee
receives written notice from a Trust Beneficiary or the Company with respect to
such litigation or arbitration. The Trustee may rely upon written notice from a
Trust Beneficiary as to the final resolution of such litigation or arbitration.

         11.3     Upon a termination of the Trust as provided in Section 11.2,
any assets remaining in the Trust, less all payments, expenses, taxes and other
charges under this Agreement as of such date of termination, shall be returned
to the Company in such amounts and in the manner instructed by the Company,
whereupon the Trustee shall be released and discharged from all obligations
under this Agreement. From and after the date of termination, and until final
distribution of the Trust assets, the Trustee shall continue to have all of the
powers provided in this Agreement as are necessary or expedient for the orderly
liquidation and distribution of the Trust.

                           XII. SPECIAL DISTRIBUTIONS

                                       11


         12.1     It is intended that (a) the creation of, transfer of assets
to, and irrevocability of, the Trust will not cause the Plan to be other than
"unfunded" for purposes of title I of ERISA; (b) transfers of assets to the
Trust or the Trust becoming irrevocable will not be transfers of property for
purposes of section 83 of the Code, or any successor provision thereto, nor will
such transfers or irrevocability cause a currently taxable benefit to be
realized by a Trust Beneficiary pursuant to the "economic benefit" doctrine; and
(c) pursuant to section 451 of the Code, or any successor provision thereto,
amounts will be includible as compensation in the gross income of a Trust
Beneficiary in the taxable year or years in which such amounts are actually
distributed or made available to such Trust Beneficiary by the Trustee.

         12.2     Notwithstanding anything to the contrary contained in the
Plan, if the Trustee obtains an opinion of tax counsel selected by the Trustee
to the effect that based upon any of the following occurring after the date of
this Agreement:

         (a)      a change in the federal tax or revenue laws, (b) a decision in
         a controlling case, (c) a published ruling or similar announcement
         issued by the Internal Revenue Service, (d) a regulation issued by the
         Secretary of the Treasury, (e) a decision by a court of competent
         jurisdiction involving a Trust Beneficiary, or (f) a closing agreement
         made under section 7121 of the Code that is approved by the Internal
         Revenue Service and involves a Trust Beneficiary,

it is more likely than not that an amount is includible in the gross income of a
Trust Beneficiary in a taxable year that is prior to the taxable year or years
in which such amount would, but for this Section 12.2, otherwise actually be
distributed or made available to such Trust Beneficiary by the Trustee, then the
Trustee shall promptly distribute to each affected Trust Beneficiary an amount
equal to the amount determined to be includible in gross income in such prior
taxable year. The Trustee shall seek such an opinion of tax counsel if and only
if requested to do so by the Fiduciary.

         12.3     Notwithstanding anything to the contrary contained in the
Plan, if a Trust Beneficiary provides evidence satisfactory to the Trustee
demonstrating that, as a result of an assertion by the Internal Revenue Service,
a final nonappealable binding determination has been made with respect to a
taxable year of such Trust Beneficiary that an amount is includible in the gross
income of such Trust Beneficiary in a taxable year that is prior to the taxable
year in which such amount would, but for this Section 12.3, otherwise actually
be distributed or made available to such Trust Beneficiary by the Trustee, then
the Trustee shall promptly distribute to such Trust Beneficiary an amount equal
to such amount determined by the Internal Revenue Service to be includible in
gross income in such prior taxable year.

                                       12


                            XIII. GENERAL PROVISIONS

         13.1     The Company shall, at any time and from time to time, upon the
reasonable request of the Trustee, provide information, execute and deliver such
further instruments and do such further acts as may be necessary or proper to
effectuate the purposes of this Trust.

         13.2     Each Exhibit referred to in this Agreement shall become a part
of this Agreement and is expressly incorporated herein by reference.

         13.3     This Agreement sets forth the entire understanding of the
parties with respect to its subject matter and supersedes any and all prior
agreements, arrangements and understandings. This Agreement shall be binding
upon and inure to the benefit of the parties and their respective successors and
legal representatives.

         13.4     This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois, other than and without
reference to any provisions of such laws regarding choice of laws or conflict of
laws.

         13.5     In the event that any provision of this Agreement or the
application of any provision to any person or circumstances shall be determined
by a court of competent jurisdiction to be invalid or unenforceable to any
extent, the remainder of this Agreement, or the application of such provision to
persons or circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected, and each provision of this Agreement shall
be valid and enforced to the maximum extent permitted by law.

         13.6     (a)      The preamble to this Agreement shall be considered a
part of the agreement of the parties as if set forth in a section of this
Agreement.

                  (b)      The headings and table of contents contained in this
Agreement are solely for the purpose of reference, are not part of the agreement
of the parties and shall not in any way affect the meaning or interpretation of
this Agreement.

                  (c)      Unless otherwise noted, all section and article
references are to sections and articles of this Agreement.

                  (d)      Any reference to a provision of a statute, regulation
or rule shall also include any successor to such statute, regulation or rule.

         13.7     The right of any Trust Beneficiary to any benefit or to any
payment hereunder may not be anticipated, assigned (either at law or in equity),
alienated or subject to attachment, garnishment, levy, execution or other legal
or equitable process except as required by law. Any attempt by any Trust
Beneficiary to anticipate, alienate, assign, sell, transfer, pledge, encumber or
charge the same shall be void. The Trust assets shall not in any manner be
subject to the debts, contracts, liabilities, engagement or torts of any Trust
Beneficiary and payments hereunder shall not be considered an asset of the Trust
Beneficiary in the event of the insolvency or bankruptcy of such Trust
Beneficiary.

                                       13


         13.8     Each Participant is an intended beneficiary under this Trust,
and as an intended beneficiary shall be entitled to enforce all terms and
provisions with the same force and effect as if such person had been a party to
this Agreement.

         13.9     Notwithstanding any other provision, the parties' respective
rights and obligations under Section 13.8 and all releases and indemnities
provided in this Agreement shall survive any termination or expiration of this
Agreement.

         13.10    This Agreement may be executed in two or more counterparts,
each of which shall be considered an original agreement, but all of which
together shall constitute one agreement.

         13.11    The provisions in this Agreement regarding the Fiduciary
(including the last sentence of Section 10.1) shall become effective only as set
forth in the fiduciary services agreement described in Section 8.11(b). In the
absence of such fiduciary services agreement or prior to the effectiveness of
the Fiduciary's services as set forth in such agreement, the Company shall be
treated as the Fiduciary for all purposes of this Agreement.

                                  XIV. NOTICES

         14.1     For all purposes of this Agreement, any communication,
including without limitation, any notice, consent, report, demand or waiver
required or permitted to be given hereunder shall be in writing and, unless
otherwise provided in this Agreement, shall be deemed to have been duly given
when hand delivered or dispatched or transmitted by electronic facsimile (with
receipt thereof orally confirmed), or five business days after having been
mailed by United States registered or certified mail, return receipt requested,
postage prepaid, or three business days after having been dispatched by a
nationally recognized overnight courier service to the appropriate party at the
address specified below:

If to the Company, to:         Greyhound Lines, Inc.
                               15110 North Dallas Parkway, Suite 600
                               Dallas, Texas  75248
                               Attention:  General Counsel

If to the Trustee, to:         LaSalle National Bank
                               135 South LaSalle Street
                               Chicago, Illinois  60603
                               Attention:  Senior Vice President
                                                  Employee Benefits Group

If to a Participant, to:       the address of such Participant as listed next to
                               such Participant's name on Exhibit A hereto,

provided, however, that if any party or such party's successors shall have
designated a different address by notice to the other parties, then to the last
address so designated.

                                       14


         IN WITNESS WHEREOF, the Company and the Trustee caused this Agreement
to be executed on its behalf as of the date first above written.

Attested                                    GREYHOUND LINES, INC.

By: _______________________________         By:_________________________________

    Its: __________________________         Its: _______________________________

Attested                                    LASALLE NATIONAL BANK

By: _______________________________         By: ________________________________
                                                     William Kursar
    Its: __________________________             Its: Senior Vice President

                                       15


                                    Exhibit A



Employee               Address           Soc. Sec. No.
- --------               -------           -------------
                                   


                                       A-1



                                    Exhibit B

                                       B-1



                                    Exhibit C

                          Fiduciary Services Agreement

                                       C-1

EX-10.6

                                                                    EXHIBIT 10.6

                  SECOND AMENDED EXECUTIVE EMPLOYMENT AGREEMENT

         This SECOND AMENDED EXECUTIVE EMPLOYMENT AGREEMENT ("Agreement") dated
as of the 16th day of March, 1999, but effective as provided herein, by and
between GREYHOUND LINES, INC. (together with its successors, the "Company"),
LAIDLAW, INC. (together with its successors, the "Parent") and JOHN WERNER
HAUGSLAND (the "Executive").

         WHEREAS, the Executive has considerable experience, expertise and
training in management related to the types of services offered by the Company;
and

         WHEREAS, the Executive and the Company entered into a First Amended
Executive Employment Agreement (the "Prior Agreement"), which was effective May
15, 1995; and

         WHEREAS, pursuant to the Agreement and Plan of Merger dated as of
October 16, 1998 (the "Merger Agreement") by and among Parent, Laidlaw Transit
Acquisition Corp., a wholly-owned subsidiary of Parent, and the Company, as
amended, at the Effective Time of the Merger (the "Effective Time"), as defined
in the Merger Agreement, Laidlaw Transit Acquisition Corp. will be merged with
and into the Company, with the Company as the surviving entity (the "Merger");
and

         WHEREAS, the Company and Parent desire and intend to continue to employ
the Executive as the Executive Vice President and Chief Operating Officer of the
Company pursuant to the terms and conditions set forth in this Agreement; and

         WHEREAS, in view of the changes in the nature and scope of the duties
and responsibilities of the Executive that will occur as a result of the Merger,
the Company, Parent and the Executive desire to amend and restate certain of the
terms and conditions of the Executive's employment with the Company as set forth
in the Prior Agreement;

         WHEREAS, the Company, Parent and the Executive have read and understood
the terms and provisions set forth in this Agreement, and have been afforded a
reasonable opportunity to review this Agreement.

         NOW, THEREFORE, in consideration of the mutual promises and covenants
set forth in this Agreement, the Executive, Parent and the Company agree as
follows:

1.       COMPENSATION: During his employment pursuant to this Agreement, the
Company agrees to provide the Executive the following compensation:

         a.       BASE SALARY: From the Effective Time until changed as provided
in this section, the Company agrees to pay the Executive an annual salary of
$305,000.00 (the "Base Salary"), payable in at least equal monthly installments
in accordance with the Company's ordinary payroll policies and procedures for
executive compensation. The Company and the Executive acknowledge that during
the employment of the Executive pursuant to this Agreement, the



Executive's Base Salary will be subject to an annual review and adjustment by
the Board of Directors of the Company (the "Board of Directors") but, in no
event, will the Executive's annual Base Salary be less than the amount set forth
in this section.

         b.       BUSINESS EXPENSES: The Company agrees that the Executive shall
be entitled to reimbursement by the Company for all reasonable expenses
(including first class air travel) that the Executive may incur in the
performance of his duties and obligations under this Agreement, consistent with
the Company's policies for documentation, reimbursement and payment.

         c.       INCENTIVE BONUS: The Company agrees that the Executive shall
be entitled to additional bonus compensation (the "Incentive Compensation") on
terms not less favorable than those applicable to other officers of the Company
(other than the President and Chief Executive Officer of the Company). For the
year ending August 31, 1999, Executive's Incentive Compensation shall be
determined on the same basis as prior years, except that such Incentive
Compensation shall be pro-rated to approximately reflect the partial year. For
subsequent years, the Executive shall be eligible for annual incentive bonus
consideration under the successor to the 1998 Management Incentive Plan for the
duration of this Agreement with an annual Target Award of at least 45% of Base
Salary and a maximum award of 90% of Base Salary for each respective year.

         d.       EMPLOYEE BENEFITS: The parties acknowledge and agree that
certain employee benefits will be provided to the Executive incident to his
employment as Chief Operating Officer of the Company. Except as specifically
modified by this section, these employee benefits shall be governed by the
applicable plan documents, and the Executive shall be entitled to participate in
all benefits provided to officers of the Company on terms not less favorable
than to other officers of the Company (other than the President and Chief
Executive Officer of the Company). These employee benefits shall continue
without amendment or change, except changes that increase compensation, for a
period of not less than 12 months following the Effective Time. Thereafter,
benefits may be amended, terminated or replaced, provided that the employee
benefits provided to the Executive shall provide, in the aggregate, not less
than a substantially equivalent level of benefits to the Executive. The Company
agrees, however, that to the extent not prohibited by law, the Company will
provide Executive the benefits listed in this Subsection and that the following
provisions shall apply to any employee benefits provided by the Company:

                  (1)      SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN: For purposes
of the Greyhound Lines, Inc. Supplemental Executive Retirement Plan (the
"SERP"), all of the Executive's prior service with Greyhound Lines, Inc. will be
credited for all purposes under the SERP, the Executive shall continue to be a
designated person eligible for coverage and benefits under the SERP, and the
Executive shall be entitled to an annual contribution of 20% of Executive's
annual Base Salary. At the Effective Time, to the extent not theretofore in
effect, the Company shall establish and fully fund, at the Company's option, in
cash, a letter of credit of Parent, or any combination thereof, a so-called
"rabbi" trust for the benefit of the Executive to secure the payment of benefits
provided to the Executive under this Subsection. Not less frequently than
annually thereafter, the Company shall contribute sufficient additional assets
to such trust to fund any increase in the liabilities of the SERP attributable
to the Executive.

                                        2


                  (2)      AUTOMOBILE ALLOWANCE: During the term of his
employment with the Company, the Executive shall be entitled to an automobile
allowance, of not less than $1,000.00 per month.

                  (3)      LIFE INSURANCE: At all times during the term of this
Agreement, Executive will receive life insurance coverage as provided by the
Company on terms not less favorable than that provided to other executives of
the Company. In addition to any life insurance provided pursuant to the
preceding sentence, the Executive will be provided with Company-paid life
insurance which will provide death benefits in the event of his death in an
amount of at least $1,500,000.00 payable to the beneficiary or beneficiaries
named by the Executive. The Company shall have the right to purchase insurance
to fund its obligations to the Executive under this section; provided, however,
that any insurance company or companies selected by the Company to fund its
obligations under this Subsection must be the company or companies that
underwrite life insurance benefits covering other officers of the Company.

                  (4)      PHYSICAL EXAMINATIONS: At least once a year, the
Executive will be entitled to a Company-paid physical examination at a clinic or
doctor mutually acceptable to the Executive and the Company.

                  (5)      COUNTY CLUB DUES: The Company agrees to pay all
initiation fees and monthly membership dues on behalf of the Executive at a
country club mutually selected by the Executive and the Company.

                  (6)      ESTATE, TAX AND FINANCIAL PLANNING: During the term
of his employment with the Company, the Executive shall be entitled to $15,000
per year for estate, tax and financial planning. Such reimbursement payments
shall be paid by the Company within a reasonable time after such expenses are
incurred by the Executive.

                  (7)      LONG TERM DISABILITY: The Company will provide
Executive long-term disability coverage and benefits on terms which are not less
favorable than that provided to other executives of the Company but which will
provide an annual disability benefit to the Executive of at least fifty percent
(50%) of his expected annual Base Salary, payable for the year during which
Executive was disabled.

                  (8)      VACATION: The Company will provide vacation to the
Executive on terms not less favorable than that provided to executive officers
of the Company. For purposes of determining the amount of vacation, Executive's
prior service with Greyhound Lines, Inc. (or any affiliate of Greyhound Lines,
Inc.) shall be deemed to be service with the Company.

                  (9)      OTHER BENEFITS: For purposes of any and all other
benefits provided by the Company to its Chief Operating Officer, the Executive
shall be eligible for such benefits to the same extent Executive was eligible
for such benefits immediately prior to the Effective Time. Additionally, for
purposes of determining eligibility, funding or vesting with respect to any
other benefits, the Executive's prior service with Greyhound Lines, Inc. shall
be deemed to be prior service with the Company.

                                        3


2.       DURATION: The duration of this Agreement shall be defined and
determined as follows:

         a.       INITIAL TERM: This Agreement shall continue in full force and
effect for three (3) years (the "Initial Term"), commencing on the Effective
Time and expiring on the third anniversary thereof (the "Expiration Date"),
unless terminated prior to the Expiration Date in accordance with Subsection
2(c).

         b.       RENEWAL: Notwithstanding Subsection 2(a), this Agreement shall
automatically renew for a period of two (2) years (the "Renewal Term") on the
Expiration Date unless either party gives effective written notice to the other
party of the party's intention not to renew this Agreement ("Notice of
Non-Renewal"), with or without Good Cause, at least ninety (90) days prior to
the Expiration Date. At the expiration of each Renewal Term, this Agreement
shall automatically renew for another two (2) year Renewal Term, unless and
until either party terminates the Agreement in accordance with Subsection 2(c).
If any Change of Control (as hereafter defined) occurs on or after the first
anniversary of the Effective Time, this Agreement will be deemed to have renewed
for a two (2) year period, and in such event, the Expiration Date(s) will occur
every two years from the date of such Change of Control.

         c.       TERMINATION AND NON-RENEWAL: This Agreement may be terminated
as follows:

                  (1)      DEATH: The Agreement will terminate in the event of
the Executive's death, provided, however, that the Executive's estate shall be
paid (a) the Base Salary through the date of death and (b) a pro rata portion of
the entire Annual Target Award of Incentive Compensation (based upon the
Executive's annual Base Salary), payable when the Incentive Compensation
payments are made to other executives of the Company. The pro rata share will be
calculated by the month of the date of death. In addition, the Executive's
designated beneficiaries shall be entitled to receive any life insurance
benefits provided to the Executive in accordance with the applicable plan
documents and/or insurance policies governing such benefits, including but not
limited to, the Life Insurance benefits set forth in Subsection l(d)(3) of this
Agreement.

                  (2)      DISABILITY: The Company shall be entitled to
terminate this Agreement in the event the Executive becomes "disabled," as that
term is defined in the Greyhound Lines, Inc. Employee Long Term Disability Plan
("the LTD Plan"), and is unable to perform the essential functions of his
position, with reasonable accommodation, for a period of one hundred eighty
(180) consecutive days. The Executive will be paid his Base Salary through the
expiration of such one hundred eighty day period and a pro rata portion of the
entire Annual Target Award of Incentive Compensation (based upon the Executive's
annual Base Salary) in accordance with the previous Subsection.

                                        4


                  (3)      GOOD CAUSE:

                           (a)      The Company shall be entitled to terminate
this Agreement by providing the Executive with written notice that the Company
is terminating the Agreement for Good Cause, as defined herein ("Notice of
Termination for Good Cause") at any time during his employment.

                           (b)      The Company shall be entitled to terminate
this Agreement by communicating Notice of Non-Renewal for Good Cause, as defined
herein, at least ninety (90) days prior to the Expiration Date, or at least
ninety (90) days prior to the expiration of any Renewal Tenn or Extension.

                           (c)      For purposes of this Agreement, "Good Cause"
shall be defined as follows:

                                    i)       Any act or omission constituting
                           fraud under the law of the State of Texas; or

                                    ii)      Conviction of, or a plea of nolo
                           contendere to, a felony; or

                                    iii)     Use of illegal drugs; or

                                    iv)      Embezzlement of Company property or
                           funds; or

                                    v)       The material breach of any
                           provision of this Agreement; or continued gross
                           neglect of his duties under this Agreement; or
                           unauthorized competition with the Company during his
                           employment pursuant to this Agreement; or
                           unauthorized use of Confidential Information (as
                           defined in Section 9); which, in any event, is
                           materially detrimental to the Company;

                           (d)      In the event the Company believes "Good
Cause" exists for terminating this Agreement pursuant to Subsection (c)(v), the
Company shall be required to give the Executive written Notice of the acts or
omissions constituting "Good Cause" ("Cause Notice").

                           (e)      No Notice of Termination for Good Cause or
Notice of Non-Renewal for Good Cause pursuant to Subsection (c)(v) shall be
communicated by the Company unless and until the Executive fails to cure such
acts or omissions within thirty (30) days after receipt of the Cause Notice.

                           (f)      In the event the Company communicates a
Notice of Termination For Good Cause or Notice of Non-Renewal for Good Cause
pursuant to this section, the Executive shall have the right to a hearing before
the President/Chief Executive Officer, on a date determined by the
President/Chief Executive Officer not later than thirty (30) days after the date
such Notice is received, to contest the alleged "Good Cause" for the Notice of
Termination

                                        5


or Notice of Non-Renewal. The President/Chief Executive Officer shall provide
the Executive with written notice of his decision resolving any contest under
this section, and no termination or non-renewal of this Agreement shall be
deemed to be effective until such written notice is received by the Executive.
In the event that the President/Chief Executive Officer affirms the "Good Cause"
for termination or non-renewal, the Executive shall have the right to the
Dispute Resolution procedures set forth in Section 10.

                  (4)      WITHOUT GOOD CAUSE:

                           (a)      The Company shall be entitled to terminate
the Executive's employment under this Agreement by providing a written Notice of
Termination "Without Good Cause" at any time during his employment, or by
providing a written Notice of Non-Renewal "Without Good Cause," as defined
herein, at least ninety (90) days prior to the Expiration Date or at least
ninety (90) days prior to the expiration of any Renewal Term or Extension.
Provided, however, that in the event of any Notice of Termination Without Good
Cause or Notice of Non-Renewal Without Good Cause, the Company shall be required
to pay Severance Pay in accordance with the Severance provisions in Section 5.

                           (b)      Any termination of employment or non-renewal
of this Agreement which is not for "Good Cause," as defined above in Subsection
2(c)(3), or which does not result from the death of the Executive, or the
disability of the Executive, shall be deemed to be a termination or non-renewal
"Without Good Cause." Furthermore, in the event that the Company communicates a
Notice of Termination for Good Cause or a Notice of Non-Renewal for Good Cause,
and either the President/Chief Executive Officer (under Subsection 2(c)(3)(f))
or an arbitration or a final, non-appealable judicial proceeding (under Section
10) determine that no Good Cause exists or existed for the Notice of Termination
or Notice of Non-Renewal that was originally communicated, then such Notice of
Termination or Notice of Non-Renewal shall be deemed to have been communication
of a Notice of Termination Without Good Cause or Notice of Non-Renewal Without
Good Cause, as appropriate, for all purposes under this Agreement.

                  (5)      RESIGNATION: The Executive shall be entitled to
terminate his employment under this Agreement by providing the Company with a
written Notice of Resignation at least ninety (90) days prior to his intended
resignation date, subject to the following provisions:

                           (a)      RESIGNATION FOR GOOD REASON: The Executive
shall have the right to resign for any "Good Reason," as defined herein, and
such resignation shall be deemed to be a termination "Without Good Cause" as
defined in Subsection 2(c)(4) for all purposes under this Agreement, including
the Change of Control provisions set forth in Section 4 and the Severance
provisions set forth in Section 5. For purposes of this Section, the term "Good
Reason" shall be defined as:

                                    i)       The Company's failure to perform
                           any material provision of this Agreement; or

                                       6


                                    ii)      Any material changes by the Company
                           or the Board of Directors in the authority, duties,
                           or responsibilities of the Executive under this
                           Agreement, without the written consent of the
                           Executive, other than a termination or non-renewal
                           for "Good Cause," as defined herein; or

                                    iii)     Any request by the Board of
                           Directors that the Executive perform, assist, abet or
                           approve any act which is or could be construed to be
                           illegal under any federal, state or local law; or

                                    iv)      Any requirement by the Board of
                           Directors that the Executive relocate from the
                           Dallas, Texas, metropolitan area without his consent;
                           or

                                    v)       In the event the Company fails to
                           maintain adequate liability insurance coverage in
                           accordance with Section 8 of this Agreement, without
                           the written consent of the Executive.

