SEC Filing | Option Care Health, Inc.

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Registration No. 333-60647
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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PRE-EFFECTIVE AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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MIM CORPORATION
(Exact name of Registrant as specified in its charter)

DELAWARE 8099 05-0489664
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or organization) Classification Code Number) Identification Number)
One Blue Hill Plaza
Pearl River, New York 10965
(914) 735-3555
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)

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Richard H. Friedman
Chairman of the Board and
Chief Executive Officer
MIM Corporation
One Blue Hill Plaza
Pearl River, New York 10965
(914) 735-3555
(Name, address, including zip code, and telephone number, including area code, of agent for service)

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Copies to:
Robert E. King, Jr.
Rogers & Wells LLP
200 Park Avenue
New York, New York 10166
(212) 878-8000

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Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement
becomes effective and all other conditions to the proposed merger of a wholly owned subsidiary of the Registrant with and into
Continental Managed Pharmacy Services, Inc. ("Continental") pursuant to the Agreement and Plan of Merger dated as of January 27,
1998, as amended, attached as Annex A to the enclosed Prospectus/Proxy Statement have been satisfied or waived.

If the securities being registered on this form are being offered in connection with the formation of a holding company and
there is compliance with General Instruction G, check the following box. |_|

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check
the following box and list the Securities Act registration statement number of the earlier effective registration for the same
offering. |_|

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective registration statement for the same offering. |_|

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CALCULATION OF REGISTRATION FEE
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Proposed
Title of Each Class of Proposed Maximum Maximum Amount of
Securities to Amount to be Offering Price Aggregate Registration
be Registered Registered Per Share (2) Offering Price(2) Fee(3)
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Common Stock, $.0001 par value 3,912,448 shares(1) $1.56 $6,113,606 $0.00
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(1) This Registration Statement covers the maximum number of shares of Common Stock of the registrant that are expected to be
issued in connection with the transactions described herein.

(2) Determined pursuant to Rule 457(f)(2). (Based on the book value per common share of Continental as of June 30, 1998 of $511.89
divided by the exchange ratio of 327.59).

(3) Pursuant to Rule 457(b), the fee is after deduction of $3,961.35 paid with respect to the transaction pursuant to Section 14(g)
of the Securities Exchange Act of 1934.

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date
until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter
become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

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MIM CORPORATION
One Blue Hill Plaza, 15th Floor
Pearl River, New York 10965
(914) 735-3555

August 5, 1998

To Our Stockholders:

I cordially invite you to attend our annual meeting at the Trumbull
Marriott Merritt Parkway, 180 Hawley Lane, Trumbull, Connecticut, on August 21,
1998, at 10:00 a.m., local time.

The Board of Directors of MIM Corporation has approved a merger that would
result in Continental Managed Pharmacy Services, Inc. becoming a wholly-owned
subsidiary of MIM. If the merger is completed, MIM stockholders would continue
to own their existing shares and Continental shareholders would receive 327.59
shares of MIM common stock for each Continental common share. We estimate that
Continental shareholders would receive approximately 21% of MIM's issued and
outstanding common stock in the merger.

We are asking the stockholders of MIM to approve the issuance of shares of
MIM common stock in connection with the merger and the election of six directors
of MIM. The Board of Directors of MIM has determined that the merger is fair to
and in the best interests of MIM. The Board of Directors of MIM recommends that
you vote FOR approval of the issuance of shares of MIM common stock in
connection with the merger and FOR the election of the six directors.

Your vote is very important. All stockholders are cordially invited to
attend the meeting in person. However, whether or not you plan to attend, please
promptly sign, date and mail the enclosed proxy card in the enclosed return
envelope, which requires no postage if mailed in the United States. Returning
your proxy card does not deprive you of your right to attend the meeting and
vote your shares in person. If you sign, date and mail your proxy card without
indicating how you wish to vote, your proxy will be counted as a vote in favor
of the proposals submitted at the meeting.

As of June 22, 1998, the record date for the annual meeting, our current
directors and executive officers owned approximately 31.6% of our outstanding
shares of common stock entitled to vote at the annual meeting. Each of them has
advised us that he plans to vote all of his shares in favor of the merger and
the other proposals. In addition, approximately 12.1% of our outstanding shares
of common stock entitled to vote at the annual meeting are owned by certain
people and entities affiliated with E. David Corvese. Mr. Corvese is a current
member of our Board of Directors, is not standing for re-election and is a
former officer and employee of MIM. Under a voting agreement, we will vote those
shares, as well as Mr. Corvese's, in favor of the merger. As a result, in order
for the proposal to approve the issuance of our common stock in connection with
the merger to be approved, a maximum of an additional 6.3% of our outstanding
shares must be voted in favor of such proposal.

We have enclosed a notice of the annual meeting and a Proxy
Statement/Prospectus which describes in detail the proposed merger and the other
proposals. We encourage you to read this entire document carefully. In addition,
you may obtain information about MIM from documents that we have filed with the
Securities and Exchange Commission.

/s/ Richard H. Friedman

Richard H. Friedman
Chairman of the Board and Chief Executive Officer

MIM CORPORATION
One Blue Hill Plaza, 15th Floor
Pearl River, New York 10965
(914) 735-3555

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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on August 21, 1998

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To Our Stockholders:

We invite you to attend our 1998 Annual Meeting of Stockholders at 10:00
a.m., local time, on August 21, 1998, at the Trumbull Marriott Merritt Parkway,
180 Hawley Lane, Trumbull, Connecticut. At the meeting, our stockholders will
vote on the following proposals, together with any other business that may
properly come before the meeting:

1. To approve the issuance of shares of MIM common stock to shareholders
of Continental Managed Pharmacy Services, Inc. as part of a merger,
through which Continental will become a wholly-owned subsidiary of
MIM.

2. To elect six directors to serve for one-year terms.

3. To transact other business which properly comes before the annual
meeting.

The Board of Directors recommends that stockholders vote to approve the
proposals listed above. These proposals and other information relating to the
annual meeting are described in detail in the accompanying Proxy
Statement/Prospectus.

The Board of Directors has fixed the close of business on June 22, 1998 as
the record date for the determination of stockholders entitled to notice of, and
to vote at, the meeting and any adjournments or postponements thereof.

All stockholders are cordially invited to attend the meeting in person.
However, whether or not you plan to attend, please promptly sign, date and mail
the enclosed proxy card in the enclosed return envelope, which requires no
postage if mailed in the United States. Returning your proxy card does not
deprive you of your right to attend the meeting and vote your shares in person.

By order of the Board of Directors,

/s/ Barry A. Posner

Barry A. Posner
Secretary

Pearl River, New York
August 5, 1998

PROXY STATEMENT FOR
ANNUAL MEETING OF STOCKHOLDERS
To Be Held on August 21, 1998

AND

PROSPECTUS OF
MIM CORPORATION
3,912,448 Shares of Common Stock

The Board of Directors of MIM Corporation ("MIM") has approved a merger
that would result in Continental Managed Pharmacy Services, Inc. ("Continental")
becoming a wholly-owned subsidiary of MIM. If the merger is completed, MIM
stockholders would continue to own their existing shares and Continental
shareholders would receive 327.59 shares of MIM common stock for each
Continental common share. Continental shareholders would receive a total of
approximately 3.9 million shares in the merger, approximately 21% of the MIM
common stock outstanding after the merger.

This Proxy Statement/Prospectus is the proxy statement of MIM, which it
will use to solicit proxies for use at the annual meeting, and at any
adjournments or postponements of that meeting. This Proxy Statement/Prospectus
also is the prospectus of MIM with respect to the MIM common stock to be issued
to Continental shareholders pursuant to the merger. MIM has provided the
information concerning MIM, and Continental has provided the information
concerning Continental.

The merger cannot be completed unless the stockholders of both companies
approve it.

The Board of Directors of MIM has approved the merger agreement and the
merger and recommends that the MIM stockholders vote FOR the proposal to issue
shares of MIM Common Stock in connection with the merger.

MIM common stock is listed on the Nasdaq Stock Market's National Market
Tier under the symbol "MIMS."

See "Risk Factors" beginning on page 11 for information about particular
risks with regard to MIM, Continental and the merger.

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Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of the merger or the
MIM common stock to be issued in the merger, and they have not
determined if the Proxy Statement/Prospectus is truthful or complete.
Any representation to the contrary is a criminal offense.

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This Proxy Statement/Prospectus is dated August 5, 1998 and is first being
mailed to stockholders on or about August 6, 1998.

TABLE OF CONTENTS

Page
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QUESTIONS AND ANSWERS ABOUT
THE MIM/CONTINENTAL MERGER ......................................... 1

SUMMARY .............................................................. 2
The Companies ..................................................... 2
The Annual Meeting ................................................ 2
MIM's Reasons for Merger .......................................... 3
Recommendation of the MIM Board ................................... 3
Fairness Opinion of Warburg Dillon
Read LLC ........................................................ 3
Continental's Reasons for Merger .................................. 4
The Merger and the Merger Agreement ............................... 4
Other MIM Annual Meeting Matters .................................. 6
Selected Historical Consolidated
Financial Data .................................................. 6
Selected Pro Forma Combined
Financial Data .................................................. 9
Unaudited Comparative Per Share Data .............................. 10

RISK FACTORS ......................................................... 11
Important Considerations Related to
Forward-Looking Statements ...................................... 11
Risks Relating to the Merger ...................................... 11
Dependence on RxCare Relationship ................................. 11
Limited Term of Material Agreements ............................... 12
MIM Has Had Historical Accounting
Losses; MIM May Experience
Future Losses ................................................... 12
Competition ....................................................... 12
Dependence on Key Management ...................................... 12
Risk of Managing Growth ........................................... 13
Differences Between Rights of
MIM Stockholders and Continental
Shareholders .................................................... 13
Significant Control by Management and
Significant Stockholders ........................................ 13
Government Regulation ............................................. 13
Tax Treatment ..................................................... 14
Risk-Based ("Capitated") Agreements ............................... 14
Professional Liability Risk ....................................... 15
Dependence on Information Systems ................................. 15
Effect of Certain Legal Proceedings ............................... 15
Possible Negative Effects of
Preferred Stock ................................................. 16
No Intention to Pay Dividends ..................................... 16
Restrictions on the Resale of MIM
Common Stock Issued in the Merger ............................... 16
Risks Related to Intangible Assets ................................ 16

THE ANNUAL MEETING ................................................... 16
Date, Time and Place; Purposes .................................... 16
Voting Rights; Votes Required
for Approval .................................................... 17
Proxies ........................................................... 17
Other Business; Adjournments ...................................... 18

PROPOSAL 1 -- THE MERGER ............................................. 18
General ........................................................... 18
Background of the Merger .......................................... 18
MIM's Reasons for the Merger;
Recommendation of the MIM Board ................................. 22
Continental's Reasons for the Merger .............................. 23
Interests of Certain Persons in
the Merger ...................................................... 25
Anticipated Accounting Treatment .................................. 25
Regulatory Approvals .............................................. 25
Material Tax Consequences of
the Merger ...................................................... 25
Resale of MIM Common Stock;
Affiliates ...................................................... 26
Listing of the MIM Common Stock ................................... 27
Dissenters' Rights ................................................ 27

MARKET PRICE INFORMATION,
DIVIDENDS AND RELATED
STOCKHOLDER MATTERS ................................................ 27
MIM ............................................................... 27
Continental ....................................................... 27

UNAUDITED PRO FORMA COMBINED
CONDENSED FINANCIAL
STATEMENTS ......................................................... 28

MIM MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS
OF OPERATIONS ...................................................... 32
Overview .......................................................... 32
Results of Operations ............................................. 32
Liquidity and Capital Resources ................................... 35
Other Matters ..................................................... 35

CONTINENTAL MANAGEMENT'S
DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND
RESULTS OF OPERATIONS .............................................. 37
Overview .......................................................... 37
Results of Operations ............................................. 37
Liquidity and Capital Resources ................................... 39
Other Matters ..................................................... 39

ROLE OF FINANCIAL ADVISORS ........................................... 40
Opinion of MIM Financial Advisor .................................. 40
Opinion of Continental Financial Advisor .......................... 43

THE MERGER AGREEMENT ................................................. 46
General ........................................................... 46

(i)

Page
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Effective Time and Effect of the Merger ........................... 46
Conditions to the Merger .......................................... 46
Representations and Warranties .................................... 46
Conduct of Business Prior to the Merger ........................... 47
Amendment, Termination and Waiver ................................. 47
Expenses .......................................................... 47

BUSINESS OF MIM ...................................................... 48
Overview .......................................................... 48
Pharmacy Benefit Management Services .............................. 48
The TennCare Program .............................................. 50
Competition ....................................................... 51
Government Regulation ............................................. 51
Employees ......................................................... 52
Properties ........................................................ 52
Legal Proceedings ................................................. 52

MANAGEMENT OF MIM AFTER
THE MERGER ......................................................... 53
Board of Directors ................................................ 53
Executive Officers ................................................ 53
Common Stock Ownership by Certain
Beneficial Owners and Management ................................ 54

BUSINESS OF CONTINENTAL .............................................. 56
General ........................................................... 56
Background ........................................................ 56
The Mail Service Pharmacy Industry ................................ 56
Customers ......................................................... 57
Subsidiaries ...................................................... 57
Drug Utilization Review ........................................... 59
Government Regulation ............................................. 59
Competition ....................................................... 59
Employees ......................................................... 60
Properties ........................................................ 60

MANAGEMENT OF CONTINENTAL ............................................ 61
Executive Officers ................................................ 61
Common Stock Ownership by Certain
Beneficial Owners and Management ................................ 61

DESCRIPTION OF THE CAPITAL STOCK
OF MIM ............................................................. 62
Authorized Capital Stock .......................................... 62
MIM Common Stock .................................................. 62
Preferred Stock ................................................... 62
Anti-Takeover Provisions .......................................... 62

DESCRIPTION OF THE CAPITAL STOCK
OF CONTINENTAL ..................................................... 63
Authorized Capital Stock .......................................... 63
Continental Common Shares ......................................... 63

COMPARISON OF RIGHTS OF
STOCKHOLDERS OF MIM AND
CONTINENTAL ........................................................ 63
General ........................................................... 63
Authorized Capital Stock .......................................... 63
Business Combinations ............................................. 63
Amendments to Charter ............................................. 64
Amendments to By-Laws/Code
of Regulations .................................................. 64
Special Stockholders Meetings ..................................... 64
Number and Election of Directors .................................. 65
Continental's Provisions Restricting
Transfer of Shares .............................................. 65
Indemnification of Directors and Officers ......................... 65

PROPOSAL 2. -- ELECTION OF
DIRECTORS .......................................................... 67
Information Concerning Meetings and
Certain Committees .............................................. 68
Compensation of Directors ......................................... 68

PROPOSAL 3. -- OTHER MATTERS ......................................... 68

ADDITIONAL INFORMATION ............................................... 69
Executive Compensation ............................................ 69
Compensation Committee Interlocks
and Insider Participation ....................................... 71
Compensation Committee Report on
Executive Compensation .......................................... 71
Employment Agreements ............................................. 71
Stockholder Return Performance Graph .............................. 72
Certain Relationships and
Related Transactions ............................................ 72
Section 16(a) Beneficial Ownership
Reporting Compliance ............................................ 73
Independent Auditors .............................................. 73
Solicitation of Proxies ........................................... 73
Stockholder Proposals ............................................. 73
Miscellaneous ..................................................... 74

LEGAL MATTERS ........................................................ 74

EXPERTS .............................................................. 74

WHERE YOU CAN FIND MORE
INFORMATION ........................................................ 74

INDEX TO FINANCIAL STATEMENTS ........................................ F-1

INDEX TO ANNEXES ..................................................... A-1

(ii)

QUESTIONS AND ANSWERS ABOUT THE MIM/CONTINENTAL MERGER

Q: Why are the two companies proposing to merge?

A: Both MIM and Continental are pharmaceutical service providers. Our services
generally are complementary, and the merger will enable the combined
enterprise to provide a broader scope of services. To review the reasons
for the merger in greater detail, as well as risks related to this
transaction, see pages 11- 16, and 18-25.

Q: How will I benefit?

A: We believe that stockholders of MIM and Continental will benefit by being
owners of a company that is better able to compete effectively in its
industry than either MIM or Continental individually.

Q: What do I need to do now?

A: If you are currently a stockholder of MIM, you should sign your proxy card
and mail it to us in the enclosed return envelope as soon as possible, so
that your shares may be represented at the annual meeting, which will take
place on August 21, 1998. The Board of Directors of MIM unanimously
recommends that MIM stockholders vote in favor of the proposed merger.
Continental shareholders will receive a separate notice for their
shareholders meeting and need do nothing at this time.

Q: Should I send in my stock certificates now?

A: No. After the merger is completed, we will send Continental shareholders
written instructions for exchanging their stock certificates. MIM
stockholders will keep their current certificates.

Q: Please explain the merger consideration.

A: Continental shareholders will receive 327.59 shares of MIM common stock in
exchange for each Continental common share which they currently own.

Q: What about future dividends?

A: Historically, MIM has not paid dividends. MIM has had and will continue to
have a substantial commitment to expanding its business, and that expansion
requires the cash that otherwise might be available for dividends.

Q: When do you expect the merger to be completed?

A: We are working towards completing the merger as quickly as possible, but in
any event no later than the week following the annual meeting.

Q: What are the tax consequences to stockholders in the merger?

A: The exchange of shares by Continental shareholders generally will be
tax-free to them for federal income tax purposes. The merger will be
tax-free to MIM stockholders for federal income tax purposes. To review the
tax consequences to stockholders in greater detail, see pages 25-26.

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SUMMARY

This summary highlights selected information from this document and may not
contain all of the information that is important to you. To understand the
merger fully and for a more complete description of the legal terms of the
merger, you should read carefully this entire document, including the documents
attached as annexes. Unless the context otherwise requires, when we refer to MIM
we mean MIM Corporation, a Delaware corporation, and its predecessors and
wholly-owned subsidiaries, including ProMark Holdings, Inc. ("Pro-Mark"); and
when we refer to Continental we mean Continental Managed Pharmacy Services,
Inc., an Ohio corporation, and its subsidiaries.

The Companies

MIM Corporation and CMP Acquisition Corp., its wholly-owned subsidiary
One Blue Hill Plaza, 15th Floor
P.O. Box 1670
Pearl River, New York 10965
(914) 735-3555

MIM is a pharmacy benefit management organization that provides a broad
range of services to the pharmaceutical health care industry and employers. MIM
promotes the cost-effective delivery of pharmacy benefits to plan members and
the public. MIM targets organizations involved in three key industry segments:
(i) sponsors of public and private health plans (such as HMOs and other managed
care organizations, long-term care facilities such as nursing homes and assisted
living facilities, and employers); (ii) retail pharmacies; and (iii)
pharmaceutical manufacturers and distributors. MIM offers services providing
financial benefits to each of them. MIM specifically targets small to medium
size HMOs, self-funded groups and third party administrators (who in turn market
to self-funded groups on MIM's behalf). MIM works with plan sponsors and local
health care professionals on both a risk (e.g., fixed cost per plan participant
or "capitated") and non-risk (e.g., a price per prescription submitted or
"fee-for-service") basis to design, implement and manage innovative pharmacy
benefit management programs to control pharmacy costs under the plans. MIM's
programs promote the clinically appropriate substitution of generic drugs and
less expensive bio-equivalent brand name drugs for equivalent but more expensive
brand name drugs. See "Business of MIM."

MIM formed CMP for the sole purpose of merging it with Continental.
Following the merger, Continental will be a wholly-owned subsidiary of MIM.

Continental Managed Pharmacy Services, Inc.
1400 E. Schaaf Road
Cleveland, Ohio 44131
(216) 459-2025

Continental is a pharmaceutical benefit management company which offers
mail order pharmacy services, pharmacy card plan services in conjunction with a
network of retail pharmacies, and billing and physician office support services
to its customers. In conjunction with these programs, Continental assists
customers in the development of prescription benefit plans, management and
analysis of plan data, and review of drug utilization data. See "Business of
Continental."

The Annual Meeting

Date, Time and Place. The annual meeting will be held on August 21, 1998 at
10:00 a.m., local time, at the Trumbull Marriott Merritt Parkway, 180 Hawley
Lane, Trumbull, Connecticut.

Purpose of the Annual Meeting. At the annual meeting, MIM's stockholders
will be asked to:

o approve the issuance of MIM common stock to Continental shareholders
as part of the merger;

o elect six directors; and

o transact other business which properly comes before the annual
meeting.

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Quorum. The holders of a majority of the outstanding shares of MIM common
stock entitled to vote must be present in person or by proxy for any action to
be taken at the annual meeting. For purposes of determining whether this quorum
requirement is met, we will count abstentions, but not broker non-votes,
received in connection with properly signed and returned proxies as being
present.

Record Date. The close of business on June 22, 1998 was the record date for
determining if you are entitled to vote at the annual meeting. At the record
date, there were 13,694,000 shares of MIM common stock entitled to vote at the
annual meeting. This stock was held by 65 record holders in addition to
approximately 2,000 stockholders whose shares were held in nominee name.

Voting. For each proposal you will have one vote at the annual meeting for
each MIM share you held of record on June 22, 1998. The affirmative vote of the
holders of a majority of the shares of MIM common stock present in person or by
proxy and entitled to vote is required to approve the issuance of MIM common
stock in connection with the merger. For the election of directors, the six
nominees receiving the highest number of votes cast will be elected.

Stock Ownership of MIM Management. As of the record date, the current
directors and executive officers of MIM owned approximately 31.6% of the
outstanding shares of MIM common stock entitled to vote at the annual meeting.
Each of the current directors and executive officers of MIM has advised MIM that
he plans to vote all of his shares in favor of the merger and the other
proposals. In addition, E. David Corvese, a member of the current MIM Board, who
is not standing for re-election, and a former officer and employee of MIM, and
certain people and entities affiliated with him have entered into a voting
agreement with MIM. These affiliates of Mr. Corvese own 1,650,947 shares, or
approximately 12.1% of the outstanding shares of MIM common stock entitled to
vote at the annual meeting. Under the voting agreement, MIM will vote the shares
of MIM common stock owned by such persons in favor of the proposal to approve
the issuance of MIM common stock in connection with the merger. As a result, in
order for the proposal to approve the issuance of MIM common stock in connection
with the merger to be approved, a maximum of an additional 6.3% of the
outstanding MIM shares must be voted in favor of such proposal.

MIM's Reasons for Merger

MIM's Board believes that the merger represents a major step for MIM and in
particular that the merger will:

o continue MIM's strategy of becoming a significant participant in the
pharmacy benefits business;

o expand MIM's network of participating pharmacies through which MIM
provides its members access to retail pharmaceuticals through
Continental's more comprehensive network;

o enhance MIM's national presence; and

o give MIM an immediate presence in the mail-order pharmaceutical
business, a market which MIM believes is currently profitable and
which will provide MIM with opportunities for growth.

MIM's Board believes that the combination of the two companies would reduce
costs by eliminating redundant expenses, including the elimination of certain
third party contractor costs. The elimination of overlapping activities is
expected to improve the combined company's overall operating results.

Recommendation of the MIM Board

The MIM Board believes that the terms of the merger are fair to and in the
best interests of MIM and recommends that its stockholders vote FOR the issuance
of MIM's common stock in the merger.

Fairness Opinion of Warburg Dillon Read LLC

In deciding to approve the merger, the MIM Board considered the opinion of
Warburg Dillon Read LLC as to the fairness of the merger consideration from a
financial point of view. This opinion is attached as Annex B to this Proxy
Statement/Prospectus. We urge you to read the entire Warburg Dillon Read LLC
opinion carefully.

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Continental's Reasons for Merger

Continental's Board of Directors believes that the merger is fair to and in
the best interests of Continental and its shareholders, and unanimously
recommends that its shareholders vote for the merger. In reaching its decision
to approve the merger agreement and the merger, the Continental Board considered
several factors including:

o the number of shares of MIM common stock to be received by the
Continental shareholders;

o the fact that MIM's common stock is publicly-traded, which will
provide Continental shareholders with increased liquidity;

o the likelihood of the merger being consummated;

o its assessment of the financial condition, results of operations and
prospects of Continental in the absence of a business combination or
similar transaction;

o the tax-free nature of the exchange of Continental shares for MIM
shares; and

o the fairness opinion of Continental's financial advisor, McDonald &
Company Securities, Inc.

Continental management also believes that the combination of the two companies
will reduce costs by eliminating redundant expenses. The elimination of
overlapping activities is expected to improve the combined company's overall
operating results.

The Merger and the Merger Agreement

The merger agreement, as amended to date, is attached as Annex A to this
Proxy Statement/Prospectus. We encourage you to read the entire merger agreement
as it is the legal document that governs the transaction.

Stockholder Vote Required to Approve the Merger. The affirmative vote of
the holders of a majority of the shares of MIM common stock present in person or
by proxy and entitled to vote at the meeting is required to approve the issuance
of shares of MIM common stock in connection with the merger. The current
directors and executive officers of MIM own a total of approximately 31.6% of
the MIM common stock entitled to vote. Each of them has advised MIM that he
plans to vote all of his shares in favor of the merger and the other proposals.
In addition, E. David Corvese, a member of the current MIM Board and a former
officer and employee of MIM, and certain people and entities affiliated with him
have entered into a voting agreement with MIM. These affiliates of Mr. Corvese
own 1,650,947 shares, or approximately 12.1% of the outstanding shares of MIM
common stock entitled to vote at the annual meeting. Under the voting agreement,
MIM will vote the shares of MIM common stock owned by such persons in favor of
the proposal to approve the issuance of MIM common stock in connection with the
merger. As a result, in order for the proposal to approve the issuance of MIM
common stock in connection with the merger to be approved, a maximum of an
additional 6.3% of the outstanding MIM shares must be voted in favor of such
proposal.

The favorable vote of at least two-thirds of the outstanding Continental
common shares is required to approve the merger. Shareholders of Continental who
own approximately 81% of the outstanding Continental common shares have agreed
to vote their shares in favor of the merger. Therefore, the merger will be
approved by Continental's shareholders. A special meeting of Continental's
shareholders is scheduled for August 17, 1998 for the purpose of voting on the
merger.

Conditions to Merger. In addition to the required approval of each
company's stockholders, the merger will only be completed if a number of
conditions are met, including:

o absence of a court order or injunction which prohibits the merger;

o receipt of governmental consents and approvals required to consummate
the merger; and

o accuracy of the representations and warranties of MIM and Continental.

Certain conditions to the merger may be waived.

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Termination. Either MIM or Continental can terminate the merger agreement
if any of the following occurs:

o we do not complete the merger by August 31, 1998;

o the stockholders of either MIM or Continental do not give the required
stockholder approvals;

o the other party materially breaches its representations, warranties or
obligations under the merger agreement; or

o a law or court order permanently prohibits the merger.

Neither MIM nor Continental can terminate the merger agreement if it is in
material breach of its obligations under the merger agreement.

Regulatory Approvals. The Hart-Scott-Rodino antitrust statute prohibits us
from completing the merger until after we have given certain information and
materials to the Antitrust Division of the Department of Justice and the Federal
Trade Commission ("FTC") and a required waiting period has expired. The required
waiting period under the statute with respect to the merger was completed on
April 3, 1998.

Board of Directors and Management of MIM after the Merger. Following the
merger, the MIM Board will consist of the directors elected by the MIM
stockholders at the annual meeting. Of those directors nominated, four are
currently MIM directors and one will be a new director. The existing senior
management of MIM will continue in office upon completion of the merger. Certain
members of Continental's senior management will continue in office upon
completion of the merger.

Interests of Certain Persons in the Merger. Continental shareholders should
see "Proposal 1--The Merger--Interests of Certain Persons in the Merger" for a
discussion of certain benefits to be received by certain officers of Continental
in connection with the merger.

Comparison of Rights Under Applicable Law. The rights of Continental
shareholders are currently governed by Ohio law, the Continental charter and the
Continental code of regulations. Following the merger, the rights of former
Continental shareholders will be governed by Delaware law, the MIM charter and
the MIM by-laws. Delaware law differs from Ohio law in several respects and the
terms of the Continental charter and Continental code of regulations differ in
several respects from MIM's charter and MIM's by-laws. Therefore, the rights of
the Continental shareholders will change in some ways as a result of the merger.
See "Comparison of Rights of Stockholders of MIM and Continental" for more
detailed information.

Appraisal Rights. Under Delaware law, MIM stockholders do not have any
right to an appraisal of the value of their shares in connection with the
merger.

Under Ohio law, Continental shareholders who do not vote in favor of the
merger and who comply with certain notice requirements and other procedures will
have the right to be paid cash for the "fair value" of their shares. Fair value
may be more or less than the value of the MIM stock to be paid to other
Continental shareholders in the merger. MIM is not required to close the merger
if shareholders owning more than 5% of the Continental common shares exercise
their dissenters' rights. See "The Merger--Dissenters' Rights."

Accounting Treatment. The merger is expected to be accounted for as a
"purchase" for accounting and financial reporting purposes.

Material Federal Income Tax Consequences of the Merger. We have structured
the merger so that neither MIM, Continental nor our stockholders will recognize
any gain or loss for federal income tax purposes (except for gain recognized by
Continental shareholders to the extent they receive cash instead of fractional
shares or upon their exercise of dissenters' rights). We urge each stockholder
of MIM and each shareholder of Continental to consult his or her own tax advisor
to determine their individual tax consequences of the merger.

Market Price and Listing of MIM Common Stock. MIM will list the shares of
its common stock to be issued in the merger on the Nasdaq Stock Market's
National Market Tier. On January 27, 1998, the last full trading day prior to
the public announcement of the proposed merger, MIM common stock closed at
$4 1/8 per share. On July 31, 1998, MIM common stock closed at $4 3/4 per share.
Based on such price, the value of the MIM common stock to be issued in the
merger would be approximately $18.6 million.

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

Effective Time of the Merger. We will consummate the merger only after we
obtain the required approvals of each company's stockholders and as soon as
practicable after all other conditions to the merger have been satisfied or
waived. We anticipate that the merger will occur within a week after MIM's
annual meeting.

Other MIM Annual Meeting Matters

At the MIM annual meeting, MIM is also asking its stockholders to vote on
the election of six directors to the MIM Board.

Approval of the merger is not a condition to the election of directors. The
MIM Board recommends that you vote FOR the nominees for director.

Selected Historical Consolidated Financial Data

The selected historical consolidated financial data of MIM as of December
31, 1996 and 1997 and for the three years in the period ended December 31, 1997
and the selected historical consolidated financial data of Continental as of
December 31, 1996 and 1997 and for the three years in the period ended December
31, 1997 have been derived from their respective audited historical consolidated
financial statements and the notes thereto, which are included in this Proxy
Statement/Prospectus. The selected historical consolidated financial data set
forth below as of December 31, 1993, 1994 and 1995 and for the years ended
December 31, 1993 and 1994 for MIM and as of December 31, 1994 and 1995 and for
the year ended December 31, 1994 for Continental have been derived from audited
financial statements not included in this Proxy Statement/Prospectus. The
selected historical unaudited consolidated financial data for MIM and
Continental as of March 31, 1998 and for the three months ended March 31, 1998
and 1997, respectively, have been derived from their respective unaudited
historical financial statements and the notes thereto, which are included in
this Proxy Statement/Prospectus. In the opinion of the management of MIM and
Continental, respectively, such unaudited financial data reflects all
adjustments, consisting only of normal recurring accruals, necessary for the
fair presentation of the results of MIM and Continental, respectively, and is
not necessarily indicative of the results that may be expected for their
respective entire fiscal years ending December 31, 1998. This selected financial
data should be read in conjunction with "MIM Management's Discussion and
Analysis of Financial Condition and Results of Operations," "Continental
Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the financial statements and related notes included in this
Proxy Statement/Prospectus.

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

- --------------------------------------------------------------------------------
MIM

Selected Historical Consolidated Financial Data

Period
from
inception
(June 22,
Three months ended 1993)
March 31, Year Ended December 31, through
------------------- ----------------------------------------------------- December 31,
1998 1997 1997 1996 1995 1994 1993
------- ------- -------- -------- -------- -------- ------------
(in thousands, except per share data)
(unaudited)

Statement of Operations
Data:
Revenue ................... $97,963 $70,811 $242,291 $283,159 $213,929 $109,326 $122
Net income (loss) ......... $1,636 $698 ($13,497)(1) ($31,754)(2) ($6,772) ($2,456) $40
Basic income (loss) per
common share............. $0.12 $0.06 ($1.07) ($3.32)(2) ($1.43) ($0.55) $0.01
Diluted income (loss)
per common share(3)...... $0.11 $0.05 ($1.07) ($3.32) ($1.43) ($0.55) $0.01
Weighted average
common shares
outstanding used in
computing basic
income (loss)
per share................ 13,369 12,068 12,620 9,557 4,732 4,500 4,500
Weighted average
common shares
outstanding used in
computing diluted
income (loss)
per share(3) ........... 15,132 15,121 12,620 9,557 4,732 4,500 4,500

December 31,
March 31, -----------------------------------------------------
1998 1997 1996 1995 1994 1993
-------- ------ ------ ------ ------ ------
(in thousands)
(unaudited)

Balance Sheet Data:
Cash and cash equivalents............ $5,816 $9,593 $1,834 $1,804 $2,933 $--
Investment securities ............... 16,343 22,636 37,038 -- -- --
Working capital ..................... 13,040 9,333 19,569 (12,080) (5,087) (3)
Property and equipment, net ......... 3,626 3,499 2,423 1,807 1,262 39
Total assets ........................ 63,846 62,727 61,800 18,924 15,260 93
Long-term debt, less current portion. -- -- -- -- -- --
Capital lease obligations, net of
current portion.................... 699 756 375 110 239 --
Total stockholders' equity (deficit). 18,442 16,810 30,143 (11,524) (3,693) 41

- ----------
(1) Included a reserve for the Sierra Agreement (as defined below) of $4.1
million for future contract losses.

(2) After recording a $26.6 million non-recurring non-cash stock option charge
and a $3.5 million reserve in connection with the termination of the
contract with Blue Cross and Blue Shield of Tennessee ("BCBS-TN"). See
"Business of MIM -- TennCare Program." Excluding the stock option charge,
the net loss for 1996 would have been $5,114, or $.54 per share of MIM
common stock.

(3) The historical diluted (loss) per common share for the years ended 1997
through 1994 excludes the effect of common stock equivalents as their
inclusion would be antidilutive.

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

Continental

Selected Historical Consolidated Financial Data

Three months
ended March 31, Year Ended December 31,
------------------- -------------------------------------------
1998 1997 1997 1996 1995 1994
------- ------ ------- ------- ------- -------
(in thousands, except share and per share data)
(unaudited)

Statement of Operations Data:
Revenues .......................... $15,047 $8,421 $47,280 $36,971 $30,202 $29,483
Net income ........................ 279 7 534 14 35 280
Basic and diluted income per
common share .................... $24.05 $0.60 $46.03 $1.21 $3.02 $25.93
Weighted average shares outstanding
used in computing basic and
diluted income per share ........ 11,600 11,600 11,600 11,600 11,600 10,800

December 31,
March 31, ------------------------------------------
1998 1997 1996 1995 1994
------ ------ ------ ------ ------
(in thousands)
(unaudited)

Balance Sheet Data:
Cash and cash equivalents ....................... $308 $166 $244 $202 $388
Investment securities ........................... -- -- -- -- --
Working capital ................................. 3,453 3,419 2,475 1,538 841
Property and equipment, net ..................... 626 704 907 1,105 972
Total assets .................................... 17,007 17,245 13,011 12,759 12,048
Long-term debt, less current portion ............ 3,837 4,069 3,710 3,245 1,917
Capital lease obligations, net of current portion 19 21 47 57
77
Total shareholders' equity ...................... 5,464 5,185 4,651 4,637 4,602

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

Selected Pro Forma Combined Financial Data

The unaudited pro forma combined financial data is based on the respective
historical consolidated financial statements and the notes thereto, which are
included elsewhere in this Proxy Statement/Prospectus. The unaudited pro forma
combined balance sheet assumes that the merger took place on March 31, 1998. The
unaudited pro forma combined statements of operations assume the merger took
place as of January 1, 1997.

The selected unaudited pro forma combined financial data is presented for
illustrative purposes only and is not necessarily indicative of the combined
financial position or results of operations of future periods or the results
that actually would have been realized had the entities been a single entity
during those periods. The selected unaudited pro forma combined financial data
is derived from the unaudited pro forma financial statements included elsewhere
herein and should be read in conjunction with those statements and notes
thereto. See "Unaudited Pro Forma Combined Condensed Financial Statements."

Three months ended Year ended
March 31, 1998 December 31, 1997
------------------ -----------------
(in thousands, except per share data)
(unaudited)

Statement of Operations Data:
Revenues.............................................. $113,010 $289,571
Net income (loss) .................................... 1,991 (13,180)
Basic income (loss) per common share.................. $ 0.12 $ (0.80)
Diluted income (loss) per common share(1) .......... $ 0.10 $ (0.80)
Weighted average shares outstanding used in
computing basic income (loss) per share............. 17,281 16,532
Weighted average shares outstanding used in
computing diluted income (loss) per share(1) ....... 19,044 16,532

March 31, 1998
--------------
(in thousands)
(unaudited)
Balance Sheet Data:
Cash and cash equivalents ................................. $ 4,624
Investment securities ..................................... 16,343
Working capital ........................................... 14,993
Property and equipment, net ............................... 4,252
Goodwill and other intangible assets, net ................. 19,422
Total assets .............................................. 93,386
Capital lease obligations, net of current portion.......... 718
Long-term debt, less current portion....................... 3,837
Total stockholders' equity ................................ 36,439

- ----------
(1) The pro forma diluted loss per common share for the year ended 1997
excludes the effect of common stock equivalents as their inclusion would be
antidilutive.

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

Unaudited Comparative Per Share Data

The following table sets forth certain historical per share data of MIM and
Continental and unaudited pro forma and equivalent pro forma per share data
after giving effect to the proposed merger using the purchase method of
accounting at an exchange ratio of 327.59 shares of MIM common stock for each
Continental common share. The data should be read in conjunction with the
separate historical consolidated financial statements of MIM and Continental and
notes thereto and the unaudited pro forma financial statements included
elsewhere in this Proxy Statement/Prospectus. The unaudited pro forma combined
financial data is not necessarily indicative of the operating results or
financial position that would have resulted had the merger been consummated at
the beginning of the periods presented and should not be construed as indicative
of future operations. Neither MIM nor Continental has declared or paid cash
dividends on their respective shares of capital stock for the periods below.

Earnings
(Loss)
Per Share Book Value
--------- ----------

As of and for the Three Months Ended March 31, 1998:
MIM Historical ........................................... $ 1.37
--Basic................................................ $ .12
--Diluted.............................................. .11

Continental Historical ................................... 24.05 471.03

MIM Pro Forma Combined(1)(2)(3) .......................... 2.10
--Basic................................................ .12
--Diluted.............................................. .10

Continental Equivalent Pro Forma(4) ...................... 687.94
--Basic................................................ 39.31
--Diluted.............................................. 32.76

As of and for the Year Ended December 31, 1997:
MIM Historical (Basic and Diluted)(5) .................... $ (1.07)

Continental Historical ................................... 46.03

MIM Pro Forma Combined(1)(3) ............................. (.80)

Continental Equivalent Pro Forma(4) ...................... (262.07)

- ----------

(1) The unaudited pro forma basic and diluted income (loss) per common share is
based upon the weighted average number of common shares and common share
equivalents of MIM and Continental outstanding at an exchange ratio of
327.59 shares of MIM common stock for each Continental common share. Pro
forma diluted loss per share for the year ended December 31, 1997 excludes
common share equivalents as their inclusion would be antidilutive.

(2) The unaudited pro forma book value per share is computed by dividing the
unaudited pro forma combined shareholders' equity by the unaudited pro
forma number of shares of stock outstanding at the end of the period, at an
exchange ratio of 327.59 shares of MIM common stock for each Continental
common share.

(3) In June 1998, the holders of Continental stock options exercised all
343.125 outstanding options. These shares have been reflected in the
unaudited pro forma combined per share data as if they were exercised as of
the beginning of the period presented.

(4) The unaudited pro forma combined net income per equivalent Continental
share amounts and the unaudited pro forma book value per equivalent
Continental share amounts are calculated by multiplying the respective
unaudited pro forma combined MIM per share amounts by an exchange ratio of
327.59 shares of MIM common stock for each share of Continental common
stock.

(5) Diluted loss per common share for the year ended December 31, 1997 excludes
common share equivalents, as their inclusion would be antidilutive.

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

RISK FACTORS

Before you vote for the merger, you should be aware that there are various
risks, including those described below. You should consider carefully these risk
factors together with the other information included in this Proxy
Statement/Prospectus in evaluating whether (i) in the case of MIM's
stockholders, to approve the issuance of MIM common stock in the merger, or (ii)
in the case of Continental's shareholders, to adopt the merger agreement and
approve the merger.

Important Considerations Related to Forward-Looking Statements

Some of the information in this Proxy Statement/Prospectus contains certain
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements include the
information concerning possible or assumed future results of operations of MIM
and Continental as well as statements preceded by, followed by or that include
the words "believes," "expects," "anticipates" or similar expressions. You are
cautioned that any forward-looking statements are not guarantees of future
performance and involve risks and uncertainties. When considering such
forward-looking statements, you should keep in mind the risk factors and other
cautionary statements in this Proxy Statement/Prospectus. The risk factors noted
in this section and other factors noted throughout the document, including
certain risks and uncertainties, could cause our actual results to differ
materially from those contained in any forward-looking statement. Neither MIM
nor Continental undertakes any obligation to publicly release the results of any
revisions to these forward-looking statements that may be made to reflect any
future events and circumstances.

Risks Relating to the Merger

MIM's current strategy contemplates the continued internal growth of
Continental. However, any business acquisition involves inherent uncertainties,
such as the effect on the acquired business of integration into a larger
organization and the availability of management resources to oversee the
operation of the acquired business. Potential obstacles to the successful
integration of the acquired business include, among others, consolidating
financial, accounting and managerial functions and eliminating operational
overlaps between our businesses, and adding and integrating key personnel. Even
though Continental may have been successful as an independent company prior to
the merger, we cannot assure you that its success will continue after the
merger.

Dependence on RxCare Relationship

RxCare of Tennessee, Inc. ("RxCare"), a pharmacy services administrative
organization owned by the Tennessee Pharmacists Association and representing
approximately 1,600 retail pharmacies, initially retained MIM in 1993 to assist
in obtaining health plan pharmaceutical benefit business for Tennessee
pharmacies and related services, including pharmacy benefit design and pricing.
In January 1994, the State of Tennessee instituted its TennCare(TM) state health
program ("TennCare") by contracting with plan sponsors to provide mandated
health services to Medicaid eligible Tennessee residents on a capitated basis.
In turn, certain of these plan sponsors contracted with RxCare to provide
TennCare-mandated pharmaceutical benefits to their TennCare beneficiaries
through RxCare's network of retail pharmacies, in most cases on a corresponding
capitated basis. Over time, substantially all of these contracts have been
restructured or renewed under fee-for-service pricing arrangements.

Since January 1994, MIM has been providing a broad range of pharmacy
benefit management services with respect to RxCare's TennCare and private
pharmaceutical benefit businesses under an agreement with RxCare formalized in
March 1994 and thereafter amended (the "RxCare Contract"). MIM assists RxCare in
designing and marketing its pharmacy benefit management services, and performs
essentially all of RxCare's obligations under its pharmacy benefit contracts
with health plan sponsors, pays certain amounts to RxCare and is compensated by
sharing with RxCare in the profit, if any, from activities under RxCare's
contracts with the sponsors.

As of December 31, 1997, MIM had contracts to service eight TennCare
sponsors with 1.2 million members under the RxCare Contract. RxCare's contracts
with Tennessee Primary Care Network, Inc., Tennessee Health Partnership,
Tennessee Behavioral Health, Inc. and BCBS-TN accounted for approximately 21%,
13%, 10% and 10%, respectively, of MIM's revenues in 1997. While MIM management
believes that

each of these contracts will be renewed, we cannot assure you that all or any
one of these contracts will be renewed at all or on terms as favorable as those
currently in effect. The failure to so renew all or any of these contracts on
terms at least as favorable as those currently in effect could have a material
adverse effect on MIM's business and results of operations.

The RxCare Contract expires on December 31, 1998. In total, this contract
accounted for 84% of MIM's revenues in 1997. Failure to renew this contract in
total or on terms as favorable as those currently in effect could have a
material adverse affect on MIM's business and results of operations. The BCBS -
TN risk-based contract was canceled effective March 31, 1997 and replaced with a
non-risk (fee-for-service) clinical services agreement between MIM and a BCBS -
TN affiliate. See "MIM Management's Discussion and Analysis of Financial
Condition and Results of Operations."

Limited Term of Material Agreements

The RxCare Contract is scheduled to expire December 31, 1998 unless renewed
in accordance with its terms. RxCare's contracts with plan sponsors typically
have a one-year term and are subject to automatic renewal unless notice of
termination is given. Those contracts are subject to earlier termination upon
the occurrence of certain events, including a breach of the agreement which is
not cured within 30 days of notice, insolvency or termination of the TennCare
program or of a plan sponsor's contract with the State of Tennessee. RxCare's
contracts with Tennessee Primary Care Network, Inc., Tennessee Health
Partnership, Tennessee Behavioral Health, Inc. and BCBS - TN accounted for
approximately 21%, 13%, 10% and 10%, respectively, of MIM's revenues in 1997. We
cannot guarantee that any of the foregoing contracts or the RxCare Contract will
be continued or renewed in accordance with their respective terms. The loss of
any of such contracts would have a material adverse effect on MIM's business and
results of operations. See "Business of MIM--Relationship with RxCare and
TennCare."

MIM Has Had Historical Accounting Losses; MIM May Experience Future Losses

MIM had losses of approximately $13.5 million, $31.8 million, $6.8 million
and $2.5 million in the years ended December 31, 1997, 1996, 1995 and 1994,
respectively. These historical results are not indicative of future results, but
we cannot assure you that MIM will not incur net losses in the future.

Competition

Dependence on Key Management

The success of MIM is largely dependent on the services of Richard H.
Friedman, MIM's Chief Executive Officer, and, to a lesser extent, other key
management personnel. MIM has an employment agreement with Mr. Friedman which
provides for his continued employment. However, we cannot assure you that MIM
will be able to retain his services or the services of any other key management
personnel. The loss of the services of one or more of MIM's senior management
following the merger could have a material adverse effect upon MIM's business,
operating results and financial condition. In addition, the success of
Continental is dependent on its senior management. However, MIM believes that
the loss of the services of one or more of Continental's senior management
following the merger would not have a material adverse effect upon MIM's
business, operating results or financial condition.

Risk of Managing Growth

Since MIM went public in August of 1996, MIM has been attempting to grow at
a rapid pace. The merger with Continental is part of MIM's growth strategy.
Rapid growth may strain MIM's financial resources. MIM's ability to manage its
growth effectively will require that it continue to hire, train and manage
additional employees. We can give no assurance that MIM will be able to continue
to expand its market presence in current locations, successfully enter other
markets or successfully integrate Continental into MIM's operations. If MIM is
unable to manage its growth effectively, MIM's business and results of
operations could be adversely affected. See "Business of MIM" for more
information.

Differences Between Rights of MIM Stockholders and Continental Shareholders

The rights of holders of common shares of Continental are currently
governed by Ohio law, the Continental articles of incorporation (the
"Continental Charter") and the Continental code of regulations (the "Continental
Code of Regulations"). If the merger takes place, the rights of former
Continental shareholders will be governed by Delaware law, the MIM charter and
the MIM by-laws. The rights of Continental's shareholders and MIM's stockholders
are not identical and we urge Continental's shareholders to read carefully the
information which we have provided under "Comparison of Rights of Stockholders
of MIM and Continental."

Significant Control by Management and Significant Stockholders

As of July 30, 1998, MIM's current directors and executive officers
beneficially owned in the aggregate approximately 42.6% of MIM's common stock.
After the merger, due primarily to management changes and the increase in
outstanding shares due to the issuance of shares in the merger, MIM's executive
officers and the nominated directors will own approximately 11.5% (assuming no
sales of shares by such persons subsequent to such date). Together, after the
merger, MIM's executive officers and directors will have the power to influence
the outcome of virtually all corporate actions requiring stockholder approval,
including the election of directors. In addition, after the merger, E. David
Corvese and John H. Klein (who will not be officers or directors of MIM after
the merger) will beneficially own 20.2% and 16.0%, respectively, of the
outstanding MIM common stock (assuming no sales of shares by such persons
subsequent to such date). As such, each, independently or together, will have
the power to influence the outcome of virtually all corporate actions requiring
stockholder approval, including the election of directors.