                           (b)      OPPORTUNITY TO CURE: In the event he
believes "Good Reason" exists for his resignation, the Executive shall be
required to give the President/Chief Executive Officer of the Company written
notice of the acts or omissions constituting Good Reason, and no Notice of
Resignation with Good Reason shall be communicated to the Company unless and
until the Company fails to cure such acts or omissions within thirty (30) days
after receipt of the notice described in this sentence. Any Notice of
Resignation with Good Reason shall be deemed to be effective immediately, and no
other notice or opportunity to cure shall be required.

                           (c)      RESIGNATION WITHOUT GOOD REASON: Any
resignation by the Executive for any reason other than "Good Reason," as defined
above, shall be deemed to be a resignation "Without Good Reason." In the event
of a Resignation Without Good Reason, the Change of Control provisions in
Section 4 (except during the thirteenth month following the Change of Control as
provided in Section 4) and the Severance provisions in Section 5 shall be
inapplicable.

3.       RESPONSIBILITIES: The Executive and the Company acknowledge and agree
that the Executive shall be employed as Executive Vice President and Chief
Operating Officer of the Company. Executive's responsibilities shall include the
inter-city coach, coach charter and line haul and any other related business
thereto of Parent and its subsidiaries in the United States. The Executive
covenants and agrees that he will faithfully devote his best efforts and full
time, attention and skill to the business of the Company as is necessary to
perform his obligations under this Agreement. The Executive shall report to the
President and Chief Executive Officer of the Company. The Executive shall have
or perform no other business responsibilities or obligations during the term of
this Agreement without the prior written approval of the President of the
Company.

4.       CHANGE OF CONTROL: The parties acknowledge that the Executive has
agreed to continue in the position of Executive Vice President and Chief
Operating Officer of the Company and to enter into this Agreement based upon his
confidence in the current shareholder

                                        7


of the Company, the support of the Board of Directors, and the continued
execution of the current business strategy of the Company. Accordingly, if the
Company should undergo a "Change of Control" while the Executive is employed by
the Company or any parent or subsidiary corporation of the Company, or in the
case of Section 4(d), in all events, the parties agree as follows:

         a.       VESTING OF STOCK INCENTIVES AND AWARDS: At the Effective Time
and in the event of a Change of Control, as defined in this section, all Stock
Incentives and Awards provided in Section 6 of this Agreement shall immediately
become vested and exercisable, all other equity incentive awards held by the
Executive shall become fully vested and all other stock options held by the
Executive shall become fully exercisable, effective at the Effective Time and on
the date of the Change of Control, as the case may be, or at such other time as
is necessary to permit the Executive to be treated with respect to vesting and
exercisability no less favorably than other shareholders.

         b.       COMPENSATION: In the event that the employment of the
Executive is terminated:

                  (1)      at any time within twenty four (24) months after the
date of a Change of Control, as defined in this section, by: (i) the Company
communicating a Notice of Termination Without Good Cause; (ii) the Company
communicating a Notice of Non-Renewal Without Good Cause, or (iii) the Executive
communicating a Notice of Resignation for Good Reason; or

                  (2)      by the resignation of the Executive, whether with or
without Good Reason, within thirty (30) days of the first Anniversary Date
(i.e., one year from the date) of a Change of Control,

the Company agrees to pay to the Executive a lump sum cash payment equal to
three (3) times the sum of: (x) an amount equal to the Executive's then current,
annualized Base Salary, and (y) the greater of: (a) the applicable Annual Payout
of Incentive Compensation paid for the Plan Year immediately prior to the
termination, or (b) the full, non-pro rata Annual Target Award for Incentive
Compensation based upon Executive's annual Base Salary for the Plan Year in
which the termination occurs, which payment shall be paid within thirty (30)
days after the effective date of termination, non-renewal or resignation. The
Company further agrees to pay benefits to the Executive as provided in
Subsection 5(d) for a period of thirty-six (36) months.

         c.       DEFINITIONS: For purposes of this Agreement and
notwithstanding anything in this Agreement to the contrary, a "Change of
Control" shall be deemed to exist in the event that any of the following occurs:

                  (1)      Parent ceases to be the beneficial owner, directly or
indirectly, of 51% or more of the voting shares of the Company or Parent and its
subsidiaries sell or cause to be sold all or substantially all of the assets of
the Company; or

                  (2)      Any individual, or incorporated or unincorporated
entity or group of the foregoing acting jointly and in concert acquires
beneficial ownership, directly or indirectly, of 30% or more of Parent's voting
shares; or

                                        8


                  (3)      A majority of the individuals who serve as directors
of Parent at the commencement of any 18 month period are replaced other than by
replacement directors who became directors at the initiative of management or
pursuant to a management proxy solicitation.

For the purpose of this Agreement, the acquisition of the Company by Parent is
not a Change of Control.

For purposes of this Subsection, a sale of all or substantially all of the
assets of the Company shall be deemed to occur if any corporation, person or
group acting in concert (a "Person") as described in Subsection 14(d)(2) of the
Securities Exchange Act of 1934, as amended, acquires (or during the 12-month
period on the date of the most recent acquisition by such Person, has acquired)
gross assets of the Company that have an aggregate fair market value equal to
50% of the fair market value of all of the gross assets of the Company
immediately prior to such acquisition(s).

         d.       CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.

                  (1)      Anything in this Agreement to the contrary
notwithstanding, but subject to Section 4(d)(8), in the event that it shall be
determined (as hereafter provided) that any payment (other than the Gross-Up
payments provided for in this Section 4(d)) or distribution by Parent, the
Company or any of their affiliates to or for the benefit of the Executive,
whether paid or payable or distributed or distributable pursuant to the terms of
this Agreement or otherwise pursuant to or by reason of any other agreement,
policy, plan, program or arrangement, including without limitation any stock
option, performance share, performance unit, stock appreciation right or similar
right, or the lapse or termination of any restriction on or the vesting or
exercisability of any of the foregoing (a "Payment"), would be subject to the
excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as
amended (the "Code") (or any successor provision thereto) by reason of being
considered "contingent on a change in ownership or control" of the Company or of
Parent, within the meaning of Section 280G of the Code (or any successor
provision thereto) or to any similar tax imposed by state or local law, or any
interest or penalties with respect to such tax (such tax or taxes, together with
any such interest and penalties, being hereafter collectively referred to as the
"Excise Tax"), then the Executive shall be entitled to receive an additional
payment or payments (collectively, a "Gross-Up Payment"); provided, however,
that no Gross-up Payment shall be made with respect to the Excise Tax, if any,
attributable to (a) any incentive stock option, as defined by Section 422 of the
Code ("ISO") granted prior to the initial execution of the Original Agreement
(as such term is defined in the Prior Agreement), or (b) any stock appreciation
or similar right, whether or not limited, granted in tandem with any ISO
described in clause (a). The Gross-Up Payment shall be in an amount such that,
after payment by the Executive of all taxes (including any interest or penalties
imposed with respect to such taxes), including any Excise Tax imposed upon the
Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal
to the Excise Tax imposed upon the Payment.

                                        9


                  (2)      Subject to the provisions of Section 4(d)(6), all
determinations required to be made under this Section 4(d), including whether an
Excise Tax is payable by the Executive and the amount of such Excise Tax and
whether a Gross-Up Payment is required to be paid by the Company to the
Executive and the amount of such Gross-Up Payment, if any, shall be made by a
nationally recognized accounting firm (the "Accounting Firm") selected by the
Executive in his sole discretion. The Executive shall direct the Accounting Firm
to submit its determination and detailed supporting calculations to both the
Company and the Executive within 30 calendar days after the date of termination
of the Executive's employment, if applicable, and any such other time or times
as may be requested by the Company or the Executive. If the Accounting Firm
determines that any Excise Tax is payable by the Executive, the Company shall
pay the required Gross-Up Payment to the Executive within five business days
after receipt of such determination and calculations with respect to any Payment
to the Executive. If the Accounting Firm determines that no Excise Tax is
payable by the Executive, it shall, at the same time as it makes such
determination, furnish the Company and the Executive an opinion that the
Executive has substantial authority not to report any Excise Tax on his federal,
state or local income or other tax return. As a result of the uncertainty in the
application of Section 4999 of the Code (or any successor provision thereto) and
the possibility of similar uncertainty regarding applicable state or local tax
law at the time of any determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments which will not have been made by the Company
should have been made (an "Underpayment"), consistent with the calculations
required to be made hereunder. In the event that the Company exhausts or fails
to pursue its remedies pursuant to Section 4(d)(6) and the Executive thereafter
is required to make a payment of any Excise Tax, the Executive shall direct the
Accounting Firm to determine the amount of the Underpayment that has occurred
and to submit its determination and detailed supporting calculations to both the
Company and the Executive as promptly as possible. Any such Underpayment shall
be promptly paid by the Company to, or for the benefit of, the Executive within
five business days after receipt of such determination and calculations.

                  (3)      The Company and the Executive shall each provide the
Accounting Firm access to and copies of any books, records and documents in the
possession of the Company or the Executive, as the case may be, reasonably
requested by the Accounting Firm, and otherwise cooperate with the Accounting
Firm in connection with the preparation and issuance of the determinations and
calculations contemplated by Section 4(d)(2). Any determination by the
Accounting Firm as to the amount of the Gross-Up Payment shall be binding upon
the Company and the Executive.

                  (4)      The federal, state and local income or other tax
returns filed by the Executive shall be prepared and filed on a consistent basis
with the determination of the Accounting Firm with respect to the Excise Tax
payable by the Executive. The Executive shall make proper payment of the amount
of any Excise Tax, and at the request of the Company, provide to the Company
true and correct copies (with any amendments) of his federal income tax return
as filed with the Internal Revenue Service and corresponding state and local tax
returns, if relevant, as filed with the applicable taxing authority, and such
other documents reasonably requested by the Company, evidencing such payment. If
prior to the filing of the Executive's federal income tax return, or
corresponding state or local tax return, if relevant, the Accounting

                                       10


Firm determines that the amount of the Gross-Up Payment should be reduced, the
Executive shall within five business days pay to the Company the amount of such
reduction.

                  (5)      The fees and expenses of the Accounting Firm for its
services in connection with the determinations and calculations contemplated by
Section 4(d)(2) shall be borne by the Company. If such fees and expenses are
initially paid by the Executive, the Company shall reimburse the Executive the
full amount of such fees and expenses within five business days after receipt
from the Executive of a statement therefor and reasonable evidence of his
payment thereof.

                  (6)      The Executive shall notify the Company in writing of
any claim by the Internal Revenue Service or any other taxing authority that, if
successful, would require the payment by the Company of a Gross-Up Payment. Such
notification shall be given as promptly as practicable but no later than 10
business days after the Executive actually receives notice of such claim and the
Executive shall further apprise the Company of the nature of such claim and the
date on which such claim is requested to be paid (in each case, to the extent
known by the Executive). The Executive shall not pay such claim prior to the
earlier of (a) the expiration of the 30-calendar-day period following the date
on which he gives such notice to the Company and (b) the date that any payment
of amount with respect to such claim is due. If the Company notifies the
Executive in writing prior to the expiration of such period that it desires to
contest such claim, the Executive shall:

                           (i)      provide the Company with any written records
                  or documents in his possession relating to such claim
                  reasonably requested by the Company;

                           (ii)     take such action in connection with
                  contesting such claim as the Company shall reasonably request
                  in writing from time to time, including without limitation
                  accepting legal representation with respect to such claim by
                  an attorney competent in respect of the subject matter and
                  reasonably selected by the Company;

                           (iii)    cooperate with the Company in good faith in
                  order effectively to contest such claim; and

                           (iv)     permit the Company to participate in any
                  proceedings relating to such claim;

provided, however, that the Company shall bear and pay directly all costs and
expenses (including interest and penalties) incurred in connection with such
contest and shall indemnify and hold harmless the Executive, on an after-tax
basis, for and against any Excise Tax or income tax, including interest and
penalties with respect thereto, imposed as a result of such representation and
payment of costs and expenses. Without limiting the foregoing provisions of this
Section 4(d)(6), the Company shall control all proceedings taken in connection
with the contest of any claim contemplated by this Section 4(d)(6) and, at its
sole option, may pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect of
such claim (provided, however, that the Executive may participate therein

                                       11


at his own cost and expense) and may, at its option, either direct the Executive
to pay the tax claimed and sue for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to pay
the tax claimed and sue for a refund, the Company shall advance the amount of
such payment to the Executive on an interest-free basis and shall indemnify and
hold the Executive harmless, on an after-tax basis, from any Excise Tax or
income or other tax, including interest or penalties with respect thereto,
imposed with respect to such advance; and provided further, however, that any
extension of the statute of limitations relating to payment of taxes for the
taxable year of the Executive with respect to which the contested amount is
claimed to be due is limited solely to such contested amount. Furthermore, the
Company's control of any such contested claim shall be limited to issues with
respect to which a Gross-Up Payment would be payable hereunder and the Executive
shall be entitled to settle or contest, as the case may be, any other issue
raised by the Internal Revenue Service or any other taxing authority.

                  (7)      If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 4(d)(6), the Executive receives any
refund with respect to such claim, the Executive shall (subject to the Company's
complying with the requirements of Section 4(d)(6)) promptly pay to the Company
the amount of such refund (together with any interest paid or credited thereon
after any taxes applicable thereto). If, after the receipt by the Executive of
an amount advanced by the Company pursuant to Section 4(d)(6), a determination
is made that the Executive shall not be entitled to any refund with respect to
such claim and the Company does not notify the Executive in writing of its
intent to contest such denial or refund prior to the expiration of 30 calendar
days after such determination, then such advance shall be forgiven and shall not
be required to be repaid and the amount of any such advance shall offset, to the
extent thereof, the amount of Gross-Up Payment required to be paid by the
Company to the Executive pursuant to this Section 4(d).

                  (8)      Notwithstanding any provision of this Agreement to
the contrary, if (a) but for this sentence, the Company would be obligated to
make a Gross-Up Payment to the Executive, (b) the aggregate "present value" of
the "parachute payments" to be paid or provided to the Executive under this
Agreement or otherwise does not exceed 1.15 multiplied by three times the
Executive's "base amount," and (c) but for this sentence, the net after-tax
benefit to the Executive of the Gross-Up Payment would not exceed $50,000
(taking into account both income taxes and any Excise Tax), then the payments
and benefits to be paid or provided under this Agreement will be reduced to the
minimum extent necessary (but in no event to less than zero) so that no portion
of any payment or benefit to the Executive, as so reduced, constitutes an
"excess parachute payment." For purposes of this Section 4(d)(8), the terms
"excess parachute payment," "present value," "parachute payment," and "base
amount" will have the meanings assigned to them by Section 280G of the Code. The
determination of whether any reduction in such payments or benefits to be
provided under this Agreement is required pursuant to the preceding sentence
will be made at the expense of the Company, if requested by the Executive or the
Company, by the Accounting Firm. The fact that the Executive's right to payments
or benefits may be reduced by reason of the limitations contained in this
Section 4(d)(8) will not of itself limit or otherwise affect any other rights of
the Executive other than pursuant to this Agreement.

                                       12


In the event that any payment or benefit intended to be provided under this
Agreement or otherwise is required to be reduced pursuant to this Section
4(d)(8), the Executive will be entitled to designate the payments and/or
benefits to be so reduced in order to give effect to this Section 4(d)(8). The
Company will provide the Executive with all information reasonably requested by
the Executive to permit the Executive to make such designation. In the event
that the Executive fails to make such designation within 10 business days of the
date of termination of the Executive's employment, the Company may effect such
reduction in any manner it deems appropriate.

5.       SEVERANCE: Severance shall be paid as follows:

         a.       NON-RENEWAL WITHOUT GOOD CAUSE: In the event that the
Agreement is not renewed by the Company (except where the renewal is for Good
Cause), the Company shall pay the severance required by Subsection 5(b) in
accordance with Subsection 5(c) and continue the benefits as required by
Subsection 5(d).

         b.       RESIGNATION FOR GOOD REASON OR TERMINATION WITHOUT GOOD CAUSE:
In the event the Company terminates this Agreement without "Good Cause," as
defined in Subsection 2(c)(3), or the Executive resigns for "Good Reason," the
Executive shall be entitled to receive a lump sum payment equal to three (3)
times the sum of: (i) an amount equal to his then current, annualized Base
Salary, and (ii) the greater of: (x) the applicable Annual Payout of Incentive
Compensation paid for the Plan Year immediately prior to the termination, or (y)
the full non-pro rata Annual Target Award for Incentive Compensation based upon
Executive's annual Base Salary for the Plan Year in which the termination
occurs.

         c.       TERMS OF PAYMENT: Severance Pay required pursuant to this
section shall be payable in cash in full within thirty (30) days after the
termination date, non-renewal date or resignation date of the Executive's
employment.

         d.       CONTINUATION OF BENEFITS: In the event of a Non-Renewal
Without Good Cause or a Termination Without Good Cause or a Resignation For Good
Reason, the Company agrees to continue any and all benefits as provided in the
Greyhound Lines, Inc. Medical Plan and Subsections 1(d)(2) through (8) of this
Agreement, as modified pursuant to the terms of Subsection l(d), for twenty-four
(24) months after the effective date of termination, non-renewal or resignation.
Additionally, Executive shall be permitted to continue participation in the
benefits provided in Subsection 1(d)(1) to the extent permitted by law so as not
to cause disqualification of the 401 k Plan and 1(d)(3) without further Company
contributions, except earnings on contributions made prior to termination and
except contributions the Company is required to make to ensure that such
benefits are fully funded for service prior to termination.

         e.       EXCEPTIONS: Severance Pay shall not be payable under this
section in any of the following circumstances:

                  (1)      In the event that this Agreement is terminated as a
result of the death or disability of the Executive, as provided in Subsections
2(c)(1)-(2); or

                                       13


                  (2)      In the event that this Agreement is terminated
pursuant to a Notice of Termination For Good Cause or a Notice of Non-Renewal
for Good Cause communicated by the Company, as provided in Subsection 2(c)(3),
and such termination or non-renewal is affirmed by both the President/Chief
Executive Officer (if applicable), and by the Dispute Resolution procedures set
forth in Section 10; or

                  (3)      In the event the provisions of Section 4 are
applicable as a result of a "Change of Control" having occurred, and the
payments provided for in Section 4 are paid by the Company; or

                  (4)      In the event that the Executive communicates Notice
of Resignation Without Good Reason as defined in Subsection 2(c)(5).

         f.       EXCLUSIVITY: The Company and the Executive acknowledge and
agree that the Severance Payments required under this section are intended to be
exclusive and to supersede any severance pay plans or policies adopted by the
Company and that the Executive shall not be entitled to any additional severance
compensation under any other severance plan or policy adopted by the Company.

         g.       MITIGATION: The payment of the severance compensation by the
Company to the Executive in accordance with Sections 4 and 5 of this Agreement
is hereby acknowledged by the Company to be reasonable, and the Executive will
not be required to mitigate the amount of any payment provided for in this
Agreement by seeking other employment or otherwise, nor will any profits,
income, earnings or other benefits from any source whatsoever create any
mitigation, offset, reduction or any other obligation on the part of the
Executive hereunder or otherwise.

6.       STOCK INCENTIVES AND AWARDS: In addition to the other compensation set
forth in this Agreement and in addition to stock incentives and awards that were
granted under the terms of the Original Agreement (as such term is defined in
the Prior Agreement), Executive shall be entitled to participate in such stock
incentives and awards plans on terms not less favorable than to other officers
and directors of the Company (except for the President and Chief Executive
Officer of the Company), except that Parent may provide for additional benefits,
incentives, or awards to Executive and except that the following shall apply to
any options granted to Executive after the Effective Time:

         a.       DEATH AND DISABILITY: If Executive dies or becomes disabled
during the term of this Agreement, (1) all unvested options as of the date of
such death or disability shall vest immediately; and (2) Executive (or his legal
representative or Estate) may exercise such options in accordance with the
exercise period prescribed in the stock incentive and award plan or twelve (12)
months from such death or disability, whichever is longer.

         b.       RETIREMENT: If Executive retires (as defined in the 401 k
plan, except that, for purposes of this Section, the service requirement will be
modified to be no more than ten (10) years and the age requirement will be no
more than age 55), (1) all unvested options as of the date of such retirement
shall vest immediately; and (2) Executive (or his Estate) may exercise

                                       14


such options in accordance with the exercise period prescribed in the stock
incentive and award plan or thirty-six (36) months, whichever is longer.

Further, notwithstanding anything to the contrary herein, nothing in this
Agreement will affect to the Executive's disadvantage any non-qualified stock
incentive and awards previously granted to Executive, whether under the Original
Agreement between Executive and the Company or otherwise.

7.       SUCCESSORS AND ASSIGNS: The parties acknowledge and agree that this
Agreement may not be assigned by either party without the written consent of the
other party. In the event of a "Change of Control" as defined in Subsection
4(c), the Company shall be entitled to assign this Agreement to any successor or
assignee; provided, however, that such assignment shall not or be construed to,
in any way whatsoever, release, limit or excuse the Company from the performance
of its obligations and the payment of its liabilities under this Agreement,
regardless of whether such obligations or liabilities accrued or accrue before,
after or as a result of such assignment, and regardless of whether such
obligations or liabilities are or were assumed by any successor or assignee. In
the event of the Executive's death, this Agreement shall be enforceable by the
Executive's estate, executors or legal representatives, but only to the extent
that such persons may collect any compensation (including stock incentives and
awards) due to the Executive under this Agreement.

8.       INDEMNIFICATION: During and after the employment of the Executive
pursuant to this Agreement, the Company shall indemnify the Executive against
all judgments, penalties, fines, assessments, losses, amounts paid in settlement
and reasonable expenses (including, but not limited to, attorneys' fees) for
which the Executive may become liable as a result of his performance of his
duties and responsibilities pursuant to this Agreement and shall advance and pay
any expenses incurred in defending such claims, to the fullest extent
permissible under the laws of the State of Delaware. In addition, the Company
agrees to purchase liability insurance for any such judgments, penalties, fines,
assessments, losses, amounts paid in settlement and reasonable expenses
(including, but not limited to, attorneys' fees) for which the Executive may
become liable as a result of his performance of his duties and responsibilities
pursuant to this Agreement in an amount not less than the amount of director and
officer liability insurance in effect at the Effective Time, and consistent with
coverage provided to other officers of the Company.

9.       NON-COMPETITION AND NON-DISCLOSURE: The Company and the Executive agree
as follows:

         a.       During the term of this Agreement, the Company agrees that it
will disclose to Executive Confidential Information, as defined in this section,
to the extent necessary for Executive to carry out his obligations to the
Company. During and after his employment by the Company, the Executive agrees
that he shall not directly or indirectly disclose any Confidential Information,
as defined in this section, unless such disclosure is: (i) to an employee or a
member of the Board of Directors of, Parent, the Company or its subsidiaries; or
(ii) to a person to whom disclosure is reasonably necessary or appropriate in
connection with the performance of his

                                       15


duties as an executive of the Company; or (iii) authorized in writing by the
Board of Directors; or (iv) required by law.

         b.       In the event that Executive's employment under this Agreement
is terminated for any reason, the Executive agrees that he shall promptly return
all records, files, documents, materials and copies relating to the business of
the Company or its subsidiaries which came into the possession of the Executive
during his employment pursuant to this Agreement; provided, however, that
nothing in this section shall be construed as any limitation on the Executive's
right to retain any documents or other information which was in the possession
of the Executive prior to the Effective Date of the Original Agreement (as such
terms are defined in the Prior Agreement).

         c.       For purposes of this Agreement, the term "Confidential
Information" shall be defined as any information relating to the business of the
Company or its subsidiaries which is not generally available to the public and
which the Company takes affirmative steps to maintain as confidential. The term
shall not include any information that the Executive was aware of prior to May
15, 1995, information that is a matter of any public record, information
contained in any document filed or submitted to any governmental entity, any
information that is common knowledge in any industry in which the Company does
business, any information that has previously been made available to persons who
are not employees of the Company or any information that is known to the
Company's competitors.

         d.       Both the Company and the Executive recognize that in his
employment at the Company, the Executive will be provided with Confidential
Information, as defined above. Both the Company and the Executive recognize that
the disclosure of such Confidential Information to a competitor of the Company
could place the Company at a competitive disadvantage. Accordingly, in
consideration of the Company agreeing to provide Confidential Information to
him, and to prevent the disclosure or use of such information to the competitive
disadvantage of the Company, the parties agree that in the event that the
Executive's employment with the Company is terminated as a result of either: (i)
Notice of Termination for Good Cause or Notice of Non-Renewal for Good Cause, as
defined in Subsection 2(c)(3); or (ii) the resignation of the Executive "Without
Good Reason," as defined by Subsection 2(c)(5), the Executive covenants and
agrees not to compete with the Company for twelve (12) calendar months
subsequent to such termination, non-renewal or resignation from employment, in
the business of providing inter-city transport of passengers or cargo by
automobile or motorbus in any city in which the Company engaged in such business
during the twelve (12) calendar months prior to such termination, nonrenewal or
resignation. This provision shall not apply in the event that the employment of
the Executive is terminated for any reason other than "Good Cause" or in the
event of a "Resignation for Good Reason."

         e.       Unless the Board of Directors provides prior written approval,
for one (1) year following the termination of the Executive's employment by the
Company, the Executive shall not, directly or indirectly:

                                       16


                  (1)      solicit, entice, persuade or induce any employee of
the Company, or its subsidiaries, to terminate his/her employment with the
Company, or its subsidiaries, or to become employed by any Person other than the
Company, or its subsidiaries; or

                  (2)      approach any such employee for any of the foregoing
purposes; or

                  (3)      authorize or assist in the taking of such actions by
any third party.

10.      DISPUTE RESOLUTION: The Company and the Executive agree as follows:

         a.       Any claim or controversy arising out of or relating to this
Agreement, or any breach of this Agreement, shall be submitted to non-binding
arbitration in the city of Dallas, Texas in accordance with procedures or rules
established by the American Arbitration Association. The Executive and the
Company agree that either party must request such non-binding arbitration of any
claim or controversy on or before the earlier of: (i) the fifteenth (15th)
business day after the termination or non-renewal of this Agreement becomes
effective; or (ii) the sixtieth (60th) business day after the date the claim or
controversy first arises, by giving written notice of the party's request for
non-binding arbitration ("Arbitration Notice"). If both parties fail to give
such Arbitration Notice, either party may proceed to seek judicial relief in a
court of competent jurisdiction located in Dallas County, Texas.

         b.       In the event that any dispute arising under this Agreement
concerns the amount of any payment required to be made under any provision of
this Agreement, either party agrees to pay the undisputed portion of the payment
to the other party and deposit the disputed portion of the payment in an
interest bearing account with a financial institution acceptable to the other
party within five (5) days after either party effectively communicates its
Arbitration Notice or files an original petition or complaint in a court of
competent jurisdiction.

         c.       At the election of both the Executive and the Company, all
claims or controversies subject to arbitration under this Agreement may be
submitted to final and binding arbitration in accordance with the applicable
Rules of the American Arbitration Association.

         d.       In any dispute arising under the terms of this Agreement,
without regard to whether such dispute proceeds to arbitration or litigation,
the Company will reimburse the Executive for reasonable and necessary attorney's
fees up to a maximum amount of Forty Thousand Dollars ($40,000.00), unless a
court of competent jurisdiction (or the Arbitrator, if the parties so elect
according to Section 10), finds that the Executive's position in such proceeding
was frivolous.

11.      RULES OF CONSTRUCTION: The following provisions shall govern the
interpretation and enforcement of this Agreement:

         a.       SEVERABILITY: The parties acknowledge and agree that each
provision of this Agreement shall be enforceable independently of every other
provision. Furthermore, the parties acknowledge and agree that, in the event any
provision of this Agreement is determined to be

                                       17


unenforceable for any reason, the remaining covenants and/or provisions will
remain effective, binding and enforceable.

         b.       WAIVER: The parties acknowledge and agree that the failure of
either to enforce any provision of this Agreement shall not constitute a waiver
of that particular provision, or of any other provisions, of this Agreement,
except as otherwise stated in this Agreement.

         c.       CHOICE OF LAW: The parties acknowledge and agree that except
as specifically provided otherwise in this Agreement, the law of Texas will
govern the validity, interpretation and effect of this Agreement and any other
dispute relating to, or arising out of, the employment relationship between the
Company and the Executive.

         d.       MODIFICATION: The parties acknowledge and agree that, except
as expressly provided herein, this Agreement constitutes the complete and entire
agreement between the parties; that the parties have executed this Agreement
based upon the express terms and provisions set forth herein; that the parties
have not relied on any representations, oral or written, which are not set forth
in this Agreement; that no previous agreement, either oral or written, shall
have any effect on the terms or provisions of this Agreement; and that all
previous agreements, either oral or written, are expressly superseded and
revoked by this Agreement. In addition, the parties acknowledge and agree that
the provisions of this Agreement may not be modified by any subsequent agreement
unless the modifying agreement (i) is in writing (ii) contains an express
provision referencing this Agreement (iii) is signed by the Executive and (iv)
is approved by the Board of Directors and by Parent.

         e.       EXECUTION: The parties agree that this Agreement may be
executed in multiple counterparts, each of which shall be deemed an original for
all purposes.

         f.       HEADINGS: The parties agree that the subject headings set
forth at the beginning of each section in this Agreement are provided for ease
of reference only, and shall not be utilized for any purpose in connection with
the construction, interpretation or enforcement of this Agreement.

12.      LEGAL CONSULTATION: The parties acknowledge and agree that all parties
have been accorded a reasonable opportunity to review this Agreement with legal
counsel prior to executing the agreement.

13.      NOTICES: The parties acknowledge and agree that any and all Notices
required to be delivered under the terms of this Agreement shall be forwarded by
personal delivery or certified U.S. mail. Either party may change their
respective address for the purpose of receiving notices only by providing
written notification via certified mail, five (5) days in advance of such
change. Notices shall be deemed to be communicated and effective on the day of
receipt. Such Notices shall be addressed to each party as follows:

                                       18


                                                          
John Werner Haugsland            Greyhound Lines, Inc.          Laidlaw, Inc.
17824 Cedar Creek Canyon         15110 No. Dallas Parkway       3221 North Service
Dallas, Texas 75252              Dallas, Texas 75248            Burlington, Ontario
                                 Attn: General Counsel          Canada  L7R 3Y8
                                                                Attn: General Counsel

With a copy to:                  With a copy to:                With a copy to:

Robert E. Sheeder, Esq.          Craig R. Lentzsch              President and Chief
1445 Ross Avenue, Suite 3200     President and Chief Executive  Executive Officer
Dallas, Texas 75202                Officer                      Laidlaw, Inc.
                                 Greyhound Lines, Inc.          3221 North Service
                                 15110 North Dallas Parkway     Burlington, Ontario
                                 Dallas, Texas 75248            Canada L7R 3Y8
                                                                Attn: General Counsel



14.      EFFECTIVENESS; PRIOR AGREEMENT: This Agreement will become effective
upon and the Prior Agreement will terminate immediately prior to, the Effective
Time. Notwithstanding any other provision of this Agreement, if the Merger
Agreement is terminated prior to the Effective Time, this Agreement will have no
further force or effect, and the Prior Agreement will remain in full force and
effect as though this Agreement had not been entered into.

         IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above written, but effective as provided in Section 14.

                                             JOHN WERNER HAUGSLAND

                                             ___________________________________

                                             GREYHOUND LINES, INC.

                                             By: _______________________________
                                             Title: ____________________________

                                             LAIDLAW, INC.

                                             By: _______________________________
                                             Title: ____________________________

                                       19

EX-10.7

                                                                    EXHIBIT 10.7

                          FIRST AMENDMENT TO THE SECOND
                     AMENDED EXECUTIVE EMPLOYMENT AGREEMENT

         This FIRST AMENDMENT TO THE SECOND AMENDED EXECUTIVE EMPLOYMENT
AGREEMENT, dated this 31st day of December, 1999 (the "Amendment"), is by and
among GREYHOUND LINES, INC. (together with its successors, the "Company"),
LAIDLAW INC. (together with its successors, the "Parent") and JOHN WERNER
HAUGSLAND (the "Executive").

         WHEREAS, the Executive, Parent and the Company are parties to a
Seconded Amended Executive Employment Agreement dated March 16, 1999 (the
"Agreement"); and

         WHEREAS, the parties desire to modify and amend the terms of the
Agreement as set forth herein.

         NOW, THEREFORE, in consideration of the mutual promises and covenants
set forth in this Amendment, the Executive, Parent and the Company agree as
follows:

1.       Based on an annual review and adjustment by the Company's Board of
Directors, effective as of April 1, 1999, Executive's Base Salary shall be
increased to $325,000.

2.       The last sentence of Section 1(a) of the Agreement shall be modified to
read as follows:

         "The Company and the Executive acknowledge that during the employment
of the Executive pursuant to this Agreement, the Executive's Base Salary will be
subject to an annual review and adjustment by the Board of Directors of the
Company (the "Board of Directors") but, in no event, will the Executive's annual
Base Salary be less than $325,000."

3.       A new Section 1(e) to the Agreement shall be added as follows:

         "e.      ANNUAL STAY BONUS: Beginning on the Effective Time and on the
         anniversary date of the Agreement thereafter for four (4) additional
         years, an annual stay bonus of $50,000 will accrue for the benefit of
         Executive. The stay bonus shall vest, and Executive shall be entitled
         to request payment of all or any portion of the vested amount,
         according to the following schedule:



         Date                                              Amount Vested
         ----                                              -------------
                                                        
After March 30, 2002                                          $100,000
After March 30, 2003                                          $150,000
After March 15, 2004                                          $250,000"


                                        1



4.       The second sentence of Section 3 of the Agreement shall be deleted in
its entirety and the following provision will be substituted therefor:

         "Executive's responsibilities shall include the inter-city coach, coach
         charter and line haul and any other related business thereto of Parent
         and its subsidiaries in the United States and Canada; provided,
         however, upon any realignment of Company and its affiliates along
         distinct product or business lines, Executive's responsibilities may be
         altered to exclude responsibility for the courier/package express and
         tour/charter businesses, and such change in responsibilities shall not
         constitute grounds for resignation by Executive for "Good Reason"
         pursuant to Section 2(c)(5)(a)(ii) of the Agreement."

5.       The first sentence of Section 5(d) of the Agreement shall be deleted in
its entirety and the following provision will be substituted therefor:

         "In the event of a Non-Renewal Without Good Cause or a Termination
         Without Good Cause or a Resignation For Good Reason, the Company agrees
         to continue any and all benefits as provided in the Greyhound Lines,
         Inc. Medical Plan and Subsections 1(d) (2) through (8) of this
         Agreement, as modified pursuant to the terms of Subsection 1(d), and
         Subsection 1(e) of this Agreement for twenty four (24) months after the
         effective date of termination, non-renewal or resignation."

6.       Defined terms used herein without definition shall have the meaning as
ascribed to such term as set forth in the Agreement.

7.       Except for the modifications and amendments set forth in this document,
the Agreement shall continue in full force and effect according to its original
terms.

8.       This Amendment shall become effective as of the date set forth above,
except where an earlier date is specified in the Amendment.

JOHN WERNER HAUGSLAND                        GREYHOUND LINES, INC.

         /s/ John W. Haugsland               By: /s/ Craig R. Lentzsch
- ---------------------------------------          -------------------------------
                                                  Craig R. Lentzsch
                                                  President and CEO

                                             LAIDLAW INC.

                                             By: /s/ John R. Grainger
                                                 -----------------------------
                                                  John R. Grainger
                                                  President and CEO

                                        2

EX-10.11

                                                                   Exhibit 10.11

                             MEMORANDUM OF AGREEMENT

         This Agreement, effective October 1, 1998, and expiring January 31,
2004, represents the joint commitment of Greyhound Lines, Inc. hereinafter
referred to as the "Company," and Amalgamated Transit Union National Local 1700,
hereinafter referred to as the "Union," to the continued growth of their
relationship with the goals of superior customer service, stable employment, and
the success of the business. The parties recognize that the Company continues to
face enormous challenges to its long-term success. A major factor in that
success will be providing passengers with cost effective, timely and efficient
service. The business of the Company is customer service and the Company and the
Union agree to direct their efforts so quality customer service becomes and
remains the paramount consideration. The parties believe that the way to achieve
success will be to continue to work together in a pro-active relationship based
upon mutual gains, cooperation, open communications, flexibility, and informal
resolution of issues.

         As part of their efforts to establish and maintain a constructive
relationship in which the Company, the Union, and the represented employees work
together to achieve joint and shared success, the parties will meet regularly,
no less than biannually, separate from the meetings called for otherwise in this
Agreement, to review and resolve any concerns, to plan for future developments,
and to develop mutual solutions. These special meetings will be reserved for
enhancement of the parties' working relationship, not for grievances.

- -        No contract language, award, adjustment, interpretation letter,
         practice, memorandum of understanding, or right agreed to before the
         effective date of this Agreement remains in effect unless expressly
         agreed to herein or subsequently agreed to and incorporated.

- -        Written communications by and between the Company and the Union will be
         answered promptly in writing.

- -        If the Company is sold, there will be included in the documents related
         to such sale a requirement that the purchaser recognize and bargain
         with the Union. The Company will not be a guarantor or be held liable
         for any breach by the purchaser.

         Whenever "he" or "his" or their related pronouns appear in this
Agreement, they are used for literary purposes and include both females and
males.

                                                                               1



                                     GENERAL

ARTICLE G-1. SENIORITY -- Full-time and part-time employees other than operators
will have seniority measured from the hour and date of first work performed in
the department to which they are assigned in the service of the Company, or in
the service of Greyhound/Dial before March 19, 1987 or Trailways before July 14,
1987. Should two or more employees commence service on the same date and hour,
the date and hour of the application for employment will determine the order of
their seniority.

         Seniority and service of operators who were in the service of
Greyhound/Dial before March 19, 1987 or Trailways before July 14, 1987 will
remain unchanged from previous collective bargaining agreements. All other
operators will have seniority measured from the date of placement on the
extraboard, or if an operator becomes a regular operator and is not placed on
the extraboard, the date of pulling his first regular run. In the case of
identical dates, operators' seniority will be based on their month and day of
birth and, if identical, they will be ranked in alphabetical order.

         Seniority of operators hired on or after October 1, 1998 will be
determined by the date operators graduate from training. Operators graduating on
the same date will have their seniority determined by a lottery mechanism
mutually agreed to by the Union and Company.

         Any merger of either operator or mechanic seniority rosters must be
approved by referendum vote and approved by a majority vote of those voting from
the respective operator and mechanic ranks. Referendum votes will be conducted
by the Union.

         Only full-time employees accrue seniority. Separate seniority rosters
will be maintained for part-time and seasonal employees only for the purpose of
establishing seniority among those employees. Part-time operators who become
seasonal operators, and seasonal operators who become part-time operators will
carry their seniority with them. Part-time and seasonal operators may not
exercise their seniority to bid on runs, other than those designated for
part-time and seasonal operators or as hold-downs for the extra board.

         All employees will be permitted to submit letters of intent to transfer
to any department when new employees are required. Employees who have submitted
a letter of intent will be given preference over outside applicants provided
they are qualified either to perform the work or enter the training program
offered to outside applicants.

         Employees electing to transfer will be given seniority in their new
department ahead of outside applicants who start on the same date, and they will
use their original service date for all benefits tied to years of service.

         Maintenance employees voluntarily transferring from one location to
another will have their bidding seniority start on the first day of work at the
new location. The bidding seniority will be used for bidding shifts and vacation
slots at that location. They will retain but not accumulate seniority at their
departing location.

ARTICLE G-2. SENIORITY RIGHTS OF UNION REPRESENTATIVES -- Employees of the
Company, used in the service of ATU Local 1700, national or state AFL-CIO, the
Amalgamated Transit Union, or trust administration will, while in such service,
retain and accumulate all seniority rights enjoyed by other employees.

ARTICLE G-3. FURLOUGH AND RECALL -- Furlough and recall will be by location.
Furloughed operators may elect to exercise seniority at any other location where
there is a working junior operator or open position.

         Involuntarily furloughed maintenance employees may elect to exercise
their seniority at any other ATU-represented location where there are vacancies.
If no vacancies exists, furloughed maintenance employees may submit a letter of
intent to their preferred location. Maintenance employees who fail to accept the
first available vacancy at the preferred location will be removed from future
consideration for transfer to that location. Maintenance employees who transfer
to another location and later reject a recall to their home location will
forfeit all future recall rights to their home location.

         When forces are reduced, the Company will provide affected employees
and the Union seven days written notice. This notice is not required for
employees displaced as a result of another employee returning from voluntary
furlough. Employees will be furloughed in reverse order of their seniority and
retain all seniority rights and privileges. The Company will solicit voluntary
furloughs prior to any involuntary reduction-in-force. The Company will notify
employees by postings at locations where opportunities exist for employees to
take voluntary furlough. Employees requesting voluntary furlough must submit
their request within seven days of the posting according to the instructions on
the posting.

                                                                               2


         Voluntary furloughs will be awarded by seniority within each location.
Employees awarded voluntary furlough have the following options:

- -        At the time of the furlough, specify a return date which is 30 days or
         more after the beginning of the furlough. The employee will be expected
         to return to work on this date unless the employee requests an
         extension or there are no junior employees at that location to
         displace.

- -        Leave the return date open in which case normal recall procedures will
         apply.

         Employees on voluntary furlough may return on or after 30 days after
the beginning of the furlough. Prior to their return, operators must first
submit a written request to return to work to the Driver Planning Department in
Dallas 15 days prior to the date an operator wishes to return to work.
Maintenance employees must submit a written request to return to work to their
garage manager 15 days prior to the date they wish to return to work.

         Furloughed employees retain their seniority except mechanics hired on
or after January 1, 1984, will be removed from the seniority roster after one
year of furlough. Furloughed employees must maintain their current mailing
address on record with the Company. The Company will recall employees in
seniority order by certified or registered United States mail, return receipt
requested or by telegram. A copy of such recall notice will be furnished to the
Local Union. Employees receiving a notice of recall will immediately acknowledge
receipt of the same by certified or registered United States mail, return
receipt requested or by telegram, and will report for work on the seventh day of
the recall notice, unless a different date is agreed to by the Company and
employee.

         Employees having other employment, who are recalled for a period of
work less than 45 days, may reject the offer without loss of seniority if
sufficient employees are available to meet the Company recall needs. Furloughed
employees failing to comply with these provisions will forfeit seniority rights
and will no longer be considered employees of the Company.

ARTICLE G-4. LEAVES OF ABSENCE

(a) Employees on Extended Sick Leave Employees must provide medical
documentation concerning their condition every 90 days. Failure to comply may
result in termination of employment.

(b) Family Leave The Company agrees to adhere to the Family and Medical Leave
Act of 1993 (FMLA) and its regulations for all eligible employees. Eligible
employees include employees at locations with less than 50 employees.

(c) Unpaid Leave of Absence Employees may be granted an unpaid leave of absence
of up to 90 days without loss of seniority. Longer leaves may be granted if they
are mutually agreed to by the Company and the Union. Employees requesting leaves
under this provision must submit a written request to their supervisor and will
specify that the request for leave is under this provision.

(d) Union Officers and Committee Members Employees who are full-time officers of
Local Union 1700, national or state AFL-CIO, the Amalgamated Transit Union or
the plan administrator of a Greyhound/Local 1700 trust will be granted the
necessary leave of absence to permit the performance of their duties and will
continue to accumulate seniority during such leave. Employees who are full-time
officers of Local Union 1700 or the plan administrator of a Greyhound/Local 1700
trust will continue to be covered by the Greyhound-ATU Health and Welfare Trust
plan on the same terms as active employees. Co-payments for such health benefits
will be received by the Greyhound-ATU Health and Welfare Trust by the 10th day
of each month of such coverage.

         Employees who are on official Union business will be granted the
necessary leaves of absence to permit the performance of their duties, provided
reasonable notice, in writing, is given and the number of granted leaves does
not interfere with the business of the Company. Such employees will suffer no
loss of rights or benefits enjoyed by other employees by reason of their absence
from duty. The Union agrees its members will not abuse the rights granted under
this provision.

(e) Work Related Disability Employees on work-related disability may be required
to be examined by a physician, at the request of and paid for by the Company, to
substantiate such disability. Failure of employees to make

                                                                               3


themselves available for such examination, or failure to report for duty
immediately after an examination which determines that an employee is fit for
duty, may result in discipline up to and including termination.

         Employees on workers' compensation who are not fit for regular duty but
are fit for light duty must report for such duty in any position or department
in which the Company offers it in the same commuting area, or, for operators, at
the domicile closest to their home address, without loss of seniority. If work
is not available for operators at the domicile closest to their home address,
operators may choose to work at another location where light duty work is
available, if agreed by the Company and the Union. Failure to report for light
duty will result in termination. If more than one light duty job is available,
seniority will prevail. There will be no light duty for maintenance employees.

         Employees returning to duty status after leave of 30 days or longer may
be required to pass a physical examination and drug test at Company expense.

 ARTICLE G-5. PROBATIONARY PERIOD -- Employees other than operators will be
given a probationary period of 90 days from the date of employment. For
operators, the 90-day probationary period will commence with the date of
placement on the extraboard or the day of assignment to a regular run, whichever
comes first. Unless probationary employees are notified to the contrary within
the 90-day period, it will be understood that the application for employment is
approved, unless it later develops that false information materially affecting
the acceptance of the application for employment was given, in which event such
employee will be subject to dismissal.

         The grievance procedure is not applicable to the dismissal of employees
during the 90-day probationary period or the dismissal of employees for
providing false information on the application for employment except that the
grievance procedure will be applicable to contest whether the information on the
application was false or whether the reason given for the discharge was
pretextual. The probationary period for any employee may be extended by mutual
agreement between the Company and the Union.

ARTICLE G-6. MANAGEMENT OF OPERATIONS -- It is not the intent of this Agreement
to include matters of management herein, and the Company reserves to itself the
management, conduct and control of the operations of its business, including:

- -        The determination of the type, kind, make and size of equipment and
         when, how and where such equipment will be used;

- -        The number and qualifications of employees employed by it and their
         standards of conduct;

- -        The route and run structure, including additions, eliminations and
         changes to existing routes and runs;

- -        The assignment of work to the extent not specified herein;

- -        Except as otherwise limited under this Agreement, the use of leased
         operations, joint ventures, independent contractors and franchised
         operations;

- -        The prescribing of reasonable rules, instructions and regulations for
         the safe, proper and effective conduct of its business in a competitive
         environment not inconsistent with the terms of this Agreement.

         The term "reasonable" will have its commonly understood meaning as any
rule that is reasonably related to a legitimate objective of management and not
the meaning ascribed to it in any arbitration prior to this Agreement.

ARTICLE G-7. DISCIPLINE -- Employees will neither be disciplined nor will
entries be made against their records without sufficient cause. Sufficient cause
includes violation of Company rules, regulations and instructions not
inconsistent with this Agreement. When discipline is issued, employees will be
given written notice specifying the charges and penalty. Notification will be
furnished to the union president, the appropriate assistant business agent, and
the designated shop steward of the Union.

         When disciplining employees, complaints, discipline or records which
have been brought to the attention of the Company 24 months prior to the
incident will not be used to determine guilt or penalty. This provision will not
apply to safety-related activities, including speeding violations, preventable
accidents, damage to property, personal injury, use of alcohol or illegal
substances.

         Customer complaints are a serious matter and operators are expected to
treat customers with courtesy so as to avoid complaints. Complaints will be
discussed with operators as soon as practicable so corrective action can be
taken. A complaint made in writing or in person identifying the customer,
operator, date of the incident, and

                                                                               4


details of the conduct complained of may be the basis for discipline up to and
including discharge. The complaining customer may appear at the third step
hearing either telephonically or in person. If the complainant fails to testify
at a third step hearing, the complainant is prohibited from appearing at an
arbitration. If the complainant appears at the third step hearing, the Union
agrees to allow the complainant to testify at the arbitration hearing by
telephone, live, or in the form of a pre-arbitration deposition.