Government Regulation

MIM. MIM's current and planned businesses are subject to extensive federal
and state laws and regulations. Subject to certain exceptions, federal law (the
"Federal Anti-Kickback Statute") prohibits the payment or receipt of any
remuneration, directly or indirectly, to induce, arrange for or recommend the
purchase of health care items or services paid for in whole or in part by
Medicare or state health care programs (including Medicaid and TennCare). In
addition, certain state laws (including professional licensing laws prohibiting
fee-splitting) contain similar provisions that may extend the prohibition to
cover items or services that are paid for by private insurance and self-pay
patients. We can make no assurance that MIM's practices will be found to be
protected by certain so-called "safe harbor" regulations, which provide
insulation from prosecution under the Federal Anti-Kickback Statute, and in some
instances it is clear that they are not so protected. MIM is also subject to
various false claim, drug distribution, antitrust and consumer protection laws
and may be subject to certain other laws, including various state insurance
laws.

While management believes that MIM is in material compliance with all
existing laws and regulations material to the operation of its business, many of
the laws and regulations affecting it are uncertain in their application and are
subject to interpretation and change. Laws regulating health care businesses,
and interpretations thereof, are undergoing rapid change. As controversies
continue to arise in this area, for example, regarding the efforts of plan
sponsors and pharmacy benefit managers to limit formularies, alter drug choice
and establish limited networks of participating pharmacies, we expect federal
and state regulation and enforcement priorities in this area to increase, the
impact of which MIM cannot currently predict. It is possible that MIM will be
subject to scrutiny or challenge under one or more of these laws. Any such
challenge, whether or not successful, could have a material adverse effect upon
MIM's business and results of operations. Violation of the Federal Anti-Kickback
Statute, for example, may result in criminal penalties, as well as exclusion
from the Medicare and Medicaid (including TennCare) programs. Further, it is
possible that MIM will not be able to obtain or maintain any of the regulatory
approvals that may be required to

operate its business, and the failure to do so could have a material adverse
effect on MIM's business and results of operations. See "Business of
MIM--Government Regulation" and "Certain Transactions."

Continental. There are extensive state and federal laws applicable to the
dispensing of prescription drugs. Since sanctions may be imposed for violations
of these laws, compliance is a significant operational requirement for
Continental.

In general, Continental's mail service pharmacy operations and dispensing
facilities are regulated by the laws of Ohio that impose certain license
requirements and other regulations relating to the operation of pharmacies.
These laws are administered by the Ohio Board of Pharmacy, which is empowered to
impose sanctions, including license suspension or revocation for noncompliance.
The laws include, among other things, provisions requiring pharmacies and
pharmacists to be licensed, as well as provisions specifying who may write and
dispense prescriptions, how prescriptions must be filled, what records must be
maintained and when generic drugs may be substituted. While Continental believes
that it is in substantial compliance with these laws, many of the laws and
regulations affecting it are uncertain in their application and are subject to
interpretation and change.

Most other states into which Continental mails pharmaceuticals also have
laws governing the operation of pharmacies and the dispensing of prescription
drugs. In many cases, these laws include provisions which regulate out-of-state
mail service pharmacies that mail drugs into the state. The regulations are
administered by a state regulatory body (typically, a pharmacy board) which is
empowered to impose sanctions, which may include license suspension or
revocation for noncompliance. In those states where they exist, state laws
regulating out-of-state pharmacies essentially are disclosure laws. Disclosure
laws generally require that out-of-state pharmacies register with the local
board of pharmacy, follow certain procedures and make certain disclosures, but
generally permit the mail order pharmacy to operate in accordance with the laws
of the state in which the pharmacy operations are located. Continental believes
it is in material compliance with all of these disclosure laws. To date, there
have been no formal administrative or judicial efforts to enforce any such laws
against Continental.

In addition to the above-described laws and regulations, there are federal
statutes and regulations which establish standards for all pharmacies concerning
the labeling, packaging, advertising and adulteration of prescription drugs and
the dispensing of "controlled" substances and prescription drugs. FTC and United
States Postal Service regulations require mail order sellers to engage in
truthful advertising, to stock a reasonable supply of drugs, fill mail orders
within thirty (30) days and, if impossible, to inform the consumer of his or her
right to a refund. Continental believes that it is in substantial compliance
with all of such requirements.

Tax Treatment

It is anticipated that the merger will be tax-free to Continental's
shareholders (except to the extent that they receive cash instead of fractional
shares or if they exercise their dissenters' rights). We must satisfy a number
of conditions for the merger to qualify as a tax-free exchange. As a ruling has
not been requested from the Internal Revenue Service regarding the tax-free
nature of the merger, we cannot assure you that the merger will in fact be
treated as a tax-free exchange. Continental shareholders could become subject to
income tax liability if the merger does not qualify as a tax-free exchange. We
urge Continental's shareholders to read the information in "The Merger--Material
Tax Consequences of the Merger" for a more detailed description of the tax
consequences of the merger.

Risk-Based ("Capitated") Agreements

Approximately 53% of MIM's revenue during 1997 and approximately 37% of
MIM's revenue for the first half of 1998 was derived from agreements through
which MIM receives a pre-determined fee each month for each member enrolled in a
particular health plan in return for providing certain covered pharmacy services
to plan members; these agreements are known as "capitated" agreements. MIM
generally negotiates the capitation fee for a particular plan (or subset of
individuals within a plan) based upon a number of factors, including competitive
conditions within a particular market and the expected costs of providing the
covered pharmacy services. Expected costs are generally based on prior
experience with similar groups and demographic data based on the population at
large. Data with respect to prior experience may not be available and, if
available, may not be a reliable indicator of the actual results for a
particular plan. The cost of providing

pharmacy services varies among plan participants and groups and is affected by
many factors, including formulary design and compliance, generic substitution
rate, drug utilization by persons covered under such arrangements, the effect of
inflation on drug costs and the co-payment structure. During the early stages of
a contract, the cost of providing pharmacy services typically exceeds the
capitation fee, primarily due to the lag between the commencement of the
contract and the full implementation of the formulary and MIM's other cost and
clinical management containment measures. There can be no assurance that the
cost of providing pharmacy services will not exceed the capitation fee, either
per member or per plan, throughout the entire contract term.

Professional Liability Risk

The services provided by MIM and Continental in connection with their
respective businesses may subject MIM and Continental to litigation and
liability for damages. We believe that MIM's insurance protection is adequate
for its present and contemplated business operations. However, we can make no
assurance that MIM will be able to obtain and maintain insurance coverage in the
future or that such insurance coverage will be available on acceptable terms or
will be adequate to cover any or all potential professional liability, product
liability or other claims. A successful claim in excess of MIM's insurance
coverage could have a material adverse effect on MIM's business and results of
operations.

Dependence on Information Systems

MIM believes that its on-line claims processing (or adjudication) systems
are an integral part of its business. MIM owns its claims processing software
and has an agreement to acquire all software upgrades to such software to ensure
that MIM maintains a state-of-the-art claims processing system. Any significant
interruption in service of MIM's computer or telephone systems could adversely
affect its ability to operate its business on a timely basis, and could
adversely affect MIM's relations with pharmacies and health plan sponsors. Under
a contract with a third party, the third party guarantees that any disruption in
MIM's computer or telephone systems will be rectified within 48 hours of MIM
notifying the third party. Although no assurance can be given, MIM believes that
this disaster recovery arrangement is sufficient to prevent any disruption from
having a material adverse effect on MIM's business, financial condition or
long-term operations. See "MIM Management's Discussion and Analysis of Financial
Condition and Results of Operations" for a discussion of year 2000
considerations.

Effect of Certain Legal Proceedings

On March 5, 1996, Pro-Mark was added as a third-party defendant in a
proceeding in the Superior Court of the State of Rhode Island, and on September
16, 1996 the third-party complaint was amended to add MIM as a third-party
defendant. The third-party plaintiffs, Medical Marketing Group, Inc. ("MMG"),
PPI Holding, Inc. ("PPI Holding") and Payer Prescribing Information, Inc.
("PPI"), allege in the amended third-party complaint: (i) that MIM employed E.
David Corvese (MIM's former Vice Chairman) with knowledge of covenants not to
compete in effect between Mr. Corvese and PPI, PPI Holding and MMG that
prevented Mr. Corvese from competing in the area of the collection, analysis or
marketing of data for the pharmaceutical or health care industries relating to
physician practice demographics and the influence of managed care plans; (ii)
that Mr. Corvese breached his employment agreement with PPI and his fiduciary
duties to PPI by not devoting his full business time and attention to PPI from
June 1993 through November 1993 (when his employment was terminated by PPI), and
(iii) that MIM interfered with the contractual relationship between the parties
and misappropriated MMG's and PPI's confidential information through MIM's
employment of Mr. Corvese. The amended third-party complaint seeks to enjoin MIM
from using confidential information allegedly misappropriated from MMG and PPI
and seeks an unspecified amount of compensatory and consequential damages,
interest and attorneys' fees. MIM believes that the third-party plaintiff's
allegations are without merit; however, loss of this litigation could have a
material adverse effect on MIM's business and results of operations.

Possible Negative Effects of Preferred Stock

MIM is authorized to issue 5,000,000 shares of preferred stock. MIM's Board
may from time to time fix the designation, rights and preferences of preferred
stock (including voting, dividend, redemption and liquidation rights) without
further stockholder action. Shares of preferred stock could be issued in the
future with rights and preferences that could make the possible takeover of MIM
or the removal of management of MIM more difficult or could otherwise adversely
impact the rights of holders of MIM's common stock. See "Description of Capital
Stock of MIM--Preferred Stock."

No Intention to Pay Dividends

MIM presently intends to retain all earnings, if any, to support the
operation and expansion of its business and does not anticipate paying cash
dividends in the foreseeable future.

Restrictions on the Resale of MIM Common Stock Issued in the Merger

The shares of MIM common stock to be issued in the merger will be
registered under the Securities Act of 1933, as amended (the "Securities Act"),
and will be freely transferable under the Securities Act, except for shares
issued to any stockholder who may be deemed to be an "affiliate" of MIM or
Continental for purposes of Rule 145 under the Securities Act (generally
individuals or entities that control, are controlled by or are under common
control with MIM or Continental). Affiliates may not sell their shares of MIM
common stock acquired in connection with the merger except pursuant to an
effective registration statement under the Securities Act covering such shares
or in compliance with Rule 145 or another applicable exemption from the
registration requirements of the Securities Act. This Proxy Statement/Prospectus
does not cover any resales of MIM common stock received by affiliates of
Continental or MIM. Therefore, Continental shareholders who are affiliates of
MIM or Continental will only be able to sell the shares of MIM common stock
which they receive in the merger pursuant to Rule 145 or another applicable
exemption from the registration requirements of the Securities Act.

Risks Related to Intangible Assets

Based upon its preliminary purchase price allocation, as a result of the
merger, MIM management estimates that approximately $19.4 million, or 21% of
MIM's total assets following the merger, will consist of intangible assets.
Based upon its preliminary purchase price allocation, MIM management estimates
that these intangible assets will be amortized over a range of periods from 7.5
to 25 years. On a pro forma basis for the three months ended March 31, 1998,
amortization of intangible assets would be approximately $0.02 per basic share
of MIM common stock. The final allocation of the excess of the purchase price
over the net assets to be acquired in the merger and the appropriate
amortization periods will be finalized based upon the results of an appraisal.
There can be no assurance that the final results will not vary materially from
the estimated amounts. In addition, in the event of any sale or liquidation of
MIM, there can be no assurance that the value of such intangible assets will be
realized. Moreover, any significant decrease in the value of such intangible
assets could have a material adverse effect on MIM's financial condition and
results of operations.

THE ANNUAL MEETING

The Board of Directors (the "MIM Board") of MIM Corporation, a Delaware
corporation ("MIM"), is furnishing this Proxy Statement/Prospectus to holders of
common stock, par value $.0001 per share ("MIM Common Stock"), of MIM in
connection with the solicitation of proxies by the MIM Board at an annual
meeting of MIM's stockholders (the "Annual Meeting"), and at any adjournments or
postponements thereof, and to holders of common shares, no par value
("Continental Shares"), of Continental Managed Pharmacy Services, Inc., an Ohio
corporation ("Continental"), in connection with the proposed issuance of shares
of MIM Common Stock to Continental shareholders in the Merger (as defined
below). This Proxy Statement/Prospectus and accompanying form of proxy are first
being mailed to MIM stockholders on or about August 6, 1998.

Date, Time and Place; Purposes

The Annual Meeting will be held on August 21, 1998 at 10:00 a.m., local
time, at the Trumbull Marriott Merritt Parkway, 180 Hawley Lane, Trumbull,
Connecticut. At the Annual Meeting, MIM's stockholders will be asked to (i)
approve the issuance of shares of MIM Common Stock in the Merger; (ii) elect six

directors to the MIM Board; and (iii) transact such other business as may
properly come before the Annual Meeting and any adjournments or postponements
thereof.

Voting Rights; Votes Required for Approval

The MIM Board has fixed the close of business on June 22, 1998 as the
record date (the "Record Date") for the determination of MIM stockholders
entitled to notice of and to vote at the Annual Meeting. The MIM Common Stock is
the only class of voting stock of MIM currently issued and outstanding. On the
Record Date, there were 13,694,000 shares of MIM Common Stock outstanding and
entitled to vote at the Annual Meeting, held by approximately 65 holders of
record in addition to approximately 2,000 stockholders whose shares were held in
nominee name. Each holder of MIM Common Stock on the Record Date is entitled to
cast one vote per share at the Annual Meeting on each matter properly brought
before the meeting, exercisable in person or by properly executed proxy.

The presence of the holders of a majority of the outstanding shares of MIM
Common Stock entitled to vote at the Annual Meeting, in person or by properly
executed proxy, is necessary to constitute a quorum. A quorum is necessary for
any action to be taken at the Annual Meeting.

The approval of the issuance of MIM Common Stock in the Merger requires the
affirmative vote of a majority of the shares of MIM Common Stock present, in
person or by proxy, and entitled to vote at the Annual Meeting. For the election
of directors, assuming a quorum is present, the six nominees receiving the
highest number of votes cast at the Annual Meeting will be elected.

As of the Record Date, the current directors and executive officers of MIM
owned approximately 31.6% of the outstanding shares of MIM Common Stock entitled
to vote at the Annual Meeting. Each of the current directors and executive
officers of MIM has advised MIM that he plans to vote all of his shares in favor
of the issuance of MIM Common Stock in the Merger. In addition, E. David
Corvese, a member of the current MIM Board, who is not standing for re-election,
and a former officer and employee of MIM, and certain people and entities
affiliated with him have entered into a voting agreement with MIM. These
affiliates of Mr. Corvese own 1,650,947 shares, or approximately 12.1% of the
outstanding shares of MIM common stock entitled to vote at the annual meeting.
Under the voting agreement, MIM will vote the shares of MIM Common Stock owned
by such persons in favor of the proposal to approve the issuance of MIM Common
Stock in connection with the Merger. As a result, in order for the proposal to
approve the issuance of MIM Common Stock in connection with the Merger to be
approved, a maximum of an additional 6.3% of the outstanding MIM shares must be
voted in favor of such proposal.

Approval of the issuance of MIM Common Stock in the Merger and the election
of directors will be voted on by MIM's stockholders as individual proposals.

Proxies

All shares of MIM Common Stock represented by properly executed proxies
received prior to or at the Annual Meeting and not revoked will be voted in
accordance with the instructions indicated in such proxies. If no instructions
are given on a properly returned proxy, your proxy will be voted FOR the
issuance of MIM Common Stock in the Merger, as provided in Proposal 1 above; FOR
the election of the six nominees for director, as provided in Proposal 2 below;
and, to the extent permitted by applicable rules of the Commission, in
accordance with the judgment of the persons voting the proxies upon such other
matters as may come before the Annual Meeting and any adjournments.

If a proxy is marked "withhold authority" or "abstain" on any matter, or if
specific instructions are given that no vote be cast on any specific matter (a
"Specified Non-Vote"), the shares represented by such proxy will not be voted on
such matter. Abstentions will be included within the number of shares present at
the meeting and entitled to vote for purposes of determining whether such matter
has been authorized, but Specified Non-Votes will not be so included. Therefore,
since the affirmative votes described above are required for approval of the
issuance of MIM Common Stock in the Merger, an abstention with respect to such
proposal will have the effect of a vote against such proposal.

MIM stockholders may revoke their proxies at any time prior to its use by
delivering written notice to the Secretary of MIM at the offices of MIM set
forth above, by presenting a duly executed proxy bearing a later

date or by voting in person at the Annual Meeting, but mere attendance at the
Annual Meeting will not revoke a proxy.

Other Business; Adjournments

The MIM Board is not currently aware of any business to be acted upon at
the Annual Meeting other than as described herein. If other matters are properly
brought before the Annual Meeting, or any adjournments or postponements thereof,
the persons appointed as proxies will, to the extent permitted by applicable
rules of the Commission, have discretion to vote or act thereon according to
their best judgment. Adjournments may be made for the purpose of, among other
things, soliciting additional proxies. Any adjournment may be made from time to
time by approval of the holders of a majority of the shares present in person or
by proxy at the Annual Meeting (whether or not a quorum exists) without further
notice other than by an announcement made at the Annual Meeting. MIM does not
currently intend to seek an adjournment of the Annual Meeting.

PROPOSAL 1 -- THE MERGER

General

MIM is furnishing this Proxy Statement/Prospectus to holders of MIM Common
Stock in connection with the solicitation of proxies by the MIM Board at the
Annual Meeting, and at any adjournments or postponements thereof, and to holders
of Continental Shares in connection with the issuance of shares of MIM Common
Stock to Continental shareholders in the Merger.

At the Annual Meeting, MIM stockholders will be asked to vote on (i) a
proposal to approve the issuance of shares of MIM Common Stock to Continental
shareholders in the Merger and (ii) the election of directors. The Agreement and
Plan of Merger, dated as of January 27, 1998 and as amended as of May 18, 1998
(the "Merger Agreement"), by and among MIM, Continental and CMP Acquisition
Corp., an Ohio corporation and a wholly-owned subsidiary of MIM ("Merger Sub"),
provides for the merger of Merger Sub with and into Continental (the "Merger"),
with Continental surviving the Merger as a wholly-owned subsidiary of MIM. The
Merger will become effective at the time of filing of a Certificate of Merger
with the Secretary of State of Ohio or at such later date as is specified in the
Certificate of Merger (the "Effective Time"), which is expected to occur as soon
as practicable after the last of the conditions precedent to the Merger set
forth in the Merger Agreement has been satisfied or waived. In the Merger,
Continental shareholders will receive 327.59 shares of MIM Common Stock for each
Continental Share (the "Merger Consideration").

Background of the Merger

Since MIM's initial public offering in August 1996, MIM has explored a
variety of ways to grow its existing core business. MIM wanted to expand its
business generally and to diversify its revenue base beyond the TennCare program
and toward more commercial (as opposed to Medicaid and Medicare) business. MIM
has attempted to accomplish growth in two ways; first, internally through the
expansion of its sales and marketing organization, and second, through mergers
and acquisitions. Beginning in September 1996, MIM has looked and continues to
look at possible acquisition candidates, many of which are local or regional
pharmacy benefit management companies in similar lines of business to those of
MIM. These local and regional pharmacy benefit management companies are located
throughout the United States. In addition, MIM has looked at a number of
acquisition targets which are not in the pharmacy benefit management industry,
but rather in industries relating to the pharmacy benefit management industry.
These industries include generic pharmaceutical distributors and pharmaceutical
wholesalers. In addition, MIM has discussed potential transactions with claims
processors.

Consistent with this strategy, on June 23, 1997, MIM acquired an 8%
interest in Wang Healthcare Information Systems, Inc. ("WHIS") for $2.3 million.
In connection with this strategic investment, MIM markets WHIS's PC-based
clinical information system for physicians and their staff, utilizing patented
image-based technology. This system captures patient information at the point of
patient care, processes such information throughout a distributed health care
organization and integrates a patient's entire clinical profile, including
medical history, charts and records, diagnoses, x-rays, laboratory test results,
diagrams, pharmaceutical protocols and prescriptions.

While MIM has researched and entered into various levels of discussions
regarding possible mergers and acquisitions, the proposed merger with
Continental was the first transaction within the pharmacy benefit management
industry for which MIM entered into a definitive agreement. MIM had preliminary
discussions with other companies which engage in the drug distribution business,
including generic drug distributors and drug wholesalers. However, certain of
these transactions did not progress beyond preliminary discussions because the
proposed business combination would have been dilutive to the potential target.
Others were not pursued by MIM because the purchase price proposed by the seller
exceeded what MIM believed to be the fair value of the potential target.

During 1996 and continuing in 1997, management of Continental felt that the
most effective way to grow its business was through strategic partnerships with,
or acquisitions of, firms in the pharmaceutical benefit management field. On
March 24, 1997, Mr. George S. Benson, Continental's President and Chief
Executive Officer, gave an explanation of management's "strategic partnership"
concept to the Continental Board. He explained that this approach should provide
additional management information systems, increased marketing and sales
capabilities, clinical program development and additional management expertise
along with increased revenues. Mr. Benson had evaluated the pharmacy benefit
management industry and had developed a list of acquisition or "strategic
partnership" candidates. The Continental Board instructed Mr. Benson to pursue
the acquisition or "strategic partnership" opportunities identified on his list.
Specifically identified from Mr. Benson's list and discussed at the meeting was
an acquisition opportunity with RX Advantage, Inc. dba SRX Pharmacy ("SRX"). The
Continental Board authorized Mr. Benson to continue negotiations with SRX and,
at a May 19, 1997 board meeting, Mr. Benson was given authorization to execute a
definitive agreement to acquire the assets of SRX. The transaction was closed on
July 25, 1997.

Following the closing of the SRX transaction, Mr. Benson continued to
pursue other possible acquisitions or "strategic partnerships." He was also
instructed by the Continental Board to utilize McDonald & Company Securities,
Inc. ("McDonald") as Continental's investment advisor to help identify potential
buyers for Continental. McDonald developed a list of companies that it concluded
would be interested in acquiring Continental. In addition, a number of companies
on Mr. Benson's list of possible strategic partners, including MIM, were
identified to McDonald by Mr. Benson. McDonald contacted all of the companies
suggested by Mr. Benson as well as the companies which McDonald had identified.

In late August 1997, representatives of McDonald contacted Mr. Friedman,
MIM's then acting Chief Operating Officer and Chief Financial Officer, to
solicit expressions of interest in a possible transaction with Continental.
After MIM expressed an initial interest in a possible transaction, on September
4, 1997, Mr. Benson, along with Jonathan Crane and Artaj Singh of McDonald, met
with Mr. Friedman to discuss the companies' businesses and histories. Each
described their customer base and their respective strategic plans for the
future. In addition, during the last week of September 1997, Mr. Friedman
discussed with Mr. Singh MIM's 1998 budget and forecasted earnings for the year
ended December 31, 1998. Mr. Singh was forwarded a copy of the MIM 1998 forecast
of net revenues, gross profit, operating income, earnings before interest and
taxes, net income and fully diluted earnings per share during the first week of
October 1997. Mr. Singh utilized such information in McDonald's presentation to
Continental's senior management (who forwarded such information to the
Continental Board). During that same time, MIM management was reviewing certain
business and financial information relating to Continental, including
projections of revenues, gross profits, earnings before interest and taxes and
net income for the years ended 1998, 1999 and 2000. On October 23, 1997, Mr.
Friedman and Mr. E. Paul Larrat, an officer of Pro-Mark, together with MIM's
financial advisors, met with representatives of Continental and toured its
facilities (including an overview of each department). They also reviewed
Continental's mail order operations and were introduced to Continental's
management team. Mr. Benson provided MIM with information regarding
Continental's organizational and ownership structures.

Being satisfied with the results of its financial and accounting due
diligence through that date, MIM performed further accounting and financial due
diligence. Upon satisfaction with its due diligence investigation, shortly
thereafter, MIM prepared and delivered to Continental a nonbinding letter of
intent whereby MIM and Continental would enter into the proposed transaction.
Continental received proposals from several other companies as well. McDonald
communicated with each interested party to try to improve their proposals.
Several of such proposals provided for the purchase of assets from Continental
rather than the purchase of Continental Shares. Any such transaction would have
required that Continental retain responsibility for any liabilities (other than
long-term debt to be assumed by the acquirer) and contingencies related to the
Continental business, whether known to Continental or not. These proposals also
contemplated payment of the purchase

price in cash. Therefore, the purchase would have resulted in a taxable event at
the Continental level. Moreover, unlike a stock purchase, any synergies
resulting from the combination of the businesses would not have affected the
value of the consideration on an after-tax basis realized by Continental's
shareholders upon the consummation of the transaction. Accordingly, the
Continental Board determined that a stock purchase would be more advantageous
for its shareholders than an asset purchase. In addition, all of such asset
purchase proposals provided for purchase prices of $20 million or less,
including any long-term debt assumed by the acquirer, which was less than the
purchase price inherent in the stock purchase proposal discussed below and the
MIM proposal. Continental received one proposal from a public company other than
MIM for an exchange of shares of the acquirer's common stock for all of the
outstanding Continental Shares. This offer provided that Continental
shareholders would receive a floating number of shares equal to a fixed dollar
value of approximately $17 million (rather than a fixed number of shares as
contemplated by the MIM proposal described below), and the value of the shares
offered was to be reduced by the amount by which Continental's long-term
liabilities exceeded $4.6 million as of the closing. Therefore, the receipt of
MIM Common Stock together with the assumption of a maximum level of long-term
debt resulted in an implied value to Continental of approximately $21.6 million,
which was less than the value of the MIM offer as described below.

At a December 5, 1997 meeting, Messrs. Klein, Corvese and Friedman met with
Mr. Thomas H. Roulston, II, Continental's Chairman, along with representatives
from McDonald to discuss the pricing of the proposed transaction. During the
negotiations, Mr. Friedman noted that MIM was interested in having the Merger
treated as a pooling of interests for accounting and financial reporting
purposes, and therefore, insisted on the merger consideration being paid with
shares of MIM Common Stock. Subsequently, following the execution of the Merger
Agreement, it was determined that the parties would be unable to treat the
Merger as a pooling of interests, and therefore, the Merger Agreement was
amended to treat the Merger as a purchase for accounting and financial reporting
purposes. At the December 5, 1997 meeting, Mr. Roulston suggested that the
parties agree to a fixed number of shares to be issued by MIM in the proposed
merger as opposed to a floating number of shares for a fixed dollar amount. MIM
agreed that a fixed number of shares would be acceptable. Mr. Roulston, on
behalf of Continental, proposed that Continental shareholders receive 4.0
million shares of MIM Common Stock. Mr. Friedman, on behalf of MIM, rejected Mr.
Roulston's proposal. At the conclusion of that meeting, no agreement was reached
as to the exact number of shares issuable upon consummation of the transaction.
After the December 5, 1997 meeting, the parties continued to negotiate the
purchase price, using their respective financial advisors as intermediaries for
communication purposes. MIM instructed WDR (as defined below) to make a
counter-offer to Mr. Roulston of 3.6 million shares, which was rejected by
Continental. Shortly thereafter, through an arm's-length negotiation, the
parties agreed to a Merger Consideration of 3.8 million shares of MIM Common
Stock in exchange for all of the outstanding Continental Shares (11,600 shares),
which both parties believed to be a fair price. In addition, MIM agreed to
assume all of Continental's outstanding options. All such options were
subsequently exercised for a total of 343.125 Continental Shares, which will be
exchanged in the Merger for 112,404 shares of MIM Common Stock.

The parties entered into a nonbinding letter of intent on December 12,
1997. On December 15, 1997, the Continental Board considered the letter of
intent. In considering whether to accept the proposal of 3.8 million shares of
MIM Common Stock, the Continental Board took into consideration the various
proposals that it received from other potential acquirors and the information
which McDonald supplied regarding the relative merger consideration paid in
comparable transactions. The purchase price reflected by the MIM offer at the
then-current market price of MIM Common Stock, when considered with the
effective assumption of Continental indebtedness in the Merger, exceeded the
purchase price of any other offers received. Based on the weighted average of
the price of MIM Common Stock for periods ranging from five days to one year
prior to the December 15, 1997 meeting of the Continental Board, the value of
the MIM Common Stock offered exceeded the value of both the other stock offer
and all of the cash offers. The Continental Board concluded that MIM's proposal
was superior to the other proposals from a financial point of view and was
generally consistent with the terms of comparable transactions, and therefore
ratified the letter of intent. At this time, Continental broke off all
discussions with other interested parties. MIM and Continental proceeded to
negotiate the terms and conditions of a definitive merger agreement and
commenced legal due diligence at the offices of Continental's legal counsel.
Upon completion of legal due diligence and the negotiations with respect to the
merger agreement, a definitive merger agreement was completed by the parties.

At MIM Board meetings held on October 22, 1997 and January 7, 1998, in
addition to the other business conducted at the meetings, MIM management
informed the MIM Board of its progress in its negotiations with Continental, as
well as other potential transactions. At the October 22, 1997 meeting of the MIM
Board, Mr.

Friedman, in his regular update to the MIM Board regarding merger and
acquisition activity, informed the MIM Board that Continental had been
identified as a possible acquisition candidate based on his review of certain
business and financial information previously delivered to him, and that he
would be visiting Continental the following day with Mr. Larrat and MIM's
financial advisors. There being no further discussion by other MIM Board
members, Mr. Friedman committed to update the MIM Board at subsequent meetings,
or sooner if necessary, regarding the results of his meeting with Continental.
At MIM's telephonic Board meeting held on January 7, 1998, Mr. Friedman again
updated the MIM Board as to the status of management's negotiations with
Continental. A discussion ensued regarding disclosure of the existence of MIM's
then-existing dispute with Sierra Health Services, Inc. and certain of its
subsidiaries and the financial impact of the losses which could potentially
arise under MIM's agreement with Sierra. The MIM Board strongly believed that
disclosure of the matter was appropriate, but that MIM would be unable to
adequately address the matter given the preliminary stage of the dispute. These
discussions led MIM to permit Continental to condition its obligations to
consummate the Merger on Continental's satisfaction with MIM's resolution of the
Sierra dispute. As discussed below, this condition has been waived and is no
longer an open contractual matter.

On January 19, 1998, the Continental Board met to consider the proposed
definitive Merger Agreement. At that meeting, McDonald delivered its opinion
that the proposed Merger Consideration was fair from a financial point of view
to the holders of Continental Shares. Based on the reasons stated below, the
Continental Board approved the Merger Agreement and the Merger. On January 23,
1998, the MIM Board met to consider the proposed transaction. Based on the
reasons stated below, the MIM Board approved the Merger Agreement and the
Merger. On January 27, 1998, the parties entered into the definitive Merger
Agreement.

MIM and Continental received advice from their respective financial
advisors in negotiating and agreeing to the Merger Consideration. WDR, employing
various standard financial valuation methodologies, provided information and
analyses to MIM with respect to several exchange ratios proposed by MIM. Once
MIM and Continental agreed to the exchange ratio, WDR opined as to the fairness
of the Merger Consideration to MIM, from a financial point of view. WDR rendered
its opinion at the MIM Board meeting on January 23, 1998. WDR was paid a fee of
$250,000 for rendering its fairness opinion. WDR was entitled to such fee under
the terms of its engagement letter with MIM regardless of whether or not WDR
found the Merger to be fair to MIM. WDR will be entitled to an additional fee of
$250,000 for its services upon the closing of the Merger. While McDonald was not
asked by the Continental Board to, and did not, make any recommendation to the
Continental Board about the form of merger consideration or an appropriate or
minimum selling price, McDonald did supply information regarding the relative
merger consideration paid in comparable transactions. McDonald will be entitled
to receive compensation in connection with the Merger only if the Merger is
consummated. See "Role of Financial Advisors--Opinion of Continental Financial
Advisor."

WDR's presentation to the MIM Board on January 23, 1998 included
projections for Continental of total sales, gross profit, earnings before
interest and taxes, and net income for the years ended December 31, 1998, 1999
and 2000. These projections were prepared by Continental management. MIM
management adjusted interest expense (a decrease of less than $100,000 for 1998)
based upon the then-present assumption that MIM would refinance or pay down
Continental's outstanding long-term debt. Such adjustment did not materially
change the projections as initially prepared by Continental management. MIM does
not presently intend to refinance or pay down such debt. Projected total sales
were $64.7 million, $85.3 million and $107.8 million for 1998, 1999 and 2000,
respectively. Projected gross profit was $10.3 million, $12.8 million and $15.7
million for 1998, 1999 and 2000, respectively. Projected earnings before
interest and taxes were $2.7 million, $3.9 million and $5.8 million for 1998,
1999 and 2000, respectively. Projected net income was $1.3 million, $1.9 million
and $3.0 million for 1998, 1999 and 2000, respectively. These projections are
forward-looking statements and are subject to a variety of risks, assumptions
and uncertainties, including those noted in "Risk Factors" beginning on page 11.
The projections in and of themselves were not given independent significance and
were not materially relied upon by the MIM Board. The MIM Board considered the
projections only to the extent that they were part of the general mix of
information presented in the materials prepared by WDR. These financial
projections were provided to WDR for purposes of its analysis and were not
prepared with a view toward public disclosure. Therefore, the projections are
necessarily incomplete in that they do not include all of the underlying
assumptions and qualifications on which they were based or any limitations on
their predictive value which may have been communicated to WDR or may otherwise
have been understood by WDR as a result of WDR's familiarity with Continental
and the industry. No assumptions, qualifications, limitations or information
regarding the adjustment to interest expense were included in WDR's presentation
materials or were otherwise communicated to the MIM Board. No assurance can be
given as to future performance and actual results may vary materially from the
projections.

MIM's Reasons for the Merger; Recommendation of the MIM Board

At a meeting of the MIM Board held on January 23, 1998, after careful
consideration, the MIM Board, subject to reaching agreement with Continental on
the then-remaining open contractual matters (which were all resolved prior to
the execution of the Merger Agreement), (i) voted that the Merger Agreement and
the proposed Merger were fair to and in the best interests of MIM and its
stockholders, (ii) approved the Merger Agreement and the transactions
contemplated thereby and (iii) recommended that the stockholders of MIM approve
the issuance of shares of MIM Common Stock in connection with the Merger. The
following briefly describes the material reasons, factors and information taken
into account by the MIM Board in reaching its conclusion.

MIM's Reasons for the Merger.

o A Suitable Acquisition Providing Opportunity for Growth. MIM believes
that to meet its long-term objective of becoming a significant
participant in the pharmacy benefits business it should explore
opportunities for growth through strategic acquisitions. The Merger
will enhance MIM's national presence as a pharmaceutical benefits
provider.

o Consolidation and Cost-Cutting. MIM's management believes that the
Merger will produce significant consolidation and cost-cutting
opportunities through the elimination of redundant expenses.

o Marketing Focus Consistent With, and Complementary to MIM's. MIM's
management believes that the focus of its sales and marketing efforts
required shifting away from large sized HMO's and

MCO's to small and medium sized HMO's and MCO's and self-insured
employer groups. Continental's sales and marketing focus is in the
self-insured employer group market. Therefore, MIM's management
believes that through Continental's marketing channels, MIM would have
more efficient and effective access to such commercial market.

o Drug Distribution. Continental possesses a pharmaceutical wholesalers
license in the State of Ohio, which MIM believes it will be able to
use as a starting point for the creation of a nationwide drug
distribution business.

o Entry into Mail-Order Business. The Merger provides MIM with an
immediate presence in the mail-order pharmaceutical business, a market
which MIM believes is currently profitable and which will provide MIM
with opportunities for growth.

o Expand MIM's Pharmacy Network. The Merger provides MIM with access to
Continental's pharmacy network, which is more comprehensive than MIM's
current network.

o Compatibility of the Companies. MIM management believes that the two
companies are highly compatible, and provide similar services. MIM
management believes that such compatibility should facilitate a
relatively smooth integration of the companies.

Factors Considered by the MIM Board. The MIM Board made its determination
after careful consideration of, and based on, a number of factors, including
those described below, which are the material factors considered by the MIM
Board:

(i) all of the reasons described above under "--MIM's Reasons for the
Merger";

(ii) the opinion of SBC Warburg Dillon Read Inc., the predecessor of
Warburg Dillon Read LLC ("WDR"), to the MIM Board that the Merger
Consideration is fair to MIM from a financial point of view (which opinion
was delivered on January 23, 1998, a copy of which, setting forth the
assumptions, limitations and qualifications of such opinion, is attached as
Annex B hereto). See "Role of Financial Advisors--Opinion of MIM Financial
Advisor";

(iii) information concerning the business, assets, capital structure,
financial performance and condition and prospects of MIM and Continental;

(iv) the strategic fit between MIM and Continental, the opportunity
for significant cost savings and synergies resulting from, among other
things, the elimination of duplicative positions and related benefits and
duplicative services, such as claims adjudication services, as well as the
possibility that MIM on its own might not be able to achieve the level of
cost savings, operating efficiencies and synergies that may be available as
a result of the Merger. The MIM Board based this determination on, among
other things, a due diligence and financial review memorandum regarding
Continental which was prepared by MIM's

finance department for the benefit of MIM management and distributed to MIM
Board members prior to the January 23, 1998 meeting. This analysis covered,
among other areas, a section entitled "potential cost savings" which
estimated cost savings and synergies associated with a potential merger
with Continental at approximately $0.8 million to $1.3 million. No
assurance can be given that this level, or any other level, of cost savings
will be realized as a result of the Merger;

(v) the challenges of combining the business of two companies
previously operated separately and the risk of not achieving the expected
cost savings or synergies and of diverting management focus and resources
from other strategic opportunities and from operational matters for a
period of time;

(vi) the terms and structure of the transaction and the terms and
conditions of the Merger Agreement, including the Merger Consideration and
the intended accounting, financial reporting and tax treatment for the
Merger;

(vii) other risks relating to the Merger described under "Risk
Factors," including the risk that integrating Continental into MIM's
organization could adversely effect Continental's or MIM's financial
performance;

(viii) the risk that the Merger might not be consummated and the fact
that the exchange ratio was fixed and the value of the Merger Consideration
to be paid by MIM would be affected as a result of fluctuations in the
market price for the MIM Common Stock; and

(ix) the likelihood of obtaining required regulatory approvals, the
possibility that regulatory authorities may impose conditions to the grant
of such approvals and the extent of the commitment of the parties to take
actions to obtain required regulatory approvals.

In view of the wide variety of factors considered in connection with its
evaluation of the Merger and the complexity of these matters, the MIM Board did
not find it practicable to and did not attempt to quantify, rank or otherwise
assign relative weights to these factors. The MIM Board relied on the experience
and expertise of WDR, its financial advisor, for quantitative analysis of the
financial terms of the Merger. See "Role of Financial Advisors--Opinion of MIM
Financial Advisor." In addition, the MIM Board did not undertake to make any
specific determination as to whether any particular factor (or any aspect of any
particular factor) was favorable or unfavorable to the MIM Board's ultimate
determination, but rather conducted an overall analysis of the factors described
above, including discussions with and questioning of MIM's management and legal,
financial and accounting advisors. In considering the factors described above,
individual members of the MIM Board may have given different weight to different
factors. The MIM Board considered all these factors as a whole, and overall
considered the factors to be favorable to and to support its determination.
However, discussions among the MIM Board members evidenced that factor (iii) was
considered as part of the general mix of available information without being
clearly favorable or unfavorable, factors (v), (vii), (viii) and (ix) were
considered uncertainties relating to the transaction and were considered
potentially unfavorable, and the other reasons and factors described above were
generally considered favorable.

Recommendation of the MIM Board. The MIM Board has determined that the
Merger Agreement is fair to, and in the best interests of, MIM and has
unanimously approved the Merger Agreement and recommends that MIM stockholders
vote "FOR" the issuance of shares of MIM Common Stock in the Merger.

Continental's Reasons for the Merger

Reasons for the Merger. The Continental Board believes that the Merger will
provide a significant strategic opportunity to expand its mail service pharmacy
and better utilize its retail network businesses with respect to both corporate
and individual customers. In reaching its decision to approve the Merger
Agreement and the transactions contemplated thereby, the Continental Board
consulted with Continental management, as well as financial and legal advisors,
and considered the following factors:

(i) The combined pharmacy benefit management company resulting from
the Merger is expected to benefit from several operational efficiencies
including, but not limited to (a) greater purchasing power with
distributors and manufacturers, (b) elimination of duplicate administrative
and accounting functions, and (c) the integration of information systems
and related personnel;

(ii) The combined business will possess greater managerial,
operational and financial resources than Continental. As a result of its
increased financial resources, Continental management believes the

combined business should have improved access to capital on more favorable
terms than were previously available to Continental;

(iii) The combined business will permit each party to decrease
expenses. Some examples are as follows: (a) The combined business will have
an expanded retail network that will reduce costs. Currently, each company
has contracts with approximately 40,000 pharmacies which are redundant in
most cases; (b) Continental will be able to utilize MIM's proprietary
system for adjudicating retail pharmacy claims and for transmitting or
"switching" retail pharmacy transaction data for drug utilization review
and claims billing. Continental currently uses a subcontractor to
adjudicate approximately 55,000 claims per month at a cost in excess of the
estimated cost associated with utilizing MIM's claims adjudication system;
(c) MIM will benefit from Continental's investments in pharmacy information
systems and pharmacy plant improvements, particularly for mail service
delivery of prescriptions;

(iv) The combined business will have an expanded network of retail
pharmacies which participates in pharmacy card plan services that should
increase revenues;

(v) MIM employs a national sales force which is equipped and motivated
to sell the various services of the combined business;

(vi) MIM has invested in clinical programs, such as disease state
management protocols and patient outcome monitoring, which are designed to
help physicians deliver the most appropriate medical treatment to their
patients and optimize costs within the modern managed care provider
industry, which should complement current products and services marketed by
Continental;

(vii) The transaction will be accomplished on a tax-free basis for
federal income tax purposes (except for tax payable on cash received by
Continental Shareholders pursuant to the exercise and perfection of
dissenters' rights or the sale of fractional shares);

(viii) The opinion of McDonald dated as of January 19, 1998 to the
effect that, as of such date, the Merger Consideration was fair from a
financial point of view to Continental shareholders (see "Role of Financial
Advisors--Opinion of Continental Financial Advisor");

(ix) Continental shareholders will receive in the Merger shares of MIM
Common Stock which are listed on Nasdaq and are more actively traded than
the privately-held Continental Shares;

(x) The potential disruption of Continental's business that might
result from the announcement of the Merger;

(xi) The possibility that the Merger might not be consummated; and

(xii) The fact that the exchange ratio was fixed and the value of the
Merger Consideration received by the Continental shareholders would be
affected as a result of fluctuations in the market price for MIM Common
Stock.

In approving the Merger Agreement and the transactions contemplated
thereby, and in recommending that Continental shareholders approve the Merger,
the Continental Board also considered the proposed structure of the Merger and
provisions relating to corporate governance and ownership following the Merger
and determined that the provisions in the Merger Agreement were sufficient to
ensure that the interests of Continental's shareholders following the Merger
would be protected. In the view of the Continental Board, factors (i) through
(ix) above were considered favorable and (x) through (xii) were considered
unfavorable, but these unfavorable factors were not sufficient, either
individually or in the aggregate, to outweigh the advantages of the Merger.

The foregoing discussion of the information and factors considered by the
Continental Board is not intended to be exhaustive but is believed to include
all material factors considered by the Continental Board. In view of the wide
variety of factors, both positive and negative, considered by the Continental
Board, the Continental Board did not find it practical to, and did not, quantify
or otherwise seek to assign relative weights to the specific factors considered.
After taking into consideration all of the factors set forth above as of the
date of this Proxy Statement/Prospectus, the Continental Board continues to
believe that the Merger is in the best interests of Continental and its
shareholders and continues to recommend approval and adoption of the Merger
Agreement and approval of the Merger.

Recommendation of the Continental Board. The Continental Board has
determined that the Merger is fair to, and in the best interests of, the
shareholders of Continental, has unanimously approved the Merger Agreement and
the Merger and unanimously recommends that the Continental shareholders vote to
adopt the Merger Agreement.

Interests of Certain Persons in the Merger

General. In considering the recommendation of the Continental Board with
respect to the Merger, Continental shareholders should be aware that certain
directors and executive officers of Continental will receive benefits described
below that differ from or are in addition to the benefits received by all other
shareholders.

Transaction Fees. Mr. George Benson, President, Chief Executive Officer and
a director of Continental, will be entitled to receive a payment based upon the
total "purchase price for the Continental shares," including the assumption of
debt. This payment can only be calculated when the price of a share of MIM
Common Stock is known at the Effective Time. Mr. Benson's fee is to be
calculated as follows: 1% of the purchase price up to $10,000,000; 2% of the
next $5,000,000; 3% of the next $5,000,000; 4% of the next $5,000,000; and 5% of
the next $5,000,000. Assuming a price of $5.00 per share of MIM Common Stock on
the day before the Effective Time, Mr. Benson will receive approximately
$478,562 at the Effective Time. Mr. Benson is not entitled to any additional
benefits, bonuses or severance pay if his employment with Continental or MIM is
terminated. John Lazarczyk, Chief Financial Officer of Continental, will be
entitled to receive $50,000 at the Effective Time. See Note 5 to Unaudited Pro
Forma Combined Condensed Financial Statements for a discussion of the accounting
treatment for these and other transaction related costs.

The Continental Board did not form a special committee of directors to
consider the Merger. Each member of the Continental Board, other than Mr.
Benson, made his evaluation of the Merger based upon the factors discussed
above, independent of the recommendations of Mr. Benson, and with the knowledge
of the transaction fee Mr. Benson would be entitled to receive as a result of
the Merger. The Continental Board unanimously approved the Merger, including all
board members who would not receive any consideration in connection with the
Merger different from that received by any other Continental shareholder.

Anticipated Accounting Treatment

The Merger is expected to be accounted for as a "purchase" for accounting
and financial reporting purposes.

Regulatory Approvals

Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended
(the "HSR Act"), and the rules promulgated thereunder by the FTC, the Merger may
not be consummated until notifications have been given and certain information
has been furnished to the FTC and the Antitrust Division of the United States
Department of Justice (the "Antitrust Division") and specified waiting period
requirements have been satisfied. MIM and Continental have filed the required
notification and report forms under the HSR Act with the FTC and the Antitrust
Division. The required waiting period under the HSR Act with respect to the
Merger was completed on April 3, 1998. Neither party is aware of any other
regulatory approvals which are required with regard to the Merger, other than
effectiveness of the Registration Statement under the Securities Act which this
Proxy Statement/Prospectus is a part and the acceptance for listing on the
Nasdaq Stock Market's National Market Tier ("Nasdaq") of the shares of MIM
Common Stock to be issued in the Merger.

Material Tax Consequences of the Merger

The following discussion of the material federal income tax consequences of
the Merger is based on the current provisions of the Internal Revenue Code of
1986, as amended (the "Code"), applicable Treasury regulations thereunder,
judicial authority and administrative rulings and practice. This discussion,
however, does not address all aspects of federal income taxation that may be
relevant to a particular Continental shareholder in light of his personal
investment circumstances and to certain types of shareholders subject to special
treatment under the federal income tax laws (including insurance companies, tax
exempt organizations, financial institutions or broker-dealers, persons who
acquired their Continental Shares pursuant to the exercise of employee stock
options or otherwise as compensation, or persons who are not citizens or
residents of the United States or who are foreign corporations, foreign
partnerships or foreign estates or trusts) and does not discuss any aspects of
state, local or foreign taxation. Further, this discussion assumes that all
Continental shareholders will hold their shares of Continental capital stock as
capital assets as of the date of the Merger.

There can be no assurance that the Internal Revenue Service (the "IRS")
will not take a contrary view to those expressed herein. Moreover, legislative,
judicial or administrative changes or interpretations may be forthcoming that
could alter or modify the statements and conclusions set forth herein. Any such
changes or interpretations may or may not be retroactive and could affect the
tax consequences to Continental shareholders.

Each Continental shareholder is urged to consult his or her own tax adviser
as to the particular tax consequences to him or her of the Merger, including the
applicability and effect of any state, local and foreign tax laws, and of
changes in the applicable tax laws.

Qualification of the Merger as a Tax-free Reorganization. In the opinion of
Rogers & Wells LLP, counsel for MIM, the Merger will be a tax-free
reorganization within the meaning of Section 368(a)(1) of the Code by reason of
the application of Section 368(a)(2)(E) of the Code with respect to, and to the
extent of, the exchange of Continental Shares for shares of MIM Common Stock.