         Except in the case of DOT log violations, discipline must be taken
within 20 days after the Company's knowledge of the incident or in cases of
dishonesty or substance abuse, within 20 days after completion of the
investigation. The Company must issue discipline in the case of DOT log
violations within 30 days of the Company's knowledge of the violation.

ARTICLE G-8. GRIEVANCE PROCEDURE

(a) Grievance All differences, disputes, suspensions, and discipline cases
hereinafter collectively referred to as "grievances" between the parties arising
out of this Agreement will be handled in the manner set forth below. All days
referred to within this provision will mean calendar days.

         Step 1. Employees covered by this Agreement who have a complaint under
this Agreement will discuss the complaint with their supervisor within 15 days
from the date of the occurrence in an effort to resolve the complaint without
resort to the formal grievance procedure. This Step 1 procedure will not extend
the Step 2 time limits to file a written grievance. Final disposition at this
step is non-precedent setting and may not be relied upon by the Union or the
Company in any arbitration hearing for any purpose.

         Step 2. Failing resolution at Step 1, an employee or Union grievance
may be presented in writing by the employee and/or union shop steward or ABA to
the employee's supervisor which must be within 30 days from the date of the
occurrence of the incident upon which the grievance is based or within 30 days
from the date a pay claim denial is received. Discharge grievances must be
initially filed at Step 2.

         Within 15 days after receipt of the written grievance, the employee's
supervisor must respond with a written decision on the grievance. Final
disposition at this step is non-precedent setting and may not be relied upon by
the Union or the Company in any arbitration hearing for any purpose.

         Step 3. Failing satisfactory disposition of such grievance at Step 2,
within 15 days of the receipt of the supervisor's written response, the
grievance may be appealed in writing by the union president or his designee to
the appropriately designated Company representative. Within 15 days after the
receipt of this appeal, a Step 3 conference will be held at the home location of
the employee, unless otherwise agreed between the parties. Within 15 days of the
conference, the Company representative must respond with a written decision.
Final disposition at this step is non-precedent setting and may not be relied
upon by the Union or the Company in any arbitration hearing for any purpose.

(b) Arbitration

         1.       In the event a grievance is not resolved at Step 3, the
         grievance may be referred in writing to arbitration by the union
         president or his designee within 45 days after the Union's next
         regularly scheduled executive board meeting not to exceed 135 days from
         the date the Step 3 decision is rendered. The issue to be arbitrated
         must be clearly stated.

         2.       Arbitrations will be administered by the American Arbitration
         Association and conducted under its labor arbitration rules. All
         arbitrators will be selected from those admitted to the National
         Academy of Arbitrators. By mutual agreement, arbitrations may be
         conducted under the American Arbitration Association's expedited labor
         arbitration procedures.

         3.       The arbitrator's award is final and binding. The compensation
         of the arbitrator and any administrative costs will be shared equally.
         Each party will pay its expenses related to representation and
         witnesses.

(c) Grievance Pay Claims A disputed pay claim, paid by grievance settlement,
will be paid in the employee's next available regular paycheck. The Company will
notify the Union monthly of all paid grievance claims.

ARTICLE G-9. CHECK-OFF -- The Company agrees to check-off and remit to the
financial secretary or president of the Union at least every two weeks all dues,
initiation fees, regular assessments and authorized voluntary

                                                                               5


contributions from the pay of each employee who is a member, fee payer or
financial core member who has authorized the Company to make such deductions.
Request for the check off of assessments must be signed by either the financial
secretary or president of the Union.

ARTICLE G-10. BULLETIN BOARD -- The Union will be allocated bulletin boards on
Company property where notices pertaining to meetings and other union business,
social events, and other proper matters are permitted. Such notices must be on
Union letterhead, dated, and signed by an accredited Union representative.
Notices not complying may be removed.

         Copies of all bulletins relating to employees covered by this Agreement
will be promptly furnished to a properly accredited officer of the Union.

ARTICLE G-11. DISABLED AND FURLOUGHED -- When new employees are required by the
Company, disabled employees and employees who have been furloughed due to lack
of work and who are applicants for employment will be given preference in
employment over new outside applicants if qualified to perform the available
work. The Company has no obligation to notify such employees of any such
vacancies.

ARTICLE G-12. BAIL BONDS -- Employees incarcerated because of their actions
while engaged in the performance of their assigned duties with the Company, and
acting within the scope of such duties, will promptly be furnished bond by the
Company, when such is required.

         Employees will have the legal assistance of the Company in any legal
proceedings brought against them and the Company, provided the employees acted
within the scope and course of their employment. Additionally, the Company will
provide legal assistance to employees who are sued as a result of acting within
the scope and course of employment.

ARTICLE G-13. CONTRAVENTION OF LAWS -- It is understood and agreed that the
provisions of this Agreement are subordinate to any present or subsequent
federal, state, or municipal law or regulation, including family leave and
military leave, to the extent that any portion hereof is in conflict therewith,
and nothing herein will require the Company to do anything inconsistent with the
orders or regulations of any competent government authority having jurisdiction
to issue the same. Because of the parties joint commitment to safety, nothing in
this Agreement or in the parties practices will preclude the Company from
complying with findings and recommendations of any governmental safety agency
with 14 days prior notice to the Union. Upon request, the parties will meet and
confer on such findings and recommendations. Except in the case of emergency,
the Company will make no changes pursuant to such findings and recommendations
before 14 days, but in no event is the Company precluded from making any such
changes after having given the Union 14 days notice if the Company was available
to meet and confer during that period.

ARTICLE G-14. NO STRIKE/LOCKOUT -- The parties having provided for the final
disposition of all disputes, differences and grievances which may arise between
them under this Agreement, the Union agrees that it will not, nor will the
employees, members of the Union, participate in any strike, slow down, work
stoppage, or interruption of service for any purpose or reason whatsoever, nor
will there be any interference with the free right of employees or passengers to
enter or leave the Company's property unmolested. The Company agrees that it
will not lock out its employees under any circumstances during the life of this
Agreement. This no strike/no lockout commitment remains in full force and effect
for the entire term of this Agreement and the parties waive their rights to
engage in such actions to support any mid-term bargaining position.

         If another union recognized by the Company establishes a legal picket
line at a Company terminal, garage, or other facility, the employees covered by
this Agreement are permitted to honor such a legal picket line only at the
facility where work of the other union local is or was being performed during a
regular shift.

         If a union representing employees at a terminal operated by another
company or by a commission agent establishes a legal picket line at a terminal,
employees covered by this Agreement will be permitted to honor such a legal
picket line, but only at the terminal where work of the other union local is or
was being performed during a regular shift. In all such instances, operators
involved may be required to drive their bus up to the picket line.

         The exceptions to the no strike clause set forth above will be strictly
construed.

                                                                               6


ARTICLE G-15. RECOGNITION OF THE UNION -- The Company recognizes the Union as
the duly designated, sole and exclusive collective bargaining representative for
its operators and for maintenance employees not otherwise represented by the
International Association of Machinists and Aerospace Workers. Supervisory
employees with the power to hire or fire or with the power effectively to
recommend hiring or firing, managerial employees and confidential secretaries
are excluded from this provision. It is expressly agreed that this Agreement
does not cover terminals which may be operated by the Company or the service
islands that may be associated with some terminals.

ARTICLE G-16. COURT INQUEST AND INVESTIGATION -- Employees who witness but are
not involved in an accident while on duty and, as a result, are required to make
a report of the accident to the Company and who are later required to attend
court or an inquest by subpoena, or employees who at the direction of the
Company are required to attend court, an inquest or an investigation called by
the Company attorney, or employees who are subpoenaed and are required to attend
court or an inquest as a result of an action arising out of carrying out the
specific orders of the Company, will be paid eight hours per day at their
regular rate. Regular operators will receive the greater of eight hours or their
missed regular run pay. The hours compensated will not be less than the amount
of actual time lost plus reimbursement for any expenses incurred while making
such appearance. Employees will not be required to report for duty for any
portion of the day when the appearance occurs during their shift. Employees not
able to obtain reasonable rest before the start of their shift will not be
required to report for work on such shift. Operators returning from making an
appearance on a date when their regular run is out of town may position
themselves to pick up their run at the layover point, if possible. Operators who
elect not to position themselves will not receive guaranteed earnings for that
day.

         When such service is required of employees on their regular assigned
days off, or on vacation, employees will be paid at one and one half times their
regular rate for hours so used with a minimum of eight hours.

         The hourly rate for operators for this provision is their driving rate.

ARTICLE G-17. CREDIT UNION -- The Company agrees to permit biweekly credit union
deductions from payroll for one certified credit union for each employee. Signed
authorizations for deductions are to be in the same amount each payroll period,
and requested changes in such amount for the certified credit union will be made
only at the beginning of a calendar month. The Company has no obligation to
establish a credit union.

ARTICLE G-18. SAFETY

(a) Employees Injured on Duty Employees injured on the job will be paid in full
for the day of the accident provided the attending physician advises an employee
not to return to work for the balance of the day. If able to work, employees
must return to their duties. Employees failing to do so will not be paid for the
hours not worked. Employees requiring further medical treatment as a direct
result of said accident will not lose time while receiving treatment, provided
the treatment requires only a nominal amount of time. Maintenance employees
requiring further treatment during working hours will be reimbursed for the cost
of Company approved transportation to and from the garage plus time lost for
treatments.

(b) Medical Examination Physical examinations required as a condition of
continued employment must be performed by a physician selected by the Company
and paid for in full by the Company, except as provided for in the appropriate
leave of absence clauses. Initial examinations will be paid by the applicant for
employment and reimbursed after the employee commences to accrue seniority.

         When the Company requires employees to take examinations not required
by the rules or regulations of the Department of Transportation or other
regulatory body, employees affected will be paid for their time. The provisions
of this paragraph do not apply to employees who have physical disqualifications
determined in accordance with the first paragraph of this section, conditions
requiring physician-required medical re-checks, absences covered by workers'
compensation, long-term illnesses, or disabilities.

         Employees who refuse to submit to a medical examination when instructed
to do so by the Company are subject to termination. Employees who fail medical
examinations by a competent medical authority approved by the Company may be
disqualified for service. The disqualified employee or the Union may within 45
days after

                                                                               7


such examination, provide the Company with the written opinion of a physician
selected and paid for by the employee. In the event the physician selected by
the employee disagrees with the opinion rendered by the Company-approved
physician, the Company and Union may meet within 45 days and select a third
physician acceptable to both parties. This same procedure will be applied to
employees returning from sick leave who fail to pass their return-to-work or DOT
physical. The third physician will examine the employee and render an opinion
binding on the parties. If the third physician determines the employee suffers a
condition correctable by treatment which is not otherwise disqualifying under
the DOT regulations, the employee may continue working. If able to work, the
employee will be permitted to return to work upon certification of fitness by
the third physician. Expenses of the third physician will be borne equally by
the Company and the employee.

         Employees separated from service because of physical disability will be
returned to their proper places if and when the cause of disability is removed.

         Employees required by the Company to travel to take a medical exam will
be reimbursed for their travel expenses.

(c) Safe Maintenance of Equipment and Machinery The Company agrees to maintain
all equipment and machinery in a safe and sanitary condition at all times.

         Supervisors will not require operators to operate a motor coach that
fails to comply with FMCSR 392.7 (Equipment, Inspection, and Use) and FMCSR
392.8 (Emergency Equipment, Inspection, and Use) The Company is responsible for
any fines, tickets or court costs in relation to faulty equipment that the
Company has directed to be utilized.

         Employees who intentionally and negligently damage or cause damage or
disablement to any safety device may be terminated.

         The Company may provide awards for safety and service.

ARTICLE G-19. WORK PROHIBITION, SUPERVISORY EMPLOYEES -- Supervisory employees
are not permitted to do any work performed by employees covered by this
Agreement, with the exception that supervisory employees may perform such work,
up to a maximum of 16 hours per month, for the purpose of understanding the
dynamics of the work or where there are no employees available and customer
needs require that the work be performed. In the latter case only, if employees
were available and fit to perform the work, they will be paid as if they had
performed the work.

ARTICLE G-20. SUPERVISORY SENIORITY -- Represented employees who accept
supervisory positions with the Company retain but do not accumulate seniority
during the first 24 months in such positions, and suffer no loss of seniority if
they return to the bargaining unit within that time.

         Employees in supervisory positions who desire to return to contract
positions must do so under the provisions applicable to those employees on
indefinite leave with a 15-day notice to the Company and the Union. Employees
may only exercise their right to retain their bargaining unit seniority when
accepting a supervisory position on one occasion. Employees who choose to return
to supervision a second time immediately forfeit their bargaining unit
seniority.

         Supervisors who are currently accruing seniority with this bargaining
unit will suffer no loss of seniority if they return to the bargaining unit
prior to January 1, 1999.

ARTICLE G-21. EMBLEMS -- Union members are permitted to wear the emblem of the
Union. Emblems will be of a size and shape so as not to detract from the
uniform.

         An appropriate decal jointly agreed upon by the Company and the Union
which integrates the separate emblems of the Company and the Union may be placed
on all Company-owned coaches operated by members of the Union, and on all
coaches operated by members of the Union that are leased by the Company on a
lease of 120 days or more. The decal will be placed where designated by the
Company and in full view of the traveling public. The Company and the Union will
jointly share the cost of developing such decals.

ARTICLE G-22. NON-DISCRIMINATION -- There will be no discrimination in hiring,
promotion, or other aspects of employment because of race, creed, color,
religion, national origin, age, sex, or disability. No employee will be
discriminated against because of affiliation with or activity in the Union.

                                                                               8


ARTICLE G-23. PART-TIME/SEASONAL DEFINED -- Part-time and seasonal employees, as
defined below, will not receive the benefits covered in this Agreement, except
as specifically provided below. Part-time employees are defined as employees who
work less than 1,500 paid hours per calendar year. Seasonal operators are
operators hired to work only during the summer season (May 15 - September 15)
and/or for the following specific peak periods: Memorial Day, Thanksgiving,
Christmas and Easter. Part-time employees who work more than 1,200 paid hours in
a calendar year will receive holiday and vacation benefits for that year as
though they were full-time employees in that year. Part-time and seasonal
operators may not exceed 10 percent of the full-time operator workforce.

ARTICLE G-24. REIMBURSEMENT -- All moneys spent by employees which are
chargeable to the Company will be reimbursed without delay.

ARTICLE G-25. NOTICE OF REPRESENTATIVES -- The Union agrees to notify the
Company in writing of the names and addresses of its respective, duly accredited
representatives and committees immediately upon their election or appointment to
such office.

ARTICLE G-26. NOTIFICATION OF PERSONNEL ACTIONS -- The Company agrees to
promptly furnish the properly accredited officer of the Union with a copy of
forms prepared covering the employment, classification, resignation, transfer
and leaves of absence of each employee who is covered by the terms of this
Agreement.

ARTICLE G-27. PROMOTIONS -- Equal consideration will be given to employees when
making promotions.

ARTICLE G-28. UNION SECURITY -- To the extent permitted by law, all full-time,
part-time and seasonal employees covered by any portion of this Agreement must
become and remain members of the Union not later than the 31st day following
completion of their probationary period or the date of this Agreement as a
condition of their continued employment with the Company. Initiation fees for
part-time and seasonal employees will not be more than $50 and monthly dues will
be one and one-half times their hourly rate of pay. Seasonal employees will be
offered withdrawal cards during off seasons, which will entitle them to
discontinue paying monthly dues for up to 12 consecutive months so long as they
do not work for the Company during off-season time and to commence working for
the Company thereafter without paying back dues for that period or a new
initiation fee

ARTICLE G-29. SUBCONTRACTING -- The Company reserves the right to subcontract no
more than five percent of its mileage in any one year and the right to
subcontract for service on routes abandoned for more than one year as of the
date of this Agreement. The Company agrees that no more than 10 percent of its
mileage, measured from the annual mileage driven in 1997, will be subcontracted
during the term of this Agreement. Notwithstanding any other language in this
Agreement, upon notice to the Union, the Company has the right to subcontract
service work, parts room work, and truck driving work.

                                   BENEFITS(1)

ARTICLE B-1. BEREAVEMENT LEAVE -- In the event of a death in the immediate
family the employee will be entitled to one three-day paid bereavement leave in
each calendar year to attend the funeral. Employees will receive their leave
rate (as defined in Leave Rate) for each day of leave except regular operators
will receive missed earnings. Employee's immediate family is defined as their
spouse, son, daughter, sibling, parent, current father-in-law, and current
mother-in-law. Employees who fail to attend the funeral will be ineligible for
benefits.

ARTICLE B-2. EMPLOYEE ASSISTANCE PROGRAM -- The Company will provide an employee
assistance program to employees covered by this Agreement on the same basis as
other employees of the Company.

- ------------------
(1) Unless otherwise noted, all changes in the Benefits section are effective
January 1, 1999.

                                                                               9


ARTICLE B-3. 401(K) PLAN -- With the plan year beginning January 1, 1999, the
Company will make a contribution of 50 cents, in cash or stock, for each dollar
contributed of the first five percent of an eligible employee's pay. Prior to
the Company selecting cash or stock, it agrees to meet and confer with the
Union. Additional matching contributions of Company stock may be made at the
discretion of the Company's Board of Directors. Company matching contributions
will be made no later than June 30th of the year following the year for which
contributions are being matched; the stock contributed will be valued as of the
date the matching contribution is made. Employees who work 1,000 hours or more
in a calendar year are eligible for Company matching contributions in the 401(k)
Plan. Company matching contributions vest after an employee has completed five
years of actual service with the Company. The Company will bear the
administrative costs associated with the 401(k) Plan, retain the right to choose
the plan administrator and exercise all shareholder rights with respect to such
stock. The Company retains the right to distribute the portion of a
participant's account held in the Company stock fund in the form of stock.

ARTICLE B-4. HEALTH AND WELFARE -- For full-time employees who have completed
their probationary period and become eligible for benefits, the Company will
contribute into the Greyhound Lines, Inc./Amalgamated Transit Union Health and
Welfare Trust:

- -        a minimum of $165.00 per month from January 31, 1998 through February
         1999;

- -        a minimum of $175.00 per month from March 1999 through February 2000;
         and

- -        a minimum of $181.50 per month for the remainder of the Agreement.

         The Company will increase its contributions on an annual basis, as of
March 1st of each year of the contract, by the amount necessary to maintain a
70/30 co-payment ratio but, under no circumstances, will the Company be
obligated to increase its contribution by more than five percent of the agreed
upon contribution in any year of this Agreement.

ARTICLE B-5. HOLIDAY PAY -- There will be eight recognized holidays: New Year's
Day, Martin Luther King's Day, Friday before Easter, Memorial Day, Fourth of
July, Labor Day, Thanksgiving and Christmas. Employees' holiday pay will be at
their leave rate. In order to receive holiday pay, employees must work a full
shift on the last scheduled work day prior to the holiday; the holiday if they
are scheduled to work the holiday; and the first scheduled work day immediately
after the holiday, unless an active employee has been properly excused for leave
without pay on such day(s). Approval of such leave must be requested in writing
and, if granted, granted in writing.

         Holiday pay is intended to ensure that all employees, whether they work
on the holiday or not, receive an additional day's pay for each holiday,
provided all such employees who are not available as required by this Agreement
will not receive holiday pay.

         Employees must have a minimum of 90 days service to qualify for holiday
pay.

ARTICLE B-6. INCENTIVE PERSONAL DAYS OFF (IPDO) -- Beginning in calendar year
1999, operators working 2,080 hours in a calendar year will earn four IPDO days.
Operators working 2,500 hours in a calendar year will earn an additional four
IPDO days for a total of eight. In calculating hours under this provision,
vacation time and IPDO will be credited. IPDO days must be taken in the calendar
year following the calendar year in which they were earned. IPDO days cannot be
banked or sold. IPDO days cannot be taken during black out periods and are
subject to manpower availability at all other times as determined by the
Company.

ARTICLE B-7. JURY DUTY -- The Company will pay operators on jury duty the
difference between missed earnings for regular operators or the leave rate (as
defined in Leave Rate) for extraboard operators and the daily amount paid for
such jury duty. Operators returning from jury duty on a date when their regular
run is out of town may position themselves to pick up their run at the layover
point if possible. However, if they elect not to position themselves, earnings
guarantee will not apply for that day.

         Maintenance employees on jury duty will be allowed the difference
between their leave rate and the daily amount paid for such jury duty.

                                                                              10


ARTICLE B-8. LEAVE RATE -- Unless otherwise specified, the leave rate for
operators will be calculated as 1/6 of 1/52 of their earnings during the
previous 12 calendar months. Any operator off for 30 consecutive days or more
without pay because of illness, workers' compensation injury, furlough, or any
new operator with less than one year of service will have their leave rate
calculated on a prorated basis, based only on actual weeks worked in the
previous 12 calendar months.

         Missed earnings will mean the amount of earnings that an employee would
have normally earned on a regularly scheduled work day. Employees are not
entitled to missed earnings for any scheduled day off.

         The leave rate for maintenance employees is calculated as eight hours'
pay at the applicable hourly rate.

ARTICLE B-9. PASSES -- Employees passing their probationary period will be
granted an annual pass to be used in accordance with Company policy.

ARTICLE B-10. RETIREMENT PLAN -- The Company and the Union agree to continue the
existing Greyhound Lines, Inc./Amalgamated Transit Union National Local 1700
Retirement and Disability Plan hereinafter referred to as "Plan" subject to the
following modifications: (1) In the event the Plan actuary notifies the Plan
Trustees on or before November 1st of any plan year that a contribution to the
Plan is likely to be required for the succeeding plan year (e.g., by reason of
an expected change in actuarial assumptions or methods or otherwise) hereinafter
referred to as the "Notice," the parties will meet to negotiate a method of
avoiding such required contribution, but upon the failure of the parties on or
before the December 8 following receipt of the Notice to agree upon a method to
avoid such contribution, all future benefit accruals under the Plan will be
frozen effective December 31st of the year of the Notice; (2) if, after the Plan
has been frozen, any subsequent annual actuarial valuation by the Plan's actuary
reports that the market value of the assets of the Plan exceed 115 percent of
the actuarial present value of accumulated plan benefits, the parties agree to
negotiate retroactive benefit increase(s), in accordance with the pre-freeze
benefit formulas, for those participants whose future benefit accruals were
frozen as a result of (1) above, but in no event will such benefit increase(s)
cause the market value of the assets of the Plan to be less than 115 percent of
the actuarial present value of accumulated Plan benefits, determined after the
benefit increase(s) described above.

ARTICLE B-11. RETIREMENT (EARLY) LEAVE OF ABSENCE (RLOA) -- Operators in the
Greyhound Lines, Inc./Amalgamated Transit Union National Local 1700 Retirement
and Disability Plan (other than highly compensated employees as defined by law)
will be allowed to take a RLOA prior to age 55 and retire without penalty at age
55. Years of service and average earnings will be frozen at the time the RLOA is
granted. Operators will not be subject to recall, but will be allowed to return
to work one time only before age 55 providing they meet all applicable
requirements at the time. At age 55 operators must return to work or retire.
Operators returning to work will not be credited with years of service during
the RLOA but will resume the accumulation of years of service upon the date of
return. Operators taking RLOA are not eligible for health and welfare benefits
except under COBRA and other applicable laws.

         Forty operators per year, selected on a seniority basis, will be
offered an opportunity to elect RLOA. No more than five percent of the operators
at any location are eligible for RLOA and locations with fewer than 25 operators
are limited to one driver taking RLOA.

ARTICLE B-12. STOCK OPTION PLAN -- A pool of two million shares of Greyhound
stock will be made available for stock options with a seven-year term. The stock
options will be granted under a new stock option plan established for active
operators and mechanics who have three years or more of seniority and have
worked at least 1,720 hours during each of the previous three calendar years as
of January 1st of the year during which options are granted. Hours worked
exclude sick leave, medical leave and periods for which workers compensation is
received. The first one million shares of stock options will be distributed as
of October 1, 1998 at a grant price of $6.00 per share and will be 100 percent
vested on October 1, 2000. The second grant of one million shares will be
granted on October 1, 2001 at a grant price of $7.00 per share and will be 100
percent vested October 1, 2004. The Company will provide for a "cash-less
exercise" program.

                                                                              11


ARTICLE B-13. SICK LEAVE -- After one year of service, employees are eligible
for paid sick leave for days missed in cases of non-work-related injury and
illness, not to exceed six days per year, subject to the following exclusions:

1.       Sick leave claims are limited to those days excluded from coverage and
         not eligible for retroactive coverage by state workers' compensation
         law.

2.       No employee will receive sick leave payments for the first three
         consecutive days, whether or not work days, except if an employee is
         hospitalized during the three-day waiting period, sick leave benefits
         commence as of the first day of hospitalization.

3.       Employees are not entitled to sick leave benefits for any time lost by
         reason of sickness while on vacation.

         Sick leave for extraboard operators will be paid at the leave rate as
follows:

         1.       The first three days will not be paid and will be considered a
                  waiting period.

         2.       The next six days will be paid.

         3.       The seventh day is a day off and will not be paid.

         4.       Thereafter six days will be paid followed by one unpaid day.

         Regular operators will be paid missed earnings less the three day
waiting period. Sick leave for maintenance employees will be missed earnings for
regular hours after the three-day waiting period.

         Employees may accumulate unused sick leave from year to year.
Accumulated sick leave may be used only for a period of sickness exceeding 10
consecutive days, but will be paid in accordance with the above, retroactive to
the fourth day of such sickness.

         In order to receive sick leave benefits, employees must submit medical
evidence of their illness from a licensed medical doctor or other satisfactory
evidence on forms provided by the Company. The expense of this medical evidence
will not be borne by the Company. At its option, the Company may require a
special examination of an employee by a designated doctor paid for by the
Company. Employees will notify their supervisor of absences on account of
sickness as soon as possible. An application for sick leave benefits will be
made within five days after return to work.

ARTICLE B-14. VACATIONS -- Vacations are earned and granted in the following
manner:

- -        Employees who complete one year but less than 11 years of continuous
         employment will be granted two weeks' paid vacation.

- -        Employees who complete 11 years but less than 21 years of continuous
         employment will be granted three weeks' paid vacation.

- -        Employees who complete 21 or more years of continuous employment will
         be granted four weeks paid vacation.

         Employees will be paid their leave rate for each day of paid vacation
except regular operators will be paid missed earnings (as defined in Leave
Rate). Each week of vacation for extraboard operators includes six days of paid
leave and one day of unpaid leave.

         Employees with less than 21 years of service are allowed to bank one
week of vacation each year up to a maximum of 30 days. Employees with 21 or more
years of service may bank two weeks of vacation each year up to a maximum of 60
days. Mechanics will bank five paid days per week and drivers six paid days per
week of vacation. All remaining vacation must be bid and taken in the year
earned. Banked vacation can then be sold, taken as extra week(s) of bid
vacation, or taken as personal time off one day at a time (VPTO) subject to
Company approval, provided 48 hours advance notice is given

         When selling vacation days or taking VPTO, employees will be paid the
leave rate as defined in the Leave Rate provision except regular operators will
be paid 1/6th of the amount paid for their last week of vacation for each day
sold or taken as VPTO.

         Employees wishing to take VPTO because of illness must comply with the
provisions governing sick leave, e.g., three-day waiting period, medical
evidence, and so forth.

         The annual posting date of vacations will be during November and
December, with vacations to be taken the following calendar year. The Company
will designate periods when vacation must be taken and will post at each
location a list showing same and the number of employees who can take vacations
during the same period.

                                                                              12


Employees will bid on vacation periods in accordance with their seniority.
Employees may, in bidding on vacation dates, divide vacation in units of weeks.
Employees will bid their vacation at vacation bidding time regardless of their
anniversary date. Employees who are inactive at the time their bid is due must
contact a supervisor to submit their bid which will be placed on the vacation
bid sheet by the supervisor. Employees must elect to bank vacation by October
15th of each year for the next calendar year.

         In the event of death of an employee, his beneficiary will receive any
vacation benefits due him at the time of his death. Employees leaving the
service of the Company will be paid for all earned and unused vacation or days.
Earned and unused vacation will be paid for at the leave rate as defined in the
Leave Rate provision.

         To the extent allowed by law, employees leaving the service of the
Company will be charged, and appropriate amounts will be taken out of any moneys
due the employee, for the number of days vacation not earned for which they have
been paid.

         Operators who move from one location to another will carry their
scheduled vacation time with them to their new location. Non-operators who
change their locations will retain any previously scheduled vacation times only
to the extent practicable, as determined by the Company.

         Vacations for non-operators commences the day after their scheduled day
off. Operators will start their vacations on Monday unless they are on a run
where they are away from their home location on Monday; in which event, they
will start their vacation on either the commencement or after completion of
their run.

         Employees who have a leave rate of $50 or less may request to sell all
of their vacation and continue working through their scheduled vacation period.

         Maintenance vacation weeks becoming open or available during the months
of June, July, August and the last two weeks of December (prime weeks) will be
rebid. For maintenance employees, such prime weeks of vacation vacated by the
successful bidder will be rebid.

                                    OPERATORS

ARTICLE O-1. BIDDING

(a) Displaced Operators Providing at least 30 calendar days remain before the
effective date of the next general bid, operators displaced by senior operators,
or who for any reason are deprived of their assignment through no fault of their
own, must displace a junior operator in assigned service at their home location
or place themselves on their home extraboard. Displaced operators must displace
a junior operator in assigned service within 24 hours of the time of
displacement unless prevented by sickness or any other approved cause, or return
to their home extraboard. Displacements occurring within 30 days of the next
general bid will continue if the initial displacement occurred at least 30 days
prior to the next bid.

         Operators exercising their right to displace another operator are
required to give at least 12 hours notice to the Company prior to the departure
from their home terminal. Notification will be attempted first by telephone. If
the operators cannot be contacted by telephone, a VRU message will be left.

         Displaced operators upon completion of their last assignment, with
proper notice, may displace any junior operator at their home location. The
displacement is effective on the first outbound trip after proper notice is
given as described above.

(b) Extraboard Positions The Company will determine the number of extraboard
positions at each location. Should extraboard positions be posted between
general bids, all active extraboard operators will be eligible to bid on such
positions. Assignments will be by seniority from among those who bid except
inactive operators will be awarded positions at the location they last worked
ahead of active operators from another location. Operators will be responsible
to be aware of such postings and the Company is not obligated to notify
operators of any such postings. Operators must sign such bid in person and be
available on the effective date. Successful bidders for the posting of
extraboard positions under this provision waive the seven-day recall language.

                                                                              13


(c) Hardship Transfer Operators may request a transfer to a new location if
their continued work at their home location creates a hardship. Hardship
transfers are subject to Company and Union approval. Operators granted a
hardship transfer forfeit all hold-down bidding and displacement rights for the
duration of the current bid at their new location.

(d) Hold-Downs and Vacancies New runs and vacancies between general bids will be
posted as hold-downs at the extraboard location covering the work. Hold-downs
will be subject to bid by all operators on the extraboard at the location and
will be awarded to the senior extraboard operator bidding. Hold-downs consist of
new runs, permanent vacancies or temporary vacancies due to vacations or other
leaves.

         The successful bidder of a hold-down posted because of a new run or
because the regular operator vacated the run permanently, either voluntarily or
due to resignation, retirement, or death will be considered the regular operator
for the duration of the bid and will be subject to all rules of a regular
operator, including displacement.

         Temporary vacancies will be posted only when there are five or more
known working days included in the hold-down posting. Operators may elect to
utilize any scheduled days off immediately at the end of the hold-down as if
they were their regular days off.

         Hold-downs will be posted each week on Wednesday, Thursday, or Friday
and awarded the following Thursday at 3:00 p.m. local time (six to nine days
later).

         If a hold-down is posted and not bid, it will be assigned to the junior
operator on that board, or may at the Company's discretion, be worked off the
extraboard.

         Successful bidders of a hold-down will be removed from the board nine
hours before the time required to report for the assignment. Successful bidders
out on an assignment at the time they should have been removed from the board
must complete their assignment and pick up the hold-down at their home location,
after they have secured their rest. Earnings guarantee will not apply.

         Operators called for an extraboard assignment and instructed to report
12 hours or less before the time required to report for the hold-down assignment
may, at the time of the call, decline the report for an assignment if sufficient
operators are available. Operators who decline such assignments will be removed
from the board and placed on the hold-down at that time. If sufficient operators
are not available, the assignment must be accepted. If unable to pull the first
trip of the hold-down, operators will be paid the greater of the first day of
the hold-down or the work performed. Operators on hold-downs, vacation or leave
of absence bidding a new hold-down must be available to perform the hold-down's
first trip. Hold-downs will be awarded only to active operators. To be
considered active, operators must be on the extraboard available for call, on
assignment, or on their time off at the time the hold-down is awarded.

         All hold-downs bids must be signed in ink. Once the hold-down is
signed, it may not be altered in any manner. Operators bidding a hold-down will
not have a claim to any guarantee for wages lost as a result of their bid.

(e) Material Change The following are considered material changes:

         1.       Change of location of assignments.

         2.       Change of run destination (excluding garage and/or terminal
                  changes within the same city).

         3.       Change of more than an aggregate of one-hour sign-on or
                  sign-off time in the assignment at the operator's home
                  location in a three-month period.

         4.       Change of more than one-hour sign-on or sign-off time in the
                  assignment at the operator's home location.

         5.       Change of days off.

         6.       Change of assignment resulting in a decrease of $100.00 or
                  more per month in earnings.

         When the working conditions of regular runs are materially changed,
operators have the following options:

         1.       Remain on their run.

         2.       Displace their home extraboard.

         3.       Displace any junior regular operator at their home location.

         Runs vacated under this provision will be handled under the Hold-downs
and Vacancies provision.

                                                                              14


(f) Regular Runs and Extraboard Selection The Company will conduct a minimum of
four nationwide general bids for all regular runs and extraboard positions to be
effective in January, March or April, June, and August or September. All
operators who have worked during the current bid period and prior to the new bid
closing are eligible to bid. Eligible operators who fail to bid forfeit rights
to displace except to the extraboard at the operator's home location; such
operators may fill any open positions or displace a junior operator on that
extraboard. Runs will be awarded on a seniority basis.

         Operators bidding regular runs and hold-downs must qualify themselves
to work the bid job. Qualified includes, but is not limited to, proper licenses
and knowledge of the route bid.

         In recognition of a business need for all operators to be available
during the busy summer season, the following applies to the June and
August/September general bids:

- -        Operators changing locations with the June general bid must assume
         their new assignment effective on the first day of the bid. Operators
         with legitimate reasons for an extension on their arrival date must
         secure an authorized leave of absence from a Company supervisor at the
         new location. Operators who do not change locations must pull the first
         cycle of their new run unless it would cause a loss of earnings between
         the pay for the old and new assignment.

- -        Operators changing locations with the August/September general bid must
         work through the final work day prior to the effective date of the
         August/September bid. Operators who do not change locations must work
         the last complete cycle of the June run bid unless it would cause a
         loss of earnings between the pay for the old and new assignment.

         Operators who change cycles due to a run bid change are not entitled to
lost wages or overtime. Operators returning to work from authorized leave or
reinstated will be assigned in the following manner:

- -        Operators with a prior assignment within the current run bid must
         return to their prior job.

- -        Operators who have not held a job in the current or upcoming bid may
         displace any junior operator or open position at their home location.

- -        Operators eligible to bid who failed to do so may only bump the
         extraboard or any open position at their home location.

         Extraboard positions are bid by seniority. Operators who do not receive
their bid choice on a general bid will be assigned to a vacancy nearest their
present location. If no vacancies exist, they will be furloughed immediately.

ARTICLE O-2. EXTRABOARDS --The Company reserves the right to establish,
maintain, alter, alleviate, or change extraboards at locations where the
necessity of the service requires. Seniority choice will determine the operators
who are assigned to the extraboards. The extraboard to which a new operator is
assigned will be designated by the operator's seniority bid. Seasonal operators
will rotate on the extraboard and will be eligible to bid on designated runs and
hold-downs only. Part-time operators will rotate on a separate extraboard and
will not rotate on the full-time extraboard. The order of assignment for
extraboard work is full-time/seasonal extraboard operators, full-time/seasonal
extraboard operators on their day off, full-time regular operators who have
signed for work on the superboard (with hours to perform the work and who would
not miss their regular run), part-time operators, pre-assigned regular
operators, and rentals.

         Full-time extraboard operators who are available for service 12 days in
a payroll period will receive a biweekly guarantee of $375.00. Available for
service means that an operator must be promptly accessible by telephone or be
present at the garage or terminal if directed by the Company. Holiday pay is in
addition to the biweekly guarantee.

         When an extra operator transfers from one board to another after
learning two routes of the board to which the operator transfers, the operator
will be placed on the extraboard for work. Extra operators must qualify for all
runs serviced by their extraboard within 30 days from the date assigned. An
extra operator who fails to become qualified within such period will be removed
from the board and must learn all routes.

         Extraboard operators entitled to an assignment over a route they have
not learned may be removed from the board and required to ride the trip and
learn the route. This provision will not apply to an operator at any
away-from-home location. If business plans indicate a potential operator or
equipment shortage, the Company may assign a regular operator, part-time
operator, or rental bus ahead of available extraboard operators. This will
permit the Company to assign regular operators to assignments that will allow
them to work and return home to be available to pull their next scheduled run.
It will also permit the Company to assign rentals or part-timers to

                                                                              15


assignments that will allow them to work and return home before their available
period ends. The first-up extraboard operator missing an assignment under this
provision is entitled to a claim under the runaround provision.

(a) Extraboard Run Assignments Extraboard operators assigned to a regular run
will be paid for protection up to the sign-on time of the run. Extraboard
operators assigned to an extra section, a charter, a deadhead, or to DHOC will
be paid for protection from report time according to instructions up to the
actual time of departure. Protection will be paid at the protection rate.

         Runs will be assigned at the specified assignment time in the Run Guide
or 30 minutes prior to departure time. Doubles, deadheads, and DHOC will be
assigned at least 15 minutes prior to scheduled departure time, if known, or
when they develop. When simultaneous assignments occur, the first-up operator
will make his choice on available work, the second-up operator will make his
choice of the remaining available work, and so on. If, after making a choice,
the run or work the operator selected is canceled, he will remain first-up for
the next known assignment after the other simultaneous assignments occur,
without a bump.

         Extraboard operators assigned to straight-away runs (a run that
requires operators to secure their rest before returning to their home terminal)
will be assigned the entire run. However, upon arrival at the layover location,
operators may elect to vacate the run and be placed on the extra board by
notifying central dispatch at the time they sign in at the layover location.
Operators will then fall under all provisions of the First-In, First-Out
language except that the Layover and Meal Allowance provisions will not apply.
This does not apply to extraboard operators assigned to a turn-around run (a run
in which the operator is not required to secure his rest before returning home)

         Open regular runs will be assigned to the first-up extraboard operator
from the location where the run originates. If no extraboard operators from the
location where the run originates are available, the run will then be assigned
board-to-board under normal first in, first-out rules.

(b) First-In, First-Out Extraboard assignments will be made on the basis of
first-in, first-out. Operators returning to their home location, who have
secured their rest at an away location, and who still have available driving
time within their 10 hours, may be first-up for assignment. The Company, at its
option, may release such operators and place them on the bottom of the board or
on protection within two hours after arrival. Four hours after being placed on
protection, operators who have not received an assignment will be placed on the
bottom of the extraboard. If an assignment is received, the assignment must be
round trip or operators will be returned home immediately upon completion of a
one-way assignment, either DHOC or other available work. No runarounds will
apply when returning operators to their home location under this provision.

         Operators returning to their home extraboard within eight hours of the
original report at their home extraboard who still have available driving time
may be first-up for an assignment if they have sufficient hours to complete the
assignment. At the Company's option, operators may be placed on the bottom of
the board or placed on protection within two hours after arrival. If placed on
protection, an operator who has not received an assignment within eight hours of
his original report will be released and placed on the bottom of the extraboard.

         Extraboard operators at an away-from-home location without an
assignment, and not on temporary transfer, will be worked first-in, first-out to
or towards their home terminal, except when the extra board is depleted. When
the extraboard is depleted, operators may be used on any assignment in any
direction.

         When two or more operators arrive at their home board at the same time,
they will be placed on the bottom of the extraboard or remain first-up in the
following order:

1        The order of the previous report for assignment.

2.       The operator who had the first report time on that day.

3.       If the report times were the same, the operator returning from the most
         distant location.

4.       If the report times were the same and traveling the same distance, the
         order they left their home location.

         Extra operators who, through no fault of their own, are runaround will
receive runaround compensation for this occurrence. In no instance will
runarounds apply to regular operators including regular operators working on the
extraboard. Extra operators will ascertain that they are on the extraboard and
in the correct position and immediately notify their supervisor when they have
been placed in the wrong position on the board or left off the board. Regardless
of circumstances, an operator will not be considered as having been runaround
more than once in any 24 hour period.

                                                                              16


         Runarounds will be paid at the fixed rate of $50.00 per occurrence per
approved runaround. If an operator is runaround and does not work within the
next 12 hours, the operator will be entitled to a full runaround payment for the
assignment missed, and will not receive the $50.00 penalty. Only the first-up
operator at the time of occurrence will be entitled to a runaround payment.

(c) Overtime for Extraboard Operators Overtime will be paid at the rate of time
and one half for all paid hours worked (does not include benefit compensation)
over 50 hours in a seven-day period and at double time rate for all paid hours
worked over 70 hours in a seven-day period. The overtime periods begin 12:01
a.m. Monday and end 11:59 p.m. Sunday.

         Hours worked on charters of 36 hours or more or hold-downs of seven
days or more will be excluded when calculating overtime under this article.

(d) Reporting Time Extraboard operators will protect all runs and schedules.
Extraboard operators are responsible for keeping themselves advised of their
status on the extraboard and all operators must provide themselves with
telephone service. To be considered available for service, extra operators must
have sufficient rest and must be able to reach the garage or terminal within two
hours at their home location and one hour at an away location, unless otherwise
extended. The Company will cooperate and upon request furnish information as to
extraboard standing and the probable call times. Operators are responsible for
all messages transmitted through or to other parties.

         First-up extraboard operators who are unavailable and cannot be
notified by the Company to receive instructions to report to work will be
removed from the extraboard for 12 hours. Extraboard removal is not considered
discipline. Operators with an assigned report time who report late may be
assigned work; may be placed at the bottom of the extraboard, if an extra
operator; or returned home until the next assignment, if a regular operator.

         Extra operators booking off sick or fatigued will be removed from the
extraboard for a minimum of 24 hours and placed on the bottom of the board when
they are physically able to call in and perform work. If the extraboard is
depleted, operators may be placed on the extraboard before the end of the 24
hours. Operators will not be permitted to drop to the bottom of the board. All
book-offs must be in 12 hour increments.

(e) Temporary Transfer Assignment Method A voluntary temporary transfer list
will be established at each extraboard point for the purpose of assigning
temporary transfers. Extraboard operators may sign this list at any time after
becoming a member of the extraboard at such location. Assignments from the
voluntary list will be made according to the operator's position on the regular
extraboard on a first-in, first-out basis. Extraboard operators who have signed
the temporary transfer list and refuse an assignment will be removed from the
voluntary transfer list and will not be eligible to sign up on the list again
for a period of 30 calendar days. In the event no operators sign the list, or if
the list is depleted, transfers will be assigned to the junior operator
currently on the board at the time of the assignment. All assignments will be
made nine hours before the operators are scheduled to leave their home terminal.

         Temporary transfer operators moving from one extraboard to another are
responsible for learning the new routes at the new extraboard location. The
Company may require the temporary transfer operators to pad on schedules to
learn the route. Temporary transfer operators will be paid $12.00 per day while
learning routes.

(f) Temporary Transfers - Extraboard Operators The Company has the right on an
emergency basis to order extraboard operators onto the extraboard at another
location. If the temporary transfer is mandatory, the temporary transfer will
not exceed seven days. Voluntary temporary transfers may extend up to 30 days.
Temporary transfers must be for a predetermined period of time. Any extension in
time must be mutually agreed upon between the Company and the employee. Any
extension exceeding 30 days is considered a permanent transfer except that an
operator on assignment on the 30th day may complete the assignment and return to
his home terminal and will not be considered a permanent transferee. During the
transfer period, the temporary transfer operator's home terminal will not change
unless the transfer becomes permanent. If a transfer becomes permanent, the
operator will be placed on the extraboard at the new location and will work
first-in, first-out from the new location for the entire period without bidding
or bumping rights at the new location.

                                                                              17


         Temporary transfer operators will be placed on the other location's
extraboard in the same order as they vacated their home boards. The Company has
the right to work operators to the temporary transfer location on deadheads or
DHOC only. Deadhead buses must go to the temporary transfer location. Other
types of assignments may be made only if the board is depleted. Temporary
transfer operators must be sent home immediately at the end of the
pre-determined time period or, if on assignment, immediately upon the completion
of the assignment. The Company may return the operators to their home location
prior to the expiration of the predetermined time.

         The Company may work the temporary transfer operator home after arrival
at the temporary transfer location, if the driver plugs the foreign extraboard
at the temporary location behind drivers from his home location, and works under
the First-In, First-Out provisions of the contract. The operator may be
cushioned home immediately ahead of other operators on the extraboard.

         The Company will provide temporary transfer operators a room and will
pay operators a meal allowance as outlined under the Meal Allowance provision
for the first 30 days. The meal allowance period commences when temporary
transfer operators leave their home terminal and continues until they return to
their home terminal or the transfer becomes permanent.

(g) Layover Upon being released from an assignment at an away-from-home
location, an extraboard operator becomes eligible for meal allowance 16 hours
after securing eight hours rest. Meal allowances will be calculated under the
Meal Allowance provision.

         An extraboard operator held away from home without work will receive a
layover penalty of $5.00 per hour or fraction thereof for each hour after the
16th hour for the next eight consecutive hours. After the first 24 hours, the
operator will be paid $5.00 per hour in eight-hour cycles--eight hours off,
eight hours paid, eight hours off, and so forth until he reports for an
assignment/protection. This does not apply to temporary transfer operators.

         Operators held away from home without work for more than 24 hours may
request an assignment to or towards their home terminal. If this request is
denied, and the operator has not worked after another 12 hours, he may again
request to be assigned on the first schedule to or towards his home terminal
after the 36th hour. The second request must be granted immediately.

         The layover penalty and meal allowance will not apply to extraboard
operators on regular run assignments or hold-downs.

(h) Time Off for Extraboard Operators Time off requested by operators will be
granted, manpower permitting, in 12 hour increments; i.e., 12 hours off, 24
hours off, 36 hours off, and so forth.

ARTICLE O-3. CHARTERS

(a) Charter List (Multiple-Day) There will be a multiple-day charter list for
all charters of 36 hours or more. To be eligible, operators must have a minimum
of one year of service and have satisfactorily completed a special charter
training program. Operators who refuse an assignment from the multiple-day
charter list will be removed from the list for 30 days. All charters of less
than 36 hours will work on a first-in, first-out basis without consideration to
the charter list.

(b) Notice of Assignment Special party or charters of less than 36 hours will be
assigned, when possible, 30 minutes in advance.

         Charters of 36 hours or more will be assigned to the first-up
multiple-day charter list operator. This is the first operator on the regular
extraboard who is on the multiple-day charter list. If no multiple-day charter
list operators are available, the charter will be assigned to the first-up
extraboard operator with sufficient hours to operate the charter. When possible,
charters of 36 hours or more will be assigned nine hours in advance. If a
nine-hour call is not possible, the assigned operator must elect at assignment
time to either accept the entire charter or be relieved at the next extraboard
location where there is available manpower.

         All charters will be operated by operators from the nearest extraboard
unless a specific operator is requested.