An opinion of counsel is based on certain customary assumptions and
representations regarding, among other things, the lack of previous dealings
between MIM and Continental, the existing and future ownership of MIM and
Continental stock and the future business plans of MIM. Continental shareholders
should be aware that an opinion of counsel is not binding on the IRS or any
court. No ruling from the IRS concerning the tax consequences of the Merger has
been, or will be, requested by MIM or Continental.

Federal Income Tax Consequences to Continental Shareholders. The historic
shareholders of Continental will not recognize gain or loss upon the receipt of
MIM stock in exchange for their Continental Shares, but each Continental
shareholder will be required to recognize a taxable gain (but not a taxable
loss) for federal income tax purposes with respect to such reorganization in an
amount equal to the lesser of (i) the amount of cash and fair market value of
any property other than MIM stock received by such Continental shareholder in
connection with the Merger, or (ii) the amount of the excess, if any, of the sum
of the fair market value of MIM stock and the cash, if any, received over the
adjusted tax basis of the Continental Shares exchanged by such shareholder.

If a Continental shareholder receives cash in lieu of a fractional share of
MIM Common Stock, the shareholder will recognize taxable gain or loss as if the
fractional share had been received and then redeemed for cash. MIM stock
received by each Continental shareholder will have a tax basis equal to the
Continental Shares exchanged therefor decreased by the amount of cash received
and increased by the amount of gain recognized (including gain characterized as
dividend income) by such shareholder.

A Continental shareholder who exercises the right to dissent in connection
with the Merger and receives only cash in exchange for such shareholder's
Continental Shares will be treated as having received such cash as a
distribution in redemption of such shareholder's Continental Shares and will
recognize gain or loss equal to the difference between the amount of cash
received and the adjusted basis of such shareholder's Continental Shares, unless
such payment, under each such Continental shareholder's particular facts and
circumstances (such as constructive stock ownership), is deemed to have the
effect of a dividend distribution and not a redemption treated as an exchange
under the principles of Section 302 of the Code.

If the Merger were not to constitute a reorganization under Sections
368(a)(1) of the Code, each Continental shareholder would recognize a taxable
gain or loss equal to the difference between (i) the fair market value of MIM
stock and cash received pursuant to the Merger and (ii) his basis in his
Continental Shares surrendered in the Merger. The basis in MIM stock received in
such a case would be equal to the fair market value of such stock on the date of
the Merger.

Capital gains or capital losses, as the case may be, recognized by a
Continental shareholder as a result of the Merger will be long-term capital
gains or losses if the Continental shareholder has held the Continental Shares
deemed sold or exchanged, in whole or in part, in connection with the Merger for
more than one year as of the date of the Merger.

Federal Income Tax Consequences to the Corporate Parties to the Merger
Agreement. No material gain or loss for federal income tax purposes will be
recognized by MIM, Merger Sub or Continental in the transactions constituting
the Merger.

Resale of MIM Common Stock; Affiliates

The shares of MIM Common Stock to be issued in the Merger will be
registered under the Securities Act and will be freely transferable under the
Securities Act, except for shares issued to any stockholder who may be deemed to
be an "affiliate" of MIM or Continental for purposes of Rule 145 under the
Securities Act

(generally individuals or entities that control, are controlled
by or are under common control with MIM or Continental). Affiliates may not sell
their shares of MIM Common Stock acquired in connection with the Merger except
pursuant to an effective registration statement under the Securities Act
covering such shares or in compliance with Rule 145 or another applicable
exemption from the registration requirements of the Securities Act. This Proxy
Statement/Prospectus does not cover any resales of MIM Common Stock received by
affiliates of Continental or MIM.

Listing of the MIM Common Stock

MIM Common Stock is listed on Nasdaq under the symbol "MIMS."

Dissenters' Rights

MIM stockholders are not entitled to appraisal rights in connection with
the Merger.

Continental shareholders who have complied with all requirements for
perfecting shareholders' dissenters' rights, as set forth in Section 1701.85 of
the General Corporation Law of Ohio (the "Ohio Law"), shall be entitled to
dissent from the Merger and receive payment of the fair value of their shares
(the "Dissenting Shares"). The "fair value" of a Continental Share may be more
or less than the value of the Merger Consideration. MIM is not required to close
the Merger if Dissenting Shares represent more than 5% of the Continental Shares
outstanding (i.e. if there are more than 580 Dissenting Shares).

MARKET PRICE INFORMATION, DIVIDENDS
AND RELATED STOCKHOLDER MATTERS

MIM

The shares of MIM Common Stock are listed on the Nasdaq under the symbol
"MIMS." The following table sets forth, for the periods indicated, the high and
low sale prices of MIM Common Stock as reported on the Nasdaq. Such prices are
interdealer prices, without retail markup, markdown or commissions, and may not
represent actual transactions. MIM, whose shares were initially sold in an
underwritten public offering on August 15, 1996, has not paid dividends to date
and does not anticipate doing so in the foreseeable future.

MIM Common Stock
-----------------------
High Low
-------- -------
1996(1) ............................................ $15.5000 $4.0000
1997
First Quarter .................................... 10.3750 4.7500
Second Quarter ................................... 16.7500 5.7500
Third Quarter .................................... 17.3750 9.0620
Fourth Quarter ................................... 9.8750 3.6250
1998
First Quarter .................................... 6.2500 3.7500
Second Quarter ................................... 6.4375 4.0000
Third Quarter (through July 31, 1998)............. 6.4375 4.7500

- ----------
(1) MIM's Common Stock began trading on the Nasdaq on August 15, 1996.
Therefore, these figures represent third and fourth quarter prices.

On January 27, 1998, the last full trading day prior to the public
announcement of the Merger, MIM Common Stock closed at $4 1/8 per share. On July
31, 1998, MIM Common Stock closed at $4 3/4 per share. As of June 22, 1998 there
were 65 stockholders of record in addition to approximately 2,000 stockholders
whose shares were held in nominee name.

Continental

Continental is a privately-held company and its securities are not listed
for quotation on Nasdaq or on any stock exchange and there is no public trading
market for the Continental Shares.

UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS

The following unaudited pro forma combined condensed financial statements
give effect to the proposed Merger of MIM and Continental using the purchase
method of accounting. The unaudited pro forma combined condensed financial
statements are based on the respective historical consolidated financial
statements and the notes thereto of MIM and Continental, which are included in
this Proxy Statement/Prospectus. The unaudited pro forma combined condensed
balance sheet assumes that the Merger took place on March 31, 1998. The
unaudited pro forma combined condensed statements of operations assume that the
Merger took place as of January 1, 1997.

The unaudited pro forma combined condensed financial statements are based
on the estimates and assumptions set forth in the notes to such statements. The
pro forma adjustments made in connection with the development of the pro forma
information are preliminary and have been made solely for purposes of developing
such pro forma information for illustrative purposes. The amount of the purchase
price in excess of Continental's net assets acquired has been allocated to
goodwill and other intangible assets based on management estimates and the
allocation will be finalized based on an appraisal. Although MIM does not expect
that the final allocation will be materially different from these estimates,
there can be no assurance that such differences, if any, will not be material.
The unaudited pro forma combined condensed financial statements do not purport
to be indicative of the results of operations for future periods or the combined
financial position or the results that actually would have resulted had the
entities been a single entity during these periods.

MIM estimates that it will incur direct transaction costs of approximately
$0.8 million associated with the Merger and Continental estimates that it will
incur related costs of approximately $0.7 million which will be expensed prior
to the Merger. These amounts are preliminary estimates only and are therefore
subject to change. In addition, MIM may incur cash and non-cash restructuring
charges to operations in the fiscal quarter in which the Merger is consummated.
However, the amounts of such charges cannot be reasonably estimated at this
time. There can be no assurance that MIM will not incur additional charges in
subsequent periods to reflect costs associated with the Merger.

These unaudited pro forma combined condensed financial statements should be
read in conjunction with the historical consolidated financial statements and
the related notes thereto of MIM and Continental included elsewhere in this
Proxy Statement/Prospectus.

Unaudited Pro Forma Combined Condensed Statement of Operations
(in thousands, except per share data)
(unaudited)

Three months ended March 31, 1998
-------------------------------------------------------
MIM Continental Pro Forma MIM
(Historical) (Historical) Adjustments Pro Forma
------------ ------------ ----------- ---------

Revenues ....................... $ 97,963 $ 15,047 $ $ 113,010
Cost of Revenue ................ 92,384 12,005 104,389
--------- --------- ---------
Gross Profit ................... 5,579 3,042 8,621
Selling, Gen. & Admin .......... 4,450 2,400 285(1) 7,056
--------- --------- ---------
(52)(1)
(27)(1)
Operating Profit ............... 1,129 642 (206) 1,565
Interest Income (Expense) ...... 507 (81) 426
Minority Interest .............. -- -- --
--------- --------- --------- ---------
Profit before Taxes ............ 1,636 561 (206) 1,991
Taxes .......................... 282 (282)(2)
--------- --------- --------- ---------
Net Income ..................... 1,636 279 76 1,991
========= ========= ========= =========
Basic Income per Share(7) ...... 0.12 24.05 0.12
Diluted Income per Share(7) .... 0.11 24.05 0.10
Weighted Average Common
Shares Used in Computing
Basic Income per Share(7) .... 13,369 12 3,900 17,281
Weighted Average Common
Shares Used in Computing
Diluted Income per Share(3)(7) 15,132 12 3,900 19,044

Year ended December 31, 1997
-------------------------------------------------------
MIM Continental Pro Forma MIM
(Historical) (Historical) Adjustments Pro Forma
------------ ------------ ----------- ---------

Revenues ....................... $ 242,291 $ 47,280 $ $ 289,571
Cost of Revenue ................ 239,002 36,320 275,322
--------- --------- ---------
Gross Profit ................... 3,289 10,960 14,249
Selling, Gen. & Admin .......... 19,098 9,503 1,139(1) 29,450
--------- --------- ---------
(208)(1)
(82)(1)
Operating Profit ............... (15,809) 1,457 (849) (15,201)
Interest Income (Expense) ...... 2,295 (291) 2,004
Minority Interest .............. (17) -- (17)
--------- --------- --------- ---------
Profit (Loss) before Taxes ..... (13,497) 1,166 (849) (13,180)
Taxes .......................... -- 632 (632)(2) --
--------- --------- --------- ---------
Net Income (Loss) .............. (13,497) 534 (217) (13,180)
========= ========= ========= =========
Basic and Diluted Income
(Loss) per Share(7) .......... (1.07) 46.03 (0.80)
Weighted Average Common Shares
Used in Computing Basic and
Diluted Income (Loss)
per Share(4)(7) ............ 12,620 12 3,900 16,532

See Accompanying Notes to Unaudited Pro Forma
Combined Condensed Financial Statements.

Unaudited Pro Forma Combined Condensed Balance Sheet
(in thousands)
(unaudited)

March 31, 1998
--------------------------------------------------------------
MIM Continental Pro Forma MIM
(Historical) (Historical) Adjustments Pro Forma
------------ ------------ ----------- ---------

Assets
Cash & cash equivalents ........................ $ 5,816 $ 308 $ (1,500)(5) $ 4,624
Investment securities .......................... 15,243 -- 15,243
Receivables .................................... 34,742 9,632 44,374
Inventory ...................................... -- 612 612
Prepaid expense ................................ 832 155 987
Deferred income taxes .......................... -- 235 235
-------- -------- -------- --------
Total current assets ........................... 56,633 10,942 (1,500) 66,075
Investment securities .......................... 1,100 -- 1,100
Investments .................................... 2,300 -- 2,300
Property & equipment, net ...................... 3,626 626 4,252
Goodwill and other intangible assets, net ...... 5,389 18,622(6) 19,422
800(5)
(5,389)(6)
Other assets ................................... 187 50 237
-------- -------- -------- --------
Total assets ................................... $ 63,846 $ 17,007 $ 12,533 $ 93,386
======== ======== ======== ========

Liabilities & Stockholders' Equity
Current portion of capital lease obligations ... $ 226 $ 21 $ 247
Current portion of long-term debt .............. 328 328
Accounts payable ............................... 367 4,431 4,798
Claims payable ................................. 29,462 1,095 30,557
Payables to plan sponsors and others ........... 11,949 -- 11,949
Accrued expenses ............................... 1,589 1,199 700(5) 2,788
(700)(5)
Income taxes payable ........................... -- 415 415
-------- -------- --------
Total current liabilities .................... 43,593 7,489 51,082
Other non-current liabilities .................. 198 198
Capital lease obligations, less current portion 699 19 718
Minority interest .............................. 1,112 -- 1,112
Long-term debt, less current portion ........... -- 3,837 3,837

Stockholders' Equity:
Common stock ................................... 1 12 (11)(6)(7) 2
Additional paid-in capital ..................... 73,593 4,309 (4,310)(6)(7) 91,589
17,997(6)(7)
Retained earnings (deficit) .................... (53,425) 1,143 (1,143)(5)(6)(7) (53,425)
Stockholder notes receivable ................... (1,727) -- (1,727)
-------- -------- -------- --------
Total stockholders' equity ................... 18,442 5,464 12,533 36,439
-------- -------- -------- --------
Total liabilities & stockholders' equity ..... $ 63,846 $ 17,007 $ 12,533 $ 93,386
======== ======== ======== ========

See Accompanying Notes to Unaudited Pro Forma
Combined Condensed Financial Statements.

NOTES TO UNAUDITED PRO FORMA

COMBINED CONDENSED FINANCIAL STATEMENTS

(1) To record amortization of goodwill (over 25 years) and other intangibles
(over an estimated 7.5 years) and elimination of prior amortization of
goodwill and other intangibles.

(2) Elimination of income taxes as a result of consolidated losses or
utilization of operating loss carryforwards.

(3) The unaudited pro forma diluted income per common share is based upon the
weighted average number of common shares and common share equivalents of
MIM and Continental outstanding for each period, at an exchange ratio of
327.59 shares of MIM Common Stock for each Continental Share.

(4) The unaudited pro forma basic and diluted loss per common share is based
upon the weighted average number of common shares of MIM and Continental
outstanding for each period, at an exchange ratio of 327.59 shares of MIM
Common Stock for each Continental Share. Diluted loss per share is the same
as basic loss per share which excludes common share equivalents since they
would be antidilutive.

(5) To record estimated direct transaction costs of approximately $0.8 million
associated with the Merger, consisting primarily of fees for investment
banking, legal, accounting and other related costs to be paid by MIM.
Contential will incur approximately $0.7 million of costs related to the
Merger, including the transaction fees payable to Messrs. Benson and
Lazarczyk. See "Proposal 1 -- The Merger -- Interests of Certain Persons in
the Merger." As these costs are non-recurring, they are not reflected in
the pro forma combined statement of operations.

(6) To record the issuance of 3,912,448 shares of MIM Common Stock in exchange
for the 11,943.125 Continental Shares (see Note 7) in connection with the
Merger. The MIM stock has been valued at $4.60 per share (the average price
per share of the MIM Common Stock several days before and after the date of
the Merger Agreement). The amount of the purchase price (including
transaction costs) in excess of Continental net assets acquired has been
allocated to goodwill ($15,538) and to other intangibles ($3,884) based on
management estimates and the allocation will be finalized based on an
appraisal. Other intangible assets primarily consist of customer lists and
non-compete agreements.

(7) In June 1998, the holders of Continental stock options exercised all
343.125 outstanding options. These shares have been reflected in the
unaudited pro forma combined condensed financial statements as if they were
exercised as of the beginning of the period presented. The shares have been
included in the determination of the purchase price.

MIM MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Overview

A majority of MIM's revenues to date have been derived from operations in
the State of Tennessee in conjunction with RxCare. MIM assisted RxCare in
defining and marketing pharmacy benefit services to private health plan sponsors
on a consulting basis in 1993, but did not commence substantial operations until
January 1994 when RxCare began servicing health plan sponsors involved in the
newly instituted TennCare state health program. See "Business of MIM -- The
TennCare Program." At March 31, 1998, MIM provided pharmacy benefit management
services to 46 health plan sponsors with an aggregate of approximately 1.9
million plan members on both a risk (i.e., capitated) and non-risk (i.e.,
fee-for-service) basis throughout the United States. TennCare represented 1.2
million members.

Results of Operations

Three months ended March 31, 1998 compared to three months ended March 31, 1997

For the three months ended March 31, 1998, MIM recorded revenue of $98.0
million compared with revenue of $70.8 million for the three months ended March
31, 1997, an increase of $27.2 million. $17.6 million of the increase resulted
from servicing 14 new plans covering approximately 490,000 lives throughout the
United States as well as increased enrollment in existing commercial plans.
Sierra (as defined below), enrolled in October 1997, accounted for $10.0 million
of the increased commercial revenue. TennCare sponsors were responsible for an
additional $9.6 million increase of revenue. In the last quarter of 1997, MIM
entered into new contracts with two TennCare managed care organizations to which
MIM previously provided pharmacy benefit management services. These new
contracts increased revenues by $17.1 million. In addition, favorable contract
renegotiations and increased enrollment in other existing TennCare sponsors
increased revenues by $18.4 million. These increases in TennCare revenues were
partially offset by a decrease of $25.9 million from the restructuring in April
1997 of a major TennCare contract (as discussed below). The contract was
restructured from a risk-based (capitated) arrangement to a non-risk
(fee-for-service) arrangement, although MIM continued to provide essentially the
same services under the restructured contract. During the three months ended
March 31, 1998, approximately 39% of MIM's revenues were generated from risk
(capitated) contracts, compared to 68% during the three months ended March 31,
1997.

Cost of revenue for the three months ended March 31, 1998 increased to
$92.4 million from $66.8 million for the three months ended March 31, 1997, an
increase of $25.6 million. New commercial contracts together with increased
enrollment in existing commercial plans resulted in $18.4 million of such
increases in cost of revenue. Such increase includes costs of $10.1 million
resulting from the Sierra Agreement. TennCare contracts contributed $7.2 million
of increased cost of revenue. Costs relating to TennCare contracts increased by
$32.7 million due to the two new TennCare contracts referred to above ($16.5
million) and eligibility increases in existing plans, increased drug prices, and
increased utilization of prescription drugs ($16.2 million). These costs were
offset by the above-mentioned restructuring of a major TennCare contract, which
resulted in a decrease in cost of revenue of $25.5 million. As a percentage of
revenue, cost of revenue was 94.3% for the three months ended March 31, 1998
compared to 94.4% for the three months ended March 31, 1997.

At December 31, 1997, a reserve of $4.1 million was established for the
anticipated losses on the Sierra Agreement. These losses resulted from
unfavorable factors, including higher pharmacy utilization rates than contained
in Sierra's historic claims data, higher than expected inflation in drug costs
and the inability to restrict the formularies under certain Sierra plans,
resulting in higher than anticipated drug costs. For the three months ended
March 31, 1998, $2.6 million of this $4.1 million reserve was utilized.
Management believes that the remaining reserve is adequate to cover any further
losses under the Sierra Agreement.

Selling, general and administrative expenses were $4.5 million for the
three months ended March 31, 1998 compared to $3.9 million for the three months
ended March 31, 1997, an increase of 15%. The additional $.6 million reflects an
increase in MIM's revenue along with a continuing commitment to enhance its
ability to manage efficiently pharmacy benefits by investing in additional
operational and clinical personnel and information systems to support new and
existing customers. In addition, MIM experienced an increase in legal fees. As a
percentage of revenue, selling, general and administrative expenses decreased to
4.5% for the three months ended March 31, 1998 from 5.5% for the three months
ended March 31, 1997.

For the three months ended March 31, 1998, MIM recorded interest income of
$.5 million compared with $.6 million for the three months ended March 31, 1997,
a decrease of $.1 million. The decrease resulted from a lower level of invested
funds in the first quarter of 1998 compared to the first quarter of 1997. The
level of invested funds decreased due to the operating needs of MIM.

For the three months ended March 31, 1998, MIM recorded net income of $1.6
million, or $.12 per basic share. This compares with net income of $.7 million,
or $.06 per basic share, for the three months ended March 31, 1997. This
decrease is due largely to the above-described changes in revenue and cost of
revenues.

Accounts receivable increased approximately $11.0 million (from $23.7
million to $34.7 million) from December 31, 1997 to March 31, 1998. The increase
resulted primarily from a proportionate increase in pharmacy benefit management
business during the period. In addition, the timing of billing and collection
for certain TennCare clients previously being processed by an outside vendor
changed after MIM began processing these claims in-house. This transition
initially caused a delay in billing and collections for these clients.

Year ended December 31, 1997 compared to year ended December 31, 1996

For the year ended December 31, 1997, MIM recorded revenues of $242.3
million compared with 1996 revenues of $283.2 million, a decrease of $40.9
million, or 14%. In an effort to stem future losses and increase profitability,
MIM through RxCare, terminated the capitated BCBS-TN contract effective March
31, 1997. Although this contract previously had been renegotiated and extended,
high utilization rates continued to hamper MIM's ability to gain profitability
under that contract even though MIM was able to lower the average cost of each
prescription. Subsequent to the termination of the original BCBS-TN contract,
MIM had negotiated a new contract directly with an affiliate of BCBS-TN to begin
providing pharmacy benefit management services on April 1, 1997. Although MIM
continued to provide essentially the same services under such restructured
contract as it did before the restructuring, the new contract eliminates
capitation risk to MIM and provides for MIM to be paid for certain
administrative and clinical consulting services on a fee-for-service basis. The
restructuring in April 1997 of the BCBS-TN contract decreased revenue for the
year ended December 31, 1997 compared to December 31, 1996 by $107.0 million.
This decrease in revenues was offset by an increase of $34.8 million in other
TennCare revenue resulting from increased enrollment and several favorable
contract restructurings. Further revenue increases of $31.3 million resulted
from increased enrollment in existing commercial plans as well as the servicing
of 11 new commercial plans covering approximately 418,000 new members throughout
the United States. In 1997, 53% of MIM's revenue was generated from risk-based
contracts, compared with 82% during 1996. MIM believes that this decrease in
risk-based arrangements during 1997 will minimize MIM's exposure to potential
losses.

Cost of revenue for 1997 decreased to $239.0 million from $278.1 million
for 1996, a decrease of $39.1 million. The above-described restructuring of the
BCBS-TN contract resulted in a decrease in cost of revenue of $111.6 million.
Costs relating to the remaining TennCare contracts increased by $34.2 million
due to eligibility increases, increasing drug prices and increasing utilization
of prescription drugs. Increased enrollment in existing commercial plans
together with several new commercial contracts resulted in a $38.3 million
increase in cost of revenue. Included in cost of revenues for commercial
business was a $4.1 million reserve which was established to cover anticipated
future costs under the Sierra Agreement described below. As a percentage of
revenue, cost of revenue increased to 98.6% in 1997 from 98.2% in 1996.

For the year ended December 31, 1997, gross profit decreased $1.8 million
to $3.3 million, after recording the $4.1 million reserve previously described,
from $5.1 million in 1996. Gross profit increases of $5.0 million in TennCare
business resulted from favorable contract renegotiations as well as increased
eligibility, offset by decreases of $6.8 million in commercial business
resulting primarily from the Sierra Agreement. The Sierra Agreement generated
$7.3 million in gross losses in the fourth quarter of 1997 (including a $4.1
million reserve for future contract losses).

Generally, loss contracts arise only on risk-based (capitated) contracts
and primarily result from higher than expected pharmacy utilization rates,
higher than expected inflation in drug costs and the inability to restrict
formularies, resulting in higher than expected drug costs. At such time as
management estimates that a contract will sustain losses over its remaining
contractual life, a reserve is established for these estimated losses. After
analyzing those factors described above, MIM recorded a $4.1 million reserve in
December 1997 with respect to the Sierra Agreement. Management believes that the
reserve is sufficient to cover any

further losses on the Sierra Agreement. Management does not believe that there
is an overall trend towards losses on its existing capitated contracts.

On April 14, 1998, MIM resolved its dispute with certain subsidiaries of
Sierra Health Services, Inc., a Nevada corporation ("Sierra"), a party to a
pharmacy benefit management services agreement (the "Sierra Agreement") with
MIM. The Sierra Agreement was entered into by Pro-Mark and became effective
October 1, 1997. This dispute related to the parties' divergent interpretation
of certain provisions of the Sierra Agreement, which led to Sierra's dispute of
certain amounts which MIM claimed were owed to it. Under the terms of the
settlement, both parties dismissed their respective claims pending in the United
States District Court, District of Nevada, as well as the American Arbitration
Association. The settlement provides that the parties work together to develop
and manage a new drug formulary to be used by one of the larger Sierra plans. In
addition, the parties modified a number of provisions of the Sierra Agreement,
including the addition of a provision permitting any party to terminate the
Sierra Agreement at any time and for any reason upon 90 days' prior written
notice. On May 8, 1998, MIM notified Sierra of its intention to terminate the
Sierra Agreement 90 days after notice thereof in accordance with the terms of
the Sierra Agreement. MIM continues to provide pharmacy benefit management
services to Sierra under the Sierra Agreement for such 90 day period. The
termination of the Sierra Agreement will reduce revenues by approximately $3.5
million per month. The termination will have no impact on 1998 net income as MIM
reserved for all expected losses under the Sierra Agreement in 1997.

Selling, general and administrative expenses increased $7.5 million to
$19.1 million in 1997 from $11.6 million in 1996, an increase of 65.0%. The $7.5
million increase was attributable to expenses associated with an expanded
national sales force, additional headquarter personnel and operations support
needed to service new business and increases in legal and consulting fees. As a
percentage of revenue, general and administrative expenses increased to 7.9% in
1997 from 4.1% in 1996.

For the year ended December 31, 1997, MIM recorded interest income of $2.3
million compared to $1.4 million for the year ended December 31, 1996, an
increase of $0.9 million. The increase resulted from funds invested from MIM's
initial public offering of the MIM Common Stock (the "Offering") being invested
for the entire year in 1997 and only five months in 1996.

For the year ended December 31, 1997, MIM recorded a net loss of $13.5
million or $1.07 per share. This compares with a net loss of $5.1 million, or
$0.54 per share (before recording a $26.6 million nonrecurring, non-cash stock
option charge, representing the difference between the exercise price and the
deemed fair market value of the MIM Common Stock granted by MIM's principal
stockholder to certain executive officers and directors of MIM) for the year
ended December 31, 1996. This 164% increase in net loss is the result of the
above described changes in revenue, cost of revenue and expenses.

Year ended December 31, 1996 compared to year ended December 31, 1995

For the year ended December 31, 1996, MIM recorded revenues of $283.2
million compared with 1995 revenues of $213.9 million. The increase of $69.3
million in revenues was due primarily to the addition of the BCBS-TN contract in
April 1995 (representing approximately $36 million of such increase) and
increased revenue from new and renegotiated contracts of approximately $33
million. In 1996, approximately 82% of MIM's revenue was generated through
capitated contracts, compared with 90% during 1995.

Cost of revenue for 1996 increased to $278.1 million compared with 1995
cost of revenue of $213.4 million for the same reasons revenues increased as
described above. As a percentage of revenue, cost of revenue decreased from
99.8% in 1995 to 98.2% in 1996. As a result of the termination of the BCBS-TN
contract on March 31, 1997, as described above, MIM reserved $3.5 million at
December 31, 1996 to cover future claims in excess of capitated payments to MIM.
Excluding this contract, MIM would have earned $2.2 million in 1996 before
taking the stock option charge (as described below). The BCBS-TN contract
represented approximately 495,000 lives and accounted for $132.8 million of
revenue and $7.3 million in net losses in 1996.

Selling, general and administrative expenses were $11.6 million in 1996 and
$8.0 million in 1995, an increase of 45.0%. The $3.6 million increase was
attributable to increases in operations, sales and marketing and headquarters
personnel to support the anticipated needs of the business as well as increases
in consulting and legal fees, depreciation expense and costs related to further
development of MIM's management information systems. As a percentage of revenue,
general and administrative expenses increased from 3.8% in 1995 to 4.1% in 1996.

For the year ended December 31, 1996, MIM recorded a net loss of $5.1
million, or $0.54 per share (before recording a $26.6 million nonrecurring,
non-cash stock option charge representing the difference between the exercise
price and the deemed fair market value of the Common Stock at the date of grant
of options to purchase an aggregate of 3,600,000 shares of Common Stock granted
by MIM's principal stockholder to certain executive officers and directors of
MIM) compared with a 1995 net loss of $6.8 million, or $1.43 per share. This
improvement was a result of the above-described changes in revenue and expenses.
After recording the effect of the stock option charge, MIM reported a net loss
of $31.8 million, or $3.32 per share, for 1996.

Liquidity and Capital Resources

For the three months ended March 31, 1998, net cash used in operating
activities totaled $9.5 million, primarily due to increases in receivables of
$11.1 million resulting from increased revenues from both the TennCare and
commercial contracts. Such uses were partially offset by increases in claims
payable of approximately $2.5 million. Investing activities provided $5.8
million in cash due primarily to the proceeds from maturities of investment
securities of approximately $10.3 million, offset by the purchase of new
investment securities of approximately $4.0 million. MIM purchased $.5 million
of property and equipment with cash on hand, primarily to upgrade and enhance
information systems necessary to strengthen and support MIM's ability to better
manage its customers' pharmacy benefits payments. MIM did not have any
additional material commitments for capital expenditures as of December 31,
1997.

At March 31, 1998, MIM had working capital of $13.0 million, compared to
$9.3 million at December 31, 1997. Cash and cash equivalents decreased to $5.8
million at March 31, 1998 compared with $9.6 million at December 31, 1997. MIM
had investment securities held to maturity of $16.3 million and $22.6 million at
March 31, 1998 and December 31, 1997, respectively. With the exception of MIM's
$2.3 million preferred stock investment in WHIS, MIM's investments are primarily
corporate debt securities rated A or better and government securities. In June
1997, MIM invested $2.3 million in the preferred stock of WHIS, a company
engaged in the development, sales and marketing of PC-based information systems
for physicians and their staff, using image-based technology.

At March 31, 1998, MIM had, for tax purposes, unused net operating loss
carryforwards of approximately $18.3 million which will begin expiring in 2008.
As it is uncertain whether MIM will realize the full benefit from its deferred
tax asset, MIM has recorded a valuation allowance for the same amount. MIM will
assess the need for a valuation allowance at each balance sheet date. The amount
of net operating loss carryforwards which may be utilized in any given year may
become limited by the Code, and the rules and regulations promulgated
thereunder, if a cumulative change of ownership of more than 50% occurs within a
three year period.

MIM believes that its financial condition and capital structure as a result
of the Offering has enhanced its ability to negotiate and obtain additional
contracts with plan sponsors and other potential customers. MIM believes that it
has sufficient cash on hand or available to fund MIM's anticipated working
capital and other cash needs for at least the next 12 months.

MIM intends to offset, against profit sharing amounts, if any, due RxCare
in the future under the RxCare Contract, approximately $4.9 million,
representing RxCare's share of MIM's cumulative losses and amounts previously
advanced or paid to RxCare as of March 31, 1998.

As part of its continued efforts to expand its pharmacy management
business, MIM expects to incur additional sales and marketing expenses. MIM also
may pursue joint venture arrangements, business acquisitions and other
transactions designed to expand its pharmacy management business, which MIM
would expect to fund from cash on hand or future indebtedness or, if
appropriate, the sale or exchange of equity securities of MIM.

Other Matters

MIM's pharmaceutical claims costs historically have been subject to a
significant increase over annual averages from October through February, which
MIM believes is due to increased medical problems during the colder months.
Currently, non-risk contracts represent 61% of MIM's revenue for the quarter
ended

March 31, 1998. Under non-risk contracts, higher utilization no longer
materially adversely affects MIM's gross margin.

Changes in prices charged by manufacturers and wholesalers for
pharmaceuticals, a component of pharmaceutical claims, have historically
affected MIM's cost of revenue. MIM believes that it is likely for prices to
continue to increase which could have an adverse effect on MIM's gross profit.
To the extent such cost increases adversely affect MIM's gross profit, MIM may
be required to increase contract rates on new contracts and upon renewal of
existing contracts. However, there can be no assurance that MIM will be
successful in obtaining these increased rates.

The TennCare program has been controversial since its inception and has
generated federal and state government investigations and adverse publicity.
There can be no assurances that MIM's association with the TennCare program will
not adversely affect MIM's business in the future.

Effective May 15, 1998, Mr. Klein, then MIM's Chief Executive Officer,
Chairman of the Board of Directors and a director resigned from such positions
with MIM. Effective on that date, Mr. Friedman, MIM's Chief Operating Officer,
Chief Financial Officer and a director through May 15, 1998, succeeded Mr. Klein
as MIM's Chief Executive Officer. Scott R. Yablon, a director of MIM, joined MIM
as an employee on May 1, 1998, and effective May 15, 1998, assumed the titles of
President, Chief Financial Officer and Chief Operating Officer of MIM.

The so-called "year 2000 problem," which is common to many companies,
concerns the inability of information systems, primarily computer software
programs, to recognize properly and process date sensitive information as the
year 2000 approaches. MIM believes that it does not and will not have any
material year 2000 problems. This belief is based upon a review of its
internally-generated programs, representations made by external software program
and hardware suppliers, experience processing information with dates on or after
the year 2000 and the known availability of software which MIM may utilize and
which is free of year 2000 problems.

MIM does not believe that inflation has had or, assuming inflation remains
at current levels, will have in the near term, a material impact on the results
of its operations.

On April 14, 1998, MIM resolved its dispute with certain subsidiaries of
Sierra, a party to the Sierra Agreement with MIM. This dispute related to the
parties' divergent interpretation of certain provisions of the Sierra Agreement,
which led to Sierra's dispute of certain amounts which MIM claimed were owed to
it. Under the terms of the settlement, both parties dismissed their respective
claims pending in the United States District Court, District of Nevada and the
American Arbitration Association. In addition, the parties modified a number of
provisions of the Sierra Agreement, including the addition of a provision
permitting any party to terminate the Sierra Agreement at any time and for any
reason upon 90 days' prior written notice. On May 8, 1998, MIM notified Sierra
of its intention to terminate the Sierra Agreement 90 days after notice thereof
in accordance with the terms of the Sierra Agreement. MIM continues to provide
pharmacy benefit management services to Sierra under the Sierra Agreement for
such 90-day period ending August 6, 1998.

CONTINENTAL MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Overview

Continental is a pharmaceutical benefit management company which offers
mail service prescription drug programs, prescription drug card plan services
through a network of retail pharmacies, and billing services to its customers.
In conjunction with these programs, Continental assists customers in the
development of prescription benefit plans, management and analysis of
prescription benefit plan data and review of drug utilization data. Continental
has corporate as well as individual customers. The corporate business is
composed of employer groups with 10,000 employees or less. The individual
business serves specific individuals who suffer from diseases that require
medication on an ongoing or maintenance basis.

Results of Operations

Three months ended March 31, 1998 compared to three months ended March 31, 1997

For the three months ended March 31, 1998, Continental recorded revenue of
$15.0 million ($0.8 million or 5.3% of which was derived from capitated
contracts) compared with revenue of $8.4 million (none of which was derived from
capitated contracts) for the three months ended March 31, 1997. The increase of
$6.6 million in revenue was attributable almost entirely to operations of
Continental's corporate business of which $4.2 million was generated by the
acquisition of SRX on July 25, 1997, and the balance was derived from new
contracts. In the three months ended March 31, 1998, approximately 77.2% of
Continental's revenue was generated by the corporate business, compared with
60.3% for the three months ended March 31, 1997. Growth in the corporate
business is attributable to the health care industry's shift in focus from
traditional indemnity insurance to managed care insurance plans. Management of
Continental expects this trend to continue. The overall gross margin rate will
drop as corporate business becomes a higher percentage of total business.
However, management projected increases in the total amount of corporate
business to result in an increase in total profits. Continental conducts all of
its individual business and most of its corporate business on a non-risk basis.
Capitated contracts do not presently, and are not projected to, exceed 10% of
Continental's corporate business.

Cost of revenue for the three months ended March 31, 1998 increased to
$12.0 million compared with $6.2 million for the three months ended March 31,
1997. As a percentage of revenue, cost of revenue increased from 73.4% in the
three months ended March 31, 1997 to 79.8% in the three months ended March 31,
1998. The percentage increase in the cost of revenue is attributable to the
increase in revenue in the corporate business. The corporate business has a
higher cost of revenue than the individual business. Margins in the corporate
business are smaller due to the corporate customers' sophistication and
bargaining power to negotiate lower prices than individual customers.

Selling, general and administrative expenses were $2.4 million for the
three months ended March 31, 1998 and $2.1 million for the three months ended
March 31, 1997, an increase of 14.1%. As a percentage of revenue, selling,
general and administrative expenses decreased from 25.0% for the three months
ended March 31, 1997 to 16.0% for the three months ended March 31, 1998 because
of the fixed nature of some selling, general and administrative expenses.

Interest expense was $81,000 for the three months ended March 31, 1998 and
$76,000 for the three months ended March 31, 1997.

Interest expense incurred on a revolving note to provide working capital
financing and on long-term financing debt was $106,000 for the three months
ended March 31, 1998 compared with $90,000 for the three months ended March 31,
1997. The increase is primarily due to increased borrowings for working capital
to support increased business. Interest income increased to $25,000 for the
three months ended March 31, 1998 versus $14,000 for the three months ended
March 31, 1997 primarily due to amounts charged to a corporate customer for the
cost of working capital to support its prescription drug program.

Income tax expense was $282,000 for the three months ended March 31, 1998
as compared to $50,000 for the three

months ended March 31, 1997. The increase was the result of higher taxable
income for the three months ended March 31, 1998. The effective income tax rate
for the three months ended March 31, 1998 was 50.3% as compared to 87.8% for the
three months ended March 31, 1997. The decrease was primarily the result of a
decrease in the amount of non-deductible goodwill amortization for the three
months ended March 31, 1998.

For the three months ended March 31, 1998, Continental recorded net income
of $279,000 compared with the three months ended March 31, 1997 net income of
$7,000. This improvement was the result of increased revenues with a less than
proportional increase in selling, general and administrative expenses.

Year ended December 31, 1997 compared to year ended December 31, 1996

For the year ended December 31, 1997, Continental recorded revenue of $47.3
million ($0.7 million or 1.5% of which was derived from capitated contracts)
compared with revenue of $37.0 million ($4.3 million or 11.6% of which was
derived from capitated contracts) for the year ended December 31, 1996. The
increase of $10.3 million in revenue was attributable almost entirely to
operations of Continental's corporate business of which $7.5 million was
generated by the acquisition of SRX on July 25, 1997 and the balance was derived
from new contracts. In 1997, approximately 67.3% of Continental's revenue was
generated by the corporate business, compared with 58.5% during 1996. Growth in
the corporate business is attributable to the health care industry's shift in
focus from traditional indemnity insurance to managed care insurance plans.
Management of Continental expects this trend to continue.

Cost of revenue for 1997 increased to $36.3 million compared with $28.4
million for 1996. As a percentage of revenue, cost of revenue decreased slightly
from 76.9% in 1996 to 76.8% in 1997. Since margins in corporate business are
smaller and the increase in revenue was in corporate business, Continental would
have had an increase in this percentage except that lower costs of goods sold
were negotiated with vendors.

Selling, general and administrative expenses were $9.5 million in 1997 and
$8.0 million in 1996, an increase of 19.0%. As a percentage of revenue, selling,
general and administrative expenses decreased from 21.6% in 1996 to 20.1% in
1997 because of the fixed nature of some selling, general and administrative
expenses.

Interest expense for 1997 of $356,000 was relatively constant compared with
the 1996 amount of $362,000. Interest expense is incurred on a revolving note to
provide working capital and on long-term financing debt. Interest income
increased to $65,000 in 1997 compared with $13,000 in 1996 primarily due to
amounts charged to a corporate customer for the cost of working capital to
support its prescription drug program.

Income tax expense for 1997 was $632,000 compared to $188,000 for 1996. The
increase was primarily a result of the higher taxable income generated in 1997.
The effective income tax rate for 1997 was 54.2% as compared to 93.1% for 1996.
The decrease in the effective income tax rate was primarily the result of a
decrease in the amount of non-deductible goodwill amortization in 1997.

For the year ended December 31, 1997, Continental recorded net income of
$534,000 compared with 1996 net income of $14,000. This improvement was the
result of increased revenues with a less than proportional increase in selling,
general and administrative expenses. Income taxes increased proportionately as
adjusted for non-deductible items, primarily goodwill amortization resulting
from the formation of the company as a holding company in 1994.

Year ended December 31, 1996 compared to year ended December 31, 1995

For the year ended December 31, 1996, Continental recorded revenue of $37.0
million ($4.3 million or 11.6% of which was derived from capitated contracts)
compared with revenue of $30.2 million (none of which was derived from capitated
contracts) for the year ended December 31, 1995. The increase of $6.8 million in
revenue was due to the corporate business. The corporate business grew as a
result of the trends in the health care industry cited above for the year ended
December 31, 1997.

Cost of revenue for 1996 increased to $28.4 million from $21.5 million for
1995. As a percentage of revenue, cost of revenue increased to 76.9% in 1996
from 71.3% in 1995. The percentage increase in cost of revenue relates to the
fact that the incremental increase in revenue was in the corporate business
which has a lower profit margin than the individual business.

Selling, general and administrative expenses were $8.0 million in 1996 and
$7.6 million in 1995, an increase of 5.3%. As a percentage of revenue, selling,
general and administrative expenses decreased from 25.1% in 1995 to 21.6% in
1996 because of the fixed nature of some selling, general and administrative
expenses.

Interest expense for 1996 increased to $362,000 compared to $283,000 in
1995, primarily as a result of higher average balances outstanding on a
revolving note, offset in part by a reduction in balances of long-term financing
debt. Interest income, which increased to $13,000 in 1996 compared to $2,000 in
1995, primarily represents amounts charged to a corporate customer for the cost
of working capital to support its prescription drug program.

Income tax expense for 1996 was $188,000 compared to $132,000 for 1995. The
increase was primarily due to higher taxable income in 1996 and a decrease in
deferred income tax benefits in 1996 as compared to 1995.

For the year ended December 31, 1996, Continental recorded net income of
$14,000 compared with $679,000 in 1995 (before recording a $644,000
non-recurring charge). The non-recurring charge resulted from the settlement of
disputed charges from prior years. Net income in 1995 after the non-recurring
charge was $35,000. Income taxes increased proportionately as adjusted for
non-deductible items, primarily goodwill amortization resulting from the
formation of the company as a holding company in 1994.

Liquidity and Capital Resources

For the three months ended March 31, 1998, net cash provided by operating
activities totaled $572,000 and was primarily provided by a decrease in accounts
receivable and inventory. Accounts receivable decreased by approximately
$300,000 to $9.6 million at March 31, 1998 from $9.9 million at December 31,
1997. This decrease is due to lower revenues in the first quarter of 1998 as
compared to those of the last quarter of 1997. Continental used net cash of
$179,000 in investing activities primarily relating to payments made in
connection with the SRX acquisition.

For the year ended December 31, 1997, net cash from operating activities
totaled $124,000, which was provided by an increase in payable items, offset by
a $5.3 million increase in accounts receivable. Continental used net cash of
$530,000 in investing activities, primarily to acquire and transition the SRX
business to Continental. Continental also increased its net financing activity
by $328,000 through draws on its existing revolving line of credit.

At December 31, 1997, Continental had working capital of $3.4 million,
compared to $2.5 million of working capital at December 31, 1996. Working
capital consists primarily of accounts receivable offset by accounts payable. If
the Merger is not consummated, Continental's management believes that it would
be expected to spend approximately $375,000 in capital expenditures during 1998
for various capital projects, which would be funded from its working capital.
Continental believes that it has sufficient cash on hand or available to fund
its anticipated working capital and other cash needs for at least the next 12
months at the current level of revenue.

Continental expects to incur additional sales, marketing, information
systems, and facilities' expenses as part of its continuing efforts to expand
its pharmacy services management business. If the Merger is not consummated,
Continental will pursue "strategic partnerships," business acquisitions or other
transactions designed to expand its pharmacy management business, which
Continental would expect to fund from cash on hand, borrowing or possibly the
sale of equity securities of Continental.

Other Matters

Changes in the prices charged by manufacturers and wholesalers for
pharmaceuticals affect Continental's cost of revenue.

Continental does not believe that inflation has had a material impact on
the results of its operations.

Continental does not believe it will have any year 2000 problems based on a
study of internal programs and on representations of external software and
hardware providers.

ROLE OF FINANCIAL ADVISORS

Opinion of MIM Financial Advisor

MIM retained WDR to act as its financial advisor in connection with the
Merger. On January 23, 1998, the MIM Board received WDR's opinion dated January
23, 1998 to the effect that, based upon and subject to the assumptions,
limitations and qualifications set forth therein, as of January 23, 1998, the
Merger Consideration to be paid by MIM pursuant to the Merger Agreement was fair
to MIM from a financial point of view. The full text of WDR's opinion dated
January 23, 1998, which sets forth a description of the assumptions made,
general procedures followed, matters considered and limitations on the review
undertaken, is set out in Annex B. WDR's opinion does not constitute a
recommendation to any stockholder as to how such stockholder should vote.
Stockholders or other interested parties are urged to read the opinion carefully
in its entirety, especially with regard to the assumptions made and matters
considered by WDR. The summary of the opinion herein is qualified in its
entirety by reference to the full text of such opinion.

In arriving at its opinion, WDR did not assign any particular weight to any
analysis or factor considered by it, but rather made qualitative judgments based
upon its experience in providing opinions and on the then existing economic,
monetary, market and other conditions as to the significance and relevance of
each analysis and factor. Accordingly, WDR believes that its analysis must be
considered as a whole and that selecting portions of its analyses and the
factors considered, without considering all analyses and factors, could create a
misleading or incomplete view of the processes underlying its opinion. In its
analyses, WDR made numerous assumptions with respect to industry performance,
general business and economic conditions and other matters, many of which are
beyond the control of MIM, Continental, and WDR. Any assumed estimates contained
in WDR's analyses are not necessarily indicative of actual values or predictive
of future results or values, which may be significantly more or less favorable
than as set forth therein. Such estimates relating to the value of a business or
securities do not purport to be appraisals or necessarily reflect the prices at
which the companies or securities may actually be sold. In rendering its
opinion, WDR expressed no view as to the range of values at which the MIM Common
Stock may trade following consummation of the Merger, nor did WDR make any
recommendations to the MIM stockholders with respect to how such shareholders
should vote on the Merger, or to the advisability of disposing of or retaining
such MIM Common Stock following the Merger.

WDR is an internationally recognized investment banking firm which, as a
part of its investment banking business, regularly engages in the evaluation of
businesses and their securities in connection with mergers and acquisitions,
negotiated underwritings, competitive bids, secondary distributions of listed
and unlisted securities, private placements and valuations for estate, corporate
and other purposes. The MIM Board selected WDR on the basis of its experience
and independence. In the past, WDR and its predecessors have provided investment
banking services to MIM and have received customary compensation for such
services. In the ordinary course of business, WDR and its affiliates may
actively trade or hold the equity securities of MIM for their own account or the
accounts of their customers and, accordingly, may at any time hold a long or
short position in such securities.

Pursuant to the engagement letter between MIM and WDR, MIM has paid to WDR
for its services a fee of $250,000 and has agreed to pay WDR for its services
approximately $250,000 upon the closing of the Merger. MIM has also agreed to
reimburse WDR for its reasonable expenses, including attorneys' fees, and to
indemnify WDR against certain liabilities in connection with its engagement.

In arriving at its opinion, WDR, among other things: (i) reviewed certain
publicly available business and historical financial information relating to
MIM, (ii) reviewed certain financial information and other data provided to WDR
by MIM that is not publicly available relating to the business and prospects of
MIM, including financial projections prepared by the management of MIM, (iii)
reviewed certain financial information and other data provided to WDR by
Continental that is not publicly available relating to the business and
prospects of Continental, including financial projections prepared by the
management of Continental, (iv) conducted discussions with members of the senior
managements of MIM and Continental, (v) reviewed publicly available financial
and stock market data with respect to certain other companies in lines of
business WDR believed to be generally comparable to those of MIM and
Continental, (vi) considered the pro forma effects of the Merger on MIM's
financial statements and reviewed certain estimates of synergies prepared by the
management of MIM and Continental, (vii) reviewed the historical market prices
and trading volumes of

the MIM Common Stock, (viii) compared the financial terms of the Merger with the
financial terms of certain other transactions which WDR believed to be generally
comparable to the Merger, (ix) reviewed the Merger Agreement, and (x) conducted
such other financial studies, analyses and investigations, and considered such
other information as WDR deemed necessary or appropriate, but none of which was
individually material. WDR's opinion was necessarily based on economic,
monetary, market and other conditions as in effect on, and the information made
available to WDR, as of the date of the opinion.