(c) Charter Pay Operators will be paid the charter driving rate for all time
spent driving and the protection rate for all non-driving time, including hours
logged off duty, except when securing required DOT rest. Pay begins at the time
an operator reports for an assignment. Pay continues until the bus is dropped at
the conclusion of the

                                                                              18


assignment or at the start of the period when the operator is released to obtain
rest at a room provided by the Company or charter party. Pay will commence again
when the operator is required to report back on duty.

         If a charter of less than 36 hours requires an operator to secure rest
(nine hours or more), away from his home location, the operator will be paid a
minimum of eight hours of pay at the charter driving rate. On charters of 36
hours or more, operators will receive a guarantee of eight hours at the driving
rate in each complete 24-hour period. The 24-hour period commences at the time
of assignment of the charter. If such charter is canceled through no fault of
the operator, after the operator reaches the pick-up point, the operator will be
paid a minimum of eight hours at the charter driving rate and placed on the
bottom of the board.

         Meal allowance will only be paid on charters of 36 hours or more as
provided in the Meal Allowance section.

         If regular operators are assigned a charter they will be guaranteed an
amount equal to their regular earnings for the duration of the charter, unless
requested; in which case, there is no guarantee.

         Operators accepting request charters from a city other than their home
location must position themselves at no cost to the Company.

(d) Charter Sales Incentive The Company will pay a five per cent commission to
operators who sell charters without the assistance of a travel agency, provided
they are accepted by the Company. Effective March 1, 2000, a six percent
commission will apply. The commission will be paid after the charter is paid for
and operates. The Company reserves the right to operate or reject any charter
and charters operated will be limited during peak periods. It is also understood
only one commission will be paid for a charter and no commission will be paid on
discounted charters.

ARTICLE O-4. GARAGE PAY -- At all points where the garage is separate and apart
from the terminal, a garage allowance will be paid to the operator driving to or
from the garage at the deadhead rate unless the operator is on protection.
Operators on protection will be paid the protection rate with no duplication of
pay.

ARTICLE O-5. REST -- Extraboard and regular operators working extra who are
required to secure their rest must have nine hours off between sign-off time and
the time of a call to report. However, operators may be assigned to the second
half of a regular straight-away run if they completed the first portion of the
same run, subject to DOT limitations.

         Unless extended, the standard call to report for duty will be two hours
at a home terminal dispatch point and one hour at away-from-home terminal
dispatch points. Call times will be consistent within each location, based on
commute times, traffic patterns, etc., and may be changed from time to time by
mutual agreement between the Company and the Union.

         Extra operators who do not have sufficient DOT hours of service
remaining will revert toward the bottom of the board, one plug at a time, until
they have secured sufficient hours to resume service.

ARTICLE O-6. LATE ARRIVAL AND CANCELLATION.

(a) Cancellation When the Company cancels service for any reason, regular
operators who have reported will be paid that day's work or be placed on the
extraboard, and if used, guaranteed the same amount as if they had worked their
regular run on that day. The operators placed on the extraboard may be passed
over for assignments that would make them miss their next run. If released,
these operators will not be recalled to work that day.

         If service is canceled, the Company will attempt to notify regular
operators of the cancellation as soon as possible. Notice must be given to the
operators at their home location at least two hours prior to sign-on time or at
least one hour at an away-from-home location. Notification will be attempted
first by telephone. If the operators can not be contacted by telephone, a VRU
message will be left. Operators so notified will not be entitled to any pay for
canceled service.

         When regular operators arrive at a point other than their normal
away-from-home location and are held, they will fall under Late Arrival
provisions unless they receive their rest at that location. The operators will
be guaranteed their run pay for that day. Regular operators held at this
location receiving their rest will be paid eight hours out of each 24-hour
period at the protection rate. The first eight hour period commences one hour
after completing eight hours rest. Reasonable room expenses and meal allowances
as defined in the Meal Allowance

                                                                              19


section will be paid. The Company may use the operators to or towards their home
terminal or on any portion of their regular run. In the event no extraboard,
superboard, or part-time operators are available at that location, the regular
operators may be used for any open assignment.

         Regular operators held at their normal away-from-home location on
Company orders due to cancellation of service will be guaranteed eight hours pay
at the protection hourly rate in the first 24-hour period commencing at their
normal schedule departure time. During the next 24 hours, regular operators will
be guaranteed 12 hours at the protection hourly rate. The third and any
subsequent 24-hour period regular operators will be guaranteed 15 hours at the
protection hourly rate. Reasonable room expenses and meal allowances as defined
in the Meal Allowance section will be paid. The Company may use these operators
to or towards their home terminal or on any portion of their regular run. In the
event no extra operators are available at that location, these regular operators
may be used for any open assignment.

         These provisions do not apply to charters.

(b) Late Arrival Operators delayed on any schedule, through no fault of their
own, who arrive at a terminal too late to operate the next portion of their run,
are guaranteed compensation no less than they would have earned. The Company
reserves the right to position operators without additional compensation so they
can perform as much of their regular work as possible.

         Operators delayed on any schedule, through no fault of their own, will
be paid the driving rate for any time in excess of 45 minutes of the scheduled
arrival time. However, late arrival pay will not be due on any subsequent
schedules when created by any previous late arrival on an operator's run. Late
arrival pay is not due if operators are notified of a revised report time two
hours prior to scheduled report time at their home terminal or one hour prior to
report time at layover. A layover point means a location at which operators are
required to secure their rest. Extraboard drivers paid protection until
departure will not receive late arrival pay unless more than 45 minutes is lost
en route.

ARTICLE O-7. MANNING OF OPERATOR WORK -- All motor coaches operated by the
Company under its certificates and permits, except wrecking equipment,
maintenance service, and delivering equipment to and from garages, will be
driven by operators holding seniority at the point of origin for the operation
if such operators are available.

         This article does not apply to equipment or operators leased or
chartered during peak periods or during emergencies, or to runs using equipment
of 35 feet or less.

         It is understood that wrecking equipment does not include any equipment
except that used in repairing and towing. It is understood that maintenance
service as used in this article means those cases where the garage dispatches a
bus driven by a maintenance employee for the purpose of replacing another bus
which is broken down and those cases where a maintenance employee takes a bus
out for testing purposes. Nothing in this Agreement limits the right of the
Company, subject to DOT limitations, to determine the daily time and distance to
be driven by an operator without regard to any formal or informal geographic
division of the Company or the Union. The Company will notify the Union of major
changes and the parties will meet promptly to confer, upon request, but in no
event is the Company precluded from making such changes after giving the Union
14 days notice if the Company was available to meet and confer during that
period.

ARTICLE O-8. MEAL ALLOWANCE -- Meal allowance will be paid in each 24-hour
period when specified in this Agreement as follows:

                                     
6 - 7 hours                             $ 4.00
8 - 15 hours                            $12.00
16 - 24 hours                           $20.00



         There are no exceptions to the above regardless of location.

ARTICLE O-9. BOOKING OFF -- A regular operator calling in sick will be required
to pick up his run at his home location after notifying the Company four or more
hours in advance of the next sign on time.

                                                                              20


ARTICLE O-10. OPERATOR'S COMPARTMENT -- The Company will meet and confer with
the Union prior to designing new driver's compartments or making changes in the
design of existing driver compartments, including the driver's seat.

ARTICLE O-11. OPERATORS EQUIPMENT -- Certain equipment necessary in the conduct
of an operator's work, including badge, punch, rule book, and working flashlight
will be furnished by the Company. Operators must sign a receipt for all
equipment furnished by the Company. Operators must safeguard such equipment, and
if any is lost or damaged beyond use, operators must make immediate application
for replacement, at their expense. Operators must turn in all equipment to the
Company upon termination of service or demand.

ARTICLE O-12. REPORTING TO COMPANY -- Operators will not be instructed to report
by the Company on their days off, after leaving their assignment or more than 20
minutes prior to the normal report time except in cases of a serious nature or
to complete an accident report. Operators may be required to report for training
on their days off and they will be compensated at one and one-half times the
protection rate for actual training hours.

ARTICLE O-13. SPEEDOMETERS -- In cases of speeding charges, if requested, the
bus speedometer will be checked when the bus is next at a garage with
speedometer test equipment. Operators must make their request during the day of
the alleged speed charge to the Maintenance Response Desk and in writing to
their own supervisor when they return to their home location. Copies of the
speedometer check will be furnished to an operator within 15 days of an operator
request to the Company or the operator's record will not be charged. If the
degree of error in the speedometer equals or exceeds the clocked miles per hour
in excess of the speed limit, the operator's record will not be charged.

ARTICLE O-14. UNIFORM ALLOWANCE -- Newly hired full-time operators are required
to purchase their initial set of Company specified uniforms.

         The Company will award full-time operators who work 1,200 hours in a
calendar year a uniform allowance of $100 on January 1st of the following
calendar year. Unused amounts of credit may be carried over from year to year.
Any allowance amount that remains unused upon termination of employment is
forfeited. Lost, stained, soiled or damaged uniforms are to be replaced at the
operator's expense. The Company will reimburse operators for cleaning and repair
of their uniforms when soiled or damaged as a result of unusual circumstances
during the performance of their duties. Operators must submit a cleaning bill
indicating it is for the cleaning of Greyhound uniforms.

ARTICLE O-15. READY LINE -- Buses will be placed on a ready line so operators
are able to pick a bus up without danger to the operator's safety record.

ARTICLE O-16. REGULAR LAYOVER ROOM -- The Company will provide and arrange for
suitable rooms for out-of-town operators at regular layover points. The cost of
such rooms will be paid by the Company.

ARTICLE O-17. REGULAR OPERATORS WORKING EXTRA -- All protection will be
performed by extra operators and regular operators placed on the extraboard
under other provisions of this Agreement except when there are no extra
operators available, qualified regular operators may be used. Regular operators
so used may not be bumped from such an assignment. Regular operators used under
this provision who are assigned an open straight-away run may be given priority
over the extra operators at the foreign board for an assignment back to their
home location or cushioned home.

         Regular operators working on their relief days will be paid time and
one half their applicable rate of pay.

         Regular operators at a terminal other than their home location will be
assigned on a first-in, first-out basis among other regular operators working on
their relief days.

         The Company will establish a superboard for regular operators who wish
to work on their days off. Superboard operators may be used only when the
regular extra board is exhausted. Superboard operators will be used prior to
requiring junior regular operators to do the work.

         Regular operators who do not have proper rest or DOT hours to pull
their regular run as a result of working extra or on their day(s) off are
guaranteed regular earnings for one day and it is their responsibility to
position themselves to pick up their regular run for subsequent days. Operators
must notify the Company of their desire to pick up their run at an
away-from-home location far enough in advance to allow for proper assignments to
extraboard

                                                                              21


operators.

ARTICLE O-18. SCHEDULE CHANGES -- The Company will notify the Union whenever
schedule changes are made. Upon request, the Company will then meet and confer
with the Union regarding changed running times.

                                    MECHANICS

ARTICLE M-1. CHANGE OF SCHEDULE NOTICE -- The scheduled hours of employees will
not be changed without at least 24 hours prior notice. This will not be used to
circumvent the use of overtime.

         The Company will keep posted in a conspicuous place the various work
schedules of each garage. Such schedules will show the hour work begins, the
period of relief for lunch, the quitting time and the days of work per week.
Said lunch period will not commence before the beginning of the fourth hour and
will be completed by the beginning of the sixth hour, from the beginning of the
shift. If an employee's shift schedule is changed more than one hour, except for
training purposes, the employee may exercise his bumping rights to displace a
junior employee or remain on the shift.

ARTICLE M-2. COMMERCIAL DRIVER"S LICENSE -- All mechanics are required to have a
commercial driver's license as a condition of employment with the following
exceptions:

- -        At locations with 15 or more employees, mechanics who are not able to
         obtain a commercial driver's license or lose their commercial driver's
         license for any reason, will be allowed to continue to work; however,
         the Company may assign them to a specific shift where a commercial
         driver's license is not necessary.

- -        At locations with less than 15 employees, mechanics who lose their
         commercial driver's license for any reason will be given an unpaid
         leave of absence not to exceed one year.

ARTICLE M-3. COVERALLS -- The Company will provide four sets of coveralls or
four sets of pants and shirts for maintenance employees each year. Where
coveralls are rented, the Company will pay 70 percent of the rental cost.

ARTICLE M-4. COMPANY TOOLS AND EQUIPMENT -- Company owned tools and equipment
will be issued from the stockroom or tool room on a custody receipt and must
returned to the stockroom or tool room. In the event the Company owned tools or
equipment are lost, the employees to whom the equipment was last issued will be
responsible and will be charged for the loss of the lost article.

         Each maintenance employee will provide, at the employee's own expense,
the hand tools necessary to enable the employee to properly perform the
mechanical duties of the employee's classification.

         A working flashlight and rubber gloves will be furnished to those
employees whose work requires such equipment. Employees will be required to turn
in new or worn out flashlights, and rubber gloves to the stockroom and/or tool
room before securing replacements. When leaving the employ of the Company,
equipment will be returned or paid for, reasonable wear and tear expected.

         The Company will cooperate with the Union in investigating and
attempting to correct and improve security measures for safeguarding maintenance
employees' tools at locations brought to the attention of the Company.
Surveillance cameras will be installed in the employees' tool storage area at
major garages.

ARTICLE M-5. FOUL WEATHER GEAR -- The Company will furnish all maintenance
employees, when exposed to foul weather, proper foul weather gear, which will
consist of rain suits and individual boots where the shoeless type is used.

ARTICLE M-6. GENERAL BIDS -- Each year every garage will have least two general
bids within each work classification. Job bid sheets on general bids will be
posted at least seven days prior to the start of bidding.

         In the event of a reduction in force or closure at a garage, laid-off
maintenance employees will have preferential transfer rights, to existing
vacancies without a bump, into any ATU Local 1700-represented garage.

                                                                              22


Transferred maintenance employees will carry their seniority with them as
provided in the seniority section of this Agreement.

         This preferential transfer right will terminate 60 days after notice of
layoff. A maintenance employee exercising transfer rights under this provision
will have recall rights to his original garage.

ARTICLE M-7. HEAVY WORK -- The Company agrees it will not create an unnecessary
burden upon any employee that would be injurious to the employee's health by
requiring the employee to do heavy work alone, such as heavy work on springs,
transmissions, reline, repacks, batteries, etc. Heavy work will be distributed
as equally as possible.

         Employees will be required to use safety equipment while working under
coaches, such equipment to be made available by the Company.

ARTICLE M-8. LACK OF WORK -- In the event there is a lack of work which
necessitates either the reduction of hours or the furloughing of employees, or
both, the Company agrees to confer with the Union before determining which
method will be used.

ARTICLE M-9. MANNING OF WORK -- It will be the Company's policy to have
maintenance work historically performed in its garages on Company operated
vehicles continued to be performed in its garages. Nothing in this Agreement
will be construed or interpreted to prevent the Company from taking its buses to
non-Company facilities for washing, cleaning, dumping, and fueling where the
Company elects not to have facilities in operation for those services or in peak
periods or emergencies, and nothing in this Agreement will be construed or
interpreted to prevent the Company from having maintenance work on road failures
and running repairs performed at non-Company facilities if those facilities are
closer to the location of the vehicle needing repair than the nearest Company
maintenance facility.

ARTICLE M-10. MOVING EXPENSE -- In the event that employees are moved by the
Company from one garage to another garage on account of work being moved to that
particular garage, financial assistance will be allowed to married employees in
the amount of $300 and to unmarried employees in the amount of $150, such amount
to be payable at the time the employee reports for work at the new location. In
addition, the employee so moved will be allowed up to five working days (40
hours) with no loss of earnings in effecting their relocation. Such employee
will report to work at the new location upon completion of the five days
referred to above.

ARTICLE M-11. OVERTIME DISTRIBUTION -- Overtime will be distributed among
employees qualified to do the work of each department without discrimination.

         An overtime record in each department at each location will be
maintained and posted on a monthly basis. When an employee declines overtime, it
will be recorded with the amount of overtime declined on the overtime record.

ARTICLE M-12. OVERTIME PASS UP -- Any employee will have the right, if the
employee so desires, to pass up the overtime when called upon by the Company to
work overtime, provided another qualified employee in that department is
available and willing at the time to take the employee's place.

ARTICLE M-13. POSTING OF VACANCIES AND NEW POSITIONS -- When vacancies are to be
filled or new positions are created, or when desirable to train an employee for
a position, the employees will be notified by bulletin posted for three
continuous days so that any employee may apply for the position. Employee
applicants will be given the same consideration as other applicants and if
qualified to perform the work without training, the senior qualified employee
applicant will be preferred over the outside applicant. Employee applicants, if
selected, will be subject to the probationary provisions of this Agreement.

         When positions are discontinued, the Union will be given notice in
writing. The exercising of displacement privileges must be done within 16 work
hours of the date when the position was awarded or vacated.

         An employee who is entitled to a displacement will indicate his choice
within 48 hours of notice if displacement is made within the garage affected or
within 72 hours if outside of the garage location. Notices to the displaced
employee and subsequent notice of his displacement will be in writing.

         New employees in a classification may be assigned to any shift on a
temporary basis for up to 60 days.

                                                                              23


ARTICLE M-14. REST PERIODS -- Each employee will be allowed two rest periods of
10 minutes during the employee's tour of duty and the second will be during the
second half of the tour of duty. There will be no abuse of this privilege by the
employee.

ARTICLE M-15. ROAD FAILURE -- Road failure work will be performed by a Company
mechanic if available and qualified. However, the paramount consideration will
be speed and efficiency of repair, and outside mechanics may be used if doing so
would better accomplish those objectives.

         Off-duty mechanics will not be called in to do road work if there are
qualified mechanics on duty at the garage. If necessary to call in an off-duty
mechanic, the mechanic on duty will have the preference of taking such road call
if qualified.

         Employees returning from road call work will be allowed 10 hours off
duty between clock-out time from the road call to clock-in time on their next
regular shift at no loss in straight time earnings.

         Mechanical road failure work on buses when the Company uses the Company
mechanics will be handled as follows:

1.       It will be the policy of the Company not to deprive a mechanic on the
         road call board of such work:

         a.       For the express purpose of avoiding the payment of overtime
                  where such eligible mechanic has not been working six hours of
                  his shift. At locations where arrangements provide for an
                  eligible mechanic to be used who has worked for a period
                  greater than six hours of his work shift, such arrangement
                  will be continued.

         b.       For the express purpose of favoring some particular mechanic
                  to the detriment of the eligible mechanic.

2.       Reasonable expenses for meals and lodging will be paid by the Company.
         Necessary expense money will be advanced by the Company upon request of
         the employee before leaving for road failure work.

3.       Employees used in road call work will not be relieved from such work in
         order to prevent the accumulation of overtime when continuous duty
         would complete the same However, they may be relieved for proper rest.
         Employees will not be paid for time relieved for rest.

4.       All reports made regarding the cause of road failure will be
         substantiated by facts and, on request, such reports will be made
         available to the Union. Maintenance supervisors may include their
         opinion in such reports.

5.       Road call boards will be established in each garage. Qualified
         employees who desire to perform road call work should advise their
         Supervisor who will place their names on such boards and they will be
         called when it becomes necessary to call employees not on duty.

6.       The Company may have towing performed by outside towing companies.

7.       The Company will provide mechanics on road calls with cell phones.

ARTICLE M-16. SANITARY CONDITIONS -- Suitable sanitary conditions will be
provided in all garages of the Company for the use of employees. An assembly
room will be provided by the Company at all garages and sufficient lockers will
be available for the accommodation of the employees. Wash basins with soap and
paper towels will also be provided.

ARTICLE M-17. SHIFT TRADING -- Mechanics will be allowed to trade shifts under
the following terms and conditions:

- -        There will be no overtime involved.

- -        The request will be made at least 48 hours in advance.

- -        The request will be in writing and signed by both parties involved in
         the requested trade.

- -        The trade will be approved by a supervisor.

- -        The trade will involve no more than two consecutive days.

         This accommodation will not be abused by the employees. The Company
will attempt to approve such requests.

ARTICLE M-18. SPRAY PAINTING -- No employees other than painters and painters'
helpers will be required to work in close proximity to equipment on which spray
painting is being done. The Company agrees that diesel motors will not run
excessively in the garage. Garages will be equipped with sufficient ventilating
equipment so that exhaust fumes will be speedily exhausted. Mechanics required
to spray paint will be provided necessary protective equipment and professional
spray guns. If any problems arise with this process, the Union and Company will
meet to resolve.

ARTICLE M-19. TEMPORARY ASSIGNMENTS -- Employees temporarily assigned to
classifications paying a higher

                                                                              24


rate than their own, upon performing such new duties, will immediately receive
the rate in such classification that is higher than the rate being paid such
employee in the classification the employee is leaving.

ARTICLE M-20. TEMPORARY TRANSFER -- Employees may be transferred from one
Company garage to another for a temporary period not to exceed 30 days during
which time an employee so transferred would retain and accumulate seniority in
the garage from which the employee was transferred. The Company agrees that, in
the event it requires employees to transfer temporarily, it will pay reasonable
living expenses during the term of transfer. If the location transferred to has
a higher rate, the employee will receive that rate. This does not apply for the
purposes of training.

ARTICLE M-21. WORKING FOREMAN -- Working foreman will be considered a
supervisory position and appointed by the Company. However, the Company agrees
it will give every consideration to the senior qualified employees at the
location where the vacancy exists, but will not be required to post the working
foreman's position for general bid provided for by this Agreement. Working
foremen will remain members of the Union. The employee appointed a working
foreman must spend a substantial portion of his time working with the tools to
be classified as such.

         Working foremen will not be permitted to bid a unit job or shift.
Working foremen will be paid at a rate of 105 percent of the mechanic's wage in
their location.

ARTICLE M-22. WORK WEEK AND OVERTIME -- The regular work week will be 40 hours,
consisting of either five consecutive eight-hour days or four consecutive
10-hour days. The Company will have the right to determine the percentage
between the work schedules at each location after consultation with the Union.
Work performed in excess of 40 hours per week or 10 hours in one day will be
paid at the rate of time and one-half.

         A mechanic called in on his off day will be paid a guarantee of four
hours' pay at the overtime rate. A building maintenance employee will receive
two hours minimum pay at the overtime rate for each call in.

                                      WAGES

ARTICLE W-1. MARKET WAGES -- The Company reserves the right to offer additional
compensation at any location in order to maintain an adequate work force.

ARTICLE W-2. INCENTIVE PAY -- The Company may offer incentive pay or non-cash
incentives at its discretion. Upon request, the parties will promptly meet and
confer over such incentive pay.

ARTICLE W-3. PAY PERIODS -- All employees will be paid every two weeks except
where prohibited by state law.

                                                                              25


ARTICLE W-4. OPERATORS -- The following rates of pay will apply to all operators
working under this Agreement:

                                 OPERATOR WAGES



                                            Schedule     Protection    Deadhead     Charter*
- -------------------------------------------------------------------------------------------
                                                                        
October 1, 1998 - November 30, 1999          17.13          8.67         12.39        12.85
- -------------------------------------------------------------------------------------------
December 1, 1999 - January 31, 2001          17.73          8.97         12.82        13.30
- -------------------------------------------------------------------------------------------
February 1, 2001 - March 31, 2002            18.44          9.33         13.33        13.83
- -------------------------------------------------------------------------------------------
April 1, 2002 - May 31, 2003                 19.08          9.66         13.80        14.31
- -------------------------------------------------------------------------------------------
June 1, 2003 - January 31, 2004              19.85         10.05         14.35        14.88
- -------------------------------------------------------------------------------------------
Charter pay is 75% of the schedule rate


         Schedule pay will be the total trip time as reflected in the Company's
System Timetable in effect when the trip is made, minus scheduled rest stops of
30 minutes or more. Operators must report for duty at their sign-on time to
pre-trip and check their assigned buses, load passengers, and complete other
assigned duties. Operators must be ready to depart on schedule and complete
post-trip duties. Schedule pay covers pre-trip and post-trip duties, without
additional pay. Minimum day pay may be established for specifically identified
runs.