In connection with its review, WDR did not assume responsibility for
independent verification of any of the publicly available information or
non-public financial or other information furnished by Continental or MIM and,
with MIM's consent, relied on its being complete and accurate in all material
respects. In addition, WDR did not make any independent evaluation or appraisal
of any of the assets or liabilities (contingent or otherwise) of MIM or
Continental or any of their subsidiaries, nor was WDR furnished with any such
evaluation or appraisal. With respect to the financial forecasts (including the
effects of the Merger on assumed savings) provided to or otherwise reviewed or
discussed with it, WDR assumed, with MIM's consent, that they were reasonably
prepared on bases reflecting the best available estimates at the time and
judgments of the management of MIM and Continental as to the future financial
performance of the respective companies. WDR's opinion was based upon market,
economic and other circumstances existing and disclosed to them as of the date
of the opinion. MIM did not place any limitations upon WDR regarding the
procedures to be followed and the factors to be considered in rendering its
opinion.

The amount of Merger Consideration to be paid by MIM pursuant to the Merger
Agreement was determined through negotiations between MIM and Continental.

In connection with rendering its opinion, WDR considered a variety of
valuation methods. The material valuation methods used are summarized below.

Comparable Company Analysis. Using publicly available information, WDR
analyzed, based upon market trading values, multiples of certain financial
criteria (latest twelve months revenues, latest twelve months earnings before
interest expense, taxes, depreciation and amortization, latest twelve months
earnings before interest expense and taxes, latest twelve months net income, and
projected net income for two years) used to value certain other companies,
which, in WDR's judgment, were generally comparable to Continental for the
purpose of this analysis. The comparable company analysis was comprised of five
public pharmacy benefit management companies. These companies were: Advance
Paradigm, Inc., Chronimed Inc., Compscript, Inc., Express Scripts, Inc., and MIM
Corporation.

The range and median for market capitalization as a multiple of each of the
indicated statistics for the comparable companies were as follows: (a) calendar
1997 earnings -- 21.7x to 49.5x with a median of 35.8x; (b) estimated calendar
1998 earnings (based upon estimates from industry sources) -- 13.5x to 29.4x
with a median of 20.7x; (c) estimated calendar 1999 earnings (based upon
estimates from industry sources) -- 15.6x to 22.0x with a median of 17.7x. The
adjusted market capitalization (defined as market capitalization plus the book
value of debt minus cash and cash equivalents) as a multiple of each of the
indicated statistics for the comparable companies were as follows: (d) latest
twelve months revenues -- 0.10x to 1.01x with a median of 0.75x; (e) latest
twelve months earnings before interest expense, taxes, depreciation and
amortization ("EBITDA") -- 10.4x to 21.7x with a median of 15.1x; and (f) latest
twelve months earnings before interest expense and taxes ("EBIT") -- 11.2x to
29.0x with a median of 18.0x.

Continental's multiples based upon the Merger Consideration to be paid by
MIM in connection with the Merger, which at the time of WDR's rendering of its
opinion, had an equity purchase price of $16.1 million (based on the closing
price of the MIM Common Stock on January 22, 1998 of $4 3/16) and a total
transaction value of $20.4 million, were as follows: (a) estimated calendar year
1997 earnings (based upon MIM management estimates) -- 30.1x, (b) estimated
calendar year 1998 earnings (based upon MIM management estimates) -- 12.4x, (c)
estimated calendar year 1999 earnings (based upon MIM management estimates) --
8.3x, (d) latest twelve months revenues -- 0.43x, (e) latest twelve months
EBITDA -- 9.9x, and (f) latest twelve months EBIT -- 14.2x. WDR believes that
this analysis yielded multiples that supported WDR's view that the Merger
Consideration to be paid to Continental by MIM is fair to MIM, from a financial
point of view, because taken as a whole, the ratios described above were within
the range of, or less than, selected public comparable multiples.

Summary of Recent Acquisition Transactions. Using publicly available
information, WDR reviewed, based upon the purchase price of the equity of the
acquired companies and total transaction values, multiples of certain financial
criteria (latest twelve months revenues, EBITDA and EBIT) used to value certain
mergers and acquisitions of acquired companies.

WDR analyzed four merger and acquisition transactions completed in the
pharmacy benefit management industry which, in WDR's judgment, were generally
comparable to the Merger for the purposes of this analysis. The acquisitions
reviewed by WDR, in reverse chronological order of announcement date, were: (a)
the acquisition of Hytree Pharmacy, Inc. by Compscript, Inc., (b) the
acquisition of Medical Services Consortium, Inc. by Compscript, Inc., (c) the
acquisition of SECURx, Inc. by Compscript, Inc., and (d) the acquisition of
Systemed, Inc. by Merck-Medco Managed Care, Inc.

The range and median for the transaction value (defined as purchase price
of equity plus the book value of debt minus cash and cash equivalents) as a
multiple of each of the indicated statistics for the group of comparable
acquisitions were as follows: (a) latest twelve months revenues -- 0.27x to
1.24x with a median of 0.65x, (b) latest twelve months EBITDA -- 10.9x to 14.4x
with a median of 14.0x, and (c) latest twelve months EBIT -- 12.9x to 27.6x with
a median of 16.5x.

Continental's multiples based upon the Merger Consideration to be paid by
MIM in connection with the Merger, which at the time of WDR's rendering of its
opinion, had a transaction value of $20.4 million, were as follows: (a) latest
twelve months revenues -- 0.43x, (b) latest twelve months EBITDA -- 9.9x, and
(c) latest twelve months EBIT -- 14.2x. WDR believes that these multiples
supported WDR's view that the Merger Consideration to be paid by MIM is fair to
MIM, from a financial point of view, because taken as a whole, the ratios
described above were within the range of, or less than, the selected comparable
acquisition multiples.

No company transaction or business used in the analysis described above
under "--Summary of Recent Acquisition Transactions" is identical to MIM,
Continental or the combined entity. Accordingly, an analysis of the results
thereof necessarily involves complex considerations and judgments concerning
differences in financial and operating characteristics and other factors which
could affect the public trading or other values of the company or companies to
which they are being compared. Mathematical analysis (such as determining the
average or median) is not itself a meaningful method of using comparable
acquisition or company data.

Discounted Cash Flow Analysis. WDR performed a discounted cash flow
analysis of Continental using a set of underlying operating assumptions which
were based upon the estimates provided by MIM management. WDR calculated the
theoretical discounted present value of equity for Continental by adding
together the present value of (i) the future stream of unlevered free cash flows
through the year 2000, (ii) the future value of Continental at the end of the
year 2000 (the "Terminal Value"), and subtracting the debt, net of cash, at
year-end 1997. The Terminal Value was calculated based on multiples of EBITDA
for 2000 ranging from 8.0x to 10.0x. The cash flow streams and terminal values
were then discounted to present values using a range of discount rates from
20.0% to 30.0%. The terminal multiples and discount rates were chosen based on
several assumptions regarding factors such as inflation rates, interest rates,
the inherent risk in Continental's business as well as the pharmacy benefit
management industry as a whole, and the cost of capital of Continental.

The theoretical equity value of Continental based on the MIM management
projections produced a range of equity value of Continental of $14.7 million to
$27.9 million. WDR also performed a discounted cash flow analysis of Continental
using the MIM management estimates for Continental after giving effect to
synergies estimated by MIM's management to result from the Merger. The
theoretical equity value of Continental based on this analysis produced a range
of equity value of Continental of $28.4 million to $48.2 million. WDR believes
that the discounted cash flow analysis supported WDR's view that the Merger
Consideration to be paid by MIM is fair, from a financial point of view, because
the Merger Consideration valued at the time of WDR's opinion was within the
range of present values of Continental's future cash flows on a stand-alone
basis and below the range of present values of Continental's future cash flows
after giving effect to expected synergies.

Pro Forma Merger Analysis. WDR also analyzed certain pro forma financial
effects of the Merger on MIM. This analysis was based upon certain assumptions,
including, without limitation, the following: (i) MIM's management projections
for 1998, (ii) Continental projections for 1998 as prepared by MIM management,
and (iii) the operating synergies as prepared by MIM management.

Based upon such assumptions, WDR's pro forma analysis of the financial
effects of the Merger indicated that the pro forma operating performance
resulting from the Merger was accretive to MIM's earnings per share for the year
ending December 31, 1998. WDR determined that the range of pro forma 1998
earnings per share accretion, based on a range of potential synergies of $0 to
$2.9 million, was $0.06 to $0.21. The magnitude of actual earnings accretion is
dependent on a multitude of factors, including, without limitation, the actual
level of synergies attained and whether or not MIM and Continental achieve or
surpass their forecasted operating performance. Therefore, the specific level of
accretion cannot be predicted with any certainty.

Contribution Analysis. WDR considered the relative contribution of MIM and
Continental to the combined company's pre-tax income for 1998 (before giving
effect to goodwill amortization), in the context of the Continental
shareholders' pro forma fully diluted ownership of MIM of 20.4%.

Using the estimates prepared by MIM management, Continental's contribution
to the combined company's pre-tax income for 1998 was 55%. WDR believes that the
contribution analysis supported WDR's view that the Merger Consideration to be
paid by MIM is fair to MIM, from a financial point of view, because
Continental's relative contribution to the combined company's pre-tax income for
1998 exceeded the Continental shareholders' pro forma fully diluted ownership of
MIM of 20.4%.

Opinion of Continental Financial Advisor

On January 19, 1998, McDonald delivered its written opinion to the
Continental Board, that as of such date, the Merger Consideration pursuant to
the Merger Agreement was fair from a financial point of view to the holders of
Continental Shares.

The full text of the written opinion of McDonald dated January 19, 1998,
and the supplement thereto dated May 18, 1998, which together set forth
assumptions made, matters considered and limitations on the review undertaken in
connection with the opinion, as supplemented, is attached as Annex C to this
Proxy Statement/Prospectus and is incorporated herein by reference. Holders of
Continental Shares are urged to, and should, read the opinion in its entirety.

In connection with its opinion, McDonald reviewed the Merger Agreement and
held discussions with certain senior officers, directors and other
representatives and advisors of Continental. In addition, McDonald reviewed
historical financial statements of Continental and certain financial forecasts
and other data provided by the management of Continental. McDonald examined
certain publicly available business and financial information relating to MIM
and to the pharmacy benefit management industry, including various investment
reports by securities analysts who follow MIM. McDonald reviewed the financial
terms of the transactions contemplated by the Merger Agreement in relation to,
among other things: current and historical market prices and trading volumes of
the MIM Common Stock; historical and projected earnings of Continental and MIM;
and the capitalization and financial conditions of Continental and MIM. McDonald
also considered, to the extent publicly available, the financial terms of
certain other similar transactions recently effected that McDonald considered
comparable to the Merger of Continental and MIM. In addition to the foregoing,
McDonald conducted such other analyses and examinations and considered such
other financial, economic and market criteria as McDonald deemed appropriate to
arrive at its opinion.

McDonald assumed and relied, without independent verification, upon the
accuracy and completeness of all financial and other information publicly
available, furnished to, otherwise received by or discussed with it. McDonald
also assumed, in accordance with the terms of the proposed Merger Agreement
provided to it, that the Merger will be accounted for as a pooling of interests
in accordance with generally accepted accounting principals and will be a tax
free reorganization for federal income tax purposes. On or about May 18, 1998,
MIM concluded that the Merger would be accounted for as a purchase rather than a
pooling of interests. McDonald has delivered a supplement dated May 18, 1998 to
its opinion letter dated January 19, 1998 to the effect that this change in
accounting method will not affect the conclusion reached in its opinion.
McDonald's opinion relates to the relative values of Continental and MIM.
McDonald did not express any opinion as to what the value of the MIM Common
Stock actually will be when issued to Continental shareholders pursuant to the
Merger or the price at which the MIM Common Stock will trade subsequent to the
Merger. McDonald's advisory services and its opinion were provided for the
information and assistance of the Continental Board in connection with their
consideration of the transaction contemplated by the Merger Agreement and such
opinion does not constitute a recommendation as to how any Continental
shareholder should vote with regard

to such transaction. McDonald was not asked to consider, and its opinion does
not address, the relative merits of the Merger as compared to any alternative
business strategy that might exist for Continental.

In preparing its opinion to the Continental Board, McDonald performed a
variety of financial and comparative analyses, including those described below.
The summary of such analyses does not purport to be a complete description of
the analyses underlying McDonald's opinion. However, all material analyses
performed by McDonald in connection with the Merger are disclosed below.

Selected Comparable Company Analysis. Using publicly available information,
McDonald analyzed, among other things, the market values and trading multiples
of MIM and four selected publicly traded companies in the pharmacy benefit
management industry, consisting of Advance ParadigM, Inc., Chronimed, Inc.,
CompScript, Inc. and Express Scripts, Inc. (the "Selected Companies"). McDonald
compared market values as multiples of, among other things, latest 12 months net
income and estimated calendar 1997 and 1998 net income, and adjusted market
values (equity market value, plus total debt and the book value of preferred
stock, and capitalized operating leases less cash and cash equivalents), and
latest 12 months EBITDA. McDonald also compared the debt to capitalization
ratios, profit margins, historical revenue growth and projected earnings per
share growth of the Selected Companies. Net income projections for the Selected
Companies were based on estimates from analyst reports deemed to be
representative of the published reports. The ranges of multiples of enterprise
value to 1997 EBITDA, the market capitalization to 1997 revenues, and 1997 and
1998 expected price to earnings ratios of the Selected Companies were as
follows: (i) enterprise value to 1997 EBITDA: 8.0x to 21.1x (with an average of
16.4x and a median of 20.2x); (ii) market capitalization to 1997 revenues: 0.3x
to 1.4x (with an average of 0.8x, a median of 1.0x); (iii) 1997 expected price
to earnings ratio: 21.7x to 42.7x (with an average of 33.5x, a median of 34.8x);
and (iv) 1998 expected price to earnings ratio: 7.2x to 27.0x (with an average
of 18.7x, a median of 18.6x). The valuation range for Continental based on a
multiple of enterprise value to 1997 EBITDA was $17.5 million to $46.2 million
with an average of $35.9 million and the valuation range based upon the market
capitalization to 1997 revenue was $14.6 million to $68.2 million with an
average of $38.9 million. In rendering its fairness opinion, McDonald gave more
significance, however, to the price earnings ratio on expected 1997 and 1998
earnings in the pharmacy benefit management industry. On Continental's 1997 and
1998 expected earnings, these multiples indicate equity value ranges of $12.2
million to $24.0 million with an average of $18.5 million, and $9.1 million to
$34.0 million with an average of $23.5 million, for the respective years.

Applying the above multiples of Selected Companies to corresponding
financial data for Continental resulted in the following average valuation
reference points for Continental: (i) $35.9 million, (ii) $38.9 million, (iii)
$18.8 million, (iv) $23.5 million. The average value for Continental derived
using this method is $29.3 million.

In addition to the payment of the Merger Consideration, MIM will assume up
to $5 million of debt. The January 16, 1998 closing price for shares of MIM
Common Stock was $4.38 and the weighted average 30 day, 90 day, 6 month and 1
year share prices were $4.53, $6.53, $9.94 and $9.47 respectively. Using the 90
day weighted average share price, the transaction value is $29.8 million.

The price for MIM Common Stock has experienced significant volatility since
it began trading publicly. In order to reduce the impact of the volatility on
its economic analysis, McDonald reviewed a number of holding periods and
assessed that the past 90 day period provided a reasonably stable interval.
Hence, the 90 day weighted average share price was utilized in McDonald's
calculations.

Selected Merger and Acquisition Transactions Analysis. Using the
information available publicly, McDonald analyzed the purchase price and implied
transaction multiples paid or proposed to be paid in four selected transactions
in the pharmacy benefit management industry (acquirer / target / date
announced): (a) Merck-Medco Managed Care, Inc./ Systemed, Inc./ June 10, 1996;
(b) CompScript, Inc./ SecuRx, Inc./ August 5, 1996; (c) CompScript, Inc./
Medical Services Consortium, Inc./ November 13, 1996; and (d) CompScript. Inc./
Hytree Pharmacy, Inc./ February 3, 1997 (the "Selected Transactions"). The
ranges of multiples of transaction consideration to latest twelve months
revenues and to latest twelve months EBITDA were as follows: (i) transaction
consideration to latest twelve months revenues: 0.27x to 1.24x (median of
0.65x); and (ii) transaction consideration to latest twelve months EBITDA: 10.9x
to 14.4x (median of 14.0x).

The Merger Consideration to be paid by MIM (based on a 90 day weighted
average MIM share price of $6.53) as a multiple of the latest twelve months
revenues and EBITDA is as follows: (i) Merger Consideration

to latest twelve months revenues: 0.61x; and (ii) Merger Consideration to latest
twelve months EBITDA: 13.6x.

No company, transaction or business used in the "Selected Comparable
Company Analysis" or "Selected Merger and Acquisition Transactions Analysis" as
a comparison is identical to Continental, MIM or the Merger. Accordingly, an
analysis of the results of the foregoing is not entirely mathematical; rather,
it involves complex considerations and judgments concerning differences in
financial and operating characteristics and other factors that could affect the
acquisition, public trading or other values of the Selected Companies, Selected
Transactions or the business segment, company or transaction to which they are
being compared.

Contribution Analysis. McDonald analyzed the respective contributions of
Continental and MIM to the estimated revenue, EBITDA, cash flow and net income
of the combined company for, among other things, fiscal year 1998, based on
estimates provided by the respective companies and without taking into account
potential cost savings and other synergies anticipated by the management of MIM
to result from the Merger. This analysis indicated that, in fiscal year 1998,
Continental would contribute approximately 12.0% of revenue, 18.0% of EBITDA and
10.0% of net income and MIM would contribute approximately 88.0% of revenue,
82.0% of EBITDA and 90.0% of net income, of the combined company. Continental's
shareholders' pro forma fully diluted ownership of MIM as a result of the Merger
will be 19.7%.

Pro Forma Merger Analysis. McDonald analyzed certain pro forma effects
resulting from the Merger, including, among other things, the impact of the
Merger on the projected earnings per share of MIM for the fiscal years ended
1997 and 1998, based on estimates provided by the respective companies. The
results of the pro forma merger analysis suggested that the Merger could be
accretive to MIM's 1998 earnings per share (which includes conservative cost
savings for synergies). McDonald calculated the increase in MIM's 1998 earnings
per share on a pro forma basis resulting from the Merger to be approximately
$0.05 per share. The calculation of the potential increase in MIM's earnings per
share on a pro forma basis resulting from the Merger is based on a number of
assumptions, including but not limited to, the potential post-merger synergies
achieved and the ability of Continental and MIM to achieve their 1998 forecasted
performance. Due to these variables, the determination of the exact level of
accretion to MIM's earnings per share is uncertain. The actual results achieved
by the combined company may vary from projected results, and the variations may
be material.

Other Factors and Comparative Analyses. In rendering its opinion, McDonald
considered certain other factors and conducted certain other comparative
analyses, including, among other things, a review of (i) Continental and MIM's
historical and forecasted financial results; (ii) the history of trading prices
and volume for MIM; (iii) selected published analysts' reports on MIM including
analysts' estimates as to the earnings growth potential of MIM; and (iv) the pro
forma ownership of the combined company.

The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to partial analysis or summary description. Considering
any portion, without considering the analyses as a whole, could create an
incomplete view of the processes underlying McDonald's opinion. In arriving at
its fairness determination, McDonald considered the results of all such
analyses. The analyses were prepared solely for purposes of McDonald's providing
its opinion to the Continental Board as to the fairness from a financial point
of view of the Merger Consideration to the holders of the Continental Shares and
do not purport to be appraisals or necessarily reflect the prices at which
businesses or securities actually may be sold. Analyses based upon forecasts of
future results are not necessarily indicative of actual future results, which
may be significantly more or less favorable than suggested by such analyses.
Because such analyses are inherently subject to uncertainty, being based upon
numerous factors or events beyond the control of the parties or their respective
advisors, none of Continental, MIM, McDonald or any other person or entity
assumes responsibility if future results are materially different from those
forecast. As described above, McDonald's opinion to the Continental Board was
one of many factors taken into consideration by the Continental Board in making
their determination to approve the Merger Agreement. The Merger Consideration
was determined as a result of negotiations between Continental and MIM. The
foregoing summary does not purport to be a complete description of the analysis
performed by McDonald and is qualified by reference to the written opinion of
McDonald set forth in Annex C hereto.

McDonald, as part of its investment banking business, is regularly engaged
in the valuation of businesses and their securities in connection with mergers
and acquisitions, negotiated underwritings, secondary

distributions of listed and unlisted securities, private placements and
valuations for estate, corporate and other purposes. Continental selected
McDonald as its financial advisor because it is a nationally recognized
investment banking firm that has substantial experience in transactions similar
to this one.

Pursuant to an engagement letter agreement dated October 15, 1997,
Continental engaged McDonald to act as its exclusive financial advisor in
connection with the sale or merger of Continental with MIM. Pursuant to the
terms of the engagement letter, Continental has agreed to pay McDonald a fee
determined in accordance with the following schedule: 1% of the first
$15,000,000 portion of the transaction value (as described in the engagement
letter); 2% of the next $5,000,000 portion of the transaction value; and 5% of
the amount of the transaction value which exceeds $20,000,000. Continental has
agreed to indemnify McDonald against certain liabilities, including certain
liabilities under the federal securities laws.

THE MERGER AGREEMENT

General

The following summary of the material terms of the Merger Agreement does
not purport to be complete and is qualified in its entirety by reference to the
Merger Agreement. The Merger Agreement, as amended to date, is attached as Annex
A to this Proxy Statement/Prospectus and you are encouraged to read the Merger
Agreement in its entirety as it is the legal document that governs the Merger.

Effective Time and Effect of the Merger

If the Merger is approved by the stockholders of MIM and Continental and
all other conditions to the obligations of the parties to consummate the Merger
are satisfied or waived, the Merger will become effective at the Effective Time.
At the Effective Time, each Continental Share outstanding immediately prior to
the Effective Time will be converted into the right to receive 327.59 fully paid
and nonassessable shares of MIM Common Stock. All such Continental Shares shall
no longer be outstanding and shall automatically be canceled and retired and
shall cease to exist, and each holder of a certificate representing any such
shares shall cease to have any rights with respect thereto, except the right to
receive the Merger Consideration per share upon the surrender of such
certificate to MIM, without interest. As a result of the Merger, Continental
will become a wholly-owned subsidiary of MIM.

Conditions to the Merger

The obligation of each of MIM and Continental to consummate the Merger is
subject to (i) obtaining the requisite approvals of the Merger Agreement and the
Merger from the respective stockholders of MIM and Continental, and (ii) the
absence of any judicial or governmental order which invalidates the Merger
Agreement.

The obligation of MIM to consummate the Merger is subject to (i) all
representations, warranties, covenants and obligations of Continental being true
and correct or performed and complied with, as the case may be, in all material
respects at the Effective Time and the delivery of officers' certificates to
that effect, (ii) the receipt of certain third party contractual consents, (iii)
the cancellation of certain related party contracts, (iv) Dissenting Shares
representing no more than 5% of all Continental Shares, (v) all officers and
directors of Continental resigning at the Effective Time, unless otherwise
instructed by MIM, and (vi) Continental's total indebtedness being no more than
$5 million. MIM and Continental believe that the condition in (iii) above has
been satisfied. The parties anticipate that all other conditions to the Merger
will be satisfied in a timely fashion.

The obligation of Continental to consummate the Merger is subject to (i)
all representations, warranties, covenants and obligations of MIM being true and
correct or performed and complied with, as the case may be, in all material
respects at the Effective Time and the delivery of officers' certificates to
that effect and (ii) the listing on Nasdaq of the shares of MIM Common Stock to
be issued to Continental shareholders in the Merger.

Representations and Warranties

In the Merger Agreement, MIM and Continental have made various
representations, warranties, covenants and agreements, relating to, among other
things, their respective businesses and financial condition, the number of
authorized shares of their capital stock, the accuracy of their various filings
with the Commission and the IRS, the satisfaction of certain legal requirements
for the Merger and the absence of certain material litigation.

The representations and warranties of each of the parties to the Merger
Agreement will expire at the Effective Time.

Conduct of Business Prior to the Merger

The Merger Agreement provides that, prior to the Effective Time,
Continental will operate its business in the ordinary course and in a manner
consistent with past practice and provides for certain restrictions with respect
to Continental regarding, among other things, the amendment of corporate charter
documents; the declaration or payment of any dividend; the issuance or other
disposition of any shares of its capital stock or any option with respect
thereto; acquiring any business organization or assets other than assets used in
the ordinary course of its business; selling, leasing or otherwise disposing or
encumbering any of its material assets or properties; materially altering any
pricing, marketing, accounting, tax practice or other financially related
policies; making any material tax election or compromising any material income
tax liability; the incurrence of certain indebtedness; the granting of certain
employee benefits or the adoption of employee benefit plans; entering into
certain contracts; the making of certain capital expenditures; the changing of
any current lines of business; or generally entering into any contract,
agreement, commitment or arrangement that would deviate from Continental's past
business practice.

Amendment, Termination and Waiver

The Merger Agreement may be amended, supplemented or modified by action
taken by or on behalf of the respective Boards of Directors of MIM and
Continental at any time prior to the Effective Time, whether prior to or after
adoption of the Merger Agreement at the Annual Meeting and at Continental's
shareholder meeting, but after such adoption only to the extent permitted by
applicable law. No such amendment, supplement or modification shall be effective
unless set forth in a written instrument duly executed by or on behalf of MIM
and Continental.

The Merger Agreement may be terminated, and the transactions contemplated
thereby may be abandoned, at any time prior to the Effective Time, whether prior
to or after the Annual Meeting or Continental's shareholder meeting by mutual
written agreement of MIM and Continental duly authorized by action taken by or
on behalf of their respective Boards of Directors; or by either MIM or
Continental upon notification to the non-terminating party by the terminating
party for the following reasons: (i) at any time after July 31, 1998 if the
Merger shall not have been consummated on or prior to such date and such failure
to consummate the Merger is not caused by a breach of the Merger Agreement by
the terminating party; (ii) if MIM shall not have obtained stockholder approval
by reason of the rejection of the transaction at the Annual Meeting, or any
adjournment thereof, called therefor; (iii) if Continental shall not have
obtained shareholder approval by reason of the rejection of the transaction at a
meeting of such shareholders, or any adjournment thereof, called therefor; (iv)
if any governmental or regulatory authority, the taking of action by which is a
condition to the obligations of either MIM or Continental to consummate the
transactions contemplated by the Merger Agreement, shall have determined not to
take such action and all appeals of such determination shall have been taken and
have been unsuccessful; (v) if there has been a material breach of any
representation, warranty, covenant or agreement on the part of the
non-terminating party set forth in the Merger Agreement which breach has not
been cured within 10 business days following receipt by the non-terminating
party of notice of such breach from the terminating party or assurance of such
cure reasonably satisfactory to the terminating party within such 10 business
day period; or (vi) if any court of competent jurisdiction or other competent
governmental or regulatory authority shall have issued an order making illegal
or otherwise restricting, preventing or prohibiting the Merger and such order
shall have become final and nonappealable.

At any time prior to the Effective Time, either MIM or Continental, by
action taken by or on behalf of its Board of Directors, may to the extent
permitted by applicable law (i) extend the time for the performance of any of
the obligations or other acts of the other party; (ii) waive any inaccuracies in
the representations and warranties of the other party; or (iii) waive compliance
with any of the covenants, agreements or conditions of the other party thereto.

Expenses

Whether or not the Merger is consummated, all costs and expenses incurred
in connection with the Merger Agreement and the transactions contemplated
thereby shall be paid by the party incurring such cost or expense.

BUSINESS OF MIM

Overview

MIM is a pharmacy benefit management organization that provides a broad
range of services to the pharmaceutical health care industry and employers. MIM
promotes the cost-effective delivery of pharmacy benefits to plan members and
the public. MIM targets organizations involved in three key industry segments --
sponsors of public and private health plans (such as HMOs and other managed care
organizations ("MCO's"), long-term care facilities such as nursing homes and
assisted living facilities, and employers), retail pharmacies and pharmaceutical
manufacturers and distributors -- and offers services providing financial
benefits to each of them. MIM specifically targets small to medium size HMOs,
self-funded groups and third party administrators (who in turn market to
self-funded groups on MIM's behalf). MIM works with plan sponsors and local
health care professionals on both a risk and non-risk basis to design, implement
and manage innovative pharmacy benefit management programs to control pharmacy
costs under the plans. MIM's programs promote the clinically appropriate
substitution of bio-equivalent generic pharmaceutical products and lower cost
therapeutic equivalent brand name pharmaceutical products for equivalent but
more expensive brand name drugs.

MIM was incorporated in Delaware in March 1996 for the purpose of combining
the businesses and operations of Pro-Mark and MIM Strategic Marketing, LLC,
which became 100% and 90% owned subsidiaries, respectively, of MIM in May 1996.
MIM completed its initial public offering in August 1996.

Pharmacy Benefit Management Services

MIM offers plan sponsors a broad range of services that are designed to
ensure the cost-effective delivery of clinically appropriate pharmacy benefits.
MIM's pharmacy benefit management programs include a number of design features
and fee structures that are tailored to suit a sponsor's particular service and
cost requirements. In addition to traditional fee-for-service arrangements, MIM
offers alternative methodologies for pricing its various benefit management
packages, including risk programs charging a fixed fee per capita (a "capitated"
program), as well as sharing costs exceeding established per capita amounts or
sharing savings where costs are less than established per capita amounts. Under
certain circumstances, MIM will also enter into profit sharing arrangements with
plan sponsors, thereby incentivizing the sponsors to support more fully MIM's
cost containment efforts. Benefit design and formulary parameters are managed
through a point-of-sale ("POS") claims processing system through which real-time
electronic messages are transmitted to pharmacists to ensure compliance with
specified benefit design and formulary parameters before services are rendered.
MIM's organization and programs are clinically oriented, with a high proportion
of staff having pharmacological certification, training and experience. MIM
relies on its own employees to solicit business from plan sponsors as well as
commissioned independent agents and brokers.

MIM provides the following benefit management services to its plan
sponsors:

Formulary Design and Compliance. MIM offers flexible formulary designs to
meet sponsors' requirements. Many of these plan sponsors do not restrict
coverage to a specific list of pharmaceuticals and are said to have "no
formulary" or an "open" formulary that generally covers all FDA-approved drugs
except certain classes of excluded pharmaceuticals (such as certain vitamins and
cosmetic, experimental, investigative or over-the-counter drugs). As a result of
rising pharmacy program costs, MIM believes that both public and private health
plans have become increasingly receptive to restricting the availability of
certain drugs within a given therapeutic class, other than in cases of medical
necessity, to the extent clinically appropriate. Once a determination has been
made by a plan sponsor to utilize a "restricted" or "closed" formulary, MIM
actively involves Pharmacy and Therapeutics Committees (consisting of local plan
sponsors, prescribers, pharmacists and other health care professionals) to
design clinically acceptable formularies in order to control costs. The
composition of the formulary is subject to the final approval of the plan
sponsor.

Controlling program costs through formulary design focuses on two areas to
the extent consistent with accepted medical and pharmacy practice and applicable
law: (i) generic substitution, which involves selection of generic drugs as a
cost-effective alternative to bio-equivalent brand name drugs, and (ii)
therapeutic interchange, which involves selected coverage of a low cost brand
name drug within a therapeutic category, or, a bio-equivalent generic
alternative for such drug. Increased usage of generic drugs by MIM-managed

programs also enables MIM to obtain purchasing concessions and other financial
incentives on generic drugs, which may be shared with plan sponsors. Rebates on
brand name drugs are also negotiated with drug manufacturers and are often
shared with plan sponsors.

The primary method for assuring formulary compliance is non-reimbursement
of pharmacists for dispensing non-formulary drugs, subject to certain limited
exceptions. Until September 1997, MIM also, directly or indirectly, provided
financial incentives to pharmacists to utilize preferred status products.
Formulary compliance is managed with the active assistance of participating
network pharmacists, primarily through prior authorization procedures, on-line
POS edits as to particular subscribers and other network communications.
Overutilization of medication is monitored and managed through quantity
limitations, based upon nationally recognized standards and guidelines regarding
maintenance vs. non-maintenance therapy, and the use of certain therapeutic
classes of drugs and specific medications. Step protocols, which are procedures
requiring that preferred therapies be tried and shown ineffective before less
favored therapies are covered, also are established by MIM in conjunction with
local Pharmacy and Therapeutics Committees to control improper utilization of
certain high-risk or high-cost medications.

Clinical Services. MIM's formularies typically provide a selection of
covered drugs within each major therapeutic class to treat appropriately most
medical conditions. However, provision is made for covering non-formulary drugs
(other than excluded products) when shown to be clinically appropriate. Since
non-formulary drugs ordinarily are automatically rejected for coverage by the
real-time POS system, procedures are employed to override restrictions on
non-formulary medications for a particular patient and period of treatment.
Restrictions on the use of certain high-risk or high-cost formulary drugs may be
similarly overridden through prior authorization procedures. Non-formulary
overrides and prior authorizations are processed on the basis of documented,
clinically-supported medical necessity and typically are granted or denied
within 48 hours after request. Requests for, and appeals of denials of coverage
in these cases are handled by MIM through its staff of trained pharmacists,
nationally certified pharmacy technicians and board certified pharmacotherapy
specialists, subject to the plan sponsor's ultimate decisional authority over
all such appeals. Further, in case of a medical emergency as determined by the
dispensing pharmacist, MIM authorizes, without prior approval, short-term
supplies of antibiotics and certain other medications.

Mail Order Services. MIM believes that program costs may be minimized by
controlling the distribution of pharmaceutical products directly to plan
sponsors' members through mail order pharmacy services. Although MIM does not
currently have in-house mail order capability, Continental owns and operates a
full service mail order pharmacy, and MIM believes that it would benefit from
increased control of retail mail order distribution as a result of the Merger.

Drug Usage Evaluation. Drug usage is evaluated on a concurrent, prospective
and retrospective basis, utilizing the real-time POS system and proprietary
information systems for multiple drug interactions, drug-health condition
interactions, duplication of therapy, step therapy protocol enforcement,
minimum/maximum dose range edits, compliance with prescribed utilization levels
and early refill notification. MIM also maintains an on-going drug utilization
review program in which select medication therapies are reviewed and data
collected, analyzed and reported for management and educational applications.

Pharmacy Data Services. MIM utilizes claims data to generate reports for
management and plan sponsor use, including drug utilization review, quality
assurance, claims analysis and rebate contract administration. MIM has developed
systems to provide plan sponsors with real-time access to pharmacy, financial,
claims, prescriber, subscriber and dispensing data.

Disease Management. MIM designs and administers programs designed to
maximize the benefits of pharmaceutical use as a tool in achieving therapy goals
for certain targeted diseases. Programs focus on preventing high risk events,
such as asthma exacerbation or stroke, through appropriate use of
pharmaceuticals, while eliminating unnecessary or duplicate therapies. Key
components of these programs include health care provider training, integration
of care between health disciplines, monitoring of patient compliance,
measurement of care process and quality, and providing feedback for continuous
improvement in achieving therapy goals.

Behavioral Health Pharmacy Services. In recent years, managed care
organizations have recognized the particular and specialized behavioral health
needs of certain individuals within an MCO's membership. Such needs require a
greater degree of clinical pharmacy benefit management than other populations.
These special needs include, among other things, (i) a greater sensitivity to
potential adverse interaction due to the fragile

nature of persons afflicted with behavioral health disorders, (ii) longer term
pharmaceutical therapies which often require frequent evaluation and dose
titration (that is, adjustments to the respective dosages of various medications
within a therapeutic regimen), and (iii) the need to integrate pharmaceutical
treatments with other types of medical interventions, such as psychiatric care,
nutritional and other lifestyle changes, and sometimes, more advanced
treatments, such as behavior modification therapies (which may include, among
others, electroconvulsive therapy). As a result, many MCO's have separated the
behavioral health population into a separate management area. MIM provides
services which encourage the proper and cost-effective utilization of behavioral
health medication to behavioral health organizations, which are traditionally
(but not always) affiliated with MCO's. Through the development of provider
education programs, utilization protocols and prescription dispensing evaluation
tools, MIM is able to integrate pharmaceutical care with other medical therapies
to enhance patient compliance and minimize unnecessary or suboptimal prescribing
practices. These MIM services are integrated into the plan sponsor's package of
behavioral health care products for marketing to private insurers, public
managed care programs and other health providers.

At December 31, 1997, MIM provided pharmacy benefit management services to
36 sponsors with approximately 1.7 million plan members, including eight
sponsors with approximately 1.2 million members receiving mandated health care
benefits to formerly Medicaid-eligible and certain uninsured state residents
under Tennessee's TennCare Medicaid waiver program. See "The TennCare Program"
below.

From MIM's initial public offering through mid-December 1997, MIM focused
its marketing efforts on large public health programs, particularly in states
with high Medicaid and Medicare populations, and on private health plans
throughout the United States. MIM has recently decided to focus its marketing on
small and large sized employer groups, both directly through its sales and
marketing force and indirectly through commissioned brokers and agents, such as
third party administrators. At March 15, 1998 approximately 420,000 of the plan
members were covered through employer groups. While such business represents
approximately 25% of managed lives, MIM believes that, over time, it will be
able to increase lives under management from its employer group marketing
efforts.

The TennCare Program

RxCare, a pharmacy services administrative organization owned by the
Tennessee Pharmacists Association and representing approximately 1,600 retail
pharmacies, initially retained MIM in 1993 to assist in obtaining health plan
pharmaceutical benefit business for Tennessee pharmacies and related services,
including pharmacy benefit design and pricing. In January 1994, the State of
Tennessee instituted its TennCare program by contracting with plan sponsors to
provide mandated health services to TennCare beneficiaries on a capitated basis.
In turn, certain of these plan sponsors contracted with RxCare to provide
TennCare-mandated pharmaceutical benefits to their TennCare beneficiaries
through RxCare's network of retail pharmacies, in most cases on a corresponding
capitated basis.

Since January 1994, MIM has been providing a broad range of pharmacy
benefit management services with respect to RxCare's TennCare and private
pharmaceutical benefit businesses under the RxCare Contract. MIM assists RxCare
in designing and marketing its pharmacy benefit management services, and
performs essentially all of RxCare's obligations under its pharmacy benefit
contracts with health plan sponsors, pays certain amounts to RxCare and is
compensated by sharing with RxCare the profit, if any, from activities under
RxCare's contracts with the sponsors.

The RxCare Contract expires on December 31, 1998. In total, this contract
accounts for 84% of MIM's revenues in 1997. Failure to renew this contract in
total or on terms as favorable as those currently in effect could have a
material adverse affect on MIM. The BCBS-TN contract was canceled effective
March 31, 1997 and replaced with a non-risk (fee-for-service) clinical services
agreement between MIM and a BCBS-TN affiliate.

Competition

The pharmacy benefit management business is highly competitive, and many of
MIM's current and potential competitors have considerably greater financial,
technical, marketing and other resources than MIM. The pharmacy benefit
management business includes a number of large, well capitalized companies with
nationwide operations and many smaller organizations typically operating on a
local or regional basis. Some of the larger organizations are owned by or
otherwise related to a brand name drug manufacturer and may have significant
influence on the distribution of pharmaceuticals. Among larger companies
offering pharmacy benefit management services are Medco Containment Services,
Inc. (a subsidiary of Merck & Co., Inc.), Caremark International Inc., PCS, Inc.
(a subsidiary of Eli Lilly & Company), Express Scripts, Inc., Advance ParadigM,
Inc., Value Health, Inc., Diversified Pharmaceutical Services, Inc. (a
subsidiary of SmithKline Beecham) and National Prescription Administrators, Inc.
Numerous insurance and Blue Cross and Blue Shield plans, managed care
organizations and retail drug chains also have their own pharmacy benefit
management capabilities.

Competition in the pharmacy benefit management business to a large extent
is based upon price, although other factors, including quality and breadth of
services and products, also are important. MIM believes that its ability and
willingness, where appropriate, to assume or share its customers' financial
risks, its independence from brand name drug manufacturers and its retail
pharmacy-based orientation represent distinct and unusual competitive advantages
in the pharmacy benefit management business.

Government Regulation

MIM believes that it is in substantial compliance with all legal
requirements material to its operations. Among the various federal and state
laws and regulations which may govern or impact MIM's current and planned
operations are the following:

Anti-Kickback Laws. Subject to certain statutory and regulatory exceptions
(including exceptions relating to certain managed care, discount, group
purchasing and personal services arrangements), federal law prohibits the
payment or receipt of remuneration to induce, arrange for or recommend the
purchase of health care items or services paid for in whole or in part by the
Medicare or state health care programs (including Medicaid and TennCare), and
certain state laws may extend the prohibition to items or services that are paid
for by private insurance and self-pay patients. MIM's arrangements with RxCare
and other pharmacy network administrators, drug manufacturers, marketing agents,
brokers, health plan sponsors, pharmacies and others parties routinely involve
payments to or from persons who provide or purchase, or recommend or arrange for
the purchase of, items or services paid in part by the TennCare program or by
other programs covered by such laws. Management carefully considers the import
of such "anti-kickback" laws when structuring its operations, and believes MIM
is in compliance therewith. However, the laws in this area are in flux and
uncertain in their application, and there can be no assurance that one or more
of such arrangements will not be challenged or found to violate such laws.
Violation of the Federal Anti-Kickback Statute could subject MIM to substantial
criminal and civil penalties, including exclusion from the Medicare and Medicaid
(including TennCare) programs. There are a number of states in which MIM does
business which have laws analogous to the Federal Anti-Kickback Statute which
likewise govern or impact MIM's current and planned operations. MIM believes
that it is in substantial compliance with these laws and regulations as well.

Antitrust Laws. Numerous lawsuits have been filed throughout the United
States by retail pharmacies against drug manufacturers challenging certain brand
drug pricing practices under various state and federal antitrust laws.

A settlement in one such suit would require defendant drug manufacturers to
provide the same types of discounts on pharmaceuticals to retail pharmacies and
buying groups as are provided to managed care entities to the extent that their
respective abilities to affect market share are comparable, a practice which, if
generally followed in the industry, could increase competition from pharmacy
chains and buying groups and reduce or eliminate the availability to MIM of
certain discounts, rebates and fees currently received in connection with its
drug purchasing and formulary administration programs. In addition, to the
extent that MIM or an associated business appears to have actual or potential
market power in a relevant market, business arrangements and practices may be
subject to heightened scrutiny from an anti-competitive perspective and possible
challenge by state or federal regulators or private parties. For example,
RxCare, which was investigated and found by

the FTC to have potential market power in Tennessee, entered into a consent
decree in June 1996 agreeing not to enforce a policy which had required
participating network pharmacies to accept reimbursement rates from RxCare as
low as rates accepted by them from other pharmacy benefits payors. To date,
enforcement of antitrust laws has not had any material affect on MIM's business.

Other State Laws. Many states have statutes and regulations that do or may
impact MIM's business operations. In some states, pharmacy benefit managers may
be subject to regulation under insurance laws or laws licensing HMOs and other
managed care organizations, in which event requirements could include satisfying
statutorily imposed performance obligations, the posting of bonds, maintenance
of reserves, required filings with regulatory agencies, and compliance with
disclosure requirements and other regulation of MIM's operations. State
insurance laws also may affect the structuring of certain risk-sharing programs
offered by MIM. A number of states have laws designed to restrict the ability of
network managers to impose limitations on the consumer's choice of pharmacies,
or requiring that the benefits of discounts negotiated by managed care
organizations be passed along to consumers in proportionate reductions of
co-payments. Some states require that pharmacies be permitted to participate in
provider networks if they are willing to comply with network requirements, while
other states require pharmacy benefit managers to follow certain prescribed
procedures in establishing a network and admitting and terminating its members.
Many states require that Medicaid obtain the lowest prices from a pharmacy,
which may limit MIM's ability to reduce the prices it pays for drugs below
Medicaid prices. States have a variety of laws regulating pharmacists' ability
to switch prescribed drugs or to split fees, which could impede MIM's business
strategy, and certain state laws have been the basis for investigations and
multi-state settlements requiring the discontinuance of certain financial
incentives provided by manufacturers to retail pharmacies to promote the sale of
the manufacturers' drugs.

While management believes that MIM is in substantial compliance with all
existing laws and regulations material to the operation of its business, such
laws and regulations are subject to rapid change and often are uncertain in
their application. As controversies continue to arise in the health care
industry (for example, regarding the efforts of plan sponsors and pharmacy
benefit managers to limit formularies, alter drug choice and establish limited
networks of participating pharmacies), federal and state regulation and
enforcement priorities in this area can be expected to increase, the impact of
which on MIM cannot be predicted. There can be no assurance that MIM will not be
subject to scrutiny or challenge under one or more of these laws or that any
such challenge would not be successful. Any such challenge, whether or not
successful, could have a material adverse effect upon MIM's business and results
of operations. Further, there can be no assurance that MIM will be able to
obtain or maintain any of the regulatory approvals that may be required to
operate its business, and the failure to do so could have a material adverse
effect on MIM's business and results of operations.

Employees

At June 17, 1998, MIM employed a total of 161 full-time and 27 part-time
people, including 28 (23 full-time and five part-time) licensed pharmacists.
MIM's employees are not represented by any union and, in the opinion of
management, MIM's relations with its employees are satisfactory.

Properties

MIM's corporate headquarters are located in leased office space in Pearl
River, New York. MIM also leases office space in the South Kingstown, Rhode
Island area and Nashville, Tennessee.

Legal Proceedings

devoting his full business time and attention to PPI from June 1993 through
November 1993 (when his employment was terminated by PPI), and (iii) that MIM
interfered with the contractual relationship between the parties and
misappropriated MMG's and PPI's confidential information through MIM's
employment of Mr. Corvese. The amended third-party complaint seeks to enjoin MIM
from using confidential information allegedly misappropriated from MMG and PPI
and seeks an unspecified amount of compensatory and consequential damages,
interest and attorneys' fees. MIM believes that the third-party plaintiff's
allegations are without merit; however, loss of this litigation could have a
material adverse effect on MIM's business and results of operations.

MANAGEMENT OF MIM AFTER THE MERGER

Board of Directors

The MIM Board will consist of those directors which the MIM stockholders
elect at the Annual Meeting.

Executive Officers

The executive officers of MIM after the Merger will be as follows:

Name Age Position
---- --- --------

Richard H. Friedman.......... 47 Chief Executive Officer and Director

Scott R. Yablon.............. 48 President, Chief Operating Officer, Chief
Financial Officer and Director

Barry A. Posner ............. 35 Vice President, Secretary and
General Counsel

Richard H. Friedman is currently the Chief Executive Officer of MIM. He
joined MIM in April 1996 and was elected Chief Financial Officer, Chief
Operating Officer and a director of MIM in May 1996. Mr. Friedman also served as
MIM's Treasurer from April 1996 until February 1998. From February 1992 to
December 1994, Mr. Friedman served as Chief Financial Officer and Vice President
of Finance of Zenith Laboratories, Inc. ("Zenith"). From January 1995 to January
1996, he was Vice President of Administration IVAX Corporation's North American
Multi-Source Pharmaceutical Group and each of its operating companies, including
Zenith and Zenith Goldline (collectively, "NAMPG").

Scott R. Yablon joined MIM on May 1, 1998 as an employee and, effective May
15, 1998, served as its President, Chief Operating Officer and Chief Financial
Officer. Mr. Yablon has served as a director of MIM since July 1996. Prior to
joining MIM as an employee, he held the position of Vice
President-Administration for Forbes Inc. since 1981, and was its Vice
President-Finance and Administration. He was also a member of the Investment
Committee of Forbes Inc., Vice President, Treasurer and Secretary of Forbes
Investors Advisory Institute and Vice President and Treasurer of Forbes
Trinchera, Sangre de Cristo Ranches, Fiji Forbes and Forbes Europe.

Barry A. Posner joined MIM in March 1997 as General Counsel and was elected
as MIM's Secretary at that time. On April 16, 1998, Mr. Posner was elected Vice
President of MIM. From September 1990 through March 1997, Mr. Posner was
associated with the Stamford, Connecticut law firm of Finn Dixon & Herling LLP,
where he practiced corporate law, specializing in the areas of mergers and
acquisitions and securities law, and commercial real estate law.

Executive officers are elected or appointed by, and serve at the pleasure
of, the MIM Board. Each of the above-named executive officers has an employment
agreement with MIM providing for, among other things, serving in the executive
position(s) listed above.

Common Stock Ownership by Certain Beneficial Owners and Management

Except as otherwise set forth below, the following table sets forth, to
MIM's knowledge, as of July 30, 1998, the beneficial ownership of MIM's Common
Stock by: (i) each of the Named Executive Officers of MIM and its subsidiaries
set forth in the Summary Compensation Table appearing later in this Proxy
Statement/Prospectus; (ii) each person or entity known to MIM to own
beneficially five percent or more of MIM's Common Stock; (iii) each of MIM's
directors; and (iv) all directors and executive officers of MIM as a group. Such
information is based upon information provided to MIM by such persons either
directly or through public filings with the Commission.

Number of Shares
Beneficially Percent
Name and/or Address of Beneficial Owner Owned(1)(2) of Class
- --------------------------------------- ------------ --------

E. David Corvese(3) .................................... 4,439,962(4) 30.1%
25 North Road
Peace Dale, RI 02883

Richard H. Friedman .................................... 1,500,000 10.9
One Blue Hill Plaza
Pearl River, NY 10965

Scott R. Yablon ....................................... 513,334(5)(6) 3.6
One Blue Hill Plaza
Pearl River, NY 10965

E. Paul Larrat ........................................ 77,500(7) *
167 Tillinghast Road
E. Greenwich, RI 02818

Barry A. Posner ........................................ 900(8) *
One Blue Hill Plaza
Pearl River, NY 10965

John H. Klein .......................................... 3,040,000(9) 20.2
One Blue Hill Plaza
Pearl River, NY 10965

Ernest Corvese, Trustee of The Corvese ................. 704,760 5.1
Irrevocable Trust-- 1992(3)
25 North Road
Peace Dale, RI 02883

Louis A. Luzzi, Ph.D. ................................. 14,134(6)(10) *
University of Rhode Island
College of Pharmacy
Forgerty Hall
Kingston, RI 02881

Richard A. Cirillo .................................... -- --
c/o Rogers & Wells LLP
200 Park Avenue
New York, NY 10166

Louis DiFazio, Ph.D .................................... -- --
Route 206
Princeton, NJ 08543

Michael Kooper ........................................ -- --
770 Lexington Avenue
New York, NY 10021

All directors and executive officers
as a group (nine persons) ............................ 6,545,830(3)(11) 42.6

- ----------
* Less than 1%.

(1) The inclusion herein of any shares as beneficially owned does not
constitute an admission of beneficial ownership of those shares. Except as
otherwise indicated, each person has sole voting power and sole investment
power with respect to all shares beneficially owned by such person.

(2) Shares deemed beneficially owned by virtue of the right of an individual to
acquire them within 60 days after July 30, 1998 upon the exercise of an
option are treated as outstanding for purposes of determining beneficial
ownership and the percentage beneficially owned by such individual.

(3) E. David Corvese's shares include 672,106 shares owned by Nancy P. Corvese.
Nancy P. Corvese and Ernest Corvese are the spouse and father,
respectively, of E. David Corvese. Each of such persons disclaims
beneficial ownership of the shares owned by such other persons. The
beneficiaries of The Corvese Irrevocable Trust -- 1992 are the children of
E. David Corvese.

(4) Includes 935,750 shares issuable upon exercise of options. Also includes
1,240,000 shares owned by Mr. Corvese that are subject to options granted
by Mr. Corvese to Mr. Klein set forth in footnote 5 below, and 300,000
shares owned by Mr. Corvese that are subject to options granted by Mr.
Corvese to Leslie B. Daniels, a former director of MIM, of which options to
purchase 1,540,000 shares are currently exercisable.

(5) Consists of shares issuable upon exercise of the vested portion of options.
Excludes 500,000 shares subject to the unvested portion of options held by
Mr. Yablon.

(6) Excludes 6,666 and 6,666 shares subject to unvested options held by Messrs.
Luzzi and Yablon, respectively.

(7) Consists of 77,500 shares issuable upon exercise of the vested portion of
options. Excludes 60,000 shares subject to the unvested portion of options
held by Mr. Larrat.

(8) Excludes 100,000 shares subject to the unvested portion of options held by
Mr. Posner.

(9) Includes 1,240,000 shares that Mr. Klein has the right to acquire from Mr.
Corvese pursuant to stock option agreements.

(10) Dr. Luzzi and his wife share voting and investment power over these shares.

(11) See footnotes 4 through 10 above.

In May 1996, Mr. Corvese granted to Messrs. Klein and Friedman options to
purchase 1,800,000 and 1,500,000, respectively, shares owned by Mr. Corvese.
These options were immediately exercisable and had a term of ten years, subject
to earlier termination upon certain mergers or consolidations of MIM or the sale
or other disposition of all or substantially all of the assets of MIM ("Change
of Control"). On January 26, 1998, Messrs. Klein and Friedman fully exercised
their respective aforesaid options utilizing personal funds. By reason of said
option exercises, a change of control of MIM was effected to the extent that the
percentage of the voting securities of MIM then legally owned by Mr. Corvese
decreased from 46.0% to 21.2% (or from 50.9% to 28.4%, assuming the exercise by
Mr. Corvese of his outstanding options), while the percentage then legally owned
by Messrs. Klein and Friedman increased from 0% to 13.5% and 11.2%, respectively
(or 12.3% and 10.2%, respectively, assuming the exercise by Mr. Corvese of his
outstanding options).

Mr. Corvese also granted to Mr. Klein an additional option to purchase
1,860,000 shares owned by Mr. Corvese (the "Additional Option"). The Additional
Option has a term of ten years, subject to earlier termination upon a Change in
Control of MIM or within certain specified periods following Mr. Klein's death,
disability or termination of employment for any reason. The Additional Option
becomes exercisable in installments of 620,000 shares each commencing on
December 31, 1996, 1997 and 1998, respectively, and is immediately exercisable
upon the approval of a Change in Control by the MIM Board and, if required,
stockholders. On May 15, 1998, due to the termination of Mr. Klein's employment
with MIM, the unvested portion (620,000 shares) of the Additional Option
terminated.

In addition, Mr. Corvese and certain people and entities affiliated with
him have entered into a voting agreement with MIM. Mr. Corvese's affiliates
owned 12.1% of the MIM Common Stock outstanding as of the Record Date. Under the
voting agreement, MIM will vote the shares of MIM Common Stock held by Mr.
Corvese and his affiliates in favor of the proposal to approve the issuance of
MIM Common Stock in connection with the Merger.

BUSINESS OF CONTINENTAL

General

Continental is a pharmaceutical benefit management company which offers
mail service prescription drug programs, prescription drug card plan services
and billing services on a national basis. Through its wholly-owned subsidiaries,
Continental, in conjunction with its proprietary pharmacy and mail service
prescription drug and prescription drug card network, administers the
prescription portion of group medical benefits (such as managed care
organizations), self-insured companies, labor unions, insurance companies, third
party administrators, home health care agencies, privately insured individuals
and uninsured individuals. Continental assists corporate customers in the
development of prescription drug benefit plans, management and analysis of plan
data, and review of drug utilization data. Continental also analyzes and
develops drug utilization programs for its individual customers. In addition,
Continental has provider relationships with independent, marketing organizations
specializing in mail service drug sales to individuals who require costly
medication on an ongoing or maintenance basis.

Background

Continental's business originated in 1988 with the formation of Preferred
Rx, Inc. ("Preferred Rx"). Preferred Rx functioned strictly as an entity which
marketed mail service prescription drug benefit programs to individuals with
prescription drug coverage as part of their health insurance coverage. Preferred
Rx initially outsourced the actual prescription fulfillment to a third party. In
1989, however, Continental Pharmacy, Inc. (the "Pharmacy") was incorporated to
fulfill the prescription needs of the Preferred Rx customers. The first
prescription was filled in 1990. In 1991, the Pharmacy expanded its operations
to offer mail service prescription drug benefit services to corporations and
their employees as well as to individual customers.

As part of its entry into the corporate market, the Pharmacy established a
business relationship with Automated Scripts, Inc. ("ASI") in 1991 which
permitted the Pharmacy to market prescription drug card plan services in
conjunction with its mail services. A prescription drug card program permits the
participant in a health plan to purchase prescription drugs from his or her
local pharmacy (rather than Continental's mail service pharmacy) and still
benefit from the discounted price provided by Continental to its customers.
During this period, a business relationship was also established with Valley
Physicians Services, Inc. ("Valley") which managed and computerized billing
services for the Pharmacy. The Pharmacy realized that its business could be
enhanced by integrating the operations of Preferred Rx, Valley and ASI together
into one company. Therefore, the Pharmacy organized Continental on February 10,
1993 for the purposes of acquiring and coordinating the respective skills of
ASI, Preferred Rx, the Pharmacy and Valley. Since the business' inception and
subsequent to the organization of Continental as a holding company, each of the
subsidiaries cooperate to provide Continental's various services to its
customers. The current business operations of each of Continental's wholly-owned
subsidiaries are discussed in detail below under the heading "--Subsidiaries."

The Mail Service Pharmacy Industry

According to the Novartis Pharmacy Benefit Report: 1997 Facts & Figures
(1996 Figures) (the "Report"), in 1996, prescription medications accounted for
more than $70 billion of the money spent on health care each year in the United
States with 9.2% of the purchases made through mail services. According to the
Report, of the purchases made through mail services, over 80% of all
prescriptions are filled for ongoing or maintenance medications. These
medications are the prime target for the mail service pharmacy industry.

According to the Report, during the three years from 1993 to 1996,
prescription drug dollar sales by mail service pharmacies rose 50%, compared
with a 38% gain by chain drug stores and 7% increases each for independent and
hospital pharmacies. Currently, there are over 100 profit and non-profit mail
service pharmacy businesses.

The mail service pharmacy industry is dominated by corporate sponsored
programs which account for over 90% of the mail service pharmacy industry's
annual sales. Large employers, large labor unions and insurance companies favor
single sourced prescription drug programs not only for the cost savings but also
for the added control it offers for the management of drug utilization. Mail
service pharmacy companies typically provide their corporate customers with drug
utilization reports which detail under use, over use and

abuse of prescription medications to allow for enhanced prescription plan
management. See "--Drug Utilization Review."

The balance of the mail service pharmacy industry is tailored to the needs
of individuals not covered by a corporate sponsored program. The objective for
this segment of the industry is to accommodate individual customers who require
medication on an ongoing or maintenance basis.

During 1997, approximately 69% of Continental's revenues were earned by its
mail service pharmacy.

Customers

Continental has designed its services to incorporate user friendly features
for corporations sponsoring prescription plans as well as for individuals with
large and continuing prescription needs.

Corporate Customers. The corporate business served by Continental is
composed of medium to small employer groups, generally those with fewer than
10,000 employees. Approximately 67% of Continental's revenues are derived from
corporate customers which contract for pharmacy benefit management services.
Continental assists, either on a stand-alone mail service basis, or in
conjunction with a nationwide network of retail pharmacies which participate in
a prescription drug card program administered by ASI (the "Automated Scripts
Network(TM)" which is discussed in greater detail below at the heading
"--Automated Scripts, Inc."), in the design, implementation and administration
of prescription drug programs. The vast majority of the programs administered
are self-funded. The typical plan represents the prescription portion of an
employer group medical benefit and establishes either a set dollar or percentage
co-payment for employees.

Continental solicits its corporate customers, pursuant to commission
arrangements, through independent insurance brokers and a direct marketing
program administered by ASI. As of December 31, 1997, Continental had contracted
with approximately 310 corporate customers representing approximately 165,000
covered lives. The patients covered by corporate plans generated approximately
157,000 mail-order prescriptions per annum at an average price per prescription
of $119.00 and approximately 541,500 retail prescriptions per annum through the
Automated Scripts Network(TM) at an average price per prescription of $23.00.

Individual Customers. For privately insured and uninsured individuals,
Continental also administers a mail service program which is offered in
conjunction with the Automated Scripts Network(TM) prescription drug card
program. Approximately 29% of Continental's revenues are generated by individual
customers.

Continental solicits individual patients through several marketing efforts,
including an exclusive agency relationship with an organization focused on
diabetics and a joint venture with an organization serving individuals who are
HIV positive. Referrals from these organizations account for 42% and 47% of
Continental's individual market, respectively. These organizations provide
Continental with a substantial base of customers who require more frequent and
more costly prescription medications than the average patient. Individuals are
also solicited by Preferred Rx. During 1997, approximately 12,900 individual
customers utilized the mail service program generating approximately 57,600
prescriptions per annum at an average price per prescription of $264.00. These
same customers also purchased approximately 25,100 prescriptions per annum
through the Automated Scripts Network(TM) at an average price per prescription
of $61.00.

Subsidiaries

Continental Pharmacy, Inc. The Pharmacy operates Continental's national
mail service prescription drug programs. By dispensing pharmaceuticals by mail
service, the Pharmacy generates substantial savings for its corporate and
individual customers and provides the convenience of home delivery, automatic
refills and the dispensing of larger authorized quantities. These services
especially benefit patients with chronic conditions who require the regular use
of high-cost pharmaceuticals. Prescriptions are filled from the Pharmacy's
centralized facility located at Continental's headquarters in Cleveland, Ohio.
See "--Properties." During 1997, the Pharmacy's team of pharmacists and
technicians filled an average of 765 prescriptions per day. Medications are
forwarded, generally within 72 hours of receipt of an order, by the United
States Postal Service or by UPS service to the patient. Prescriptions are
received either via mail, facsimile or the telephone. Prior to filling a
prescription, the Pharmacy verifies the patient's membership and eligibility
status. The Pharmacy also verifies the physician's name, the name of the
prescription, the strength, the quantity and

directions. Additionally, the Pharmacy confirms the appropriateness of the
quantity and price by reviewing the prescription information contained in the
patient's profile.

The cost efficiency of the Pharmacy's mail service delivery system is
generated by the bulk purchase of pharmaceuticals on terms not available for
smaller orders, rebates on certain high volume purchases, and the low-cost of
prescription fulfillment through the Pharmacy's centralized facility. Most of
the Pharmacy's purchases of pharmaceuticals are made through a leading drug
distributor. Through an electronic ordering system, the Pharmacy is able to
receive just-in-time daily deliveries of pharmaceuticals.

Preferred Rx, Inc. Preferred Rx markets the Pharmacy's mail services and
the Automated Scripts Network(TM) to individual customers. Preferred Rx also
assists insured individuals with the financing and management of their
prescription medication. Preferred Rx offers benefits to insured individuals
through the Traditional Preferred Rx program and to uninsured individuals
through the Preferred Rx Express Club program.

Traditional Preferred Rx Program. The Traditional Preferred Rx program
specializes in the financing and administration of prescription medication for
insured individuals who receive reimbursement for prescription drugs from their
private insurance companies. This program offers membership to individuals in
corporate sponsored plans. No membership fee is required. The program is
designed to ease the financial burden placed upon many people who use long-term
or "maintenance" prescription drugs, by shipping the medications with no
up-front payments required. While a member is using a prescription drug,
Preferred Rx will automatically send a claim to the member's insurance company,
will finance the purchase of the drug at no cost and will wait for reimbursement
for the purchase. Members are billed for co-payment amounts or deductibles
required under their insurance plans.

Members are also provided, at no additional cost, with a prescription drug
card which allows them to purchase prescription medication at discount prices at
retail pharmacies participating in the Automated Scripts Network(TM).
Reimbursement claims are automatically switched to the member's insurance
carrier for processing. Claim processing for both the mail service and drug card
service are supplied by Valley.

Preferred Rx Express Club Program. The Preferred Rx Express Club program
was developed for those individuals without insurance coverage. Unlike the
Traditional Preferred Rx program, however, members must pay an annual membership
fee. The program offers discounts of up to 40% off the national average
medication prices on prescriptions filled by the Pharmacy's mail service
program. In addition, similar to the Traditional Preferred Rx program, members
receive a prescription drug card which may be used to obtain prescription
medication at discount prices at retail pharmacies participating in the
Automated Scripts Network(TM).

Automated Scripts, Inc. ASI markets Continental's programs to corporate
customers. ASI also manages the Automated Scripts Network(TM) prescription drug
card program which is comprised of over 38,000 retail pharmacies located in all
fifty states and U.S. territories. Additional retail pharmacies are routinely
added to provide convenient and reasonable access to all customers.
Participating retail pharmacies provide prescription services to all customers
identifying themselves as members of the Automated Scripts Network(TM).
Participating pharmacies agree to reimbursement rates that are typically lower
than the retail price. These pharmacies benefit because customers, who would
otherwise purchase prescriptions from competitors, patronize the pharmacy due to
its participation in the Automated Scripts Network(TM). Customers generally use
the prescription drug card for acute care prescriptions such as antibiotics and
analgesics.

ASI also provides eligibility management, member materials, identification
cards, and drug utilization reporting to Continental's corporate customers. MedE
America Corporation ("MedE") captures transactions conducted by Automated
Scripts Network(TM) customers at retail pharmacies and adjudicates and switches
the data to Continental for invoicing and use in drug utilization reporting.

Valley Physicians Services, Inc. Valley provides in-house insurance claim
billing services for Continental and its subsidiaries, contract billing and
administrative service organization for physicians, medical practices and
clinics. Valley currently is expanding its operations to include contract
billing for Ohio municipalities for ambulance transports. Valley played an
important role by designing and implementing Continental's billing functions
described above. Valley offers fully automated and computerized patient and
insurance billing, bookkeeping and payroll services. Valley handles time
consuming administrative functions for its customers allowing them to
concentrate their time and attention to see patients and expand their practices.

Drug Utilization Review

Information concerning drug utilization by customers of Continental's mail
service pharmacy program and prescription drug card program is collected from
the Pharmacy's records and from the data collected by MedE through the Automated
Scripts Network(TM). This information is reviewed regularly by Continental to
make recommendations for additional client pharmacy management opportunities.
Continental pinpoints each of the following: change in dosage, directions, and
prescribing physician for the particular medication; drug contra indications;
drug-drug interactions; drug-allergy interactions; therapeutic duplication;
over/under utilization; inappropriate duration of drug treatment; and other
abuse or misuse. If any of the foregoing are recognized, the Pharmacy takes
appropriate steps to avoid or resolve the potential problem, including but no
limited to, contacting or counseling the prescribing physician and/or the
patient. Utilization controls established under Continental's programs help to
manage the dispensing and prescribing habits of physicians and retail
pharmacies.

Government Regulation

Many states have statutes and regulations which may impact Continental's
business operations. In some states, pharmacy benefit managers may be subject to
regulation under insurance laws or laws licensing HMOs and other managed care
organizations, in which event requirements could include the maintenance of
reserves, required filings with regulatory agencies, and compliance with
disclosure requirements and other regulation of Continental's operations. State
insurance laws may affect the structuring of certain risk-sharing programs
offered by Continental. There are extensive state and federal laws applicable to
the dispensing of prescription drugs. Severe sanctions may be imposed for
violations of these laws. While compliance is a significant operational priority
for Continental, there can be no assurance that Continental will successfully
monitor compliance with all such regulations. Material non-compliance with any
such regulations could have a material adverse effect on Continental.

Continental has a number of third party payor contracts in which
Continental is the exclusive provider of prescriptions. "Freedom of choice"
statutes, pursuant to which all pharmacies are entitled to be a provider under
such contracts, have been enacted in certain states and may be enacted and
enforced in states in which Continental conducts its business. Such statutes
could have material adverse effects on Continental's revenues.

States have a variety of laws that regulate a pharmacist's ability to
substitute prescribed drugs. Certain state laws have been the basis for
investigations and multi-state settlements requiring the discontinuance of
certain financial incentives provided by manufacturers to retail pharmacies to
promote the sale of the manufacturers' drugs. These laws could impede
Continental's business strategy.

While management believes that Continental is in substantial compliance
with all existing laws and regulations material to the operation of its
business, such laws and regulations are subject to rapid change and often are
uncertain in their application. As controversies continue to arise in the health
care industry (for example, regarding the efforts of plan sponsors and pharmacy
benefit managers to limit or alter drug choice and establish limited networks of
participating pharmacies), federal and state regulation and enforcement
priorities in this area can be expected to increase. The impact of this on
Continental cannot be predicted. There can be no assurance that Continental will
not be subject to scrutiny or challenge under one or more of these laws or that
any such challenge would not be successful. Any such challenge, whether or not
successful, could have a material adverse effect upon Continental's business and
results of operations. Further, there can be no assurance that Continental will
be able to obtain or maintain any of the regulatory approvals that may be
required to operate its business, and the failure to do so could have material
adverse effect on Continental's business and results of operations.

Competition

The pharmacy benefits management business is highly competitive, and many
of Continental's current and potential competitors have considerably greater
financial, technical, marketing and other resources than Continental. The
pharmacy benefits management business includes a number of large, well
capitalized companies with nationwide operations and many smaller organizations
typically operating on a local or regional basis. Some of the larger
organizations are owned by or otherwise related to a brand name drug
manufacturer and may have significant influence on the distribution of
pharmaceuticals. Among larger companies offering

pharmacy benefits management services are Medco Containment Services, Inc. (a
subsidiary of Merck & Co., Inc.), Caremark International Inc., PCS, Inc. (a
subsidiary of Eli Lilly & Company), Express Scripts, Inc., Advance ParadigM,
Inc., Value Health, Inc., Diversified Pharmaceutical Services, Inc. (a
subsidiary of SmithKline Beecham) and National Prescription Administrators, Inc.
Numerous insurance and Blue Cross and Blue Shield plans, managed care
organizations and retail drug chains also have their own pharmacy benefit
management capabilities.

Competition in the pharmacy benefits management businesses is, to a large
extent, based upon price, although other factors, including quality and breadth
of services and products, also are important. Continental believes that its
flexibility, customer service focus, drug utilization review, its independence
from brand name drug manufacturers and its retail pharmacy-based orientation
represent competitive advantages in the pharmacy benefits management business.
Furthermore, Continental believes that it has a specialized focus within the
industry due to its emphasis on middle market corporate customers through a
network of independent insurance brokers, third party administrators and its
concentration on certain disease specific groups of customers.

Employees

At June 6, 1998, Continental employed a total of 132 people including 12
licensed pharmacists. Continental employees are not represented by any union
and, in the opinion of management, Continental enjoys good relations with its
employees.

Properties

Continental's headquarters, mail-order pharmacy and other operations are
located in a 19,000 square foot leased facility located at 1400 East Schaaf
Road, Cleveland, Ohio.

MANAGEMENT OF CONTINENTAL

Executive Officers

The following table sets forth the names of the Executive Officers of
Continental:

Name Position
---- ---------
Thomas H. Roulston Chairman of the Board
George S. Benson President and CEO
James G. Wright Senior Vice President -- Operations
Paul C. Matchinga Senior Vice President -- Marketing
Carl L. Jesina Vice President -- Chief Pharmacist
John R. Lazarczyk Vice President -- Finance, CFO and Treasurer
Ronald R. Kimes Vice President and Chief Administrative Officer
Michael R. Erlenbach Secretary

Common Stock Ownership by Certain Beneficial Owners and Management

Except as otherwise set forth below, the following table sets forth the
beneficial ownership of the Continental Shares, as of the date of this Proxy
Statement/Prospectus, and of MIM Common Stock, as of the Effective Time, by: (i)
each person or entity known to Continental to own beneficially five percent or
more of the Continental Shares; (ii) each of Continental's directors; (iii) each
of the executive officers of Continental; and (iv) all directors and executive
officers of Continental as a group:

Of MIM
Of Continental As of the Effective Time
------------------------ -------------------------
Number of Number of
Shares Shares
Beneficially Percent Beneficially Percent
Name and/or Address of Beneficial Owner Owned(1) of Class Owned(1) of Class
- ----------------------------- ------------ -------- ------------- --------

Michael R. Erlenbach ....................... 6,260.000 52.42% 2,050,713.400 11.65%
Thomas H. Roulston, II ..................... 240.000 2.01 78,621.600 *
George S. Benson ........................... -- -- -- --
Ronald R. Kimes ............................ 570.000 4.77 186,726.300 1.06
Carl L. Jesina ............................. 218.000 1.83 71,414.620 *
Donald W. Strang, Jr ....................... 176.250 1.48 57,737.738 *
John L. Herron ............................. 120.625 1.01 39,515.544 *
Heather R. Ettinger ........................ 80.000 * 26,207.200 *
James E. Heighway .......................... 81.250 * 26,616.688 *
Roulston Investment Trust
Limited Partnership...................... 1,565.000 13.10 512,678.350 2.91
Roulston Ventures Limited Partnership....... 1,565.000 13.10 512,678.350 2.91
All directors and executive officers as a
group (9 persons)......................... 7,746.125 64.86% 2,537,553.089 14.41

- ----------
* Less than 1%.

DESCRIPTION OF THE CAPITAL STOCK OF MIM

Authorized Capital Stock

The authorized capital stock of MIM consists of 40,000,000 shares of MIM
Common Stock and 5,000,000 shares of Preferred Stock. As of June 22, 1998, MIM
had 13,694,000 shares of MIM Common Stock issued and outstanding and no shares
of Preferred Stock issued and outstanding.

The MIM Common Stock is listed for trading on Nasdaq under the symbol
"MIMS." The transfer agent and registrar for the MIM Common Stock is American
Stock Transfer and Trust Company.

MIM Common Stock

The holders of MIM Common Stock are entitled to one vote for each share
held of record on all matters submitted to the vote of stockholders, including
the election of directors. The holders of MIM Common Stock do not have
cumulative voting rights. Subject to any preferential rights held by holders of
the Preferred Stock, the holders of MIM Common Stock are entitled to receive
ratably such dividends as may be declared from time to time by the MIM Board out
of funds legally available therefor. In the event of the liquidation,
dissolution or winding up of MIM, holders of MIM Common Stock will be entitled
to share ratably in all assets remaining after payment of liabilities and the
liquidation preference of outstanding Preferred Stock, if any. Holders of MIM
Common Stock do not have preemptive, conversion or redemption rights. All the
issued and outstanding shares of MIM Common Stock are duly authorized, validly
issued, fully paid and nonassessable.

Preferred Stock

The MIM Board, without further approval or action by the stockholders, is
authorized to issue shares of Preferred Stock in one or more series and to fix
as to any such series the dividend rate, redemption prices, preferences on
liquidation or dissolution, sinking fund terms, if any, conversion rights,
voting rights and any other preference or special rights and qualifications.
Issuances of Preferred Stock may adversely affect the rights of holders of MIM
Common Stock. Holders of Preferred Stock might, for example, be entitled to
preference in distributions to be made to stockholders upon the liquidation,
dissolution or winding up of MIM. In addition, holders of Preferred Stock might
enjoy voting rights that limit, qualify or adversely affect the voting rights of
holders of MIM Common Stock. Such rights of the holders of one or more series of
Preferred Stock might include the right to vote as a class with respect to the
election of directors, major corporate transactions or otherwise, or the right
to vote together with the holders of MIM Common Stock with respect to any such
matter. The holders of Preferred Stock might be entitled to cast multiple votes
per share. The issuance of Preferred Stock could have the effect of delaying,
deferring, or preventing a change in control of MIM without further action by
the stockholders. MIM has no present plans to issue any shares of Preferred
Stock.

Anti-Takeover Provisions

The Certificate of Incorporation (the "MIM Charter") and the by-laws (the
"MIM By-laws") of MIM: (i) generally provide that only a majority of the MIM
Board shall have the authority to fill vacancies on the MIM Board; (ii) provide
that only directors, and not stockholders, may call a special meeting of
stockholders; (iii) establish an advance notice procedure regarding stockholder
proposals to be brought before an annual meeting; and (iv) authorize the MIM
Board to issue preferred stock without further stockholder approval. These
provisions are designed to encourage any person who desires to take control of
and/or acquire MIM to enter into negotiations with the MIM Board, thereby making
more difficult a change in control of MIM by means of a tender offer, a proxy
contest or other non-negotiated means. In addition to encouraging any person
intending to attempt a takeover of MIM to negotiate with the MIM Board, these
provisions also curtail such person's use of a dominant equity interest to
control any negotiations with the MIM Board. Under such circumstances, the MIM
Board may be better able to make and implement reasoned business decisions and
protect the interest of all of MIM's stockholders.

DESCRIPTION OF THE CAPITAL STOCK OF CONTINENTAL

Authorized Capital Stock

The authorized capital stock of Continental consists of 12,000 common
shares without par value. As of the date of this Proxy Statement/Prospectus,
Continental had 11,943.125 common shares outstanding. There are no authorized
shares of preferred capital stock.

Continental Common Shares

The holders of Continental Shares have cumulative voting rights in the
election of directors. If cumulative voting is invoked, each shareholder would
be entitled to cast an aggregate number of votes in an election of directors
determined by multiplying the number of persons to be elected by the number of
shares the shareholder holds as of the record date and to distribute such votes
among nominees in any fashion the shareholder sees fit. The holders of
Continental Shares are entitled to one vote for each share held of record on all
matters submitted to the vote of shareholders other than the election of
directors. If cumulative voting is not invoked in connection with an election of
directors, each shareholder would be entitled to cast for any nominee (up to a
number of nominees to be elected) up to that number of votes that equals the
number of shares held by the shareholder as of the record date. The nominees
receiving the greatest number of votes, up to the number of nominees to be
elected, would be elected. The holders of Continental Shares are entitled to
receive such dividends as may be declared from time to time by the Continental
Board from funds legally available therefor.

COMPARISON OF RIGHTS OF STOCKHOLDERS
OF MIM AND CONTINENTAL

General

The rights of MIM stockholders are currently governed by the Delaware
General Corporation Law (the "Delaware Law") and the MIM Charter and the MIM
By-laws. Neither the MIM Charter nor the MIM By-laws are being amended in
connection with the Merger. The rights of Continental shareholders are currently
governed by the Ohio Law and the Continental Charter and the Continental Code of
Regulations. Accordingly, upon consummation of the Merger, the rights of
Continental shareholders who become MIM stockholders in the Merger will be
governed by the Delaware Law, the MIM Charter and the MIM By-laws. The following
is a summary of the principal differences between the current rights of
Continental shareholders and those of MIM stockholders following the Merger.

The following discussions are not intended to be complete and are qualified
by reference to the Delaware Law, the Ohio Law, the Continental Charter, the
Continental Code of Regulations, the MIM Charter and the MIM By-laws.

Authorized Capital Stock

As of the date of this Proxy Statement/Prospectus, the authorized capital
stock of Continental consisted of 12,000 Continental Shares. The authorized
capital stock of MIM is set forth under "Description of Capital Stock of
MIM--Authorized Capital Stock." Both the Delaware Law and the Ohio Law permit a
corporation's certificate of incorporation or articles of incorporation,
respectively, to allow the directors to issue, without stockholder approval, a
series of preferred or preference stock and to designate their rights,
preferences, privileges and restrictions. The Ohio Law, however, does not permit
the directors to fix the voting rights of any such series of preferred or
preference stock.

Business Combinations

Generally, under Delaware Law the approval by the affirmative vote of the
holders of majority of the outstanding stock (or, if the certificate of
incorporation provides for more or less than one vote per share, a majority of
the votes of the outstanding stock) of a corporation entitled to vote on the
matter is required for a merger or consolidation or sale, lease or exchange of
all or substantially all of the corporation's assets to be consummated. The MIM
Charter does not contain provisions regarding business combinations and does not
impose requirements in addition to or different from those imposed by Delaware
Law.

Under Ohio Law, unless otherwise provided in the articles of incorporation,
any merger, consolidation or sale of substantially all of the assets of the
corporation requires the approval of the holders of shares entitling them to
exercise at least two-thirds of the voting power. The articles of incorporation
may provide for a greater or lesser vote, so long as the vote required is not
less than a majority of the voting power. The Continental Charter does not
contain provisions regarding business combinations and does not impose
requirements in addition to or different from those imposed by Ohio Law.

Amendments to Charter

Under Delaware Law, an amendment to the certificate of incorporation
requires that the board of directors adopt a resolution setting forth the
proposed amendment, and an affirmative vote of a majority of the outstanding
stock entitled to vote thereon. If any such amendment would adversely affect the
rights of any holders of shares of a class or series of stock, the vote of the
holders of a majority of all outstanding shares of the class or series, voting
as a class, is also necessary to authorize such amendment. The MIM Charter does
not contain provisions regarding amendment to its charter that impose
requirements in addition to or different from those imposed by Delaware Law.

The Ohio Law permits the adoption of amendments to the articles of
incorporation if such amendments are approved at a meeting held for such purpose
by the holders of shares entitling them to exercise two-thirds of the voting
power of the corporation, or such lesser (but not less than a majority) or
greater vote as specified in the articles of incorporation. The Continental
Charter does not contain provisions regarding amendment to its articles of
incorporation and does not impose requirements in addition to or different from
those imposed by Ohio Law.

Amendments to By-Laws/Code of Regulations

Under Delaware Law, the power to adopt, alter and repeal by-laws is vested
in the stockholders, except that the certificate of incorporation may also vest
it in the board of directors. The MIM Charter and the MIM By-laws provide that
the MIM By-laws, or any one of them, may be altered, amended or repealed, and
new by-laws may be adopted, by the stockholders or by the board of directors at
any regular meeting of the stockholders or of the board of directors, as the
case may be, or at any special meeting of the stockholders or of the board of
directors, as the case may be, if notice of such alteration, amendment, repeal
or adoption of new by-laws be contained in the notice of such special meeting.

Under Ohio Law, a code of regulations may be adopted, amended or repealed
only by approval of the shareholders either at a meeting of shareholders by the
affirmative vote of the holders of shares entitling them to exercise a majority
of the voting power on such proposal or by written consent signed by holders of
shares entitling them to exercise two-thirds of the voting power on such
proposal. The articles of incorporation or code of regulations may provide for
amendment by a greater or lesser proportion of the voting power, but not less
than a majority. The Continental Code of Regulations provides that the
Continental Code of Regulations may be amended, or new regulations may be
adopted, at any meeting of shareholders called for such purpose by the
affirmative vote of the holders of shares entitling them to exercise two-thirds
of the voting power on such proposal.

Special Stockholders Meetings

Delaware Law provides that a special meeting of stockholders may be called
by the board of directors or by such person or persons as may be authorized by
the certificate of incorporation or by the by-laws. The MIM By-laws provide that
a special meeting may be called by the Chairman or the Vice-Chairman and shall
be called by the Chief Operating Officer or Secretary at the request in writing
of a majority of the MIM Board.

Under Ohio Law, a special meeting of shareholders may be called by the
Chairman, the President, the directors by action at a meeting, a majority of the
directors voting without a meeting, holders of 25% of the outstanding shares
entitled to vote at such meeting (or a lesser or greater proportion as specified
in the articles or regulations but not greater than 50%) or the person(s)
authorized to do so by the articles of incorporation or the code of regulations.
The Continental Code of Regulations does not contain provisions regarding
special shareholder meetings that impose requirements in addition to or
different from those imposed by Ohio Law.

Number and Election of Directors

Delaware Law permits the certificate of incorporation or the by-laws of a
corporation to contain provisions governing the number and terms of directors.
However, if the certificate of incorporation contains provisions fixing the
number of directors, such number may not be changed without amending the
certificate of incorporation. The MIM Charter provides that the number of
directors shall be fixed from time to time pursuant to a resolution adopted by a
majority of the board of directors. The MIM By-laws currently provide for a
board of directors with seven members.

Ohio Law allows the articles of incorporation or code of regulations of a
corporation to specify or fix the number and terms of directors, or may
authorize the shareholders or the board of directors to fix or change the number
of directors, or may establish a variable range for the size of the board of
directors. The Continental Code of Regulations provides that the directors shall
be elected at each annual meeting and shall serve for a term of one year and the
Continental Code of Regulations fixes the number of directors at seven until
changed by the shareholders. Under the Ohio Law, cumulative voting (unless
eliminated by an amendment of the articles of incorporation) is required to be
available for the election of directors if notice to such effect is given by a
shareholder prior to a shareholders' meeting and an announcement to such effect
is made at the meeting. The Continental Charter neither expands nor restricts
cumulative voting for the election of directors.

Continental's Provisions Restricting Transfer of Shares

The Continental Code of Regulations requires that no holder of common
shares of any class of Continental will sell, transfer or otherwise dispose of
all or any part of the shares held by him without first offering the same to
Continental for purchase at a price equal to the price offered by a third party.
In the event and to the extent that the right to purchase is not exercised by
Continental (whether for lack of legal authority or for any other reason), the
shares owned by such shareholder proposed to be transferred will be offered for
sale to the remaining shareholders of the same class of common shares of
Continental at the price the shares were offered to Continental. In the event
and to the extent neither Continental nor the remaining shareholders elects to
purchase all of the shares offered, the offering shareholder (or his executor or
administrator in the case of deceased shareholder) has the right to sell,
transfer or otherwise dispose of any shares not so purchased to such other party
or parties as he desires for period of one hundred twenty (120) days after
expiration of the right to purchase of the remaining shareholders provided,
however, that the shares may not be disposed of to any other party at a lesser
price or on more favorable terms than those provided to Continental or remaining
shareholders without again offering them to Continental and the remaining
shareholders at such lesser price or more favorable terms; provided, further,
that in the event of any such disposition of the shares, the person acquiring
the shares or any rights therein will acknowledge in writing to Continental his
receipt of a copy of the restrictions contained in the Code of Regulations and
his/her agreement to comply therewith and be bound thereby (any such person,
even absent such written acknowledgment, being bound by such restrictions
through his acceptance of possession of the shares). After the
one-hundred-twenty (120) day period, these restrictions will again apply and be
in full force and effect. These restrictions do not apply to a transfer
constituting more than 20% of the outstanding capital stock of Continental. The
MIM Charter and the MIM By-laws do not contain a similar provision.

Indemnification of Directors and Officers

Under Delaware Law, a corporation may indemnify any director, officer,
employee or agent against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement in connection with specified actions, suits or
proceedings, whether civil, criminal, administrative or investigative (other
than an action by or in the right of the corporation to procure a judgment in
its favor -- a "derivative action") if such person acted in good faith and in a
manner such person reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal proceeding, had
no reasonable cause to believe that his or her conduct was unlawful.

The MIM By-laws provide, among other things, that MIM will 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 MIM, or is or was serving while a
director or officer of MIM at the request of MIM as a director, officer,
employee, agent, fiduciary or other representative of another corporation,
partnership, joint

venture, trust, employee benefit plan or other enterprise, will be indemnified
by MIM against expenses (including attorneys' fees), judgments, fines, excise
taxes and amounts paid in settlement actually and reasonably incurred by such
person in connection with such action, suit or proceeding to the full extent
permissible under Delaware law.

Under Ohio Law, a corporation may indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending, or
completed action or suit because such person was or is a director, officer,
employee, or agent of the corporation, or is or was serving upon the request of
the corporation as a director, trustee, officer, employee, member, manager or
agent of another corporation or entity if such person acted in good faith and in
a manner he reasonably believed to be in or not opposed to the best interests of
the corporation and, with regard to criminal actions, the director or officer
had no reason to believe his conduct was unlawful. In the event that any
director or officer succeeds on the merits of any action, indemnification is
required. Such indemnification includes attorneys fees actually and reasonably
incurred by such a person in connection with the defense or settlement of any
such action or suit. In the context of a derivative suit by or in the right of a
corporation, a corporation may indemnify a director or officer if the director
or officer acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the corporation, and such director or
officer is not adjudged to be liable for negligence or misconduct to the
corporation, or the action or lawsuit is not brought under provisions of Ohio
law pertaining to unlawful loans, dividends or distributions of assets.

Directors (but not other indemnified persons) are entitled to advancement
of costs incurred in defending any suit or derivative action, provided that any
such action does not arise under provisions of Ohio law pertaining to unlawful
loans, dividends or distributions of assets. In order to receive mandatory
advancement, a director must first agree to cooperate with the corporation and
repay the amount advanced if it is proven by clear and convincing evidence that
his act or failure to act was done with deliberate intent to cause injury to the
corporation or reckless disregard for the corporation's best interests.

The indemnification provided pursuant to Ohio law is not exclusive and is
in addition to any further indemnification provided pursuant to a corporation's
code of regulations, any other agreement or otherwise.

The Continental Code of Regulations provides that Continental will
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, other than an action by or in
the right of Continental, by reason of the fact that he is or was a director or
officer of Continental, or is or was serving at the request of Continental as a
director, trustee, officer, employee, or agent of another corporation, domestic
or foreign, nonprofit or for profit, partnership, joint venture, trust, or other
enterprise, against expenses, including attorneys' fees, judgments, fines, and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit, or proceeding if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of
Continental, and with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit, or proceeding by judgment, order, settlement, conviction, or upon
a plea of nolo contendere or its equivalent, will not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of
Continental, and with respect to any criminal action or proceeding, he had
reasonable cause to believe that his conduct was unlawful.

The Continental Code of Regulations further provides that Continental will
indemnify any person who was or is a party, or is threatened to be made a party
to any threatened, pending, or completed action or suit by or in the right of
Continental to procure a judgment in its favor by reason of the fact that he is
or was a director or officer of Continental, or is or was serving at the request
of Continental as a director, trustee, officer, employee, or agent of another
corporation, domestic or foreign, nonprofit or for profit, partnership, joint
venture, trust, or other enterprise against expenses, including attorneys' fees,
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of
Continental, except that no indemnification will be made in respect of any
claim, issue or matter as to which such person will have been adjudged to be
liable for negligence or misconduct in the performance of his duty to
Continental unless, and only to the extent that the Court of Common Pleas, or
the court in which such action or suit was brought will determine upon
application that, despite the adjudication of liability, but in view of all the
circumstances of

the case, such person is fairly and reasonably entitled to indemnity for such
expenses as the Court of Common Pleas or such court will deem proper.

PROPOSAL 2. -- ELECTION OF DIRECTORS

The MIM By-laws provide that the number of directors shall be such number,
currently six, as shall be designated from time to time by resolution of the MIM
Board. Each director shall hold office until his or her successor is elected at
the next annual meeting of stockholders and duly qualified or until his or her
earlier death, resignation or removal. The MIM Board has nominated and
recommends the election of Richard H. Friedman, Scott R. Yablon, Dr. Louis A.
Luzzi, Richard A. Cirillo, Michael Kooper and Dr. Louis DiFazio, all of whom
currently are directors of MIM. The MIM Board also contemplates that it will
search for and appoint one additional independent director to the MIM Board as
soon as practicable following the Annual Meeting.

Although the MIM Board has no reason to believe any of the nominees will be
unable to serve, if such should occur, proxies will be voted (unless marked to
the contrary) for such person or persons, if any, as shall be recommended by the
MIM Board. However, proxies will not be voted for the election of more than six
directors.

The following table sets forth, as of the date of the filing of this Proxy
Statement/Prospectus, certain information with respect to each nominee for
election as a director:

Name Age Position
---- --- --------
Richard H. Friedman ......... 47 Chief Executive Officer and Director

Scott R. Yablon.............. 48 President, Chief Operating Officer, Chief
Financial Officer and Director

Louis A. Luzzi, Ph.D ........ 65 Director

Richard A. Cirillo .......... 47 Director

Michael Kooper .............. 63 Director

Louis DiFazio, Ph.D ......... 60 Director

Richard H. Friedman is currently the Chief Executive Officer of MIM. He
joined MIM in April 1996 and, in May 1996, was elected Chief Operating Officer,
Chief Financial Officer and a director of MIM. Mr. Friedman also served as MIM's
Treasurer from April 1996 until February 1998. Effective May 15, 1998, Mr.
Friedman assumed the title of Chief Executive Officer and relinquished the
titles of Chief Operating Officer and Chief Financial Officer. From February
1992 to December 1994, Mr. Friedman served as Chief Financial Officer and Vice
President of Finance of Zenith. From January 1995 to January 1996, he was Vice
President of Administration of NAMPG.

Scott R. Yablon joined MIM on May 1, 1998 and, effective May 15, 1998,
served as its President, Chief Operating Officer and Chief Financial Officer.
Mr. Yablon has served as a director of MIM since July 1996. Prior to joining
MIM, he held the position of Vice President-Administration for Forbes Inc. since
1981, and was its Vice President-Finance and Administration. He was also a
member of the Investment Committee of Forbes Inc., Vice President, Treasurer and
Secretary of Forbes Investors Advisory Institute and Vice President and
Treasurer of Forbes Trinchera, Sangre de Cristo Ranches, Fiji Forbes and Forbes
Europe.

Louis A. Luzzi, Ph.D. has served as a director of MIM since July 1996. Dr.
Luzzi is Dean of Pharmacy and Provost for Health Science Affairs of the
University of Rhode Island College of Pharmacy. He has been a Professor of
Pharmacy at the University of Rhode Island since 1981. Dr. Luzzi participates in
several university, industry and government committees and has published
numerous research articles.

Richard A. Cirillo has served as a director of MIM since April 1998. Mr.
Cirillo is a partner of the law firm of Rogers & Wells LLP, which he has been
associated with since 1975. Rogers & Wells LLP has served as outside general
counsel to MIM since March 1997.

Martin ("Michael") Kooper has served as a director of MIM since April 1998.
Mr. Kooper has served as President of The Kooper Group since December 1997, a
successor to Michael Kooper Enterprises, an insurance

and risk management consulting firm. From 1980 through December 1997, Mr. Kooper
served as President of Michael Kooper Enterprises.

Louis DiFazio, Ph.D. has served as a director of MIM since May 1998. From
1990 through March 1997, Dr. DiFazio served as President of Technical Operations
for the Pharmaceutical Group of Bristol-Myers Squibb and since March 1997 has
served as Group Senior Vice President. Dr. DiFazio also serves as a member of
the Board of Trustees for Rutgers University and the University of Rhode Island.
Dr. DiFazio received his B.S. in Pharmacy from Rutgers University and his Ph.D.
in Pharmaceutical Chemistry from the University of Rhode Island.

Information Concerning Meetings and Certain Committees

MIM has standing Audit and Compensation Committees of the Board of
Directors. The Audit Committee, currently comprised of Messrs. Friedman and
Yablon, makes recommendations to the MIM Board regarding the selection of
independent auditors, reviews the results and scope of the audit and other
services provided by MIM's independent auditors, reviews and evaluates MIM's
internal accounting controls and performs such other functions as directed by
the MIM Board. The Compensation Committee, currently comprised of Messrs. Luzzi
and Cirillo, administers MIM's stock incentive plans, makes recommendations to
the MIM Board concerning executive officer compensation matters and performs
such other duties as from time to time are designated by the MIM Board. During
1997, the MIM Board held four meetings (which all directors attended), except
that Mr. Luzzi did not attend one meeting due to a death in the family. The
Compensation Committee held one meeting in 1997; the Audit Committee did not
hold any meetings; however, the MIM Board and the Committees conferred
informally and took action by unanimous written consent on a number of
occasions, thereby minimizing the need for regularly scheduled meetings.

Compensation of Directors

Directors who are not officers of MIM ("Outside Directors") receive fees of
$1,500 per month and $500 per meeting of the MIM Board and any committee thereof
and are reimbursed for expenses incurred in connection with attending such
meetings. In addition, each Outside Director joining MIM since the adoption of
MIM's 1996 Non-Employee Directors Stock Incentive Plan (the "Directors Plan")
receives options to purchase 20,000 shares of MIM Common Stock under that plan.
Directors who are also officers of MIM are not paid any director fees.

The Directors Plan was adopted in July 1996 to attract and retain qualified
individuals to serve as non-employee directors of MIM, to provide incentives and
rewards to such directors and to associate more closely the interests of such
directors with those of MIM's stockholders. The Directors Plan provides for the
automatic grant of non-qualified stock options to purchase 20,000 shares of MIM
Common Stock to non-employee directors joining MIM since the adoption of the
Directors Plan. The exercise price of such options is equal to the fair market
value of the MIM Common Stock on the date of grant. Options granted under the
Directors Plan generally vest over three years. A reserve of 100,000 shares of
MIM Common Stock has been established for issuance under the Directors Plan.
Through May 15, 1998, options to purchase 20,000 shares have been granted under
the Directors Plan to each of Messrs. Luzzi and Yablon at an exercise price of
$13 per share and options to purchase 20,000 shares have been granted under the
Directors Plan to Mr. Cirillo at an exercise price of $4.35 per share.

PROPOSAL 3. -- OTHER MATTERS

The MIM Board knows of no matters to be presented for action at the Annual
Meeting other than those set forth in the attached Notice and customary
procedural matters. However, if any other matters should properly come before
the Annual Meeting or any adjournments or postponements thereof, the proxies
solicited hereby will be voted on such other matters, to the extent permitted by
applicable rules of the Commission, in accordance with the judgment of the
persons voting such proxies.