         Full-time operators hired after October 1, 1998 will be paid according
to the following schedule:



                LENGTH OF SERVICE                    PERCENTAGE OF SCHEDULE RATES
- ---------------------------------------------------------------------------------
                                                  
Less than one year                                               85%
- ---------------------------------------------------------------------------------
More than one year but less than two years                       90%
- ---------------------------------------------------------------------------------
More than two years but less than three years                    92%
- ---------------------------------------------------------------------------------
More than three years but less than four years                   94%
- ---------------------------------------------------------------------------------
More than four years but less than five years                    96%
- ---------------------------------------------------------------------------------
More than five years                                            100%


         The Company reserves the right to modify this wage progression schedule
and rates. Notwithstanding this provision, operators hired before October 1,
1998 will continue on the wage progression in effect at the time they were
hired.

         Length of service for pay purposes will be determined by full-time
continuous years of actual service as an operator with the Company.

         Part-time and seasonal operators will be paid market rates as
determined by the Company. The market rate of pay may not exceed the full-time
hourly rate for operators.

                                                                              26


ARTICLE W-5. MAINTENANCE EMPLOYEES -- Wage rates for mechanics under this
Agreement are contingent on a mechanic successfully completing the prescribed
courses; not to exceed two courses in a contract year to be eligible for the
next scheduled annual increase. Any employee failing a course after two attempts
will forfeit the wage increase for the next contract year. The Company will
continue to provide training to all employees.

     Maintenance employees working under this Agreement will receive area wages
as set forth in the following table:

                                 MECHANIC WAGES



LOCATION        10/1/98-12/31/98  1/1/99-11/30/99   12/1/99-1/31/01     21/01-3/31/02      4/1/02-5/31/03    6/1/03-1/31/04
- ---------------------------------------------------------------------------------------------------------------------------
                                                                                           
Albany               $15.20           $15.45            $16.00             $16.63               $17.47            $18.17
- ------------------------------------------------------------------------------------------------------------------------
Atlanta               15.36            15.61             16.16              16.80                17.64             18.35
- ------------------------------------------------------------------------------------------------------------------------
Atlantic City         18.02            18.27             18.91              19.67                20.60             21.43
- ------------------------------------------------------------------------------------------------------------------------
Billings              13.21            13.46             13.93              14.48                15.24             15.85
- ------------------------------------------------------------------------------------------------------------------------
Boston                18.26            18.51             19.16              19.92                20.87             21.70
- ------------------------------------------------------------------------------------------------------------------------
Chicago               18.49            18.74             19.39              20.17                21.12             21.97
- ------------------------------------------------------------------------------------------------------------------------
Cleveland             16.17            16.42             16.99              17.67                18.54             19.28
- ------------------------------------------------------------------------------------------------------------------------
Columbus              16.17            16.42             16.99              17.67                18.54             19.28
- ------------------------------------------------------------------------------------------------------------------------
Denver                16.80            17.05             17.64              18.35                19.24             20.01
- ------------------------------------------------------------------------------------------------------------------------
Jackson               14.90            15.15             15.68              16.31                17.13             17.82
- ------------------------------------------------------------------------------------------------------------------------
Jacksonville          13.70            13.95             14.44              15.02                15.80             16.43
- ------------------------------------------------------------------------------------------------------------------------
Las Vegas             15.63            15.88             16.43              17.09                17.94             18.66
- ------------------------------------------------------------------------------------------------------------------------
Louisville            18.04            18.29             18.93              19.69                20.63             21.45
- ------------------------------------------------------------------------------------------------------------------------
Memphis               13.64            13.89             14.38              14.95                15.73             16.35
- ------------------------------------------------------------------------------------------------------------------------
Milwaukee             15.15            15.40             15.94              16.58                17.41             18.11
- ------------------------------------------------------------------------------------------------------------------------
Minneapolis           15.37            15.62             16.17              16.81                17.65             18.36
- ------------------------------------------------------------------------------------------------------------------------
Nashville             15.42            15.67             16.22              16.87                17.71             18.42
- ------------------------------------------------------------------------------------------------------------------------
New Orleans           13.99            14.24             14.74              15.33                16.12             16.76
- ------------------------------------------------------------------------------------------------------------------------
New York              16.62            16.87             17.46              18.16                19.05             19.81
- ------------------------------------------------------------------------------------------------------------------------
Philadelphia          18.02            18.27             18.91              19.67                20.60             21.43
- ------------------------------------------------------------------------------------------------------------------------
Pittsburgh            15.51            15.76             16.32              16.97                17.81             18.53
- ------------------------------------------------------------------------------------------------------------------------
Richmond              14.53            14.78             15.30              15.91                16.72             17.39
- ------------------------------------------------------------------------------------------------------------------------
Salt Lake             15.83            16.08             16.64              17.30                18.16             18.89
- ------------------------------------------------------------------------------------------------------------------------
Seattle               18.63            18.88             19.54              20.32                21.28             22.14
- ------------------------------------------------------------------------------------------------------------------------
Syracuse              12.84            13.09             13.55              14.09                14.84             15.43
- ------------------------------------------------------------------------------------------------------------------------
Washington            16.57            16.82             17.41              18.11                18.99             19.75


                                                                              27


                              DURATION OF AGREEMENT

         This Agreement will be in effect from October 1, 1998, until and
including January 31, 2004, and remains in effect from year to year thereafter
unless changed or terminated as herein provided.

         Either party desiring to make any changes or modifications in this
Agreement to become effective at the end of its initial term or any annual
extension, or desiring to terminate the Agreement at its expiration, will notify
the other party in writing of its desire to negotiate modifications or to
terminate the Agreement at least 60 days prior to the expiration of the initial
term or any extension. In the event that any change or modification so requested
by either party is not mutually agreed upon prior to the expiration date of the
Agreement (or any extension), the Agreement will terminate at such expiration
date unless the parties agree to extend it by mutual agreement.

         In Witness Whereof, the parties have set their hands by their
respective duly authorized representatives, this 30th day of September, 1998.

         Greyhound Lines, Inc.

         ___________________________________

         Craig Lentzsch
         President and CEO

         Amalgamated Transit Union National Local 1700

         ___________________________________

         James Cushing-murray
         President

                                                                              28

EX-10.12

                                                                   EXHIBIT 10.12

                              GREYHOUND LINES, INC.
                                CHANGE IN CONTROL
                              SEVERANCE PAY PROGRAM
                                OCTOBER 16, 1998



         GREYHOUND LINES, INC., a Delaware corporation (hereinafter the
"Company") hereby adopts the GREYHOUND LINES, INC. CHANGE IN CONTROL SEVERANCE
PAY PROGRAM (hereinafter the "Program"), effective October 16, 1998 for the
benefit of eligible employees as described herein. The Program is an unfunded
welfare benefit plan for purposes of the Employee Retirement Income Security Act
of 1974, as amended (hereinafter "ERISA") and a severance pay plan within the
meaning of the United States Department of Labor regulations section
2510.3-2(b).

         The Company considers it essential to the best interests of the Company
and its shareholders that, in the event of a "Change in Control" (as defined in
Section 2 hereof), its management be encouraged to remain with the Company and
to continue to devote full attention to the Company's business. This Program
sets forth the severance benefits which the Company agrees will be provided to
eligible employees in the event their employment with the Company is terminated
either by the employee for "Good Reason" or by the Company "Without Cause" (both
as defined in Section 3 hereof) within a two year period immediately following
any Change in Control of the Company. In the event that a Change in Control of
the Company does not occur, severance benefits, if any, shall be determined,
without regard to this Program.

         1.       ELIGIBILITY. This Program applies to all full-time employees
of the Company, Job Grades 15, 16, 17 and 18, not represented by a union for
purposes of collective bargaining.

         2.       CHANGE IN CONTROL. No benefits shall be payable hereunder
unless:

                                    (i)      a Change in Control of the Company
                           occurs; and

                                    (ii)     an eligible employee's employment
                           with the Company is terminated within two years
                           thereafter either by the employee for Good Reason or
                           by the Company Without Cause.

         This Program is not intended to apply to termination of employment by
reason of Death, Disability or Cause (as defined in Section 3 hereof).

         For purposes of this Program, a "Change in Control" of the Company
shall mean:

         (a)      The acquisition by any person (defined for the purposes of
this definition to mean any person within the meaning of Section 13(d) of the
Securities Exchange Act of 1934 and the regulations thereunder (the "Exchange
Act")), other than the Company or an employee benefit plan created by the Board
of Directors of the Company (the "Board") for the benefit of its employees,
either directly or indirectly, of the beneficial ownership (determined under
Rule 13d-3 of the regulations promulgated by the SEC under Section 13(d) of the
Exchange Act) of securities issued by the Company having 30% or more of the
voting power of all the voting securities issued by the Company in the election
of directors at the next meeting of the holders of voting securities to be held
for such purpose; or

         (b)      The election of a majority of the directors to the Board
elected at any meeting of the holders of voting securities of the Company who
are persons who were not nominated for



such election by the Board or a duly constituted committee of the Board having
authority in such matters; or

         (c)      The approval by the stockholders of the Company of a merger or
consolidation with another person, other than a merger or consolidation in which
the holders of the Company's voting securities issued and outstanding
immediately before such merger or consolidation continue to hold voting
securities in the surviving or resulting corporation (in the same relative
proportions to each other as existed before such event) comprising 80% or more
of the voting power for all purposes of the surviving or resulting corporation;
or

         (d)      The approval by the stockholders of the Company of a transfer
of substantially all of the assets of the Company to another person other than a
transfer to a transferee, 80% or more of the voting power of which is owned or
controlled by the Company or by the holders of the Company's voting securities
issued and outstanding immediately before such transfer in the same relative
proportions to each other as existed before such event.

         The first date upon which a Change in Control as defined above takes
place shall be known as the "Effective Date." Anything in this Program to the
contrary notwithstanding, if a Change in Control occurs and if an eligible
employee's employment with the Company is terminated prior to the date on which
the Change in Control occurs, and if it is reasonably demonstrated by the
employee that such termination (i) was at the request of a third party who had
taken steps reasonably calculated to effect a Change in Control or (ii) was by
the Company and arose with or in anticipation of a Change in Control, then for
all purposes of this Program, employment shall be deemed to have been terminated
by the Company Without Cause under Section 3(e) of this Program.

         3.       TERMINATION OF EMPLOYMENT. An eligible employee's employment
with the Company shall or may be terminated, as the case may be, for any of the
following reasons:

                  (a)      Death. Termination of employment with the Company due
to death;

                  (b)      Disability. Termination of employment with the
Company either by the eligible employee or the Company after the employee is
physically or mentally incapacitated for a period of (i) 180 consecutive days,
or (ii) 180 days in any 360 day period, such that the employee cannot
substantially perform his or her duties of employment with the Company on a
full-time basis, with reasonable accomodation;

                  (c)      Cause. Termination of the eligible employee's
employment with the Company at any time for Cause. For purposes of this Program,
"Cause" shall mean:

                                    (i)      Any act or omission constituting
                                    fraud under the laws of the State of Texas
                                    or the State of the employee's primary
                                    employment; or

                           (ii)     Conviction of, or a plea of nolo contendere
                           to, a felony; or



                           (iii)    Use of illegal drugs; or

                                    (iv)     Embezzlement of Company property or
                           funds; or

                           (v)      Gross neglect of duties with the Company.

                  (d)      Good Reason. An eligible employee may terminate his
or her employment with the Company for Good Reason. For purposes of this
Program, "Good Reason" shall mean:

                           (i)      a substantial diminishment of an employee's
                                    duties and authority (except at the
                                    employee's request), other than an isolated,
                                    insubstantial and inadvertent action not
                                    taken in bad faith and which is remedied by
                                    the Company promptly after the receipt of
                                    notice thereof given by the employee; or

                           (ii)     any failure by the Company to continue to
                                    provide the eligible employee with an annual
                                    base salary, employee benefits and an
                                    opportunity to earn incentive and bonus
                                    compensation equal or greater to that which
                                    was provided to the employee by the Company
                                    immediately prior to the Effective Date
                                    other than an isolated, insubstantial and
                                    inadvertent failure not occurring in bad
                                    faith and which is remedied by the Company
                                    promptly after the receipt of notice thereof
                                    given by the employee; or

                           (iii)    The Company requiring a Dallas, Texas-based
                                    eligible employee without his or her written
                                    consent to be based at or generally work
                                    from any location more than 25 miles outside
                                    of Dallas County, Texas; or

                           (iv)     any failure by the Company to comply with
                                    and satisfy Section 9 of this Program.

                  (e)      Without Cause. The Company may terminate the
employment of an eligible employee with the Company Without Cause. For purposes
of this Program the term "Without Cause" shall mean termination of employment
for reasons other than for Death, Disability or Cause.

         4.       SEVERANCE PAY. If a Change in Control of the Company occurs
and within two years thereafter the employment with the Company of an eligible
employee is terminated either by the employee for Good Reason or by the Company
Without Cause, the Company shall pay to the eligible employee as severance pay,
in a lump sum on or before the thirtieth day following the date of termination,
the following amounts:



                  (a)      the eligible employee's full base salary and benefits
earned and payable through the date his or her employment is terminated, plus
the dollar amount of the eligible employee's "target" payout under the Company's
Management Incentive Plan ("MIP") in effect on the date the eligible employee's
employment is terminated, prorated from the beginning of the then-current plan
year through the date of termination of employment; and

                  (b)      one (1) times the sum of (i) the eligible employee's
then-current annual base salary and (ii) the dollar amount of his or her
"target" payout under the Company's Management Incentive Plan ("MIP") in effect
on the Effective Date.

         5.       EMPLOYEE BENEFITS. If a Change in Control of the Company
occurs and within two years thereafter an eligible employee's employment with
the Company is terminated either by the employee for Good Reason or by the
Company Without Cause, then in addition to all other benefits which the employee
has earned prior to such termination or to which the employee is otherwise
entitled, the provisions of this Section 5 shall apply. For a period of one year
following an eligible employee's date of termination, the Company shall continue
to make available to the employee and to his or her dependents the same medical,
dental and vision coverage as was in effect immediately prior to the date of
termination at the same cost that such coverage is provided for active employees
of the Company who are at the Job Grade level the employee was at on his or her
date of termination. This extended medical, dental and vision coverage shall run
concurrently with any COBRA continuation medical, dental and vision coverage
rights that the employee or his or her dependents have under Section 4980B of
the Internal Revenue Code; therefore, the employee and his or her dependents
will be required to elect such COBRA coverage on a timely basis in order to
receive such continued medical, dental and vision coverage. Notwithstanding the
foregoing, the availability of the extended medical, dental and vision coverage
described in this Section 5 will terminate prior to the end of the one year
period in the event that the rights to continuation coverage of the employee or
his or her dependents terminate under COBRA. In the event that medical, dental
and vision coverage is revised or terminated for active employees of the
Company, such revisions or termination shall apply to medical, dental and vision
coverage described in this Section 5. In addition to continued medical, dental
and vision coverage, for the one year period immediately following the date of
termination of an eligible employee at Job Grade level 18, the Company will
reimburse such employee for the premium costs for any disability plan coverage
provided to the employee by the Company immediately prior to the date of
termination, but only to the extent that the employee has an individual right to
convert such disability plan coverage to individual coverage following
termination of employment and only in the event the employee exercises such
conversion privilege. Finally, for the one year period following the date of
termination of an eligible employee at Job Grade level 18, the Company shall
reimburse such employee for the premium cost for any executive life insurance
policy that is in place immediately prior the date of termination and pursuant
to which the employee has a right to convert such policy to an individual policy
and exercises such conversion privilege.

         6.       NO MITIGATION REQUIRED. An eligible employee shall not be
required to mitigate the amount of any payment or benefit provided for in
Sections 4 or 5 by seeking other



employment or otherwise, nor will any profits, income, earnings or other
benefits from any source whatsoever create any mitigation, offset, reduction or
other obligation on an eligible employee's part hereunder or otherwise.

         7.       EXCESS PARACHUTE PAYMENT LIMIT. Anything in this Program to
the contrary notwithstanding, if it is determined that any payment or
distribution by the Company to or for the benefit of an individual (whether paid
or payable or distributed or distributable pursuant to the terms of this Program
or otherwise) (a "Payment") would be nondeductible by the Company for federal
income tax purposes because of Section 280G of the Internal Revenue Code but for
the application of this sentence, then the aggregate present value of amounts
payable or distributable pursuant to this Program (such payments pursuant to
this Program are hereinafter referred to as "Program Payments" for purposes of
this Section 7) shall be reduced (but not below zero) to the Reduced Amount. The
"Reduced Amount" shall be an amount expressed in present value which maximizes
the aggregate present value of Program Payments without causing any Payment to
be nondeductible by the Company because of Section 280G of the Internal Revenue
Code. For purposes of this Section 7, present value shall be determined in
accordance with Section 280G(d)(4) of the Internal Revenue Code. All
determinations required to be made under this Section 7 shall be made at the
expense of the Company, if requested by an employee or the Company, by an
accounting firm selected by the Company (the "Accounting Firm") which shall
provide detailed supporting calculations both to the Company and to affected
eligible employees within 30 days after the date on which the request has been
made. Eligible employees shall cooperate with the Accounting Firm and provide
necessary information so that the Accounting Firm may make all such
determinations. All such determinations by the Accounting Firm shall be final
and binding upon the Company and employees. The fact that an employee's right to
Program Payments may be reduced by reason of the limitations contained in this
Section 7 shall not of itself limit or otherwise affect any other of an
employee's rights other than pursuant to this Program. In the event that any
Program Payment intended to be provided under this Program or otherwise is
required to be reduced pursuant to this Section 7, an employee shall be entitled
to designate the Program Payments to be so reduced in order to give effect to
this Section 7. The Company shall provide employees with all information
reasonably requested to permit them to make such designation. In the event that
an employee fails to make such designation within 10 business days of the date
of termination of employment, the Company may effect such reduction in any
manner it deems appropriate. As a result of the uncertainty in the application
of Section 280G of the Internal Revenue Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that Program
Payments will be made by the Company which should not have been made
("Overpayment") or that additional Program Payments will not be made by the
Company which could have been made ("Underpayment"), in each case, consistent
with the calculations required to be made hereunder. In the event that the
Accounting Firm or a court of competent jurisdiction (in a final judgment as to
which the time for appeal has lapsed or no appeal is available) determines at
any time that an Overpayment has been made, any such Overpayment shall be
treated for all purposes as a loan to the employee which the employee shall
repay to the Company together with interest at the applicable short-term federal
rate provided for in Section 1274(d)(1) of the Internal Revenue Code, compounded
semi-annually; provided, however, that no amount shall be payable by the
employee to the Company (or if paid by an employee to the Company, such payment
shall be returned to the



employee) if and to the extent such payment would not reduce the amount which is
subject to taxation under Section 4999 of the Internal Revenue Code. In the
event that the Accounting Firm or a court of competent jurisdiction (in a final
judgment as to which the time for appeal has lapsed or no appeal is available)
determines at any time that an Underpayment has occurred, any such Underpayment
shall be promptly paid by the Company to or for the benefit of the eligible
employee with interest at the applicable short-term federal rate provided for in
Section 1274(d)(1) of the Internal Revenue Code, compounded semi-annually.

         8.       TAXES; WITHHOLDING OF TAXES. Without limiting the right of the
Company to withhold taxes pursuant to this Section, an eligible employee shall
be responsible for all income, excise, and other taxes (federal, state, city, or
other) imposed on or incurred as a result of receiving the payments and benefits
provided in this Program. The Company may withhold from any amounts payable
under this Program all federal, state, city, or other taxes as the Company shall
determine to be appropriate pursuant to any law or government regulation or
ruling.

         9.       SUCCESSORS, BINDING OBLIGATION. The Company shall require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company to expressly assume and agree to perform this Program in the same manner
and to the same extent that the Company would be required to perform it if no
such succession had taken place. As used in this Program "Company" shall mean
the Company as hereinbefore defined and any successor to its business and/or
assets or which otherwise becomes bound by all the terms and provisions of this
Program by operation of law. If an eligible employee should die while any
amounts would still be payable hereunder if he or she had continued to live, all
such amounts, unless otherwise provided herein, shall be paid in accordance with
the terms of this Program to the eligible employee's devises, legates, or other
designee or, if there be no such designee, to his or her estate.

         10.      CLAIMS FOR PROGRAM BENEFITS. In the event that an eligible
employee believes that benefits under this Program are not paid in an amount or
at the time they are due, the eligible employee shall make a written claim for
such benefits to the Program Administrator. Within fourteen (14) days after
receiving a claim, the Program Administrator will:

                  (a)      Either accept or deny the claim completely or
partially; and

                  (b)      Notify the claimant of acceptance or denial of the
claim.

         If the claim is completely or partially denied, the Program
Administrator will furnish a written notice to the claimant containing the
following information:

                  (a)      Specific reasons for the denial.

                  (b)      Specific references to the Program provisions on
which any denial is based;



                  (c)      A description of any additional material or
information that must be provided by the claimant in order to support the claim;
and

                  (d)      An explanation of the Program's appeal procedures.

         A claimant may appeal the denial of his or her claim and have the
Program Administrator reconsider the decision. The claimant or his or her
authorized representative has the right to:

                  (a)      Request an appeal by written request to the Program
Administrator not later than sixty (60) days after receipt of notice from the
Program Administrator denying his or her claim;

                  (b)      Review pertinent Program documents; and

                  (c)      Submit issues and comments regarding the claim in
writing to the Program Administrator.

         The Program Administrator will make a decision with respect to such an
appeal, within ten (10) days after receiving the written request for such
appeal. The claimant will be advised of the Program Administrator's decision on
the appeal in writing. The notice will set forth the specific reasons for the
decision and specific reference to Program provisions upon which the decision on
the appeal is based.

         11.      ASSIGNMENT OF PROGRAM BENEFITS. Under no circumstances may
benefits under the Program be subject to anticipation, alienation, pledge, sale,
transfer, assignment. garnishment, attachment, execution, encumbrance, levy,
lien or charge, and any attempt to cause any such benefit to be so subjected
shall not be recognized, except to the extent required by law.

         12.      MISCELLANEOUS. Prior to a Change in Control of the Company,
eligible employees do not have any vested right to benefits under this Program
and the Company reserves the right in its sole discretion to amend or terminate
this Program. Following a Change in Control of the Company, no provisions of
this Program may be amended with regard to an eligible employee unless such
amendment is agreed to in writing signed by an affected eligible employee. No
waiver of, or compliance with, any condition or provision of this Program shall
be deemed a waiver of similar or dissimilar provisions or conditions at the same
or at any prior or subsequent time. Any specific compensation program (other
than a severance pay program) that provides for benefits upon a change in
control relative to that program shall remain in effect, notwithstanding this
Program. However, benefits payable under this Program shall be in complete
substitution for any severance pay benefits an individual is entitled to receive
under the Company's Severance Pay Program dated January 28, 1994, as amended. No
employee nor any other person shall acquire by reason of the Program any right
in or title to any assets, funds, or property of the Company. Program benefits
which become payable under the Program are obligations of and shall be paid from
the general assets of Greyhound Lines, Inc. Eligible employees must furnish to
the Program Administrator such documents, data, or other information



as the Program Administrator considers necessary or desirable for the purpose of
administering the Program. The provisions of the Program for each eligible
employee are on the condition that such eligible employee shall furnish full,
true, and complete documents, data, or other information, and will promptly sign
any document reasonably related to the administration of the Program requested
by the Program Administrator. Any mistake of fact or misstatement of fact shall
be corrected when it becomes known and proper adjustment shall be made. The
validity, interpretation, construction and performance of this Program shall be
governed by federal law and to the extent not preempted, by the laws of the
State of Delaware.

         13.      VALIDITY. The invalidity or unenforceability of any one or
more provisions of this Program shall not affect the validity or enforceability
of any other provision of this Program, which shall remain in full force and
effect.

         14.      YOUR RIGHTS UNDER ERISA. As an eligible employee, you are
entitled to certain rights and protections under ERISA. ERISA provides that
Program participants shall be entitled to:

                  (a)      Examine without charge at the Program Administrator's
office all Program documents and copies of all Program documents filed by the
Program with the U.S. Department of Labor or with the Internal Revenue Service.