ADDITIONAL INFORMATION

Executive Compensation

The following table sets forth certain information concerning the annual,
long-term and other compensation of the chief executive officer and the other
executive officers of MIM and the most highly compensated non-executive officer
of MIM's subsidiaries (the "Named Executive Officers") for services rendered in
all capacities to MIM and its subsidiaries during 1997 and 1996:

Summary Compensation Table

Long-Term
Compensation
Annual Compensation Awards
-------------------------------------------------- Securities
Other Underlying All Other
Name and Principal Position Year Salary(1) Bonus Compensation(2) Options Compensation
- --------------------------- ---- --------- ----- --------------- ------- ------------

John H. Klein ................... 1997 $ 325,000 -- $ 12,000 -- $ 4,710(7)
Chief Executive Officer 1996 $ 220,192 -- $ 9,000 3,660,000(3) --

E. David Corvese ................ 1997 $ 325,000 -- $ 11,917 -- $61,681(5)
Vice Chairman 1996 $ 174,791 -- $ 11,924 1,336,950(4) $76,850(6)

Richard H. Friedman ............. 1997 $ 275,000 -- $ 12,000 -- $ 4,710(7)
Chief Operating Officer and 1996 $ 187,977 -- $ 7,000 1,500,000(3) $ 3,657(7)
Chief Financial Officer

Barry A. Posner ................. 1997 $ 127,366(8) -- $ 4,166 50,000(9) $ 4,710(7)
Vice President, Secretary 1996
and General Counsel

E. Paul Larrat(10) .............. 1997 $ 155,000 -- $ 3,600 -- $ 4,113(7)
Executive Vice President, 1996 $ 135,556 -- $ 3,600 157,500(11) $ 7,549(12)
Pro-Mark Holdings, Inc.

- ----------
(1) The annualized base salaries of the Named Executive Officers for 1997 were
as follows: Mr. Klein ($325,000), Mr. Corvese ($325,000), Mr. Friedman
($275,000), Mr. Posner ($175,000) and E. Paul Larrat ($155,000).

(2) Consists of automobile allowances.

(3) Represents options to purchase shares of MIM Common Stock from E. David
Corvese. See "Common Stock Ownership by Certain Beneficial Owners and
Management" above.

(4) Represents options to purchase shares of MIM Common Stock from MIM issued
in connection with the formation of MIM in exchange for options to purchase
Pro-Mark common stock that were previously granted by Pro-Mark.

(5) Represents $43,604 of legal costs and expenses paid by Pro-Mark and MIM
Holdings, LLC on behalf of Mr. Corvese and $18,077 of life insurance
premiums paid by Mr. Corvese and reimbursed by MIM.

(6) Represents $3,799 of legal costs and expenses paid by Pro-Mark and MIM
Holdings, LLC on behalf of Mr. Corvese and $73,051 of life insurance
premiums paid by Mr. Corvese and reimbursed by MIM.

(7) Consists of up to $3,000 of life insurance premiums paid by the Named
Executive Officer and reimbursed by MIM.

(8) The annualized base salary for Mr. Posner, who joined MIM in March 1997,
initially was $165,000 and increased to $175,000 effective in June 1997.

(9) Represents options to purchase shares of MIM Common Stock from MIM.

(10) $65,000 of Mr. Larrat's base salary is paid to Mr. Larrat indirectly by MIM
to the University of Rhode Island College of Pharmacy through a time
sharing arrangement. In turn, the University pays such amount to Mr.
Larrat. The balance of his base salary is paid directly by MIM.

(11) Consists of 77,500 options to purchase shares of MIM Common Stock at an
exercise price equal to $0.0067 per share and 60,000 options to purchase
shares of MIM Common Stock at an exercise price equal to $13.00 per share.

(12) Consists of life insurance premiums paid to such person by MIM.

The following table sets forth information concerning stock option grants
made during 1997 to the Named Executive Officers. The grants listed hereunder
are also reflected in the Summary Compensation Table. In accordance with the
rules and regulations of the Commission, the hypothetical gains or "option
spreads" for each option grant are shown assuming compound annual rates of stock
price appreciation of 5% and 10% from the grant date to the expiration date. The
assumed rates of growth are prescribed by the Commission and are for
illustrative purposes only; they are not intended to predict the future stock
prices, which will depend upon market conditions and MIM's future performance,
among other things.

Option Grants in Last Fiscal Year

Individual Grants (1)
-----------------------------------------------------
Number of % of Total
Securities Options Potential Realizable
Underlying Granted to Exercise Value at Assumed Annual
Options Employees Price Expiration Rates of Stock Price
Name Granted in 1997 ($/share) Date Appreciation for Option Term
- ---- ---------- ------- --------- ---------- ----------------------------
5% 10%
------ ------

John H. Klein ................ -- -- -- -- -- --

E. David Corvese ............. -- -- -- -- -- --

Richard H. Friedman .......... -- -- -- -- -- --

Barry A. Posner .............. 50,000(1) 58.8% $7.4375 3/26/07 $233,870 $592,673

E. Paul Larrat ............... -- -- -- -- -- --

- ---------
(1) The first two-thirds of such options became exercisable in equal
installments on March 26, 1997 and 1998. The remaining one-third of such
options becomes exercisable on March 26, 1999. Effective July 6, 1998,
under a company repricing program, Mr. Posner elected to reprice the
exercise price of this option to $6.50 per share. As a result of the
conditions imposed upon such repricing program, the vested portion of this
option became unvested and all 50,000 shares of MIM Common Stock subject to
this option become exercisable in three equal installments on July 6, 1999,
July 6, 2000 and July 6, 2001. The repricing program offered all employees
holding options the right to reprice all outstanding options held by them
on the same terms described above.

The following table sets forth for each Named Executive Officer the number
of shares covered by both exercisable and unexercisable stock options held as of
December 31, 1997. Also reported are the values for "in-the-money" options,
which represent the difference between the respective exercise prices of such
stock options and $4.75, the per share closing price of the MIM Common Stock on
December 31, 1997.

Aggregated Option Exercises In Last Fiscal Year
And Fiscal Year-End Option Values

Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options at
Shares Value Options at Fiscal Year-End Fiscal Year-End
Acquired On Realized -------------------------- -------------------------
Name Exercise (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- ---- ------------ --- ----------- ------------- ----------- -------------

John H. Klein (1) .......... -- -- 3,040,000 620,000 $8,370,000 --

E. David Corvese (2) ....... -- -- 1,336,950 -- $6,341,555 --

Richard H. Friedman (1) .... -- -- 1,500,000 -- $6,975,000 --

Barry A. Posner (3) ........ -- -- -- 50,000 -- --

E. Paul Larrat (3) ......... 20,000 $248,666 97,500 40,000 $ 367,606 --

- ----------
(1) Indicated options are to purchase shares of MIM Common Stock from E. David
Corvese (see "Common Stock Ownership by Certain Beneficial Owners and
Management" above). In February 1998, Messrs. Klein and Friedman exercised
these options for a total of 1,800,000 and 1,500,000 shares, respectively.

(2) Indicated options are to purchase shares of MIM Common Stock from MIM
issued in exchange for options previously granted by Pro-Mark (see
"Compensation Committee Interlocks and Insider Participation" below).

(3) Indicated options are to purchase shares of MIM Common Stock from MIM.

Compensation Committee Interlocks and Insider Participation

The Compensation Committee of the MIM Board administers MIM's stock
incentive plans and makes recommendations to the MIM Board regarding executive
officer compensation matters, including policies regarding the relationship of
corporate performance and other factors to executive compensation. During 1997,
the members of the Committee were Messrs. Luzzi and Yablon.

At December 31, 1997, Mr. and Mrs. Corvese were indebted to MIM in the
amount of $978,750 respecting loans received from MIM in June 1994 and amended
in June 1997 in said amount. The loans bear interest at 7.125% per annum, with
interest payable monthly and principal payable in full on or before June 15,
2000, and are secured by a first mortgage on the Corveses' principal residence.

Compensation Committee Report on Executive Compensation

Prior to March 1997, there was no committee of the MIM Board responsible
for establishing or recommending compensation policies applicable to MIM's
executive officers. The compensation to executive officers for 1996 and 1997 was
determined by negotiation between MIM and the executive officers and is set
forth in the executive officers' respective employment agreements with MIM
described below. As such, other than Mr. Posner's salary increase described
below, executive compensation during 1997 was not performance based. Since then,
the Compensation Committee has been delegated responsibilities regarding
executive compensation matters. See "Compensation Committee Interlocks and
Insider Participation."

Employment Agreements

In May 1996, Messrs. Klein, Corvese and Friedman entered into executive
employment agreements with MIM which provide for initial base salaries at
annualized rates of $325,000, $325,000 and $275,000, respectively, and certain
fringe benefits including automobile and life insurance allowances. Such
executives are (or were) also eligible to participate in an executive bonus
program for senior executive officers. The term of employment is four years,
subject to earlier termination by either party. If employment is terminated
early due to disability, or by MIM without cause, or by the executive with
cause, MIM is obligated to continue to pay his salary and provide fringe
benefits for twelve months following termination. During the term of employment
and for one year after the later of termination of severance payments (unless
MIM terminates the executive without cause) or employment, the executive may
not, directly or indirectly, participate in the United States (other than with
MIM) in the pharmacy benefit management business, any business then being
engaged in by MIM or any component of any such business, nor may the executive
induce any customers to take actions disadvantageous to MIM. On March 31, 1998,
Mr. Corvese terminated his employment agreement and resigned as an officer and
employee of MIM. In addition, Mr. Corvese agreed not to stand for re-election as
a director of MIM. Effective May 15, 1998, Mr. Klein terminated his employment
agreement and resigned as an officer, employee and director of MIM.

Effective March 1997, Mr. Posner entered into an executive employment
agreement with MIM which provides for an initial base salary at an annualized
rate of $165,000 (increasing to $175,000 after three months based upon a
favorable review by the Chief Operating Officer), options to purchase 50,000
shares of MIM Common Stock at the then current fair market value, and certain
fringe benefits including life insurance and eligibility for participation in
MIM's executive bonus program. The agreement continues until terminated by
either party. If employment is terminated due to disability, or by MIM without
cause, or by Mr. Posner with cause, MIM is obligated to continue to pay his
salary and provide fringe benefits for nine months following termination. If Mr.
Posner ceases to serve as General Counsel or is assigned a position which
principally has business responsibilities, thereafter he is subject to
restrictions on competition similar to those applying to the other above-listed
executive officers.

Stockholder Return Performance Graph

MIM's Common Stock first commenced public trading on August 15, 1996 in
connection with MIM's underwritten initial public offering of common stock. The
graph set forth below compares, for the period of August 15, 1996 through
December 31, 1997, the total cumulative return to holders of MIM Common Stock
with the cumulative total return of the Nasdaq Stock Market (U.S.) Index and the
Nasdaq Health Services Index.

Comparison of Cumulative Total Return Among MIM,
the Nasdaq Stock Market (U.S.) Index and the Nasdaq Health Services Index*

[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]

DATE MIM Corp MIMS NASDAQ STOCK MARKET (U.S.) NASDAQ HEALTH SERVICES
- ---- ------------- -------------------------- ----------------------

08/15/96 100 100 100
9/96 112 108 104
12/96 38 114 92
3/97 49 107 86
6/97 111 127 96
9/97 75 149 105
12/97 37 139 94

- ----------
* The above graph assumes an investment of $100 in MIM's Common Stock on
August 15, 1996 and in the Nasdaq Stock Market (U.S.) Index and the Nasdaq
Health Services Index on July 31, 1996, and that all dividends were
reinvested. The performances shown in the above table are not necessarily
indicative of future performance.

Certain Relationships and Related Transactions

At December 31, 1997, Alchemie Properties, LLC, a Rhode Island limited
liability company of which Mr. Corvese is the manager and principal owner
("Alchemie"), was indebted to MIM in the amount of $280,629 respecting a loan
received from MIM in 1994 in the original principal amount of $299,000. The loan
bears interest at 10% per annum, with interest payable monthly and principal
payable in full on or before December 1, 2004, and is secured by a lien on
Alchemie's rental income.

In December 1994, MIM entered into a ten-year agreement to lease a facility
from Alchemie. The lease provides for monthly payments of $3,000 plus real
estate taxes and condominium association fees. Rent expense was approximately
$60,000, $52,000 and $56,000 for the years ended December 31, 1995, 1996 and
1997, respectively. MIM has expended an aggregate of approximately $513,000 for
alterations and improvements in this space through December 31, 1997, which upon
termination of the lease will revert to the lessor. The future MIM lease rental
payments under these agreements are included in Note 6 to the December 31, 1997
consolidated financial statements which appear elsewhere herein.

At December 31, 1997, MIM Holdings, LLC ("MIM Holdings") was indebted to
MIM in the amount of $456,000 respecting loans received from MIM during 1995 in
the aggregate principal amount of $1,078,000. MIM holds a $456,000 promissory
note from MIM Holdings due March 31, 2001 that bears interest at 10% per annum.
Interest generally is payable quarterly, although in December 1996 the note was
amended to extend the due date to September 30, 1997 for all interest accruing
from January 1, 1996 to said date. This note is guaranteed by Mr. Corvese and
further secured by the assignment to MIM of a $100,000 promissory note that was
originally given by an MIM officer to MIM Holdings. The remaining $622,000 of
indebtedness will not be repaid and was recorded as a stockholder distribution
during the first half of 1996.

At December 31, 1997, MIM Holdings paid off a $99,000 loan received from
MIM during the first half of 1996. Originally scheduled to be repaid by
September 30, 1996 without interest, the $86,000 principal amount outstanding at
December 31, 1996 had been rescheduled to be due and payable on September 30,
1997 together with 10% interest accruing on the unpaid balance since September
30, 1996 pursuant to an unsecured promissory note.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
directors and officers of MIM and persons, or "groups" of persons, who own more
than 10% of a registered class of MIM's equity securities (collectively,
"Covered Persons") to file with the Securities and Exchange Commission and The
Nasdaq Stock Market, within specified time periods, initial reports of
beneficial ownership, and subsequent reports of changes in ownership, of certain
equity securities of MIM. Based solely on its review of copies of such reports
furnished to it and upon written representations of Covered Persons that no
other reports were required, other than as described below, MIM believes that
all such filing requirements applicable to Covered Persons with respect to all
periods up to and including 1997 have been complied with on a timely basis. Mr.
Posner's initial statement of beneficial ownership on Form 3 was not timely
filed.

Independent Auditors

Arthur Andersen LLP served as MIM's independent public accountants for 1997
and, subject to the formal recommendations of the Audit Committee and approval
of the MIM Board, are expected to serve again as such for 1998. Representatives
of that firm are expected to be present at the Annual Meeting. They will be
given an opportunity to make a statement if they wish to do so, and are expected
to be available to respond to appropriate questions.

Solicitation of Proxies

The cost of soliciting the proxies will be paid by MIM. Directors, officers
and employees of MIM may solicit proxies in person, or by mail, telephone,
electronic mail or otherwise, but no such person will be compensated for such
services. MIM will request banks, brokers and other nominees to forward proxy
materials to beneficial owners of stock held of record by them and will
reimburse them for their reasonable out-of-pocket expenses in so doing.

Stockholder Proposals

In order to be eligible for inclusion in MIM's proxy material for the 1999
Annual Meeting of Stockholders, stockholders' proposals to take action at such
meeting must comply with applicable Commission rules and regulations, must be
directed to the Secretary of MIM at its principal executive offices set forth on
page 2 of this Proxy Statement/Prospectus, and must be received by MIM not later
than April 7, 1999.

Miscellaneous

A copy of MIM's 1997 Annual Report to Stockholders is enclosed but is not
to be regarded as proxy solicitation material or as part of the Registration
Statement.

Upon request, MIM will furnish free of charge to record and beneficial
owners of its common stock a copy of its 1997 Annual Report on Form 10-K
(including financial statements and schedules but without exhibits). Copies of
exhibits to the Form 10-K also will be furnished upon request and the payment of
a reasonable charge. All requests should be directed to the Secretary of MIM at
the address and telephone number of MIM's principal executive offices set forth
on page 2 of this Proxy Statement/Prospectus.

LEGAL MATTERS

Certain of the tax consequences of the Merger will be passed upon for MIM
by the law firm of Rogers & Wells LLP, New York, New York. The validity of the
shares to be issued in connection with the Merger will be passed upon for MIM by
Barry A. Posner, its Vice President, Secretary and General Counsel.

EXPERTS

The audited consolidated financial statements of MIM included in this Proxy
Statement/Prospectus have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their report with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in giving
said report.

The consolidated financial statements of Continental at December 31, 1996
and 1997, and for each of the three years in the period ended December 31, 1997,
included in this Proxy Statement/Prospectus, have been audited by Ernst & Young
LLP, independent auditors, as set forth in their report thereon appearing
elsewhere herein, and are included in reliance upon such report given upon
authority of such firm as experts in accounting and auditing.

WHERE YOU CAN FIND MORE INFORMATION

MIM files annual, quarterly and special reports, proxy statements and other
information with the Commission. You may read and copy any reports, statements
or other information we file at the Commission's public reference rooms in
Washington, D.C., New York, New York and Chicago, Illinois. Please call the
Commission at 1-800-SEC-0330 for further information on the public reference
rooms. Our filings are also available to the public from commercial document
retrieval services and at the web site maintained by the Commission at
"http://www.sec.gov". MIM Common Stock is traded on the Nasdaq. Any such
reports, proxy statements and other information filed or to be filed by MIM may
also be inspected at the offices of the National Association of Securities
Dealers, Inc., Market Listing Section, 1735 K Street, N.W., Washington, D.C.
20006.

MIM filed a Registration Statement on Form S-4 to register with the
Commission the issuance of MIM Common Stock to Continental shareholders in the
Merger. This Proxy Statement/Prospectus is a part of that Registration Statement
and constitutes a prospectus of MIM in addition to being a proxy statement of
MIM for the Annual Meeting. As allowed by Commission rules, this Proxy
Statement/Prospectus does not contain all the information you can find in the
Registration Statement or the exhibits to the Registration Statement.

MIM stockholders should rely only on the information contained in this
Proxy Statement/Prospectus to vote on the proposals presented herein. We have
not authorized anyone to provide you with information that is different from
what is contained in this Proxy Statement/Prospectus. This Proxy
Statement/Prospectus is dated August 5, 1998. You should not assume that the
information contained in the Proxy Statement/Prospectus is accurate as of any
date other than such date, and neither the mailing of this Proxy
Statement/Prospectus to stockholders nor the issuance of MIM Common Stock in the
Merger shall create any implication to the contrary.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Page
----

MIM CORPORATION AND SUBSIDIARIES

Report of Independent Public Accountants............................................. F-2

Consolidated Balance Sheets as of December 31, 1996 and 1997......................... F-3

Consolidated Statements of Operations for the years ended
December 31, 1995, 1996 and 1997................................................... F-4

Consolidated Statements of Stockholders' Equity (Deficit)
for the years ended December 31, 1995, 1996 and 1997............................... F-5

Consolidated Statements of Cash Flows for the
years ended December 31, 1995, 1996 and 1997....................................... F-6

Notes to Consolidated Financial Statements........................................... F-7

Consolidated Balance Sheets as of December 31, 1997
and March 31, 1998 (unaudited)..................................................... F-20

Consolidated Statements of Operations for the
three months ended March 31, 1997 and 1998 (unaudited)............................. F-21

Consolidated Statements of Cash Flows for the
three months ended March 31, 1997 and 1998 (unaudited)............................. F-22

Notes to Consolidated Financial Statements (unaudited)............................... F-23

CONTINENTAL MANAGED PHARMACY SERVICES, INC. AND SUBSIDIARIES

Report of Independent Auditors....................................................... F-25

Consolidated Balance Sheets as of December 31, 1996 and 1997......................... F-26

Consolidated Statements of Income for each of the
three years in the period ended December 31, 1997.................................. F-27

Consolidated Statements of Stockholders' Equity for each of the
three years in the period ended December 31, 1997.................................. F-28

Consolidated Statements of Cash Flows for each of the
three years in the period ended December 31, 1997.................................. F-29

Notes to Consolidated Financial Statements........................................... F-30

Consolidated Balance Sheets as of December 31, 1997
and March 31, 1998 (unaudited)..................................................... F-37

Consolidated Statements of Income for the
three months ended March 31, 1997 and 1998 (unaudited)............................. F-38

Consolidated Statements of Cash Flows for the
three months ended March 31, 1997 and 1998 (unaudited)............................. F-39

Notes to Consolidated Financial Statements (unaudited)............................... F-40

F-1

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To MIM Corporation and Subsidiaries:

We have audited the accompanying consolidated balance sheets of MIM
Corporation and Subsidiaries as of December 31, 1996 and 1997 and the related
consolidated statements of operations, stockholders' equity (deficit) and cash
flows for each of the three years in the period ended December 31, 1997. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards 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. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of MIM
Corporation and Subsidiaries as of December 31, 1996 and 1997 and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1997, in conformity with generally accepted accounting
principles.

ARTHUR ANDERSEN LLP

Roseland, New Jersey
March 23, 1998

F-2

MIM CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
DECEMBER 31,
(In thousands, except for share amounts)

1996 1997
-------- --------

ASSETS
Current assets
Cash and cash equivalents ...................................................... $ 1,834 $ 9,593
Investment securities .......................................................... 28,113 19,235
Receivables, less allowance for doubtful accounts of
$1,088 and $1,386, respectively............................................... 18,646 23,666
Prepaid expenses and other current assets ...................................... 1,129 888
-------- --------
Total current assets ................................................... 49,722 53,382
Investment securities, net of current portion .................................... 8,925 3,401
Other investments ................................................................ -- 2,300
Property and equipment, net ...................................................... 2,423 3,499
Due from affiliates, less allowance for doubtful accounts of
$2,157 and $2,360, respectively................................................. 628 --
Other assets, net ................................................................ 102 145
-------- --------
Total assets........................................................ $ 61,800 $ 62,727
======== ========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current portion of capital lease obligations ................................... $ 213 $ 222
Accounts payable ............................................................... 1,562 931
Deferred revenue ............................................................... -- 2,799
Claims payable ................................................................. 17,278 26,979
Payables to plan sponsors and others ........................................... 10,174 10,839
Accrued expenses ............................................................... 926 2,279
-------- --------
Total current liabilities............................................... $ 30,153 $ 44,049
Capital lease obligations, net of current portion ................................ 375 756
Commitments and contingencies (Note 6)
Minority interest ................................................................ 1,129 1,112
Stockholders' equity
Preferred stock, $.0001 par value; 5,000,000 shares authorized,
no shares issued or outstanding............................................... -- --
Common stock, $.0001 par value; 40,000,000 shares authorized,
12,040,600 and 13,335,150 shares issued and outstanding, respectively......... 1 1
Additional paid-in capital ....................................................... 73,443 73,585
Accumulated deficit .............................................................. (41,564) (55,061)
Stockholder notes receivable ..................................................... (1,737) (1,715)
-------- --------
Total stockholders' equity.............................................. 30,143 16,810
-------- --------
Total liabilities and stockholders' equity.......................... $ 61,800 $ 62,727
======== ========

The accompanying notes are an integral part of these
consolidated financial statements.

F-3

MIM CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31,
(In thousands, except for per share amounts)

1995 1996 1997
-------- -------- --------

Revenue ............................................................... $213,929 $283,159 $242,291
Cost of revenue ....................................................... 213,398 278,068 239,002
-------- -------- --------
Gross profit .................................................... 531 5,091 3,289
Selling, general and administrative expenses .......................... 8,048 11,619 19,098
Non-cash stock option charge .......................................... -- 26,640 --
-------- -------- --------
Loss from operations ............................................ (7,517) (33,168) (15,809)
Interest income, net .................................................. 745 1,393 2,295
-------- -------- --------
Loss before minority interest ................................... (6,772) (31,775) (13,514)
Less: minority interest ............................................... -- (21) (17)
-------- -------- --------
Net loss ........................................................ $ (6,772) $(31,754) $(13,497)
======== ======== ========

Basic and diluted loss per common shares .............................. $ (1.43) $ (3.32) $ (1.07)
======== ======== ========

Weighted average common shares used in computing basic
and diluted loss per share........................................... 4,732 9,557 12,620
======== ======== ========

The accompanying notes are an integral part of these
consolidated financial statements.

F-4

MIM CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
(In thousands)

Retained Total
Additional Earnings Stockholder Stockholders'
Common Paid-In (Accumulated Notes Equity
Stock Capital Deficit) Receivable (Deficit)
-------- -------- -------- -------- --------

Balance, December 31, 1994 ................... $ 1 $ -- $ (2,416) $ (1,278) $ (3,693)
Stockholder loans, net ..................... -- -- -- (1,059) (1,059)
Net loss ................................... -- -- (6,772) -- (6,772)
-------- -------- -------- -------- --------

Balance, December 31, 1995 ................... 1 -- (9,188) (2,337) (11,524)
Stockholder loans, net ..................... -- -- -- (22) (22)
Stockholder distribution ................... -- -- (622) 622 --
Net proceeds from initial public offering .. -- 46,786 -- -- 46,786
Non-cash stock option charge ............... -- 26,640 -- -- 26,640
Non-employee stock option
compensation expense ..................... -- 17 -- -- 17
Net loss ................................... -- -- (31,754) -- (31,754)
-------- -------- -------- -------- --------

Balance, December 31, 1996 ................... 1 73,443 (41,564) (1,737) 30,143
-------- -------- -------- -------- --------
Stockholder loans, net ....................... -- -- -- 22 22
Exercise of stock options .................... -- 113 -- -- 113
Non-employee stock option
compensation expense ....................... -- 29 -- -- 29
Net loss ..................................... -- -- (13,497) -- (13,497)
-------- -------- -------- -------- --------

Balance, December 31, 1997 ................... $ 1 $ 73,585 $(55,061) $ (1,715) $ 16,810
======== ======== ======== ======== ========

The accompanying notes are an integral part of these
consolidated financial statements.

F-5

MIM CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31,
(In thousands)

1995 1996 1997
-------- -------- --------

Cash flows from operating activities:
Net loss ...................................................... $ (6,772) $(31,754) $(13,497)
Adjustments to reconcile net loss to net cash (used in)
provided by operating activities:
Net loss allocated to minority interest ................... -- (21) (17)
Depreciation and amortization ............................. 366 781 1,091
Stock option charges ...................................... -- 26,657 29
Provision for losses on receivables and due from affiliates 1,977 928 501
Changes in assets and liabilities:
Receivables ................................................. (4,728) (4,551) (5,318)
Prepaid expenses and other current assets ................... 98 (648) 241
Accounts payable ............................................ (376) 491 (631)
Deferred Revenue ............................................ -- -- 2,799
Claims payable .............................................. 9,031 (2,016) 9,701
Payables to plan sponsors and others ........................ 2,003 1,738 665
Accrued expenses ............................................ (202) 755 1,353
-------- -------- --------
Net cash provided (used in) by operating activities ... 1,397 (7,640) (3,083)
-------- -------- --------
Cash flows from investing activities:
Purchase of property and equipment ............................ (802) (870) (1,575)
Purchase of investment securities ............................. -- (37,038) (27,507)
Purchase of other investments ................................. -- -- (2,300)
Maturities of investment securities ........................... -- -- 41,909
Stockholder notes receivable, net ............................. (1,059) (22) 22
Due from affiliates, net ...................................... (1,759) (828) 425
(Increase) decrease in other assets ........................... 164 (93) (48)
-------- -------- --------
Net cash (used in) provided by investing activities ... (3,456) (38,851) 10,926
-------- -------- --------
Cash flows from financing activities:
Principal payments on capital lease obligations ............... (220) (265) (197)
Proceeds from initial public offering ......................... -- 46,786 --
Proceeds from exercise of stock options ....................... -- -- 113
Minority interest investment .................................. 1,150 -- --
-------- -------- --------
Net cash provided by (used in) financing activities ... 930 46,521 (84)
-------- -------- --------
Net (decrease) increase in cash and cash equivalents ............ (1,129) 30 7,759
Cash and cash equivalents--beginning of period .................. 2,933 1,804 1,834
-------- -------- --------
Cash and cash equivalents--end of period ........................ $ 1,804 $ 1,834 $ 9,593
======== ======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Income taxes ................................................ $ 286 $ -- $ --
======== ======== ========
Interest .................................................... $ 31 $ 55 $ 41
======== ======== ========
SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS:
Equipment acquired under capital lease obligations ............ $ 109 $ 527 $ 587
======== ======== ========
Distribution to stockholder through cancellation of
stockholder notes receivable ................................ $ -- $ 622 $ --
======== ======== ========

The accompanying notes are an integral part of these
consolidated financial statements.

F-6

MIM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except for share and per share amounts)

NOTE 1 -- NATURE OF BUSINESS

Corporate Organization

MIM Corporation was incorporated in Delaware in March 1996 for the purpose
of combining the businesses and operations of Pro-Mark Holdings, Inc., a
Delaware corporation ("Pro-Mark"), and MIM Strategic Marketing, LLC, a Rhode
Island limited liability company ("MIM Strategic"), (the "Formation"). The
Formation was effected in May 1996. Previously, Pro-Mark Drug Benefit Management
Services, LLC, a Rhode Island limited liability company, formed in June 1993
("Pro-Mark DBMS"), had merged into Pro-Mark in April 1994. Pro-Mark is a
wholly-owned subsidiary of MIM Corporation, and MIM Strategic is 90% owned by
MIM Corporation. As used in these notes, the "Company" refers to MIM Corporation
and its subsidiaries and predecessors.

Prior to the Formation, Pro-Mark DBMS, Pro-Mark and Strategic were
controlled by an officer of the Company (See Note 11) and his family who, before
subsequent stock transfers, collectively held a direct or indirect controlling
interest in MIM Corporation. The Formation has been accounted for using the
carryover basis of accounting, and MIM Corporation's consolidated financial
statements include the accounts and operations of the subsidiaries for all
periods presented from the date each entity was formed.

At incorporation, the authorized capital stock of MIM Corporation consisted
of 1,500,000 shares of common stock, $0.001 par value. In May 1996, the
certificate of incorporation of MIM Corporation was amended and restated to
provide for authorized capital stock consisting of 40,000,000 shares of common
stock, $0.0001 par value ("Common Stock"), and 5,000,000 shares of Preferred
Stock, $0.0001 par value. In May 1996, 8,023,800 shares of Common Stock were
issued in connection with the Formation.

In the Formation, MIM Corporation acquired all of the outstanding stock of
Pro-Mark and 90% of the ownership and membership interests in MIM Strategic. In
exchange, Pro-Mark's stockholders received 150 shares of Common Stock of MIM
Corporation for each Pro-Mark share (or an aggregate of 4,500,000 shares of
Common Stock), and certain members of MIM Strategic received an aggregate of
3,523,800 shares of Common Stock for their 90% interest in MIM Strategic. Zenith
Goldline Pharmaceuticals, Inc., a Florida corporation ("Zenith Goldline"), has
held a 10% interest in MIM Strategic since its inception and did not participate
in the Formation.

In the Formation, outstanding stock options granted by Pro-Mark to
employees and key contractors were exchanged for options from MIM Corporation on
substantially similar terms (see Note 8). Except as otherwise indicated, all
stock and stock option amounts (including share, per share par value and
exercise price) pertaining to Pro-Mark DBMS, Pro-Mark and MIM Strategic prior to
the Formation have been restated to reflect the equivalent amounts pertaining to
Common Stock as if the Formation had already occurred.

MIM Strategic was formed in 1995 by MIM Holdings, LLC ("MIM Holdings"),
which is controlled by a former officer of the Company (See Note 11) and his
family. MIM Holdings and Zenith Goldline contributed various intangibles and
$1,150 in cash, respectively, to the capital of MIM Strategic in exchange for
their 90% and 10% interests, respectively, in MIM Strategic. No accounting
recognition has been given to the intangibles for financial reporting purposes
since their value is not objectively determinable, and the entire $1,150 of
capital contributed by Zenith Goldline has been presented as minority interest
in the accompanying consolidated balance sheets. Profits and losses of MIM
Strategic are allocated 90% to the Company and 10% to Zenith Goldline.

Business

The Company's revenues have been derived primarily from agreements to
provide pharmacy benefit management services to sponsors of public and private
health plans. To date, a majority of the services provided by the Company have
been to sponsors of Tennessee-based plans who have entered into pharmacy benefit
management contracts with RxCare of Tennessee, Inc. ("RxCare"), a subsidiary of
the Tennessee Pharmacists Association, including contracts ("TennCare
contracts") to provide mandated pharmaceutical services to formerly
Medicaid-eligible and uninsured and uninsurable Tennessee residents under the
State's TennCare Medicaid waiver program ("TennCare").

F-7

MIM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except for share and per share amounts)

NOTE 1 -- NATURE OF BUSINESS -- Continued

Under an agreement with RxCare formalized in March 1994 and thereafter
amended (the "RxCare Contract"), the Company is responsible for operating and
managing RxCare's pharmacy benefit management contracts. In return for receipt
of all sponsor payments due RxCare under its pharmacy benefit management
contracts and all rebates negotiated with pharmaceutical manufacturers in
connection with RxCare programs, the Company implements and enforces the drug
benefit programs, bears all program costs including payments to dispensing
pharmacies and certain payments to RxCare and sponsors, and shares with RxCare
the remaining profit, if any, under the pharmacy benefit management contracts
(see Note 2). The RxCare Contract is scheduled to expire in December 1998 unless
renewed in accordance with its terms.

NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make certain estimates and
assumptions that 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 those estimates.

Revenue Recognition

Capitated Agreements. Certain pharmacy benefit management contracts are
capitated agreements pursuant to which the Company receives a fixed monthly fee
for each member enrolled in a particular health plan. In exchange for this fee,
the Company is obligated to provide covered pharmacy services to plan members.
Typically, capitated agreements have a one-year term and are subject to
automatic renewal unless notice of termination is given. These contracts are
subject to earlier termination upon the occurrence of certain events.

Capitation payments under TennCare contracts are based upon the latest
eligible member data provided by the State of Tennessee. On a monthly basis, the
Company receives payments (and recognizes revenue) for those members eligible
for the current month, plus or minus capitation amounts for those persons
determined to be retroactively eligible or ineligible for prior months under the
contract. The related receivables at December 31, 1996 and 1997 were
approximately $1,056 and $120, respectively. The related capitated revenue for
the years ended December 31, 1995, 1996 and 1997 was approximately $192,625,
$232,395 and $127,477, respectively.

Fee-for-Service Agreements. Certain pharmacy benefit management contracts
are fee-for-service agreements pursuant to which the Company is paid by the plan
sponsor an amount reflecting the cost of a prescription plus a per prescription
service fee. Under these contracts, the Company is obligated to pay network
pharmacies for pharmacy services provided to plan members. The Company
recognizes the cost incurred to pay network pharmacies with its corresponding
fees for service revenue at the time a pharmacy prescription claim is
adjudicated. The related fee-for-service revenue for the years ended December
31, 1995, 1996 and 1997 was approximately $16,525, $49,941 and $114,654,
respectively.

Receivables. Receivables include amounts due from plan sponsors under the
Company's pharmacy benefit management contracts and amounts due from
pharmaceutical manufacturers, which represent rebates resulting from the
distribution of certain drugs through retail pharmacies.

Cost of Revenue. Cost of revenue includes pharmacy claims, fees paid to
pharmacists and other direct costs associated with pharmacy management and
claims processing operations, offset by rebates received from pharmaceutical
manufacturers in connection with the Company's pharmacy management programs.
Rebates are earned in accordance with contractual agreements between the Company
and pharmaceutical manufacturers. For the years ended December 31, 1995, 1996
and 1997, rebates earned net of rebate sharing arrangements on pharmacy benefit
management contracts were approximately $7,141, $7,738 and $13,290,
respectively.

F-8

MIM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except for share and per share amounts)

NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- Continued

Payables to Plan Sponsors and Others

Certain pharmacy benefit management contracts provide for an income or loss
share with the plan sponsor. The income or loss share is calculated by deducting
all related costs and expenses from revenues earned under the contract. To the
extent revenues exceed costs, the Company records a payable representing the
plan sponsor's share of the profit attributable to that contract, and to the
extent costs exceed revenues the Company records a receivable. Agreements
between RxCare and certain plan sponsors also provide for the sharing of
pharmaceutical manufacturers' rebates with the plan sponsor. The Company is also
obligated to share with RxCare the cumulative profit, if any, under the
Company's agreement with RxCare (see Note 4). The Company estimates that any
difference between the recorded liability on the accompanying consolidated
balance sheets and the ultimate exposure under those contract provisions will
not have a material adverse effect on the consolidated financial statements.

Cash and Cash Equivalents

For the purpose of the accompanying consolidated statements of cash flows,
cash and cash equivalents are defined as demand deposits and overnight
investments at banks.

Property and Equipment

The Company provides for depreciation and amortization using the
straight-line method over the estimated useful lives of assets ranging from
three to five years or, in the case of leases, over the life of the lease.
Maintenance and repairs are expensed as incurred.

Long-Lived Assets

The provisions of Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of" ("SFAS 121") requires, among other things, that an entity review
its long-lived assets and certain related intangibles for impairment whenever
changes in circumstances indicate that the carrying amount of an asset may not
be fully recoverable. Impairment of long-lived assets exist if, at a minimum,
the future expected cash flows (undiscounted and without interest charges) from
operations are less than the carrying value of those assets. An impairment loss,
if any, would be measured as the amount by which the carrying amount of the
asset exceeds its fair value. Management does not believe that any such change
in circumstances has occurred.

Deferred Revenue

Deferred revenues represent fees received in advance from certain plan
sponsors and are recognized as revenue in the month these fees are earned.

Claims Payable

The Company is responsible for all covered prescriptions provided to plan
members during the contract period. At December 31, 1996 and 1997, certain
prescriptions were dispensed to members for which the related claims had not yet
been presented to the Company for payment. Estimates of $3,296 and $1,858 at
December 31, 1996 and 1997, respectively, have been accrued for these claims in
the accompanying consolidated balance sheets. Unpaid claims incurred and
reported amounted to $10,482 and $20,786 at December 31, 1996 and 1997,
respectively. The Company entered into several commercial risk-based contracts
during 1997 (see Note 6) for which future losses are expected. Based on
management's estimate of losses to be incurred the Company has accrued $4,335 at
December 31, 1997. The Company also experienced losses on one of the TennCare
contracts since the contract was entered into as of April 1, 1995. RxCare
exercised its option to terminate the contract on March 31, 1997, before its
scheduled expiration date of December 31, 1997. At December 31, 1996 the Company
accrued $3,500 to cover management's estimate of losses to be incurred during
the remainder of the original contract. These amounts are included in claims
payable in the accompanying consolidated balance sheets.

F-9

MIM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except for share and per share amounts)

NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- Continued

Minority Interest

The minority interest in the loss of MIM Strategic is reflected as a
reduction of net loss in the accompanying consolidated statements of operations.

Income Taxes

The Company accounts for income taxes under the provisions of Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS
109"). SFAS 109 utilizes the liability method, and deferred taxes are determined
based on the estimated future tax effects of differences between the financial
statement and tax bases of assets and liabilities at currently enacted tax laws
and rates.

Disclosure of Fair Value of Financial Instruments

The Company's financial instruments consist mainly of cash and cash
equivalents, investment securities (see Note 3), accounts receivable and
accounts payable. The carrying amounts of cash and cash equivalents, accounts
receivable and accounts payable approximate fair value due to their short-term
nature.

Accounting for Stock-Based Compensation

The Company accounts for employee stock based compensation plans and
non-employee director stock incentive plans in accordance with APB Opinion No.
25, "Accounting for Stock Issued to Employees" ("APB 25"). Stock options granted
to anyone other than employees and non-employee directors are accounted for in
accordance with Statement of Financial Accounting Standards No. 123, "Accounting
for Stock-Based Compensation" ("SFAS 123") (see Note 8).

Earnings Per Share

Effective for the year ended December 31, 1997, the Company adopted
Statement of Financial Accounting Standards, No. 128, "Earnings Per Share"
("SFAS 128"). SFAS 128 requires the presentation of basic earnings (loss) per
share and diluted earnings (loss) per share. Basic loss per share is based on
the average number of shares outstanding during the year. Diluted loss per share
is the same as basic loss per share as the inclusion of common stock equivalents
would be anti-dilutive. Common shares outstanding and per share amounts reflect
the formation (see Note 1) and are considered outstanding from the date each
entity was formed.

Recently Issued Accounting Standards

In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income" ("SFAS
130") and No. 131, "Disclosures About Segments of an Enterprise and Related
Information" ("SFAS 131"). SFAS 130 establishes standards for reporting
comprehensive income and its components. SFAS 131 establishes standards for
reporting financial and descriptive information regarding an enterprise's
operating segments. Both are effective for periods beginning after December 15,
1997. These standards increase financial reporting disclosures and will have no
impact on the Company's financial position or results of operations.

F-10

MIM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except for share and per share amounts)

NOTE 3 -- INVESTMENT SECURITIES AND OTHER INVESTMENTS

Investment Securities

The Company's marketable investment securities are classified as
held-to-maturity and are carried at amortized cost on the accompanying balance
sheet as of December 31, 1996 and 1997. Management believes that it has the
positive intent and ability to hold such securities to maturity. Amortized cost
(which approximates fair value), of these securities as of December 31, 1996 and
1997 is as follows:
1996 1997
------- -------
Held-to-maturity securities:
U.S. government ............................. $ 1,000 $ 3,600
States and political subdivision ............ 545 295
Corporate securities ........................ 35,493 18,741
------- -------
Total investment securities ................... $37,038 $22,636
======= =======

The contractual maturities of all held-to-maturity securities at December
31, 1997 are as follows:

Amortized Cost
--------------
Due in one year or less................................. $19,235
Due after one year through five years................... 3,401
-------
Total investment securities............................. $22,636
=======

Other Investments

On June 23, 1997, the Company, along with other strategic partners, made an
investment in Wang Healthcare Information Systems, Inc. ("WHIS"), a company
engaged in the development, marketing and servicing of PC-based clinical
information systems for physicians and their staff, using patented image-based
technology. The Company purchased 1,150,000 shares of the Series B Convertible
Preferred Stock, par value $0.01 per share, of WHIS (the "WHIS Shares")
representing a minority 8% interest for an aggregate purchase price equal to
$2,300. An executive officer (See Note 11), assumed the Company's board seat and
was elected Chairman of WHIS. The preferred stock is not registered on a
securities exchange and, therefore, the fair value of these securities is not
readily determinable.

NOTE 4 -- RELATED PARTY TRANSACTIONS

During 1995, the Company advanced RxCare approximately $1,957 to fund the
losses RxCare had incurred in connection with one of its pharmacy benefit
management contracts. Although the Company does not currently intend to seek
repayment of the advance, the Company intends to offset such amount against
future profit sharing amounts, if any, due RxCare under the Company's agreement
with RxCare. As RxCare's revenue is largely dependent upon the Company's results
of operations in Tennessee, the collectibility of this amount is uncertain, and
a full reserve has been recorded against the advance. During October 1996, the
Company advanced approximately $349 directly to individual pharmacies in
Tennessee on behalf of RxCare. This advance was repaid in full in March 1997.

As part of its agreement with RxCare, the Company is obligated to share
with RxCare the Company's cumulative profit, if any, from the RxCare pharmacy
benefit management contracts. No amount was due RxCare for the years ended
December 31, 1996 or 1997.

The Company entered into two three-year contracts with Zenith Goldline in
December 1995. Pursuant to the contract, the Company is entitled to receive fees
based on a percentage of the growth in Zenith Goldline's gross margins from
related sales. Included in due from affiliates at December 31, 1996 and 1997 is
management's estimate of revenues earned under these agreements. At December 31,
1997 the collectibility of the amounts is uncertain and a full reserve has been
recorded against the revenues earned.

During 1996, the Company made short-term advances to MIM Holdings and
Alchemie Properties, LLC ("Alchemie") of $99 and $25, respectively. Alchemie is
controlled by an executive officer of the Company (see Note 11). Repayments by
MIM Holdings and Alchemie through December 31, 1996 were $13 and $25,
respectively.

F-11

MIM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except for share and per share amounts)

NOTE 4 -- RELATED PARTY TRANSACTIONS -- Continued

The remaining $86 principal amount owed by MIM Holdings and accrued interest
from September 1996 was paid in full at December 31, 1997.

In June 1996, an executive officer of the Company loaned $500 to the
Company for working capital purposes pursuant to an unsecured, 10% promissory
note that was payable upon demand. The loan amount plus $2.5 for interest and
fees was repaid by December 31, 1996.

Other Activities

Pursuant to the RxCare Contract, which expires in December 1998, the
Company makes monthly payments to RxCare to defray the cost of office space and
equipment provided by RxCare on behalf of the Company and to provide RxCare with
cash flow to meet its operating expenses. Expenses under this agreement were
$140 for the year ended December 31, 1995 and $240 for the years ended December
31, 1996 and 1997. In addition, from November 1995 through October 1996 the
Company paid RxCare $6.5 monthly to cover expenses associated with a regional
cost containment initiative.

In December 1994, the Company entered into a ten-year agreement to lease a
facility from Alchemie. The lease provides for monthly payments of $3 plus real
estate taxes and condominium association fees. Rent expense was approximately
$60, $52 and $56 for the years ended December 31, 1995, 1996 and 1997,
respectively. The Company has expended an aggregate of approximately $513 for
alterations and improvements to this space through December 31, 1997, which upon
termination of the lease will revert to the lessor. The future minimum rental
payments under these agreements are included in Note 6 with the Company's other
operating leases.

Consulting and Service Agreements

In January 1994, the Company entered into consulting agreements with three
minority stockholders of the Company. These agreements expire in 1999 and
provide for payments to be made as services are rendered. No amounts were paid
in 1995, 1996 or 1997.

In January 1994, the Company entered into a consulting agreement with an
officer of RxCare which provided for payments by the Company of $5.5 per month,
and additional compensation as agreed by the parties for special projects,
through December 1996. The Company paid $66 in both 1995 and 1996 and made no
payments in 1997. The Company was reimbursed $225 of the amount paid to such
officer and recorded a reduction of general and administrative expenses.

In September 1995, the Company entered into a contract with MIM Holdings to
receive management consulting services in return for monthly payments to MIM
Holdings of $75. Consulting expenses amounted to $300 and $225 for the years
ended December 31, 1995 and 1996, respectively. The contract was terminated on
March 31, 1996.

A professional services agreement was entered into as of January 1, 1996
between MIM Holdings and the Company. Under this agreement, MIM Holdings
provided the Company with operational professional services required to perform
the Company's obligations under a Marketing Services Agreement with Zenith
Goldline (see Note 1), for which the Company paid MIM Holdings $150 in 1996. The
agreement was terminated in May 1996.

Stockholder Notes Receivable

In June 1994, the Company advanced to an executive officer, who has since
resigned as an employee and officer and who has been on administrative leave
(Note 11), approximately $979 for purposes of acquiring a principal residence,
$975 of which is secured by a first mortgage on the residence. In exchange for
the funds, the Company received two promissory notes, the aggregate outstanding
principal balance of which was $955 and $979 at December 31, 1996 and 1997,
respectively. Originally scheduled to be repaid by June 15, 1997 and bearing
interest at 5.42% per annum payable monthly, the remaining principle balance
currently is due and payable on June 15, 2000 together with 7.125% interest.
Interest income on the notes for the years ended December 31, 1995, 1996 and
1997 was $55, $52 and $60, respectively. In August 1994, the Company advanced to
Alchemie $299 for the

F-12

MIM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except for share and per share amounts)

NOTE 4 -- RELATED PARTY TRANSACTIONS -- Continued

purposes of acquiring a building leased by the Company, of which approximately
$280 was outstanding at December 31, 1996 and 1997. The note bears interest at a
rate of 10% per annum with principal due on December 1, 2004. Interest income
was $29 for the years ended December 31, 1995, 1996 and 1997.

In December 1995, the Company advanced to MIM Holdings $800 for certain
consulting services to be performed for the Company in 1996. During 1995, the
Company also paid $278 for certain expenses on behalf of MIM Holdings including
$150 for consulting services to MIM Holdings by an officer of RxCare. These
amounts, totaling $1,078, were recorded as a stockholder note receivable at
December 31, 1995. The Company has received a note from MIM Holdings for $456.
As originally written, the note bore interest at 10% per annum, payable
quarterly, with principal due on March 31, 2001. The note was rewritten in
December 1996 to make all interest from January 1, 1996 to September 30, 1997
payable on September 30, 1997. Thereafter, interest will be paid quarterly, in
arrears, until March 31, 2001. The note is guaranteed by an officer of the
Company and further secured by the assignment to the Company of a note in favor
of MIM Holdings in the aggregate principal amount of $100. The remaining balance
of $622 will not be repaid and was recorded as a stockholder distribution during
the first quarter of 1996. The outstanding balance at December 31, 1996 and 1997
was $502 and $456, respectively.

NOTE 5 -- PROPERTY AND EQUIPMENT

Property and equipment, at cost, consists of the following at December 31,:

1996 1997
------- -------
Computer and office equipment, including equipment
under capital leases............................... $ 2,794 $ 4,227
Furniture and fixtures .............................. 364 442
Leasehold improvements .............................. 506 540
------- -------
3,664 5,209
Less: Accumulated depreciation ...................... (1,241) (1,710)
------- -------
$ 2,423 $ 3,499
======= =======

NOTE 6 -- COMMITMENTS AND CONTINGENCIES

Legal Proceedings

The Company is currently a third-party defendant in a proceeding in the
Superior Court of the State of Rhode Island. The third-party complaint alleges
that the Company interfered with certain contractual relationships and
misappropriated certain confidential information. The third-party complaint
seeks to enjoin the Company from using the allegedly misappropriated
confidential information and seeks an unspecified amount of compensatory and
consequential damages, interest and attorneys' fees. Although the Company
believes that the third-party plaintiffs' allegations are without merit, the
loss of this litigation could have a material adverse effect on the Company's
financial position and results of operations.

Pro-Mark is currently engaged in efforts to recover amounts it believes are
reimbursable from Sierra Health Services, Inc. collectively, on behalf of its
subsidiaries, Sierra Health and Life Insurance Company, Inc., Sierra Healthcare
Options, Inc., Sierra Healthplan of Nevada, Inc. and HMO Texas L.C.
(collectively, "Sierra") under a pharmacy benefit management services agreement
(the "Sierra Agreement") dated as of August 6, 1997, which went into effect on
October 1, 1997. The Company and Sierra disagree with respect to the
interpretation of certain provisions of the Sierra Agreement.

F-13

MIM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except for share and per share amounts)

NOTE 6 -- COMMITMENTS AND CONTINGENCIES -- Continued

On February 13, 1998, Pro-Mark gave Sierra notice of termination of the
agreement which provided for the termination of the Sierra Agreement 30 days
from the date of such notice and commenced an arbitration of the dispute before
the American Arbitration Association, which the agreement specifies as the sole
forum for resolving disputes arising under the agreement. The terminated date
was extended an additional ten days upon neutral agreement of the parties.

On March 13, 1998, Sierra filed a lawsuit against Pro-Mark in the United
States District Court, District of Nevada. The suit claims Pro-Mark breached the
Sierra Agreement and that Sierra was misled as to the nature of that agreement.
Sierra has asked the court to issue an order preventing Pro-Mark from
terminating the Sierra Agreement under its February 13, 1998 notice of
termination.

In ruling upon Sierra's motion, the court directed that if Sierra elected
to post a $5 million bond in Pro-Mark's favor, a temporary restraining order
would be issued, pending a motion for a preliminary injunction. Sierra elected
to post such bond. The Court will schedule a hearing on Sierra's request for a
preliminary injunction. Pro-Mark is opposing Sierra's request for a preliminary
injunction and is asking the court to refer Sierra's contentions and claims to
the arbitration proceeding before the American Arbitration Association. The
Company believes that it has the right to receive the disputed funds from Sierra
under the Sierra Agreement, and that the Company has the right to terminate the
agreement; however, if the court were to rule in favor of Sierra, and if
Pro-Mark were both unable to terminate the agreement and unable to recover from
Sierra the amounts Pro-Mark claimed was owed, then the Company's business would
be materially adversely affected.

Government Regulation

Various Federal and state laws and regulations affecting the healthcare
industry do or may impact the Company's current and planned operations
including, without limitation, Federal and state laws prohibiting kickbacks in
government health programs (including TennCare), Federal and state antitrust and
drug distribution laws, and a wide variety of consumer protection, insurance and
other state laws and regulations. While management believes that the Company is
in substantial compliance with all existing laws and regulations material to the
operation of its business, such laws and regulations are subject to rapid change
and often are uncertain in their application. As controversies continue to arise
in the healthcare industry (for example, regarding the efforts of plan sponsors
and pharmacy benefit managers to limit formularies, alter drug choice and
establish limited networks of participating pharmacies), Federal and state
regulation and enforcement priorities in this area can be expected to increase,
the impact of which on the Company cannot be predicted. There can be no
assurance that the Company will not be subject to scrutiny or challenge under
one or more of these laws or that any such challenge would not be successful.
Any such challenge, whether or not successful, could have a material adverse
effect upon the Company's financial position and results of operations.
Violation of the Federal anti-kickback statute, for example, may result in
substantial criminal penalties as well as exclusion from the Medicare and
Medicaid (including TennCare) programs. Further, there can be no assurance that
the Company will be able to obtain or maintain any of the regulatory approvals
that may be required to operate its business, and the failure to do so could
have a material adverse effect on the Company's financial position and results
of operations.

Non-Compete Covenant

In connection with his resignation from Zenith Laboratories, Inc. a
manufacturer and distributor of generic drugs ("Zenith"), in January 1996 the
Company's Chief Executive Officer agreed that he would provide consultative
services to Zenith through December 31, 1998 and that, until then, neither he,
nor any business in which he has a direct or indirect interest, will own, manage
or be employed or engaged by any business that is substantially competitive with
any material portion of the business of Zenith or its subsidiaries as conducted
in early 1996. Such covenant may restrict the Company's ability to compete in
certain areas including any future drug distribution business in which the
Company may engage.

F-14

MIM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except for share and per share amounts)

NOTE 6 -- COMMITMENTS AND CONTINGENCIES -- Continued

Employment Agreements

The Company has entered into employment agreements with certain key
employees which expire at various dates through May 2000. Total minimum
commitments under these agreements are approximately as follows:

1998............................. $1,088
1999............................. 958
2000............................. 399
------
$2,445
======

Other Agreements

The Company has two consulting agreements which will require payments of
$300 in the aggregate through 1998. As discussed in Note 4, the Company rents
one of its main facilities from Alchemie. Rent expense for non-related party
leased facilities and equipment was approximately $116, $208 and $477 for the
years ended December 31, 1995, 1996 and 1997, respectively.

Operating Leases

The Company leases its facilities and certain equipment under various
operating leases. The future minimum lease payments under these operating leases
at December 31, 1997 are as follows:

1998............................. $ 584
1999............................. 436
2000............................. 383
2001............................. 378
2002............................. 363
Thereafter ...................... 272
------
$2,416
======

Capital Leases

The Company leases certain equipment under various capital leases. Future
minimum lease payments under the capital lease agreements at December 31, 1997
are as follows:

1998........................................... $ 292
1999........................................... 292
2000........................................... 292
2001........................................... 267
------
Total minimum lease payments .................. 1,143
Less: amount representing interest ............ 165
------
Obligations under leases ...................... 978
Less: current portion of lease obligation ..... 222
------
$ 756
======

NOTE 7 -- INCOME TAXES

The Company accounts for income taxes in accordance with SFAS 109. Under
SFAS 109, deferred tax assets or liabilities are computed based on the
differences between the financial statement and income tax bases of assets and
liabilities as measured by currently enacted tax laws and rates. Deferred income
tax expenses and benefits are based on changes in the deferred assets and
liabilities from period to period.

F-15

MIM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except for share and per share amounts)

NOTE 7 -- INCOME TAXES -- Continued

The effect of temporary differences which give rise to a significant
portion of deferred taxes is as follows as of December 31, 1996 and 1997:

1996 1997
------- -------
Deferred tax assets:
Reserves and accruals not yet deductible for tax purposes $ 3,327 $ 3,700
Net operating loss carryforward ......................... 2,475 7,427
------- -------
Subtotal ........................................ 5,802 11,127
Less: valuation allowance ............................... (5,734) 11,196)
------- -------
Total deferred tax assets ................................. 68 (69)
------- -------
Deferred tax liabilities:
Property basis differences .............................. (68) 69
------- -------
Total deferred tax liability .............................. (68) 69
------- -------
Net deferred taxes ........................................ $ -- $ --
======= =======

It is uncertain whether the Company will realize full benefit from its
deferred tax assets, and it has therefore recorded a valuation allowance. The
Company will assess the need for the valuation allowance at each balance sheet
date.

There is no provision (benefit) for income taxes for the years ended
December 31, 1996 and 1997. A reconciliation to the tax provision (benefit) at
the Federal statutory rate is presented below:

1996 1997
-------- --------
Tax benefit at statutory rate ........................... $(10,796) $ (4,589)
State tax benefit, net of federal taxes ................. (2,096) (891)
Provision for valuation allowance ....................... 2,065 5,460
Non-deductible executive stock option compensation charge 10,816 --
Other ................................................... 11 20
-------- --------
Recorded income taxes ................................... $ -- $ --
======== ========

At December 31, 1997, the Company had, for tax purposes, unused net
operating loss carryforwards of approximately $18.3 million that may be
available to offset future taxable income, if any, and which will begin expiring
in 2008. The amount of net operating loss carryforwards which may be utilized in
any one period may become limited by federal income tax requirements if a
cumulative change in ownership of more than 50% occurs within a three year
period.

NOTE 8 -- STOCKHOLDERS' EQUITY

Public Offering

On August 14, 1996, the Company completed its initial public offering of
4,000,000 shares of Common Stock sold at $13.00 per share. Net proceeds amounted
to $46,786 after offering costs of $1,574.

Stock Option Plans

In 1994, Pro-Mark established the Pro-Mark Holdings, Inc. 1994 Stock Plan
(the "Pro-Mark Plan"). The Pro-Mark Plan provided for, among other awards,
options to employees, contractors and consultants to purchase up to 60,000
shares of Pro-Mark common stock at an option price not less than 100% of the
fair market value of the shares on the grant date. The period during which an
option may be exercised varied, but no option could be exercised after 15 years
from the date of grant. During 1994, options to purchase 560,700 shares of the
Company's Common Stock at $0.0067 per share were granted. During 1995, options
to purchase 2,494,200 shares of the Company's Common Stock at $0.0067 per share
were granted. (See Note 1).

F-16

MIM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except for share and per share amounts)

NOTE 8 -- STOCKHOLDERS' EQUITY -- Continued

In May 1996, the Company adopted the MIM Corporation 1996 Stock Incentive
Plan (the "Plan"). The Plan provides for the granting of incentive stock options
(ISOs) and non-qualified stock options to employees and key contractors of the
Company. Options granted under the Plan generally vest over a three-year period,
but vest in full upon a change in control of the Company or at the discretion of
the Company's compensation committee, and generally are exercisable for from 10
to 15 years after the date of grant subject to earlier termination in certain
circumstances. The exercise price of ISOs granted under the Plan will not be
less than 100% of the fair market value on the date of grant (110% for ISOs
granted to more than a 10% shareholder). If non-qualified stock options are
granted at an exercise price less than fair market value on the grant date, the
amount by which fair market value exceeds the exercise price will be charged to
compensation expense over the period the options vest. The number of shares
authorized for issuance under the Plan, initially 4,000,000, was increased to
4,375,000 in December 1996. At December 31, 1997, 368,369 shares remained
available for grant under the Plan.

As of December 31, 1996 and 1997, the exercisable portion of outstanding
options was 2,793,550 and 2,004,306, respectively. No options were exercisable
at December 31, 1994. Stock option activity under the Plan through December 31,
1997 is as follows:
Average
Options Price
------- ------
Balance, December 31, 1994 ..................... 552,300 $0.0067
Granted ...................................... 2,494,200 $0.0067
Canceled ..................................... (24,600)
---------
Balance, December 31, 1995 ..................... 3,021,900 $0.0067
Granted ...................................... 1,124,902 $ 11.26
Canceled ..................................... (46,421)
Exercised .................................... (16,800)
---------
Balance, December 31, 1996 ..................... 4,083,581 $ 2.99
Granted ...................................... 85,000 $ 9.49
Canceled ..................................... (178,750)
Exercised .................................... (1,294,550)
---------
Balance, December 31, 1997 ..................... 2,695,281 $ 4.21
========= =======

In July 1996, the Company adopted the MIM Corporation 1996 Non-Employee
Directors Stock Incentive Plan (the "Directors Plan"). The purpose of the
Directors Plan is to attract and retain qualified individuals to serve as
non-employee directors of the Company ("Outside Directors"), to provide
incentives and rewards to such directors and to associate more closely the
interests of such directors with those of the Company's stockholders. The
Directors Plan provides for the automatic granting of non-qualified stock
options to Outside Directors joining the Company since the adoption of the
Directors Plan. Each such Outside Director receives an option to purchase 20,000
shares of Common Stock upon his or her initial appointment or election to the
Board of Directors. The exercise price of such options is equal to the fair
market value of the Common Stock on the date of grant. Options granted under the
Directors Plan generally vest over three years. A total of 100,000 shares of
Common Stock are authorized for issuance under the Directors Plan. At December
31, 1997, options to purchase 40,000 shares of Common Stock were outstanding
under the Directors Plan at an exercise price of $13.00 per share, 13,334 of
which were exercisable.

Accounting for Stock-Based Compensation

In May 1996, the then majority stockholder of the Company granted to three
individuals who were unaffiliated with the Company (each of whom became a
director of the Company and two of whom also became officers of the Company)
options to purchase an aggregate of 3,600,000 shares of Common Stock owned by
him at $0.10 per share. These options are immediately exercisable and have a
term of ten years, subject to earlier termination upon a change in control of
the Company, as defined. In connection with these options, under APB 25, for the
year ended

F-17

MIM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except for share and per share amounts)

NOTE 8 -- STOCKHOLDERS' EQUITY -- Continued

December 31, 1996 the Company recorded a nonrecurring, non-cash stock option
charge (and a corresponding credit to additional paid-in capital) of $26,640,
representing the difference between the exercise price and $7.50, the deemed
fair market value of the Common Stock at the date of grant. In January 1998, two
of these individuals who are officers of the Company exercised a total of
3,300,000 of these options.

In July 1996, the then majority stockholder also granted to one of these
individuals an additional option ("additional option") to purchase 1,860,000
shares of Common Stock owned by him at $13 per share. The additional option has
a term of ten years, subject to earlier termination upon a change in control of
the Company, as defined, or within certain specified periods following the
grantee's death, disability or termination of employment for any reason. The
additional option vests in installments of 620,000 shares each on December 31,
1996, 1997 and 1998, and is immediately exercisable upon the approval of a
change in control of the Company, as defined, by the Company's Board of
Directors and, if required, stockholders.

Had compensation cost for the Company's stock option plans for employees
and directors been determined based on the fair value method in accordance with
SFAS 123, the Company's net loss would have been increased to the pro forma
amounts indicated below for the years ended December 31,:

1995 1996 1997
---------------------- ---------------------- ----------------------
As Reported Pro Forma As Reported Pro Forma As Reported Pro Forma
----------- --------- ----------- --------- ----------- ---------

Net loss ................. $ (6,772) $ (6,779) $(31,754) $(32,131) $(13,497) $(14,416)
-------- -------- -------- -------- -------- --------
Basic and diluted loss per
common share ........... $ (1.43) $ (1.43) $ (3.32) $ (3.36) $ (1.07) $ (1.14)
-------- -------- -------- -------- -------- --------
Weighed average shares
outstanding ............ 4,732 4,732 9,557 9,557 12,620 12,620
======== ======== ======== ======== ======== ========

Because the method prescribed by SFAS No. 123 has not been applied to
options granted prior to January 1, 1995, the resulting pro forma compensation
expense may not be representative of the amount to be expected in future years.
Pro forma compensation expense for options granted is reflected over the vesting
period, therefore future pro forma compensation expense may be greater as
additional options are granted.

The fair value of each option grant was estimated on the grant date using
the Black-Scholes option-pricing model with the following weighted-average
assumptions:

1995 1996 1997
---- ---- ----
Volatility............................... 50% 50% 60%
Risk-free interest rate.................. 5% 5% 5%
Expected life of options................. 4 years 4 years 4 years

The Black-Scholes option-pricing model was developed for use in estimating
the fair value of traded options which have no vesting restrictions and are
fully transferable. In addition, option-pricing models require the input of
highly subjective assumptions including expected stock price volatility. Because
the Company's employee stock options have characteristics significantly
different from those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, in management's
opinion the existing models do not necessarily provide a reliable single measure
of the fair value of its employee stock options.

F-18

MIM CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except for share and per share amounts)

NOTE 9 -- CONCENTRATION OF CREDIT RISK

The majority of the Company's revenues have been derived from TennCare
contracts pursuant to the RxCare Contract. The following table outlines
contracts with plan sponsors having revenues which individually exceeded 10% of
total revenues during the applicable time period:

Plan Sponsor
---------------------------------------
A B C D
---- ---- ---- ----

Year ended December 31, 1995
% of total revenue .................................. 30% 45% -- --
% of total accounts receivable at period end ........ * 28% -- --
Year ended December 31, 1996
% of total revenue .................................. 18% 47% 11% --
% of total accounts receivable at period end ........ * 13% 14% --
Year ended December 31, 1997
% of total revenue .................................. 21% 10% 13% 10%
% of total accounts receivable at period end ........ * * * *

- --------
* Less than 10%.

There were no other contracts representing 10% or more of the Company's
total revenue for the years ended December 31, 1995, 1996 and 1997. It is
possible that the State of Tennessee or the Federal government could require
modifications to the TennCare program. The Company is unable to predict the
effect of any such future changes to the TennCare program. Effective April
1,1997, one of the TennCare contracts was terminated which represented 1996
revenues and net losses of $132,846 and $7,321 (including a $3,500 loss
reserve), respectively (see Note 2).

NOTE 10 -- PROFIT SHARING PLAN

The Company maintains a deferred compensation plan under Section 401(k) of
the Internal Revenue Code. Under the plan, employees may elect to defer up to
15% of their salary, subject to Internal Revenue Service limits. The Company may
make a discretionary matching contribution. The Company made no matching
contributions for the years ended December 31, 1995, 1996 and 1997.

NOTE 11 -- SUBSEQUENT EVENTS

The Company has entered into an agreement to acquire Continental Managed
Pharmacy, Inc., a Cleveland based pharmacy benefit management company, for
approximately 3.9 million shares of the Company's Common Stock. See "Risk
Factors--Risks Relating to the Merger" included in this Proxy
Statement/Prospectus for a discussion of the risks to be considered in
connection with the proposed merger. The acquisition is subject to shareholder
approval and will be treated as a purchase for accounting and financial
reporting purposes.

Effective March 31, 1998, Mr. E. David Corvese, the Vice Chairman and a
director of the Company and an officer and director of certain Company
subsidiaries resigned as an employee and officer of the Company and its
subsidiaries, pursuant to a separation agreement between Mr. Corvese and the
Company. Under that agreement, he also agreed not to stand for re-election as a
director of the Company at its annual shareholders meeting. Effective January 1,
1998, Mr. Corvese had requested, and was granted, an administrative leave from
his responsibilities with the Company and its subsidiaries. This leave was
requested so that Mr. Corvese could attend to matters of a personal nature. Mr.
Corvese's former responsibilities were allocated among the Company's senior
management.

F-19

MIM CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(In thousands, except for share amounts)

December 31, March 31,
1997 1998
-------- --------
(Unaudited)

ASSETS
Current assets
Cash and cash equivalents ....................................... $ 9,593 $ 5,816
Investment securities ........................................... 19,235 15,243
Receivables, less allowance for doubtful accounts of $1,386 ..... 23,666 34,742
Prepaid expenses and other current assets ....................... 888 832
-------- --------
Total current assets .................................... 53,382 56,633
Investment securities, net of current portion ..................... 3,401 1,100
Other investments ................................................. 2,300 2,300
Property and equipment, net ....................................... 3,499 3,626
Due from affiliates, less allowance for doubtful accounts of $2,360 -- --
Other assets, net ................................................. 145 187
-------- --------
Total assets ............................................ $ 62,727 $ 63,846
======== ========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current portion of capital lease obligations .................... $ 222 $ 226
Accounts payable ................................................ 931 367
Deferred Revenue ................................................ 2,799 --
Claims payable .................................................. 26,979 29,462
Payables to plan sponsors and others ............................ 10,839 11,949
Accrued expenses ................................................ 2,279 1,589
-------- --------
Total current liabilities ............................... 44,049 43,593

Capital lease obligations, net of current portion ................. 756 699

Commitments and contingencies

Minority interest ................................................. 1,112 1,112

Stockholders' equity
Preferred Stock, $.0001 par value; 5,000,000 shares authorized,
no shares issued or outstanding ............................... -- --
Common Stock, $.0001 par value; 40,000,000 shares authorized,
13,421,850 shares issued and outstanding at March 31, 1998 .... 1 1
Additional paid-in capital ...................................... 73,585 73,593
Accumulated deficit ............................................. (55,061) (53,425)
Stockholder notes receivable .................................... (1,715) (1,727)
-------- --------
Total stockholders' equity .............................. 16,810 18,442
-------- --------
Total liabilities and stockholders' equity .............. $ 62,727 $ 63,846
======== ========

The accompanying notes are an integral part of these consolidated financial
statements.

F-20

MIM CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except for per share amounts)
(Unaudited)

Three months ended
March 31,
------------------
1997 1998
------- -------
Revenue .................................................. $70,811 $97,963
Cost of revenue .......................................... 66,829 92,384
------- -------
Gross profit ......................................... 3,982 5,579
Selling, general and administrative expenses ............. 3,909 4,450
------- -------
Income from operations ............................... 73 1,129
Interest income, net ..................................... 623 507
------- -------
Income before minority interest ...................... 696 1,636
Minority interest ........................................ 2 --
------- -------
Net income ............................................... $ 698 $ 1,636
======= =======

Basic earnings per share ................................. $ 0.06 $ 0.12
======= =======

Diluted earnings per share ............................... $ 0.05 $ 0.11
======= =======

Weighted average shares outstanding used in computing
basic earnings per share ............................... 12,068 13,369
======= =======

Weighted average shares outstanding used in computing
Diluted earnings per share ............................. 15,121 15,132
======= =======

The accompanying notes are an integral part of these consolidated financial
statements.

F-21

MIM CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

Three Months Ended
March 31,
--------------------
1997 1998
-------- --------
(Unaudited)

Cash flows from operating activities:
Net income .................................................. $ 698 $ 1,636
Adjustments to reconcile net loss to net cash provided
by (used in) operating activities:
Net loss allocated to minority interest ................... (2) --
Depreciation and amortization ............................. 239 361
Stock option charges ...................................... 7 7
Provision for losses on receivables and loans to affiliates 579 --
Changes in assets and liabilities:
Receivables ............................................... (1,318) (11,076)
Prepaid expenses and other assets ......................... (7) 56
Accounts payable .......................................... (826) (564)
Deferred revenue .......................................... -- (2,799)
Claims payable ............................................ 3,014 2,483
Payables to plan sponsors and others ...................... (2,180) 1,110
Accrued expenses .......................................... (454) (690)
-------- --------
Net cash used in operating activities ............... (250) (9,476)
-------- --------
Cash flows from investing activities:
Purchase of property and equipment .......................... (312) (487)
Purchase of investment securities ........................... (14,832) (4,000)
Proceeds from maturates of investment securities ............ 21,239 10,293
Increase in other assets .................................... (11) (43)
Stockholder loans, net ...................................... (35) (12)
Loans to affiliates, net .................................... 359 --
-------- --------
Net cash provided by investing activities ........... 6,408 5,751
-------- --------
Cash flows from financing activities:
Principal payments on capital lease obligations ............. (53) (53)
Proceeds from exercise of stock options ..................... -- 1
-------- --------
Net cash used in financing activities ............... (53) (52)
-------- --------
Net increase (decrease) in cash and cash equivalents .......... 6,105 (3,777)
Cash and cash equivalents--beginning of period ................ 1,834 9,593
-------- --------
Cash and cash equivalents--end of period ...................... $ 7,939 $ 5,816
======== ========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for: Interest ................... $ 12 $ 19
======== ========

SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS:
Equipment acquired under capital lease obligations .......... $ -- $ --
======== ========
Distribution to stockholder through the cancellation of
stockholder notes receivable .............................. $ -- $ --
======== ========

The accompanying notes are an integral part of these consolidated financial
statements.

F-22

MIM CORPORATION AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(in thousands, except for share and per share amounts)

NOTE 1 -- BASIS OF PRESENTATION

The accompanying unaudited consolidated interim financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information, pursuant to the rules and regulations of the U.S.
Securities and Exchange Commission (the "Commission"). Pursuant to such rules
and regulations, certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. In the opinion of
management, all adjustments considered necessary for a fair presentation of the
financial statements, primarily consisting of normal recurring adjustments, have
been included. The results of operations and cash flows for the three months
ended March 31, 1998 are not necessarily indicative of the results of operations
or cash flows which may be reported for the remainder of 1998.

These consolidated financial statements should be read in conjunction with
the consolidated financial statements, notes and information included in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1997, as amended by an amendment thereto on Form 10-K/A, filed with the
Commission (the "Form 10-K").

The accounting policies following for interim financial reporting are the
same as those disclosed in Note 2 to the consolidated financial statements
included in Form 10K.

NOTE 2 -- EARNINGS PER SHARE

The following table sets forth the computation of Basic Earnings per Share
and Diluted Earnings per Share:

Three Months
Ended March 31,
---------------
1998 1997
------ ------
(In thousands except
per share share amounts)
Net income less preferred dividends ................. 1,636 698
Denominator:
Average number of common shares outstanding ....... 13,369 12,068
------ ------
Basic Earnings per Share ...................... $ .12 $ .06
====== ======
Denominator:
Average number of common shares outstanding ....... 13,369 12,068
Common share equivalents of outstanding stock options
and deferred contingent common stock awards ....... 1,763 3,053
Total shares ........................................ 15,132 15,121
------ ------
Diluted Earnings per Share .................... $ .11 $ .05
====== ======

NOTE 3 -- OTHER COMPREHENSIVE INCOME

The Company adopted Statement of Financial Accounting Standard No. 130,
"Reporting Comprehensive Income" ("SFAS 130") for the three months ended March
31, 1998. There were no transactions during this period that would be required
to be reported as a component of other comprehensive income.

NOTE 4 -- SUBSEQUENT EVENTS

On April 14, 1998, the Company resolved its dispute with certain
subsidiaries of Sierra Health Services, Inc., a Nevada corporation ("Sierra"), a
party to a PBM Services Agreement (the "Sierra Agreement") with the Company. As
disclosed in the Company's Form 10-K, this dispute related to the parties'
divergent interpretations of certain provisions of the Sierra Agreement, which
led to Sierra's dispute of certain amounts which the Company claimed were owed
to it. Under the terms of the settlement, both parties dismissed their
respective claims pending in the United States District Court, District of
Nevada and the American Arbitration Association. In addition, the parties
modified a number of provisions

F-23

MIM CORPORATION AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(in thousands, except for share and per share amounts)

NOTE 4 -- SUBSEQUENT EVENTS -- Continued

of the Sierra Agreement, including the additional of a provision permitting any
party to terminate the Sierra Agreement at any time and for any reason upon 90
days' prior written notice. On May 8, 1998, the Company notified Sierra of its
intention to terminate the Sierra Agreement 90 days after notice thereof in
accordance with the terms of Agreement. The Company continues to provide
pharmacy benefit management services to Sierra under the Sierra Agreement.

Effective May 15, 1998, Mr. John H. Klein, currently the Company's Chief
Executive Officer, Chairman of the Board of Directors and a director, will
resign from all positions held with the Company, including Chief Executive
Officer, Chairman of the Board and director. Effective on that date, Mr. Richard
H. Friedman, currently the Company's Chief Operating Officer, Chief Financial
Officer and a director will succeed Mr. Klein as the Company's Chief Executive
Officer. Mr. Scott R. Yablon, currently a director of the Company, has joined
the Company as an employee, and effective May 15, 1998, will assume the titles
of President, Chief Financial Officer and Chief Operating Officer of the
Company.

F-24

REPORT OF INDEPENDENT AUDITORS

Board of Directors
Continental Managed Pharmacy Services, Inc. and Subsidiaries

We have audited the accompanying consolidated balance sheets of Continental
Managed Pharmacy Services, Inc. and Subsidiaries as of December 31, 1996 and
1997, and the related consolidated statements of income, shareholders' equity,
and cash flows for each of the three years in the period ended December 31,
1997. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Continental Managed Pharmacy Services, Inc. and Subsidiaries at December 31,
1996 and 1997, and the consolidated results of their operations and their cash
flows for each of the three years in the period ended December 31, 1997, in
conformity with generally accepted accounting principles.

ERNST & YOUNG LLP

January 30, 1998
Cleveland, Ohio

F-25

CONTINENTAL MANAGED PHARMACY SERVICES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(In thousands)

December 31
-----------------
1996 1997
------- -------
ASSETS
Current Assets
Cash ..................................................... $ 244 $ 166
Receivables .............................................. 5,599 9,911
Inventories .............................................. 592 779
Prepaid expenses ......................................... 170 95
Deferred income taxes .................................... 272 239
------- -------
Total current assets ..................................... 6,877 11,190
Property & equipment, net ................................ 907 704
Goodwill, net ............................................ 4,572 4,364
Deferred income taxes .................................... 23 35
Other assets ............................................. 107 15
Other intangible assets, net ............................. 525 937
------- -------
Total assets ........................................... $13,011 $17,245
======= =======

LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Current portion of capital lease obligations ............. $ 38 $ 26
Current portion of long-term debt ........................ 428 340
Accounts payable ......................................... 2,468 4,295
Claims payable ........................................... 333 1,171
Accrued expenses ......................................... 1,053 1,429
Income taxes payable ..................................... 82 510
------- -------
Total current liabilities ................................ 4,402 7,771
Other non-current liabilities ............................ 201 199
Capital lease obligations, less current portion .......... 47 21
Long-term debt, less current portion ..................... 3,710 4,069

Shareholders' Equity
Common stock, without par value, stated
value $1.00 per share, 12,000 shares
authorized, 11,600 shares issued and outstanding ....... 12 12
Additional paid-in capital ............................... 4,309 4,309
Retained earnings ........................................ 330 864
------- -------
Total shareholders' equity ............................... 4,651 5,185
------- -------
Total liabilities & shareholders' equity ................... $13,011 $17,245
======= =======

See notes to consolidated financial statements

F-26

CONTINENTAL MANAGED PHARMACY SERVICES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share and per share amounts)

Year ended December 31
--------------------------------
1995 1996 1997
-------- -------- --------

Revenues ................................................. $ 30,202 $ 36,971 $ 47,280
Cost of revenues ......................................... 21,530 28,437 36,320
-------- -------- --------
Gross profit ......................................... 8,672 8,534 10,960
Selling, general & administrative ........................ 7,580 7,983 9,503
Nonrecurring charges ..................................... 644
-------- -------- --------
Operating profit ..................................... 448 551 1,457
Interest income (expense) ................................ (281) (349) (291)
-------- -------- --------
Profit (loss) before taxes ........................... 167 202 1,166
Taxes .................................................... 132 188 632
-------- -------- --------
Net income ........................................... $ 35 $ 14 $ 534
======== ======== ========
Basic and diluted earnings per share ..................... $ 3.02 $ 1.21 $ 46.03
======== ======== ========
Weighted average shares used to compute earnings per share 11,600 11,600 11,600
======== ======== ========

See notes to consolidated financial statements

F-27

CONTINENTAL MANAGED PHARMACY SERVICES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(In thousands, except share amounts)

Total
Common Additional Retained Shareholders'
Shares Stock Capital Earnings Equity
-------- -------- -------- -------- ---------

Balance at January 1, 1995 ................... 11,600 $ 12 $ 4,309 $ 281 $ 4,602
Net Income ................................. 35 35
-------- -------- -------- -------- ---------
Balance at December 31, 1995 ................. 11,600 12 4,309 316 $ 4,637
Net Income ................................. 14 14
-------- -------- -------- -------- ---------
Balance at December 31, 1996 ................. 11,600 12 4,309 330 4,651
Net Income ................................. 534 534
-------- -------- -------- -------- ---------
Balance at December 31, 1997 ................. 11,600 $ 12 $ 4,309 $ 864 $ 5,185
======== ======== ======== ======== =========

See notes to consolidated financial statements

F-28

CONTINENTAL MANAGED PHARMACY SERVICES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

Year ended December 31
--------------------------------
1995 1996 1997
-------- -------- --------

Operating activities
Net income ........................................ $ 35 $ 14 $ 534
Adjustments to reconcile net income to net cash
(used in) provided by operating activities:
Depreciation and amortization ................. 508 635 629
Provision for bad debts ....................... 697 688 963
Deferred taxes ................................ (151) (25) 20
Nonrecurring charge ........................... 281
Changes in operating assets and liabilities:
Accounts receivable ......................... (695) (1,356) (5,276)
Inventory ................................... (256) (4) (187)
Prepaid expenses and other assets ........... (33) (5) 75
Accounts payable ............................ (252) (174) 1,827
Claims payable .............................. (342) (319) 838
Accrued commissions, wages and payroll
Related items ............................. (96) 219 375
Income taxes payable ........................ (231) 98 428
Other liabilities ........................... 42 (25) (102)
-------- -------- --------
Net cash (used in) provided by operating activities (493) (254) 124
Investing activities
Purchases of property and equipment ............... (341) (100) (137)
Purchases of businesses ........................... (495) (23) (393)
-------- -------- --------
Net cash used in investing activities ............. (836) (123) (530)
Financing activities
Proceeds from revolving note agreement ............ 17,300 25,977 28,948
Payments on revolving note agreement .............. (16,595) (25,598) (28,156)
Proceeds form note payable ........................ 750 500
Payments on notes payable ......................... (134) (399) (521)
Note receivable form related party ................ (95) 95
Payments on obligations under capital leases ...... (49) (57) (38)
Payment of loan origination fees .................. (34) (4)
-------- -------- --------
Net cash provided by financing activities ......... 1,143 419 328
-------- -------- --------
(Decrease) increase in cash ....................... (186) 42 (78)
Cash at beginning of year ......................... 388 202 244
-------- -------- --------
Cash at end of year ............................... $ 202 $ 244 $ 166
======== ======== ========
Cash paid during the year for
Interest .......................................... $ 256 $ 308 $ 350
======== ======== ========
Income taxes ...................................... $ 518 $ 115 $ 193
======== ======== ========

See notes to consolidated financial statements

F-29

CONTINENTAL MANAGED PHARMACY SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the Three Years Ended December 31, 1995, 1996 and 1997
(In thousands, except share and per share amounts)

A. Description of Business

Continental Managed Pharmacy Services, Inc. (CMPS or the Company) is a
national provider of pharmaceutical benefits management services, plan design
and consultation, and physician billing. Through its Subsidiaries, the Company
markets prescription drug programs and provides mail order and network pharmacy
services and billing and administrative services for customers that provide
medical and health care cost containment services.

B. Summary of Significant Accounting Policies

Consolidation

The consolidated financial statements include the accounts of CMPS and its
wholly owned Subsidiaries. All significant intercompany accounts and
transactions have been eliminated in consolidation.

Net Revenue and Accounts Receivable

Net revenue and the related accounts receivable for services rendered are
reported at the estimated net realizable amounts from customers and third-party
payors. The allowance for uncollectible accounts receivable was approximately
$661 and $639 at December 31, 1996 and 1997, respectively.

Inventory

Inventory is stated at the lower of cost or market. The cost of the
inventory is determined using the first-in, first-out (FIFO) method.

Property and Equipment

Property and equipment are stated on the basis of cost. Depreciation on
furniture and equipment is computed on a straight-line basis over the estimated
useful lives of the related assets. Leasehold improvements and leased assets are
amortized on a straight-line basis over the lesser of the related lease term or
estimated useful life of the asset. Amortization of capital leased assets is
included in depreciation expense. The estimated useful lives of the assets are
as follows:

Machinery and equipment 5 years
Computer equipment 3-5 years
Furniture, fixtures and leasehold improvements 7 years

Depreciation expense was $248, $323 and $341 for the years ended December
31, 1995, 1996 and 1997, respectively

Intangible Assets

Goodwill, less accumulated amortization of $623 and $831 at December 31,
1996 and 1997, respectively, represents the cost in excess of the fair value of
net assets acquired and is amortized using the straight-line method over a
period of 15 to 25 years. Other intangible assets, less accumulated amortization
of $156 and $238 at December 31, 1996 and 1997, consist of customer records and
files and organizational costs which are amortized using the straight-line
method over 5 to 15 years, and a five year non-compete agreement which is being
amortized over the term of the agreement.

Long-lived assets are reviewed for impairment. Impairment is recognized
when events or changes in circumstances indicate that the carrying amount of the
asset, or related group of assets, may not be recoverable. If the expected
future undiscounted cash flows are less than the carrying amount of the asset,
an impairment loss is recognized at that time. Measurement of impairment may be
based upon appraisals, market values of similar assets or discounted cash flows.

F-30

CONTINENTAL MANAGED PHARMACY SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the Three Years Ended December 31, 1995, 1996 and 1997
(In thousands, except share and per share amounts)

B. Summary of Significant Accounting Policies -- Continued

Income Taxes

The Company accounts for income taxes using the liability method. Deferred
taxes are recognized based on temporary differences between the financial
statement carrying amounts and the tax bases of assets and liabilities.

Financial Instruments

The fair value of long-term debt is estimated based on the present value of
the underlying cash flows discounted at the Company's estimated borrowing rate.
At December 31, 1996 and 1997, the fair value of long-term debt approximates its
carrying value.

Stock Options

CMPS applies the intrinsic value based method in accordance with Accounting
Principles Board Opinion No. 25 (APB 25), Accounting for Stock Issued to
Employees, to account for options granted to employees and directors to purchase
common shares. Accordingly, no compensation expense is recognized on the grant
date since at that date the option price is equal to the estimated fair market
value of the underlying common shares.

Earnings Per Share

Earnings per common share are calculated in accordance with Statement of
Financial Accounting Standards No. 128, "Earnings per Share" issued by the
Financial Accounting Standards Board during 1997. Basic earnings per share are
computed by dividing net income available to common shareholders by the weighted
average number of common shares outstanding for the period. Diluted earnings per
share reflect the potential dilution that could occur if securities to issue
common shares were converted into common shares. Such common shares consist of
shares issuable upon exercise of stock options computed by using the treasury
stock method.

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the consolidated financial
statements and accompanying notes. Actual results may differ from those
estimates.

C. Long-Term Debt

In March 1997, the Company extended its Revolving Note Agreement (the
Agreement) with a bank (the Bank) through May 1999. The Company can borrow up to
$6,500 under the Agreement. Advances are limited to 85% of eligible receivables,
as defined, and outstanding amounts bear interest at the Bank's prime rate plus
0.75% (9.25% at December 31, 1997). At December 31, 1997, $2,994 was available
for borrowing under the Agreement. The Company has two Installment Notes
(Installment Notes I and II). Installment Note I bears interest at the Bank's
prime rate plus 1.25% (9.75% at December 31, 1997). Payments are due in monthly
installments of $9 plus interest, with the final payment due February 1, 2000.
Installment Note II bears interest at the same rate as Installment Note I.
Payments of principal of $14 plus interest are made monthly on Installment Note
II with the final payment due February 28, 1999.

The Agreement and Installment Notes I and II are secured by accounts
receivable and furniture and equipment of the Company and personally guaranteed
by a shareholder up to $1,000. The Company has also granted a security interest
in the inventory, accounts receivable and furniture and equipment to a vendor
(the Supplier). Under the terms of an Inter Creditor Agreement between the
Company, the Bank and the Supplier, the Supplier will not exercise any right or
remedy it may have with respect to the Bank's collateral, until the amounts owed
to the Bank are fully paid and satisfied and the Bank's security interests have
been terminated in writing. The Inter Creditor Agreement does not preclude the
Supplier from taking such action to enforce payment of indebtedness to the
Supplier not involving collateral of the Bank.

F-31

CONTINENTAL MANAGED PHARMACY SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the Three Years Ended December 31, 1995, 1996 and 1997
(In thousands, except share and per share amounts)

C. Long-Term Debt -- Continued

The Company and the Bank have entered into an Interest Rate Adjustment
Agreement whereby the Company could reduce the interest rate charged by the Bank
on the Agreement by a maximum of .50% if certain financial performance levels
are met. In addition, the personal guaranty of the shareholder could be reduced
by $1 million upon meeting certain financial performance levels. Effective
February 20, 1996, the interest rate charged by the Bank on the Agreement was
reduced by .25% from prime plus 1% to prime plus .75%.

Under the terms of the Agreement and Installment Notes, the Company is
required to comply with certain financial covenants which among other matters
require the Company to maintain a specified level of net worth.

The Company has notes payable outstanding to a shareholder. The notes bear
interest at the greater of 9% or prime plus 1% (9 1/2% at December 31, 1997) and
are payable in monthly installments of principal and interest of $7 through June
30, 2001.

1996 1997
------ ------
Long-term debt consists of the following at December 31:
Master revolving note ................................ $2,714 $3,506
Variable rate Installment Notes I and II ............. 915 641
Notes payable-shareholder ............................ 322 262
Note payable-TPA-Note K .............................. 187
------ ------
4,138 4,409
Less current portion ................................... 428 340
------ ------
$3,710 $4,069
====== ======

Future maturities of long-term debt for the next five years are as follows:
1998-$340; 1999-$3,714;2000-$312; 2001-$43 and 2002-$0.

D. Leases

The Company is obligated under various capital leases for certain equipment
that expire at various dates during the next 5 years. The carrying amount of
equipment and the related accumulated amortization recorded under capital leases
at December 31 is as follows:

1996 1997
---- ----
Equipment .................................. $174 $115
Less accumulated amortization .............. 66 61
---- ----
$108 $ 54
==== ====

The Company also has several operating leases, primarily for office space
and equipment, that expire at various times through 1998. Rent expense was $142,
$129 and $128 in 1995, 1996 and 1997, respectively.

Future minimum lease payments under noncancelable leases as of December 31,
1997 are:

Capital Operating
Leases Leases
------- --------
Year ending December 31:
1998............................................ $29 $84
1999............................................ 8
2000............................................ 8
2001............................................ 8
------ ------
Total minimum lease payments ..................... 53 $84
======
Less amount representing interest ................ 6
------
Present value of minimum capital lease payments .. $ 47
======

F-32

CONTINENTAL MANAGED PHARMACY SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the Three Years Ended December 31, 1995, 1996 and 1997
(In thousands, except share and per share amounts)

D. Leases -- Continued

During 1995, 1996 and 1997, the Company entered into noncash investing
activities related to capital lease obligations totaling $40, $35 and $0,
respectively.

E. Other Liabilities

Accrued wages, commissions and other payroll related liabilities consist of
the following at December 31, 1996 and 1997:

1996 1997
------ ------
Commissions ........................ $ 544 $ 725
Wages .............................. 276 420
Other .............................. 233 284
------ ------
$1,053 $1,429
====== ======

Other noncurrent liabilities primarily consist of a customer advance.

F. Stock Options

The Company maintains an Employee and Director Stock Option Plan (the
Plan). The Plan authorizes the granting of options to qualified individuals, as
defined, to purchase up to 400 shares of common stock. Options granted under the
Plan are exercisable at not less than the fair market value at the date of grant
and expire five years from the date of grant. All options granted under the plan
vest six months after the date of grant.

The following is a summary of stock option activity during the year ended
December 31:

1995 1996 1997
------- ------- -------

Outstanding at beginning of year ($800 per share) .... 66.875 195.625 256.250
Granted ($800 per share) ............................. 128.750 90.625 86.875
Forfeited ............................................ (30.000)
------- ------- -------

Outstanding at end of year ($800 per share) .......... 195.625 256.250 343.125
======= ======= =======
Exercisable at end of year ........................... 151.250 211.250 300.625
======= ======= =======

The Company applies APB 25 in accounting for stock options. Accordingly, no
compensation cost has been recognized for its stock options because the exercise
price of the Company's stock options equals the market price of the underlying
stock on the date of grant. Had compensation cost for the stock options granted
been determined based on the fair value at grant date, consistent with the fair
value method of Statement of Financial Accounting Standards (SFAS) No. 123,
Accounting for Stock-Based Compensation, the Company's net income would have
been reduced by $2, $5 and $8 in 1995, 1996 and 1997, respectively. The fair
value of the stock option at the grant date was determined using the minimum
value method with an assumed risk free interest rate of 5.38% in 1995, 7.41% in
1996, and 6.50% in 1997. A five year average life was used for all years. The
pro forma results are not necessarily indicative of what would have occurred had
the Company adopted SFAS No. 123.

F-33

CONTINENTAL MANAGED PHARMACY SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the Three Years Ended December 31, 1995, 1996 and 1997
(In thousands, except share and per share amounts)

G. Income Taxes

A summary of income tax expense is as follows:

1995 1996 1997
----- ----- -----
Current:
Federal ...................... $ 213 $ 146 $ 515
State and local .............. 70 67 97
----- ----- -----
283 213 612
Deferred:
Federal ...................... (124) (21) 17
State and local .............. (27) (4) 3
----- ----- -----
(151) (25) 20
----- ----- -----
$ 132 $ 188 $ 632
===== ===== =====

The income tax rate for financial reporting purposes varied from the
federal statutory rate as follows:

1995 1996 1997
------ ------ ------
Federal statutory income tax rate ................ 34.0% 34.0% 34.0%
Increase (decrease):
State and local taxes, net of federal benefit .. 18.8 20.8 5.6
Goodwill amortization .......................... 31.3 35.0 6.1
Other, net ..................................... (5.2) 3.3 8.5
------ ------ ------
Effective income tax rate ........................ 78.9% 93.1% 54.2%
====== ====== ======

Significant components of the Company's deferred tax liabilities and assets
at December 31 are as follows:

1996 1997
---- ----
Deferred tax liabilities:
Tax over book depreciation ..................... $ 24 $ 3
Deferred tax assets:
Allowance for doubtful accounts .............. 188 174
State taxes .................................. 21 29
Accrued expenses ............................. 110 74
---- ----
Total deferred tax assets ...................... 319 277
---- ----
Net deferred tax assets ........................ $295 $274
==== ====

F-34

CONTINENTAL MANAGED PHARMACY SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the Three Years Ended December 31, 1995, 1996 and 1997
(In thousands, except share and per share amounts)

H. Employee Benefit Plans

The Company maintains defined contribution 401(k) plans covering
substantially all employees who have completed three months of service.
Contributions by the Company are discretionary. Costs related to the 401(k)
totaled $0, $38 and $67 in 1995, 1996 and 1997, respectively.

I. Related Party Transactions

Preferred Rx., Inc. (Preferred) has an agreement with an entity owned by a
shareholder of CMPS whereby the entity provides various marketing related
services to Preferred. Preferred has agreed to pay 1.5% of the monthly cash
receipts collected from its non-corporate customers for such services. As of
December 31, 1996, the Company had advanced commissions to this entity in the
amount of $53. Commission expense was $229 in 1995, $182 in 1996 and $200 in
1997. Additionally, in October 1995, the Company loaned this entity $95. This
amount was recorded in other assets at December 31, 1996, and was evidenced by a
note which bore interest at prime plus 1% (9.25% at December 31, 1996). The note
was paid in full on May 28, 1997 at which time the Company discontinued paying
advanced commissions.

J. Acquisitions and 1994 Reorganization

On July 25, 1997, the Company acquired certain assets of Rx Advantage,
Inc., d/b/a SRX ("SRX"), a provider of pharmaceutical benefits management
services, for $150 plus direct acquisition costs. The excess of the purchase
price paid over the fair value of the net assets acquired has been recorded as
goodwill and is being amortized over 15 years. The acquisition has been
accounted for under the purchase method of accounting, and the consolidated
results of operations include the results of the business from the date of
acquisition. The terms of the purchase agreement require the Company to make
additional payments through 1999 based on prescription volume. During 1997, the
Company has paid or accrued approximately $250 of additional amounts under the
purchase agreement which have increased the recorded amount of goodwill.
Unaudited pro forma financial information for the years ended December 31, 1996
and 1997 as though the Company had completed the acquisition at the beginning of
1996 is as follows:

Year ended December 31
-----------------------
1996 1997
------- -------
Pro forma net revenue .................... $46,622 $56,851
Pro forma net income (loss) .............. $ (269) $ 537

The unaudited pro forma unaudited operating results are not necessarily
indicative of what would have occurred had the transactions taken place on
January 1, 1996.

On December 15, 1995, the Company acquired the customer records and files
of a mail order pharmacy organization and obtained noncompete agreements from
the principal shareholders for $405 and $90 respectively. The terms of the
purchase agreement provide for the Company to make additional payments through
1998 contingent upon sales volume. During 1996 and 1997, the Company made
contingent payments of $29 and $0, respectively. The acquisition was accounted
for using the purchase method of accounting; accordingly, the purchase price was
allocated to the assets acquired based on their estimated fair values as set
forth in the purchase agreement. The recorded values of customer records files
(goodwill), have been increased by the amount of contingent cash payments made
in 1996 and 1997, and are being amortized over 15 years.