                  (b)      Obtain copies of all Program documents and other
Program information upon written request to the Program Administrator. The
Program Administrator may make a reasonable charge for the copies.

                  (c)      Receive a copy of the Program's financial report. The
Program Administrator may be required by law to furnish each Program participant
with a copy of the summary annual report.

         In addition to creating rights for Program participants, ERISA imposes
duties upon the people who are responsible for the operation of the Program:

                  (a)      The people who operate the Program, called
"fiduciaries" of the Program, have a duty to do so prudently and in the interest
of you and other Program participants.

                  (b)      No one, including the Company, or any other person
may fire you or otherwise discriminate against you in any way to prevent you
from obtaining a benefit or exercising your rights under ERISA.

                  (c)      If your claim for a Program benefit is denied, in
whole or in part, you must receive a written explanation of the reason for the
denial. You have the right to have the Program Administrator review and
reconsider your claim.

         Under ERISA, there are steps you can take to enforce the above rights.
For instance, if you request materials from the Program Administrator and you do
not receive them within thirty (30) days, you may file suit in a federal court.
In such a case, the court may require the Program



Administrator to provide the materials and to pay you up to $100 per day until
you receive the materials, unless the materials were not sent because of reasons
beyond the control of the Program Administrator. If you have a claim for
benefits which is denied or ignored, in whole or in part, you may file suit in a
state or federal court. If it should happen that Program fiduciaries misuse the
Program's money, or if you are discriminated against for asserting your rights,
you may seek assistance from the U.S. Department of Labor or you may file suit
in a federal court. The court will decide who should pay court costs and legal
fees. If you are successful the court may order the person you have sued to pay
these costs and fees. If you lose, the court may order you to pay these costs
and fees, for instance, if it finds your claim to be frivolous.

         If you have any questions about the Program, you should contact the
Program Administrator. If you have any questions about this statement or about
your rights under ERISA, you should contact the nearest area office of the U.S.
Labor-Management Services Administration, Department of Labor.

         15.      GENERAL INFORMATION.

Name of Program:           Greyhound Lines, Inc.
                           Change in Control
                           Severance Pay Program

Program Number:            514

Company and

Program Sponsor:           Greyhound Lines, Inc.
                           P. O. Box 660362
                           Dallas, TX 75266-0362



Company's Employer
Identification Number:     86-0572343

Program Administrator:

                           Director, Benefits
                           P. O. Box 660362
                           Dallas, TX 75266-0362
                           214-789-7000

Agent for Service
Of Legal Process:          CT Corporation
                           350 N. St. Paul St.
                           Dallas, TX 75201

Type of Program:           Welfare Benefit

Program Year:          Calendar Year

                  IN WITNESS WHEREOF, GREYHOUND LINES, INC. hereby adopts the
foregoing Severance Pay Program effective as of October 16, 1998.

                                             GREYHOUND LINES, INC.

                                             By:________________________________

                                             Title: ____________________________

EX-10.13

                                                                   EXHIBIT 10.13

                          CHANGE IN CONTROL AGREEMENT

                              ____________ [date]

Dear ________________:

         Greyhound Lines, Inc. (the "Company") considers it essential to the
best interests of the Company and its shareholders that, in the event of a
"Change in Control" (as defined in Section 2 hereof), its management be
encouraged to remain with the Company and to continue to devote full attention
to the Company's business.

         This letter agreement ("Agreement") sets forth the severance benefits
which the Company agrees will be provided to you in the event your employment
with the Company is terminated either by you for "Good Reason" or by the Company
"Without Cause" (both as defined in Section 3 hereof) within a two year period
immediately following any Change in Control of the Company. In the event that a
Change in Control of the Company does not occur, no benefits shall be payable
under this Agreement.

         1.       CONTINUED EMPLOYMENT. Nothing in this Agreement shall be
construed so as to give you any right to continued employment by the Company.
Notwithstanding the foregoing, by entering into this Agreement you are
confirming that in consideration of, among other things, the Company's entering
into this Agreement with you, it is your present intention to remain in the
employ of the Company.

         2.       CHANGE IN CONTROL. No benefits shall be payable hereunder
unless:

                                    (i)      a Change in Control of the Company
                           occurs; and

                                    (ii)     your employment with the Company is
                           terminated within two years thereafter either by you
                           for Good Reason or by the Company Without Cause.

         This Agreement is not intended to apply to termination of your
employment by reason of Death, Disability or Cause (as defined in Section 3
hereof).

         For purposes of this Agreement, a "Change in Control"of the Company
shall mean:

         (a)      The acquisition by any person (defined for the purposes of
this definition to mean any person within the meaning of Section 13(d) of the
Securities Exchange Act of 1934 and the regulations thereunder (the "Exchange
Act")), other than the Company or an employee benefit plan created by the Board
of Directors of the Company (the "Board")for the benefit of its employees,
either directly or indirectly, of the beneficial ownership (determined under
Rule 13d-3 of the regulations promulgated by the SEC under Section 13(d) of the
Exchange Act) of



securities issued by the Company having 30% or more of the voting power of all
the voting securities issued by the Company in the election of directors at the
next meeting of the holders of voting securities to be held for such purpose; or

         (b)      The election of a majority of the directors to the Board
elected at any meeting of the holders of voting securities of the Company who
are persons who were not nominated for such election by the Board or a duly
constituted committee of the Board having authority in such matters; or

         (c)      The approval by the stockholders of the Company of a merger or
consolidation with another person, other than a merger or consolidation in which
the holders of the Company's voting securities issued and outstanding
immediately before such merger or consolidation continue to hold voting
securities in the surviving or resulting corporation (in the same relative
proportions to each other as existed before such event) comprising 80% or more
of the voting power for all purposes of the surviving or resulting corporation;
or

         (d)      The approval by the stockholders of the Company of a transfer
of substantially all of the assets of the Company to another person other than a
transfer to a transferee, 80% or more of the voting power of which is owned or
controlled by the Company or by the holders of the Company's voting securities
issued and outstanding immediately before such transfer in the same relative
proportions to each other as existed before such event.

         The first date upon which a Change in Control as defined above takes
place shall be known as the "Effective Date." Anything in this Agreement to the
contrary notwithstanding, if a Change in Control occurs and if your employment
with the Company is terminated prior to the date on which the Change in Control
occurs, and if it is reasonably demonstrated by you that such termination (i)
was at the request of a third party who had taken steps reasonably calculated to
effect a Change in Control or (ii) was by the Company and arose with or in
anticipation of a Change in Control, then for all purposes of this Agreement
your employment shall be deemed to have been terminated by the Company Without
Cause under Section 3(e) of this Agreement.

         3.       TERMINATION OF EMPLOYMENT. Your employment with the Company
shall or may be terminated, as the case may be, for any of the following
reasons:

                  (a)      Death. Termination of your employment with the
Company due to your death;

                  (b)      Disability. Termination of your employment with the
Company either by you or the Company after you are physically or mentally
incapacitated for a period of (i) 180 consecutive days, or (ii) 180 days in any
360 day period, such that you cannot substantially perform your duties of
employment with the Company on a full-time basis with reasonable accomodation;

                  (c)      Cause. Termination of your employment with the
Company at any time for Cause. For purposes of this Agreement, "Cause" shall
mean:





                           (i)      Any act or omission constituting fraud under
                  the laws of the State of Texas [or the state of your
                  employment]; or

                           (ii)     Conviction of, or a plea of nolo contendere
                  to, a felony; or

                           (iii)    Use of illegal drugs; or

                           (iv)     Embezzlement of Company property or
                  funds; or

                           (v)      Gross neglect of your duties with the
                  Company.

                  (d)      Good Reason. You may terminate your employment with
the Company for Good Reason. For purposes of this Agreement, "Good Reason" shall
mean:

                           (i)      a substantial diminishment of your duties
                                    and authority (except at your request),
                                    other than an isolated, insubstantial and
                                    inadvertent action not taken in bad faith
                                    and which is remedied by the Company
                                    promptly after the receipt of notice thereof
                                    given by you; or

                           (ii)     any failure by the Company to continue to
                                    provide you with an annual base salary,
                                    employee benefits and an opportunity to earn
                                    incentive and bonus compensation equal or
                                    greater to that which was provided to you by
                                    the Company immediately prior to the
                                    Effective Date, other than an isolated,
                                    insubstantial and inadvertent failure not
                                    occurring in bad faith and which is remedied
                                    by the Company promptly after the receipt of
                                    notice thereof given by you; or

                           (iii)    [OPTIONAL PROVISION TO BE INCLUDED IN
                                    AGREEMENTS APPLICABLE TO DALLAS-BASED
                                    EMPLOYEES] the Company is requiring you
                                    without your written consent to be based at
                                    or generally work from any location more
                                    than 25 miles outside of Dallas County,
                                    Texas; or

                           (iv)     any failure by the Company to comply with
                                    and satisfy Section 10 of this Agreement.

         (e)      Without Cause. The Company may terminate your employment with
the Company Without Cause. For purposes of this Agreement the term "Without
Cause" shall mean termination of your employment for reasons other than for
Death, Disability or Cause.

         4.       SEVERANCE PAY. If a Change in Control of the Company occurs
and within two years thereafter your employment with the Company is terminated
either by you for Good



Reason or by the Company Without Cause, the Company shall pay to you as
severance pay, in a lump sum on or before the thirtieth day following the date
of termination, the following amounts:

                  (a)      your full base salary and benefits earned and payable
through the date your employment is terminated, plus the dollar amount of your
"target" payout under the Company's Management Incentive Plan ("MIP") in effect
on the date your employment is terminated, prorated from the beginning of the
then-current plan year through the date your employment is terminated; and

                  (b)      two (2) times the sum of (i) your then-current annual
base salary and (ii) the dollar amount of your "target" payout under the
Company's Management Incentive Plan ("MIP") in effect on the Effective Date.

         5.       EMPLOYEE BENEFITS. If a Change in Control of the Company
occurs and within two years thereafter your employment with the Company is
terminated either by you for Good Reason or by the Company Without Cause, then
in addition to all other benefits which you have earned prior to such
termination or to which you are otherwise entitled, the provisions of this
Section 5 shall apply. For a period of two years following the date of
termination of your employment, the Company shall continue to make available to
you and to your dependents the same medical, dental and vision plan coverage as
was in effect immediately prior to your termination at the same cost that such
coverage is provided for active employees of the Company. This extended medical,
dental and vision plan coverage shall run concurrently with any COBRA
continuation medical, dental and vision plan coverage rights that you or your
dependents have under Section 4980B of the Internal Revenue Code; therefore, you
and your dependents will be required to elect such COBRA coverage on a timely
basis in order to receive such continued medical, dental and vision plan
coverage. Notwithstanding the foregoing, the availability of the extended
medical, dental and vision plan coverage described in this Section 5 will
terminate prior to the end of the two year period in the event that the rights
to continuation coverage of you or your dependents terminate under COBRA. In the
event that medical, dental and vision plan coverage is revised or terminated for
active employees of the Company, such revisions or termination shall apply to
medical, dental and vision plan coverage described in this Section 5. In
addition to continued medical, dental and vision plan coverage, for the two year
period immediately following the termination of your employment, the Company
will reimburse you for the premium costs for any disability plan coverage
provided to you by the Company immediately prior to the termination of your
employment, but only to the extent that you have an individual right to convert
such disability plan coverage to individual coverage following your termination
of employment and only in the event you exercise such conversion privilege.
Finally, for the two year period following the termination of your employment,
the Company shall reimburse you for the premium cost for any executive life
insurance policy that is in place for you immediately prior to your termination
and pursuant to which you have a right to convert such policy to an individual
policy and you exercise such conversion privilege.

         6.       NO MITIGATION REQUIRED. You shall not be required to mitigate
the amount of any payment or benefit provided for in Sections 4 or 5 by seeking
other employment or otherwise, nor will any profits, income, earnings or other
benefits from any source whatsoever create any mitigation, offset, reduction or
other obligation on your part hereunder or otherwise.



         7.       CONFIDENTIAL INFORMATION. You hereby agree that you shall not
at any time (whether employed by the Company or not), either directly or
indirectly, disclose or make known to any person or entity any confidential
information, trade secret, or proprietary information that you acquired during
the course of your employment with the Company which shall not have become
public knowledge (other than by your actions in violation of this Agreement).
You further agree that upon the termination of your employment with the Company
or at any time upon the request of the Company you shall deliver to the Company
any and all literature, documents, correspondence, and other materials and
records furnished to or acquired by you from the Company during the course of
your employment with the Company.

         8.       EXCESS PARACHUTE PAYMENT LIMIT. Anything in this Agreement to
the contrary notwithstanding, if it is determined that any payment or
distribution by the Company to or for your benefit (whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise) (a "Payment") would be nondeductible by the Company for federal
income tax purposes because of Section 280G of the Internal Revenue Code but for
the application of this sentence, then the aggregate present value of amounts
payable or distributable to or for your benefit pursuant to this Agreement (such
payments pursuant to this Agreement are hereinafter referred to as "Agreement
Payments" for purposes of this Section 8) shall be reduced (but not below zero)
to the Reduced Amount. The "Reduced Amount" shall be an amount expressed in
present value which maximizes the aggregate present value of Agreement Payments
without causing any Payment to be nondeductible by the Company because of
Section 280G of the Internal Revenue Code. For purposes of this Section 8,
present value shall be determined in accordance with Section 280G(d)(4) of the
Internal Revenue Code. All determinations required to be made under this Section
8 shall be made at the expense of the Company, if requested by you or the
Company, by an accounting firm mutually agreeable to you and the Company (the
"Accounting Firm") which shall provide detailed supporting calculations both to
the Company and to you within 30 days after the date on which the request has
been made. The Company and you shall cooperate with each other and the
Accounting Firm and will provide necessary information so that the Accounting
Firm may make all such determinations. All such determinations by the Accounting
Firm shall be final and binding upon the Company and you. The fact that your
right to Agreement Payments may be reduced by reason of the limitations
contained in this Section 8 shall not of itself limit or otherwise affect any
other of your rights other than pursuant to this Agreement. In the event that
any Agreement Payment intended to be provided under this Agreement or otherwise
is required to be reduced pursuant to this Section 8, you shall be entitled to
designate the Agreement Payments to be so reduced in order to give effect to
this Section 8. The Company shall provide you with all information reasonably
requested by you to permit you to make such designation. In the event that you
fail to make such designation within 10 business days of the date of termination
of your employment, the Company may effect such reduction in any manner it deems
appropriate. As a result of the uncertainty in the application of Section 280G
of the Internal Revenue Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Agreement Payments will be made
by the Company which should not have been made ("Overpayment") or that
additional Agreement Payments will not be made by the Company which could have
been made ("Underpayment"), in each case, consistent with the calculations
required to be made hereunder. In the event that the



Accounting Firm or a court of competent jurisdiction (in a final judgment as to
which the time for appeal has lapsed or no appeal is available) determines at
any time that an Overpayment has been made, any such Overpayment shall be
treated for all purposes as a loan to you which you shall repay to the Company
together with interest at the applicable short-term federal rate provided for in
Section 1274(d)(1) of the Internal Revenue Code, compounded semi-annually;
provided, however, that no amount shall be payable by you to the Company (or if
paid by you to the Company, such payment shall be returned to you) if and to the
extent such payment would not reduce the amount which is subject to taxation
under Section 4999 of the Internal Revenue Code. In the event that the
Accounting Firm or a court of competent jurisdiction (in a final judgment as to
which the time for appeal has lapsed or no appeal is available) determines at
any time that an Underpayment has occurred, any such Underpayment shall be
promptly paid by the Company to or for the benefit of you together with interest
at the applicable short-term federal rate provided for in Section 1274(d)(1) of
the Internal Revenue Code, compounded semi-annually.

         9.       TAXES; WITHHOLDING OF TAXES. Without limiting the right of the
Company to withhold taxes pursuant to this Section, you shall be responsible for
all income, excise, and other taxes (federal, state, city, or other) imposed on
or incurred by you as a result of receiving the payments and benefits provided
in this Agreement. The Company may withhold from any amounts payable under this
Agreement all federal, state, city, or other taxes as the Company shall
determine to be appropriate pursuant to any law or government regulation or
ruling.

         10.      SUCCESSORS, BINDING AGREEMENT. The Company shall require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform it
if no such succession had taken place. Failure of the Company to obtain such
agreement prior to the effectiveness of any such succession shall be a breach of
this Agreement and shall entitle you to compensation from the Company in the
same amount and on the same terms as you would be entitled hereunder if the
Company had terminated your employment after a Change in Control of the Company
occurring at the time of succession. As used in this Agreement "Company" shall
mean the Company as hereinbefore defined and any successor to its business
and/or assets or which otherwise becomes bound by all the terms and provisions
of this Agreement by operation of law. This Agreement shall inure to the benefit
of and be enforceable by your personal or legal representatives, executors,
administrators. successors, heirs, distributees, devisees and legatees. If you
should die while any amounts would still be payable to you hereunder if you had
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to your devises, legates, or
other designee or, if there be no such designee, to your estate.

         11.      NOTICE. Notices and all other communications provided for in
this Agreement shall be in writing and shall be deemed to have been duty given
when delivered or mailed by United States registered mail, return receipt
requested, postage prepaid, addressed to the respective addresses set forth on
the last page of this Agreement, provided that all notices to the



Company shall be directed to the attention of the Secretary of the Company, or
to such other address as either party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.

         12.      MISCELLANEOUS. No provisions of this Agreement may be
modified, waived or discharged unless such modification, waiver or discharge is
agreed to in writing signed by you and such officer as may be specifically
designated by the Board. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. Any specific compensation program (other than a
severance pay program) that provides for benefits upon a change in control
relative to that program, including without limitation, the Company's stock
option plans and Supplemental Executive Retirement Plan, shall remain in effect,
notwithstanding this Agreement. However, benefits payable to you under this
Agreement shall be in complete substitution for any severance pay benefits you
might be entitled to receive under the Company's Severance Pay Program dated
January 28, 1994, as amended and under the Company's Change in Control Severance
Pay Program dated _______________________, 1998, as amended. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of Delaware.

         13.      VALIDITY. The invalidity or unenforceability of any one or
more provisions of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall remain in
full force and effect.

         14.      COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.

         15.      JURISDICTION. In the event of any dispute or controversy
arising under or in connection with this Agreement you and the Company hereby
irrevocably consent to the jurisdiction of the State Courts located in Dallas
County, Texas or the United States District Court for the Northern District of
Texas.

         16.      LEGAL FEES AND EXPENSES. If it should appear to you that the
Company has failed to comply with any of its obligations under this Agreement or
in the event the Company or any other person takes any action to declare this
Agreement void or unenforceable, or institutes any arbitration or litigation
designed to deny, or to recover from, you the benefits intended to be provided
to you hereunder, the Company irrevocably authorizes you from time to time to
retain counsel of your choice, to represent you in connection with the
initiation or defense of any arbitration, litigation, other legal action or
negotiation to resolve any disputes whether by or against the Company or any
director, officer, shareholder or other person affiliated with the Company. The
Company shall pay or cause to be paid and shall be solely responsible for any
and all attorneys' and related fees and expenses incurred by you as a result of
the Company's failure to perform this Agreement or any provision hereof
(including this Section 16) or as a result of the Company or any person
contesting the validly or enforceability of this Agreement or any



provision hereof, up to a maximum amount of twenty-five thousand dollars
($25,000). Any such fees and expenses incurred by you in excess of such
twenty-five thousand dollar ($25,000) maximum amount shall not be payable by the
Company and you hereby agree to indemnify and hold the Company harmless for any
amounts exceeding such maximum, including any amounts awarded to you or to your
counsel or other advisers by any court of competent jurisdiction.

         If this letter correctly sets forth our agreement on the subject matter
hereof, kindly sign and return to the Company the enclosed copy of the letter
which will then constitute our agreement on this subject.

                                    Sincerely,

                                    By:_______________________________________

                                    Title: ____________________________________
                                            GREYHOUND LINES, INC.
                                            15110 North Dallas Parkway
                                            Dallas, Texas  75248

ACCEPTED AND AGREED TO AS OF ____________________, 1998

____________________________________

        type name and address of employee
_________________________________________

EX-21

                                                                               .
                                                                               .
                                                                               .

                                                                      EXHIBIT 21

               SUBSIDIARIES OF REGISTRANT - GREYHOUND LINES, INC.
                                DECEMBER 31, 2003



                                                                     JURISDICTION OF
SUBSIDIARIES                                                            FORMATION                 %
- -----------------------------------------------------------------------------------------------------
                                                                                          
Atlantic Greyhound Lines of Virginia, Inc.                             Virginia                  100%
Gateway Ticketing Systems, Inc.                                        Pennsylvania               25%
Greyhound de Mexico, S.A. de C.V.                                      Republic of Mexico       99.9%
Greyhound Xpress Delivery, L.L.C.                                      Delaware                  100%
LSX Delivery, L.L.C.                                                   Delaware                  100%
Rockford Coach Lines, L.L.C.                                           Delaware                    1%
Transportation Realty Income Partners L.P.                             Delaware                   50%
Union Bus Station of Oklahoma City, Oklahoma                           Oklahoma                   40%
Wilmington Union Bus Station Corporation                               North Carolina           55.1%
GLI Holding Company                                                    Delaware                  100%
     Carolina Coach Company                                            Virginia                  100%
         Wilmington Union Bus Station Corporation                      North Carolina            3.4%
     Seashore Transportation Company                                   North Carolina            100%
         Wilmington Union Bus Station Corporation                      North Carolina           39.1%
     GLI Corporate Risk Solutions, Inc.                                Delaware                  100%
     Greyhound Shore Services, L.L.C.                                  Delaware                  100%
     Greyhound Transit Ltd.                                            Cayman Islands             20%
     On Time Delivery Service, Inc.                                    Minnesota                 100%
     Rockford Coach Lines, L.L.C.                                      Delaware                   99%
     Texas, New Mexico, & Oklahoma Coaches, Inc.                       Delaware                  100%
         T.N.M. & O Tours, Inc.                                        Texas                     100%
     Valley Garage Company                                             Texas                     100%
     Valley Transit Co., Inc.                                          Texas                     100%
     Vermont Transit Co., Inc.                                         Vermont                   100%
Sistema Internacional de Transporte de Autobuses, Inc.                 Delaware                  100%
     American Bus Sales Associates, Inc.                               New Mexico                 51%
     Americanos U.S.A., L.L.C.                                         Delaware                   51%
     Autobuses Americanos, S.A. de C.V.                                Republic of Mexico         49%
     Autobuses Amigos, L.L.C.                                          Delaware                   51%
     Autobuses Amigos, S.A. de C.V.                                    Republic of Mexico         49%
     Autobuses Crucero, S.A. de C.V.                                   Republic of Mexico         39%
     Crucero U.S.A., L.L.C.                                            Delaware                  100%
     Giros Americanos, Inc.                                            Delaware                  100%
     Gonzalez, Inc. d/b/a Golden State Transportation                  California               51.4%
     Omnibus Americanos, S.A. de C.V.                                  Republic of Mexico         49%

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Stephen E. Gorman, certify that:

1.	I have reviewed this annual report on Form 10-K of Greyhound Lines, Inc. and Subsidiaries;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
c)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 30, 2004

/s/ Stephen E. Gorman

Stephen E. Gorman, President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Cheryl W. Farmer, certify that:

1.	I have reviewed this annual report on Form 10-K of Greyhound Lines, Inc. and Subsidiaries;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
c)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 30, 2004

/s/ Cheryl W. Farmer

Cheryl W. Farmer, Vice President — Finance

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Greyhound Lines, Inc. and Subsidiaries (the “Company”) on Form 10-K for the year ended December 31, 2003 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned President and Chief Executive Officer and Vice President — Finance of the Company hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of their knowledge:

1.	The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.	The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ Stephen E. Gorman

Stephen E. Gorman, President and Chief Executive Officer

March 30, 2004

/s/ Cheryl W. Farmer

Cheryl W. Farmer, Vice President — Finance

March 30, 2004

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to Greyhound Lines, Inc. and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.