F-35

CONTINENTAL MANAGED PHARMACY SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the Three Years Ended December 31, 1995, 1996 and 1997
(In thousands, except share and per share amounts)

J. Acquisitions and 1994 Reorganization -- Continued

Goodwill also relates to the Company's plan of reorganization which took
place in 1994. Effective January 3, 1994, the Board of Directors of Continental
Managed Pharmacy Services, Inc. approved a Reorganization Plan (the
Reorganization) whereby Continental Pharmacy, Inc, (Continental), Preferred Rx.
Inc. (Preferred), Automated Scripts, Inc. (Automated), and Valley Physician
Services. Inc. (Valley) became wholly-owned subsidiaries of the Company. The
principal financial elements of the Reorganization are:

1. A 32% shareholder of Continental and 50% shareholder of Preferred
exchanged all of his shares of common stock in these entities for 60%
of the shares of common stock in CMPS, for which prior to this
transaction he was the sole shareholder. The transfer of net assets of
Continental and Preferred have been recorded at the shareholder's
historical cost basis in accordance with the Securities and Exchange
Commission's Staff Accounting Bulletin No. 48.

2. CMPS acquired 32% of the outstanding common shares of Continental and
50% of the outsanding common shares of Preferred for $2,700. The
acquisition was accounted for using the purchase method of accounting.
Accordingly, the purchase price was allocated to the net assets
acquired based on their fair values. The cost in excess of the net
assets acquired was recorded as goodwill. The Company also paid $300
pursuant to a consulting and non-compete agreement.

3. CMPS exchanged 1,500 common shares (representing 15% of the
outstanding common stock of CMPS) for 36% of the outstanding common
stock of Continental owned by the minority shareholders. The exchange
was accounted for using the purchase method of accounting.
Accordingly. the net assets transferred have been recorded based on
their fair values. The cost in excess of the net assets acquired was
recorded as goodwill.

4. CMPS issued 2,500 shares of common stock (representing 25% of the
outstanding common stock of CMPS) for $2,000 to a third party.

5. CMPS acquired all of the outstanding common stock of Automated (500
shares) and Valley (100 shares). The acquisition cost of Valley was
approximately $575. CMPS assumed the liabilities of Automated totaling
$906 in exchange for its common stock. The acquisitions were accounted
for using the purchase method of accounting. Accordingly, the purchase
price was allocated to the net assets acquired based on their fair
values. Goodwill was recorded related to each entity for the cost in
excess of the net assets acquired.

The total cost in excess of net assets acquired which is recorded as
goodwill is being amortized over 25 years.

K. Nonrecurring Charge

In November 1995, the Company recorded a nonrecurring charge of $644 as a
result of a settlement that the Company reached with a third party administrator
(the TPA) over disputed amounts. The 1995 charge covered the full amount of the
settlement including related interest on scheduled payments and professional
fees. As of December 31, 1996, $187 was outstanding under the terms of a note
payable to the TPA. The note was paid in full during 1997.

L. Subsequent Event

On January 28, 1998, the Company announced the signing of a merger
agreement with MIM Corporation under which all of the shares of the Company's
common stock would be exchanged for shares of common stock of MIM Corporation.
The transaction is contingent upon certain matters including shareholder
approval.

F-36

CONTINENTAL MANAGED PHARMACY SERVICES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)

December 31, March 31,
1997 1998
------- -------
(unaudited)

ASSETS
Current Assets
Cash & equivalents ....................................... $ 166 $ 308
Receivables .............................................. 9,911 9,632
Inventories .............................................. 779 612
Prepaid expense .......................................... 95 155
Deferred income taxes .................................... 239 235
------- -------
Total current assets ............................. 11,190 10,942

Property & equipment, net ................................ 704 626
Goodwill, net ............................................ 4,364 4,312
Deferred income taxes .................................... 35 35
Other assets ............................................. 15 15
Other intangible assets, net ............................. 937 1,077
------- -------
Total assets ..................................... $17,245 $17,007
======= =======

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current portion of capital lease obligations ............. $ 26 $ 21
Current portion of long term debt ........................ 340 328
Accounts payable ......................................... 4,295 4,431
Claims payable ........................................... 1,171 1,095
Accrued expenses ......................................... 1,429 1,199
Income taxes payable ..................................... 510 415
------- -------
Total current liabilities ........................ 7,771 7,489

Other non-current liabilities ............................ 199 198
Capital lease obligations, less current portion .......... 21 19
Long-term debt, less current portion ..................... 4,069 3,837

Shareholders Equity
Common stock ............................................. 12 12
Additional paid-in capital ............................... 4,309 4,309
Retained earnings ........................................ 864 1,143
------- -------
Total shareholders' equity ....................... 5,185 5,464
------- -------
Total liabilities & shareholders' equity ......... $17,245 $17,007
======= =======

See notes to unaudited consolidated financial statements

F-37

CONTINENTAL MANAGED PHARMACY SERVICES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands, except share and per share amounts)

Three months ended March 31,
-----------------------------
1997 1998
-------- --------

Revenues ................................................ $ 8,421 $ 15,047
Cost of revenues ........................................ 6,184 12,005
-------- --------
Gross profit ........................................ 2,237 3,042
Selling, general & administrative ....................... 2,104 2,400
-------- --------
Operating profit .................................... 133 642
Interest income (expense) ............................... (76) (81)
-------- --------
Profit (loss) before taxes .......................... 57 561
Taxes ................................................... 50 282
-------- --------
Net income .............................................. $ 7 $ 279
======== ========

Basic and diluted earnings per share .................... $ 0.60 $ 24.05
======== ========

Weighted average share used to compute earnings per share 11,600 11,600
======== ========

See notes to unaudited consolidated financial statements

F-38

CONTINENTAL MANAGED PHARMACY SERVICES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
(In thousands)

Three Months ended March 31
---------------------------
1997 1998
-------- --------

Operating activities
Net income ............................................. $ 7 $ 279
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization ........................ 154 169
Changes in operating assets and liabilities:
Accounts receivable ................................ (122) 280
Inventory .......................................... (539) 167
Prepaid expenses and other assets .................. (76) (62)
Accounts payable ................................... 744 135
Claims Payable ..................................... (21) (76)
Accrued commissions, wages and payroll related items (105) (239)
Income taxes ....................................... (21) (89)
Other liabilities .................................. (20) 8
-------- --------
Net cash provided by operating activities ...... 1 572
-------- --------

Investing activities
Purchases of property and equipment, net ............... (16) (12)
Purchase of SRX pharmacy ............................... (167)
-------- --------
Net cash used in investing activities ............ (16) (179)
-------- --------

Financing activities
Proceeds on line of credit ............................. 5,172 11,497
Payments on line of credit ............................. (5,430) (11,657)
Proceeds on note receivable ............................ 0 0
Payments on capital leases ............................. (12) (7)
Proceeds from installment notes payable ................ 0 0
Payments on notes payable .............................. (83) (84)
Payment of loan origination fees ....................... 0 0
-------- --------
Net cash used in financing activities .......... (353) (251)
-------- --------

Increase (decrease) in cash .............................. (368) 142

Cash at beginning of period .............................. 244 166
-------- --------

Cash at end of period .................................... $ (124) $ 308
======== ========

See notes to unaudited consolidated financial statements

F-39

CONTINENTAL MANAGED PHARMACY SERVICES, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Year Ended December 31, 1997 (Audited) and the
Three months ended March 31, 1998 and 1997 (Unaudited)
(In thousands, except share and per share amounts)

A. Description of Business

B. Summary of Significant Accounting Policies

Consolidation

The consolidated financial statements include the accounts of CMPS and its
wholly owned Subsidiaries. All significant intercompany accounts and
transactions have been eliminated in consolidation.

Net Revenue and Accounts Receivable

Net revenue and the related accounts receivable for services rendered are
reported at the estimated net realizable amounts from customers and third-party
payors. The allowance for uncollectible accounts receivable was approximately
$639 at December 31, 1997 and $701 at March 31, 1998.

Inventory

Inventory is stated at the lower of cost or market. The cost of the
inventory is determined using the first-in, first-out (FIFO) method.

Property and Equipment

Machinery and equipment ............................. 5 years
Computer equipment................................... 3-5 years
Furniture, fixtures and leasehold improvements....... 7 years

Depreciation expense was $72 and $89 for the quarters ended March 31, 1997
and 1998, respectively.

Intangible Assets

Goodwill, less accumulated amortization of $831 at December 31, 1997 and
$883 on March 31, 1998, represents the cost in excess of the fair value of net
assets acquired and is amortized using the straight-line method over a period of
15 to 25 years. Other intangible assets, less accumulated amortization of $238
at December 31, 1997 and $265 on March 31, 1998, consist of customer records and
files and organizational costs which are amortized using the straight-line
method over 5 to 15 years, and a five year non-compete agreement which is being
amortized over the term of the agreement.

F-40

CONTINENTAL MANAGED PHARMACY SERVICES, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the Year Ended December 31, 1997 (Audited) and the
Three months ended March 31, 1998 and 1997 (Unaudited)
(In thousands, except share and per share amounts)

B. Summary of Significant Accounting Policies -- Continued

Income Taxes

Financial Instruments

The fair value of long-term debt is estimated based on the present value of
the underlying cash flows discounted at the Company's estimated borrowing rate.
At December 31, 1997 and March 31, 1998, the fair value of long-term debt
approximates its carrying value.

Stock Options

Earnings Per Share

Use of Estimates

C. Long-Term Debt

In March 1997, the Company extended its Revolving Note Agreement (the
Agreement) with a bank (the Bank) through May 1999. The Company can borrow up to
$6.5 million under the Agreement. Advances are limited to 85% of eligible
receivables, as defined, and outstanding amounts bear interest at the Bank's
prime rate plus .75% (9.25% at December 31, 1997 and 9.25% at March 31, 1998).
At December 31, 1997, $2,994 was available and on March 31, 1998, $3,154 was
available for borrowing under the Agreement.

The Company has two Installment Notes (Installment Notes I and II).
Installment Note I bears interest at the Bank's prime rate plus 1.25% (9.75% at
December 31, 1997 and 9.75% at March 31, 1998). Payments are due in monthly
installments of $9 plus interest, with the final payment due February 1, 2000.
Installment Note II bears interest at the same rate as Installment Note I.
Payments of principal of $14 plus interest are made monthly on Installment Note
II with the final payment due February 28, 1999.

The Agreement and Installment Notes I and II are secured by accounts
receivable and furniture and equipment of the Company and personally guaranteed
by a shareholder up to $1 million. The Company has also granted a security
interest in the inventory, accounts receivable and furniture and equipment to a
vendor (the Supplier).

F-41

CONTINENTAL MANAGED PHARMACY SERVICES, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the Year Ended December 31, 1997 (Audited) and the
Three months ended March 31, 1998 and 1997 (Unaudited)
(In thousands, except share and per share amounts)

C. Long-Term Debt -- Continued

Under the terms of an Inter Creditor Agreement between the Company, the Bank and
the Supplier, the Supplier will not exercise any right or remedy it may have
with respect to the Bank's collateral, until the amounts owed to the Bank are
fully paid and satisfied and the Bank's security interests have been terminated
in writing. The Inter Creditor Agreement does not preclude the Supplier from
taking such action to enforce payment of indebtedness to the Supplier not
involving collateral of the Bank.

The Company has notes payable outstanding to a shareholder. The notes bear
interest at the greater of 9% or prime plus 1% (9.5% at December 31, 1997 and
9.25% at March 31, 1998) and are payable in monthly installments of principal
and interest of $7 through June 30, 2001.

Long-term debt consists of the following at:

12/31/97 3/31/98
-------- -------
Master revolving note ........................ $3,506 $3,346
Variable rate Installment Notes I and II ..... 641 573
Notes payable--shareholder ................... 262 246
------ ------
4,409 4,165
Less current portion ......................... 340 328
------ ------
$4,069 $3,837
====== ======

After December 31, 1997, future maturities of long-term debt for the next
five years are as follows: 1998--$340; 1999--$3,714; 2000--$312; 2001--$43; and
2002--$0.

D. Leases

12/31/97 3/31/98
-------- -------
Equipment .................................. $115 $115
Less accumulated amortization .............. 61 75
---- ----
$ 54 $ 40
==== ====

The Company also has several operating leases, primarily for office space
and equipment, that expire at various times through 1998. Rent expense was $27
and $27 for the three months ending March 31, 1997 and 1998, respectively.

F-42

CONTINENTAL MANAGED PHARMACY SERVICES, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the Year Ended December 31, 1997 (Audited) and the
Three months ended March 31, 1998 and 1997 (Unaudited)
(In thousands, except share and per share amounts)

D. Leases -- Continued

Future minimum lease payments under noncancelable leases at of December 31,
1997 are:

Capital Operating
Leases Leases
------ ------
At December 31:
1998......................................... $ 29 $ 84
1999......................................... 8
2000......................................... 8
2001......................................... 8
------ ------
Total minimum lease payments .................... 53 $ 84
======
Less amount representing interest ............... 6
------
Present value of minimum capital lease payments.. $ 47
======

During the three months ending March 31, 1998, the Company entered into no
noncash investing activities related to capital lease obligations.

E. Other Liabilities

Accrued wages, commissions and other liabilities consist of the following:

12/31/97 3/31/98
-------- -------
Commissions .................... $ 725 $ 636
Wages .......................... 420 249
Other .......................... 284 355
------ ------
$1,429 $1,240
====== ======

Other noncurrent liabilities primarily consist of a customer advance.

F. Stock Options

The following is a summary of stock option activity during the year ended
December 31:

1995 1996 1997
------- ------- -------

Outstanding at beginning of year ($800 per share) ....... 66.875 195.625 256.250
Granted ($800 per share) ................................ 128.750 90.625 86.875
Forfeited ............................................... (30.000)
------- ------- -------
Outstanding at end of year ($800 per share).............. 195.625 256.250 343.125
======= ======= =======
Exercisable at end of year .............................. 151.250 211.250 300.625
======= ======= =======

F-43

CONTINENTAL MANAGED PHARMACY SERVICES, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the Year Ended December 31, 1997 (Audited) and the
Three months ended March 31, 1998 and 1997 (Unaudited)
(In thousands, except share and per share amounts)

F. Stock Options -- Continued

Standards (SFAS) No. 123, Accounting for Stock-Based Compensation, the Company's
net income would have been reduced by $2, $5 and $8 in 1995, 1996 and 1997,
respectively. The fair value of the stock option at the grant date was
determined using the minimum value method with an assumed risk free interest
rate of 5.38% in 1995, 7.41% in 1996, and 6.50% in 1997. A five year average
life was used for all years. The pro forma results are not necessarily
indicative of what would have occurred had the Company adopted SFAS No. 123.

There was no stock option activity during the three months ending March 31,
1998.

G. Income Taxes

A summary of income tax expense for the three months ending March 31, 1997
and 1998 is as follows:

1997 1998
---- ----
Current:
Federal ............................ $ 41 $230
State and local .................... 8 44
---- ----
49 274
Deferred:
Federal ............................ 1 7
State and local .................... 1
---- ----
1 8
---- ----
$ 50 $282
==== ====

The income tax rate for financial reporting purposes for the three months
ending March 31, 1997 and 1998 varied from the federal statutory rate as
follows:

1997 1998
------ ------
Federal statutory income tax rate ............. 34.0% 34.0%
Increase (decrease):
State and local taxes, net of federal benefit 18.9 4.5
Goodwill amortization ....................... 31.8 4.9
Other, net .................................. 3.1 6.9
------ ------
Effective income tax rate ..................... 87.8% 50.3%
====== ======

Significant components of the Company's deferred tax liabilities and assets
are as follows:

12/31/97 3/31/98
-------- -------
Deferred tax liabilities:
Tax over book depreciation ................. $ 3 $ 3
Deferred tax assets:
Allowance for doubtful accounts ............ 174 174
State taxes ................................ 29 29
Accrued expenses ........................... 74 70
---- ----
Total deferred tax assets .......... 277 273
---- ----
Net deferred tax assets ...................... $274 $270
==== ====

F-44

CONTINENTAL MANAGED PHARMACY SERVICES, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the Year Ended December 31, 1997 (Audited) and the
Three months ended March 31, 1998 and 1997 (Unaudited)
(In thousands, except share and per share amounts)

H. Employee Benefit Plans

The Company maintains defined contribution 401(k) plans covering
substantially all employees who have completed three months of service.
Contributions by the Company are discretionary. Costs related to the 401(k)
totaled $18 for the three months ending March 31, 1997 and $20 for the three
months ending March 31, 1998.

I. Related Party Transactions

J. Acquisitions and 1994 Reorganization

On July 25, 1997, the Company acquired certain assets of Rx Advantage,
Inc., a provider of pharmaceutical benefits management services, for $150 plus
direct acquisition costs. The excess of the purchase price paid over the fair
value of the net assets acquired has been recorded as goodwill and is being
amortized over 15 years. The acquisition has been accounted for under the
purchase method of accounting, and the consolidated results of operations
include the results of the business from the date of acquisition. The terms of
the purchase agreement require the Company to make additional payments through
1999 based on prescription volume. During 1997, the Company has paid or accrued
approximately $250 of additional amounts under the purchase agreement which have
increased the recorded amount of goodwill. Unaudited pro forma financial
information for the three months ending March 31, 1997 as though the Company had
completed the acquisition at the beginning of 1997 is as follows:

Three Months
ending 3/31/97
--------------
Pro forma net revenue .............................. $12,658
Pro forma net income ............................... $ 8

The pro forma operating results are not necessarily indicative of what
would have occurred had the transactions taken place on January 1, 1997.

On December 15, 1995, the Company acquired the customer records and files
of a mail order pharmacy organization and obtained noncompete agreements from
the principal shareholders for $405 and $90, respectively. The terms of the
purchase agreement provide for the Company to make additional payments through
1998 contingent upon sales volume. During the first three months of 1997 and
1998, the Company made contingent payments of $0 and $0, respectively. The
acquisition was accounted for using the purchase method of accounting;
accordingly, the purchase price was allocated to the assets acquired based on
their estimated fair values as set forth in the purchase agreement. The recorded
values of customer records and files (goodwill), have been increased by the
amount of contingent cash payments made in 1996 and 1997, and are being
amortized over 15 years.

Goodwill also relates to the Company's plan of reorganization which took
place in 1994. Under the plan Continental Pharmacy, Inc., Preferred, Automated
Scripts, Inc., and Valley Physician Services, Inc. became wholly owned
Subsidiaries of the Company through a series of business acquisitions accounted
for using the purchase method of accounting. The total cost in excess of net
assets acquired was recorded as goodwill and is being amortized over 25 years.

There was no acquisition or reorganization activity in the three months
ending March 31, 1998.

F-45

INDEX TO ANNEXES

Annex Page

A. Agreement and Plan of Merger, dated as of January 27, 1998 and as
amended as of May 18, 1998 and as of July 20, 1998, by and among
MIM Corporation, CMP Acquisition Corp. and Continental Managed
Pharmacy Services, Inc. A-2

B. Opinion of Warburg Dillon Read LLC - Financial Advisor to MIM A-57

C. Opinion of McDonald & Company Securities, Inc., as supplemented -
Financial Advisor to Continental A-59

A-1

This AGREEMENT AND PLAN OF MERGER dated as of January 27, 1998 (this
"Agreement") is made and entered into by and among MIM CORPORATION, a Delaware
corporation ("Parent"), CMP Acquisition Corp., an Ohio corporation wholly owned
by Parent ("Sub"), CONTINENTAL MANAGED PHARMACY SERVICES, INC., an Ohio
corporation (the "Company") and the individuals named as "Principal
Shareholders" on the signature pages to this Agreement (the "Principal
Shareholders").

WHEREAS, the respective Boards of Directors of Parent, Sub and the Company
have each determined that it is advisable and in the best interests of their
respective corporations and stockholders to consummate, and have approved, the
business combination transaction provided for herein in which Sub would merge
with and into the Company, and the Company would become a wholly-owned
subsidiary of Parent (the "Merger");

WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties and agreements in connection with the Merger and
also to prescribe various conditions to the Merger;

WHEREAS, it is the intention of the parties that the Merger shall qualify
as: (1) a "pooling of interests" under generally accepted accounting principles
("GAAP") and the rules, regulations and interpretations of the Securities and
Exchange Commission (the "SEC"); and (2) a tax free reorganization under Section
368(a)(2)(E) of the Internal Revenue Code of 1986, as amended (the "Code"), and
that this Agreement shall qualify as a "plan of reorganization" within the
meaning of Section 368 of the Code; and

WHEREAS, the Boards of Directors of the Company, Parent and Sub have
approved and adopted, at meetings of each of such Boards of Directors, this
Agreement and have authorized the execution hereof, and shareholders of the
Company owning common shares representing at least 75% of the outstanding common
shares of the Company, have executed this Agreement;

NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

ARTICLE I.

THE MERGER

1.01 The Merger. At the Effective Time (as defined in Section 1.02), upon
the terms and subject to the conditions of this Agreement, Sub shall be merged
with and into the Company in accordance with the General Corporation Law of the
State of Ohio (the "Ohio GCL"). The Company shall be the surviving corporation
in the Merger (the "Surviving Corporation"), and the separate existence of Sub
shall cease. Sub and the Company are sometimes referred to herein as the
"Constituent Corporations." As a result of the Merger, the

A-2

outstanding common shares of the Constituent Corporations shall be converted or
cancelled in the manner provided in Article II.

1.02 Effective Time. As soon as practicable after satisfaction or, to the
extent permitted hereunder, waiver of all conditions to the Merger, the Company
and Sub will file a certificate of merger, in the form of Exhibit 1.02 attached
hereto (the "Certificate of Merger"), with the Secretary of State of the State
of Ohio (the "Secretary of State") in accordance with Section 1701.81 of the
Ohio GCL and make all other filings or recordings required by the Ohio GCL in
connection with the Merger. The Merger shall become effective on such date as
the Certificate of Merger is duly filed with the Secretary of State or at such
later date as is specified in the Certificate of Merger (the "Effective Time").
From and after the Effective Time, the Surviving Corporation shall possess all
the rights, privileges, powers and franchises and be subject to all of the
restrictions, disabilities, liabilities and duties of the Company and Sub, as
applicable, all as provided in the Ohio GCL.

1.03 Closing. The closing of the Merger (the "Closing") will take place at
the offices of Rogers & Wells, 200 Park Avenue, New York, New York 10166, or at
such other place as the parties hereto mutually agree, on a date and at a time
to be specified by the parties, which shall in no event be later than 10:00
a.m., local time, on the second business day following satisfaction of the
condition set forth in Section 7.01(a), provided that the other closing
conditions set forth in Article VII have been satisfied or, if permissible,
waived in accordance with this Agreement, or on such other date as the parties
hereto mutually agree (the "Closing Date"). At the Closing there shall be
delivered to Parent, Sub and the Company the certificates and other documents
and instruments required to be delivered under Article VII.

1.04 Articles of Incorporation and Code of Regulations of the Surviving
Corporation. At the Effective Time: (i) the Articles of Incorporation of Sub as
in effect immediately prior to the Effective Time shall be the Articles of
Incorporation of the Surviving Corporation until thereafter amended as provided
by law and such Articles of Incorporation, and (ii) the Code of Regulations of
Sub as in effect immediately prior to the Effective Time shall be the Code of
Regulations of the Surviving Corporation until thereafter amended as provided by
law, the Articles of Incorporation of the Surviving Corporation and such Code of
Regulations.

1.05 Directors and Officers of the Surviving Corporation. Until successors
are duly elected or appointed and qualified, the directors and officers of the
Surviving Corporation shall be those individuals listed as such on Schedule
1.05.

1.06 Effects of the Merger. Subject to the provisions of this Agreement,
the effects of the Merger shall be as provided in the applicable provisions of
the Ohio GCL.

1.07 Further Assurances. Each party hereto will execute such further
documents and instruments and take such further actions as may reasonably be
requested by one or more of the others to consummate the Merger, to vest the
Surviving Corporation with full title to all assets, properties, rights,
approvals, immunities and franchises of either of the Constituent Corporations
or to effect the other purposes of this Agreement.

A-3

ARTICLE II.

CONVERSION OF SHARES

2.01 Conversion of Shares. At the Effective Time, by virtue of the Merger
and without any action on the part of Sub, the Company or the holders of any of
the securities of Sub or of the Company:

(a) Common Shares of Sub. Each issued and outstanding common share, without
par value, of Sub ("Sub Common Shares") shall be converted into and become one
fully paid and nonassessable common share, without par value, of the Surviving
Corporation ("Surviving Corporation Common Shares"). Each certificate
representing outstanding Sub Common Shares shall at the Effective Time represent
an equal number of Surviving Corporation Common Shares.

(b) Cancellation of Treasury Shares and Shares Owned by Parent and
Subsidiaries. All common shares, without par value, of the Company ("Company
Common Shares") that are owned by the Company as treasury shares and any Company
Common Shares owned by Parent, Sub or any other wholly-owned Subsidiary (as
defined herein) of Parent or Company shall be canceled and retired and shall
cease to exist and no stock of Parent or other consideration shall be delivered
in exchange therefor. As used in this Agreement, "Subsidiary" means, with
respect to any party, any corporation or other organization, whether
incorporated or unincorporated, of which more than fifty percent (50%) of either
the equity interests in, or the voting control of, such corporation or other
organization is, directly or indirectly through Subsidiaries or otherwise,
beneficially owned by such party.

(c) Exchange Ratio for Company Common Shares. Each issued and outstanding
Company Common Share (other than shares to be canceled in accordance with
Section 2.01(b) and other than Dissenting Shares (as defined in Section
2.01(d))) shall be converted into the right to receive 327.59 fully paid and
nonassessable shares (the "Merger Consideration") of the common stock, $.0001
par value per share, of Parent (the "Parent Common Stock"). All such Company
Common Shares shall no longer be outstanding and shall automatically be canceled
and retired and shall cease to exist, and each holder of a certificate
representing any such shares shall cease to have any rights with respect
thereto, except the right to receive the Merger Consideration per share, upon
the surrender of such certificate in accordance with Section 2.02, without
interest. If at any time during the period between the date of this Agreement
and the Effective Time, any change in the outstanding shares of Parent Common
Stock shall occur due to a reclassification, recapitalization, stock split or
combination, exchange or readjustment of shares, or any stock dividend thereon
with a record date during such period, the Merger Consideration shall be
appropriately adjusted.

(d) Dissenting Shares. (i) Notwithstanding any provision of this Agreement
to the contrary, each outstanding Company Common Share, the holder of which has
not voted in favor of the Merger, has perfected such holder's right to seek
relief as a dissenting shareholder in accordance with the applicable provisions
of the Ohio GCL and has not effectively withdrawn or lost such right to
appraisal (a "Dissenting Share"), shall not be converted into or represent a
right to receive the Merger Consideration pursuant to

A-4

Section 2.01(c), but the holder thereof shall be entitled only to such rights as
are granted by the applicable provisions of the Ohio GCL; provided, however,
that any Dissenting Share held by a person at the Effective Time who shall,
after the Effective Time, withdraw the demand for appraisal or lose the right of
appraisal, in either case pursuant to the Ohio GCL, shall be deemed to be
converted into, as of the Effective Time, the right to receive the Merger
Consideration pursuant to Section 2.01(c).

(ii) The Company shall give Parent (x) prompt notice (but in any event
within five days) of any written demands for appraisal, withdrawals of demands
for appraisal and any other instruments served pursuant to the applicable
provisions of the Ohio GCL relating to the appraisal process received by the
Company and (y) the opportunity to direct all negotiations and proceedings with
respect to demands for appraisal under the Ohio GCL. The Company will not
voluntarily make any payment with respect to any demands for appraisal and will
not, except with the prior written consent of Parent, settle or offer to settle
any such demands.

(e) Stock Option Plan. Subject to the terms and conditions of the Company's
1994 Employee and Director Stock Option Plan (the "Company Option Plan") and the
stock option agreements executed pursuant thereto, the Company Option Plan and
each option to purchase Company Common Shares granted thereunder that is
outstanding at the Effective Time shall be assumed by Parent and continued in
accordance with their respective terms and each such option shall become a right
to purchase a number of shares of Parent Common Stock equal to the Merger
Consideration multiplied by the number of Company Common Shares subject to such
option immediately prior to the Effective Time, as more fully described in
Section 6.05.

2.02 Exchange of Certificates.

(a) The Principal Shareholders hereby authorize and direct the Company to
deliver the certificates representing Company Common Shares ("Certificates")
owned by them to Parent at the Closing upon fulfillment (or waiver by the
Company) of each of the conditions set forth in Sections 7.01 and 7.03. At the
Closing, each Certificate shall be canceled and exchanged and, simultaneously
with such cancellation and exchange, a new certificate shall be issued to each
Principal Shareholder and each other shareholder of the Company (except with
respect to Dissenting Shares), representing the number of shares of Parent
Common Stock into which the Company Common Shares formerly held by such
shareholder shall have been converted in the Merger in accordance with Section
2.01(c) hereof, together with a check payable to such shareholder representing
any payment of cash in lieu of fractional shares determined in accordance with
Section 2.02(d) hereof. From and after the Effective Time, each Certificate
which prior to the Effective Time represented Company Common Shares shall be
deemed to represent only the right to receive the shares of Parent Common Stock
and a cash payment, if any, contemplated by the preceding sentence, and the
holder of each such Certificate shall cease to have any rights with respect to
the Company Common Shares formerly represented thereby other than as provided in
this Agreement. All of the shares of Parent Common Stock issued in the Merger
shall be duly authorized, validly issued, fully paid and nonassessable and, at
the time of issuance, shall be free and clear of all liens, claims,
encumbrances, security interests and rights of redemption (together, "Liens"),
other than those Liens created by or arising by action of the shareholders of
the Company.

A-5

(b) Distributions with Respect to Unexchanged Shares. No dividends or other
distributions declared or made after the Effective Time with respect to Parent
Common Stock with a record date on or after the Effective Time shall be paid to
the holder of any unsurrendered Certificate with respect to the shares of Parent
Common Stock represented thereby and no cash payment in lieu of fractional
shares shall be paid to any such holder pursuant to Section 2.02(d) until the
holder of record of such Certificate shall surrender such Certificate in
accordance with this Section 2.02. Subject to the effect of applicable laws,
following surrender of any such Certificate, there shall be paid to the record
holder of the certificates representing whole shares of Parent Common Stock
issued in exchange therefor, without interest: (i) at the time of such
surrender, the amount of dividends or other distributions, if any, with a record
date on or after the Effective Time which theretofore became payable, but which
were not paid by reason of the immediately preceding sentence, with respect to
such whole shares of Parent Common Stock, and (ii) at the appropriate payment
date, the amount of dividends or other distributions with a record date on or
after the Effective Time but prior to surrender and a payment date subsequent to
surrender payable with respect to such whole shares of Parent Common Stock.

(c) No Further Ownership Rights in Common Shares. All shares of Parent
Common Stock issued upon the surrender for exchange of Certificates in
accordance with the terms of this Agreement (including any cash paid pursuant to
Section 2.02(d)) shall be deemed to have been issued (or paid, as the case may
be) at the Closing in full satisfaction of all rights pertaining to the Company
Common Shares represented thereby. From and after the Closing, the stock
transfer books of the Company shall be closed and there shall be no further
registration of transfers on the stock transfer books of the Surviving
Corporation of the Company Common Shares which were outstanding immediately
prior to the Effective Time. If, after the Closing, Certificates are presented
to the Surviving Corporation for any reason, they shall be canceled and
exchanged as provided in this Section 2.02.

(d) No Fractional Shares. No certificate or scrip representing fractional
shares of Parent Common Stock will be issued in the Merger upon the surrender
for exchange of Certificates, and such fractional share interests will not
entitle the owner thereof to vote or to any rights of a stockholder of Parent.
In lieu of any such fractional shares, each holder of Company Common Shares who
would otherwise have been entitled to a fraction of a share of Parent Common
Stock in exchange for Certificates pursuant to this Section 2.02 shall receive
from the Surviving Corporation a cash payment in lieu of such fractional share
determined by multiplying (i) the Average Closing Price of a whole share of
Parent Common Stock by (ii) the fractional share interest to which such holder
would otherwise be entitled. The "Average Closing Price" shall be equal to the
arithmetic average of the Sales Price (as defined herein) on each of the last 10
Nasdaq trading days preceding the third day before the Closing Date. The term
"Sales Price" shall be equal to, on any Nasdaq trading day, the arithmetic
average of the high and low sales prices per share of Parent Common Stock
reported on the National Association of Securities Dealers Automated Quotation
System ("Nasdaq") on such day.

A-6

ARTICLE III.

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company represents and warrants to Parent and Sub as follows:

3.01 Organization and Qualification. Each of the Company and its
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the State of Ohio and has all requisite corporate
power and authority to conduct its business as and to the extent now conducted
and to own, use, lease and operate its assets and properties. Each of the
Company and its Subsidiaries is duly qualified, licensed or admitted to do
business and is in good standing in each jurisdiction in which the ownership,
use or leasing of its assets and properties, or the conduct or nature of its
business, makes such qualification, licensing or admission necessary, except for
such failures to be so qualified, licensed or admitted and in good standing
which, individually or in the aggregate: (i) are not having and could not be
reasonably expected to have a material adverse effect on the Company and its
Subsidiaries taken as a whole, and (ii) could not be reasonably expected to have
a material adverse effect on the validity or enforceability of this Agreement or
on the ability of the Company to perform its obligations hereunder. As used in
this Agreement, any reference to any event, change or effect being "material" or
"materially adverse" or having a "material adverse effect" on or with respect to
an entity (or group of entities taken as a whole) means such event, change or
effect is or could reasonably be expected to be material or materially adverse,
as the case may be, to the business, condition (financial or otherwise),
properties, assets (including intangible assets), liabilities (including
contingent liabilities), prospects or results of operations of such entity (or,
if with respect thereto, of such group of entities taken as a whole). The only
Subsidiaries of the Company (the "Company Subsidiaries") are Preferred Rx, Inc.,
Continental Pharmacy, Inc., Automated Scripts, Inc. and Valley Physicians
Services, Inc., each an Ohio corporation. Except for the Company Subsidiaries or
as disclosed on Schedule 3.01: (i) the Company does not directly or indirectly
own any equity or similar interest in, or any interest convertible into or
exchangeable or exercisable for, any equity or similar interest in, any
corporation, partnership, joint venture or other business association or entity,
(ii) is not an affiliate (as defined in Rule 12b-2 under the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) (an "Affiliate") of any other
entity, and (iii) is not a party to any joint venture, profit-sharing or similar
agreement regarding the profitability or financial results of the Company or any
of its Affiliates or the division of revenues or profits of the Company or any
of its Affiliates or any other enterprise.

3.02 Capitalization. (a) The authorized capital stock of the Company
consists solely of 12,000 Company Common Shares. As of the date hereof, 11,600
Company Common Shares are issued and outstanding, no shares are held in the
treasury of the Company and 343.125 shares are reserved for issuance upon
exercise of outstanding options granted under the Company Option Plan. All of
the issued and outstanding Company Common Shares are, and all shares reserved
for issuance will be, upon issuance in accordance with the terms specified in
the instruments or agreements pursuant to which they are issuable, duly
authorized, validly issued, fully paid and nonassessable. The Company Common
Shares are owned by the shareholders of the Company in the amounts set forth in
Schedule 3.02 and no adjustment to or reallocation of such amounts shall be made
prior to the Effective Time. No other person owns

A-7

of record any shares of capital stock or other equity interest in the Company.
Except pursuant to this Agreement and except pursuant to the Company Option
Plan, there are no outstanding subscriptions, options, warrants, rights
(including "phantom" stock rights), preemptive rights or other contracts,
commitments, understandings or arrangements, including any right of conversion
or exchange under any outstanding security, instrument or agreement (together,
"Options"), obligating the Company or any of its Subsidiaries to issue or sell
any shares of capital stock of the Company or to grant, extend or enter into any
Option with respect thereto. Except as expressly provided in this Agreement, the
Merger will not cause the vesting of any benefits to be accelerated or a payment
to be made under the Company Option Plan. The Company has no outstanding bonds,
notes or other obligations the holders of which have the right to vote with the
shareholders of the Company on any matter. Each Principal Shareholder owns all
the Company Common Shares indicated as owned by him or her in Schedule 3.02,
subject to the articles of incorporation and code of regulations of the Company,
free and clear of all Liens and rights of others, and at the Effective Time,
Parent will own all of the outstanding Company Common Shares free and clear of
all Liens and rights of others.

(b) All of the outstanding shares of capital stock of each Company
Subsidiary are duly authorized, validly issued, fully paid and nonassessable and
are owned directly by the Company, free and clear of any Liens. There are no (i)
outstanding Options obligating the Company or any of its Subsidiaries to issue
or sell any shares of capital stock of any Company Subsidiary or to grant,
extend or enter into any such Option or (ii) voting trusts, proxies or other
commitments, understandings, restrictions or arrangements in favor of any person
other than the Company or a Subsidiary wholly owned, directly or indirectly, by
the Company with respect to the voting of or the right to participate in
dividends or other earnings on any capital stock of any Company Subsidiary.

(c) There are no outstanding contractual obligations of the Company or any
Company Subsidiary to repurchase, redeem or otherwise acquire any Company Common
Shares or any capital stock of any Company Subsidiary or to provide funds to, or
make any investment (in the form of a loan, capital contribution or otherwise)
in, any Company Subsidiary or any other person.

3.03 Authority Relative to this Agreement. The Company has full corporate
power and authority to enter into this Agreement and, subject to obtaining the
Company Shareholders' Approval (as defined in Section 5.03), to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
The execution, delivery and performance of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby have been
duly and validly approved by the Board of Directors of the Company, the Board of
Directors of the Company has recommended adoption of this Agreement by the
shareholders of the Company and directed that this Agreement be submitted to the
shareholders of the Company for their consideration, and no other corporate
proceedings on the part of the Company or its shareholders are necessary to
authorize the execution, delivery and performance of this Agreement by the
Company and the consummation by the Company of the transactions contemplated
hereby, other than obtaining the Company Shareholders' Approval. This Agreement
has been duly and validly executed and delivered by the Company and, subject to
the obtaining of the Company Shareholders' Approval, constitutes a legal, valid
and binding obligation of the Company enforceable against the Company in
accordance with its terms.

A-8

3.04 Non-Contravention; Approvals and Consents.

(a) The execution and delivery of this Agreement by the Company do not, and
the performance by the Company of its obligations hereunder and the consummation
of the transactions contemplated hereby will not, conflict with, result in a
violation or breach of, constitute (with or without notice or lapse of time or
both) a default under, result in or give to any person any right of payment or
reimbursement, termination, cancellation, modification or acceleration of, or
result in the creation or imposition of any Lien upon any of the assets or
properties of the Company or any of its Subsidiaries under, any of the terms,
conditions or provisions of (i) the certificates or articles of incorporation or
code of regulations (or other comparable charter documents) of the Company or
any of its Subsidiaries, or (ii) subject to the obtaining of the Company
Shareholders' Approval and the taking of the actions described in paragraph (b)
of this Section, (x) any statute, law, rule, regulation or ordinance (together,
"Laws"), or any judgment, decree, order, writ, permit or license (together,
"Orders"), of any court, tribunal, arbitrator, authority, agency, commission,
official or other instrumentality of the United States or any state, county,
city or other political subdivision (a "Governmental or Regulatory Authority"),
applicable to the Company or any of its Subsidiaries or any of their respective
assets or properties, or (y) any note, bond, mortgage, security agreement,
indenture, license, franchise, permit, concession, contract, lease or other
instrument, obligation or agreement of any kind (together, "Contracts") to which
the Company or any of its Subsidiaries is a party or by which the Company or any
of its Subsidiaries or any of their respective assets or properties is bound.

(b) Except (i) for the filing of a premerger notification report by the
Company under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations thereunder (the "HSR Act"), (ii) for the
filing of the Certificate of Merger and other appropriate merger documents
required by the Ohio GCL with the Secretary of State and appropriate documents
with the relevant authorities of other states in which the Constituent
Corporations are qualified to do business and (iii) as disclosed in Schedule
3.04 hereto, no consent, approval or action of, filing with or notice to any
Governmental or Regulatory Authority or other public or private third party is
necessary or required under any of the terms, conditions or provisions of any
Law or Order of any Governmental or Regulatory Authority or any Contract to
which the Company or any of its Subsidiaries is a party or by which the Company
or any of its Subsidiaries or any of their respective assets or properties is
bound for the execution and delivery of this Agreement by the Company, the
performance by the Company of its obligations hereunder or the consummation of
the transactions contemplated hereby.

3.05 Financial Statements. The Company has delivered to Parent the
following financial statements (collectively, the "Company Financial
Statements"): (i) the audited consolidated statements of financial condition of
the Company as of December 31 for each of the years from and including 1994
through 1996, and the unaudited statement of financial condition as of September
30, 1997, and (ii) the Company's related audited statements of operations,
statements of cash flow, statements of changes in equity, and notes to financial
statements for the years ended December 31, from and including 1994 through 1996
and the unaudited statement of operations for the nine-month period ended
September 30, 1997. Each

A-9

Company Subsidiary is treated as a consolidated subsidiary of the Company in the
Company Financial Statements for all periods covered thereby. The Company
Financial Statements fairly present the financial position of the Company and
the results of operations and changes in cash flows and equity, respectively, as
of the dates thereof or for the periods then ended, and have been prepared in
accordance with GAAP, consistently applied.

3.06 Absence of Certain Changes or Events. Except as contemplated hereby or
as disclosed in Schedule 3.06 hereto: (a) since September 30, 1997, there has
not been any change, event or development having, or that could be reasonably
expected to have, individually or in the aggregate, a material adverse effect on
the Company or any of its Subsidiaries, other than those occurring as a result
of general economic or financial conditions or other developments which are not
unique to the Company or any of its Subsidiaries but also generally affect other
persons who participate or are engaged in the lines of business in which the
Company or any such Subsidiary participate or are engaged, and (b) between
September 30, 1997 and the date hereof (i) the Company and its Subsidiaries have
conducted their respective businesses only in the ordinary course consistent
with past practice, (ii) neither the Company nor any of its Subsidiaries has
taken any action which, if taken after the date hereof, would constitute a
breach of any provision of clause (ii) of Section 5.01(b), (iii) there has not
been any declaration, setting aside or payment of any dividend or other
distribution with respect to any Company Common Shares, or any repurchase,
redemption or other acquisition by the Company or any Company Subsidiary of any
outstanding Company Common Shares, (iv) there has not been any amendment of any
term of any outstanding security of the Company or of its Subsidiaries, and (v)
there has not been any change in any method of accounting by the Company or any
Company Subsidiary.

3.07 Absence of Undisclosed Liabilities. Except for matters reflected or
reserved against in the balance sheet for the period ended included in the
Company Financial Statements or as disclosed in Schedule 3.07 hereto, neither
the Company nor any of its Subsidiaries had at such date, or has incurred since
that date, any liabilities or obligations (whether absolute, accrued,
contingent, fixed or otherwise, or whether due or to become due) of any nature.

3.08 Legal Proceedings. Except as disclosed in Schedule 3.08 hereto, (i)
there are no actions, suits, arbitrations or proceedings pending or, to the
knowledge of the Company and its Subsidiaries, threatened against, relating to
or affecting, nor to the knowledge of the Company and its Subsidiaries are there
any Governmental or Regulatory Authority investigations or audits pending or
threatened against, relating to or affecting, the Company or any of its
Subsidiaries or any of their respective assets and properties, and there are no
facts or circumstances known to the Company or any of its Subsidiaries that
could be reasonably expected to give rise to any such action, suit, arbitration,
proceeding, investigation or audit, and (ii) neither the Company nor any of its
Subsidiaries is subject to any Order of any Governmental or Regulatory
Authority.

A-10

3.09 Information Supplied. Neither the information supplied or to be
supplied by or on behalf of the Company or any Principal Shareholder, in
writing, expressly for inclusion in any document to be filed by Parent or Sub
with the SEC, including the Form S-4 (as defined herein) and the Proxy Statement
(as defined herein), or any other Governmental or Regulatory Authority in
connection with the Merger and the other transactions contemplated hereby, will
on the date of its filing, and in the case of the Proxy Statement, at the time
the Proxy Statement or any amendment or supplement thereto is first mailed or
delivered to stockholders of Parent, and at the time of the Parent Stockholders'
Meeting (as defined herein) and at the Effective Time, and, in the case of the
Registration Statement, when it becomes effective under the Securities Act of
1933, as amended (the "Securities Act"), contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.

3.10 Compliance with Laws and Orders. The Company and its Subsidiaries hold
all permits, licenses, variances, exemptions, orders and approvals of all
Governmental and Regulatory Authorities necessary for the lawful conduct of
their respective businesses (the "Company Permits"). The Company and its
Subsidiaries are in compliance with the terms of the Company Permits. The
Company and its Subsidiaries are not in violation of or default under any Law or
Order of any Governmental or Regulatory Authority.

3.11 Compliance with Agreements; Certain Agreements.

(a) Neither the Company nor any of its Subsidiaries is in breach or
violation of, or in default in the performance or observance of any term or
provision of, and no event has occurred which, with notice or lapse of time or
both, could be reasonably expected to result in a material default under, the
certificates of incorporation or code of regulations (or other comparable
charter documents) of the Company or any of its Subsidiaries.

(b) Except as disclosed in Schedule 3.11 hereto or as provided for in this
Agreement, as of the date hereof, neither the Company nor any of its
Subsidiaries is a party to any oral or written (i) consulting agreement not
terminable on 30 days' or less notice, (ii) union or collective bargaining
agreement, (iii) agreement with any executive officer or other key employee of
the Company or any of its Subsidiaries the benefits of which are contingent or
vest, or the terms of which are materially altered, upon the occurrence of a
transaction involving the Company or any of its Subsidiaries of the nature
contemplated by this Agreement, (iv) agreement with respect to any executive
officer or other key employee of the Company or any of its Subsidiaries
providing any term of employment or compensation guarantee or (v) agreement or
plan, including any stock option, stock appreciation right, restricted stock or
stock purchase plan, any of the benefits of which will be increased, or the
vesting of the benefits of which will be accelerated, by the occurrence of any
of the transactions contemplated by this Agreement or the value of any of the
benefits of which will be calculated on the basis of any of the transactions
contemplated by this Agreement.

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3.12 Taxes. The Company and its Subsidiaries have filed with the
appropriate governmental agencies all material Tax Returns (as defined below)
required to be filed. All Tax Returns were in all material respects (and as to
such Tax Returns not filed as of the date hereof, will be) true, complete and
correct and filed on a timely basis. The Company and each Subsidiary have,
within the time and in the manner established by law, paid (and until the
Closing will pay within the time and in the manner prescribed by law) all
material Taxes (as defined below) due and payable. The Company and each
Subsidiary have established (and until Closing will maintain) on their books and
records reserves adequate to pay all Taxes not yet due and payable. There are no
Tax liens upon any property or asset of the Company or any Subsidiary except
liens for Taxes not yet due and payable. Schedule 3.12 contains a true and
complete list of the names of all jurisdictions in which the Company or any of
its Subsidiaries files federal, state and local tax returns and tax reports and
the status of any examinations in process by the taxing authorities of such
jurisdictions. All deficiencies asserted or assessments made as a result of such
examination have been fully paid or fully reflected on the books of the Company
and its Subsidiaries to the extent required by GAAP. Except as shown in Schedule
3.12, there are no agreements, waivers or other arrangements providing for an
extension of time with respect to the assessment of any Tax or deficiency
against the Company or any of its Subsidiaries, nor are there any actions,
suits, proceedings, investigations or claims now pending against the Company or
any of its Subsidiaries with respect to any Tax or assessment, or any claims for
additional Taxes or assessments asserted by any federal, state, local or foreign
authority. No property of the Company or any Subsidiary is property that any
party to the Merger is or will be required to treat as being owned by another
person pursuant to the provisions of Code ss. 168(f)(8) (as in effect prior to
its amendment by the Tax Reform Act of 1986) or is "tax-exempt use property"
within the meaning of Code ss. 168. Neither the Company nor any Subsidiary is
required to include in income any adjustment pursuant to Code ss. 481(a) by
reason of a change in accounting method and neither the Company nor any
Subsidiary has knowledge that the Internal Revenue Service has proposed any such
adjustment or change in accounting method. Neither the Company nor any
Subsidiary is a party to any agreement, contract, or arrangement that would
result, separately or in the aggregate, in the payment of any "excess parachute
payments" within the meaning of Code ss. 280G. Neither the Company nor any
Subsidiary is a party to any express tax settlement agreement, arrangement,
policy or guideline, formal or informal (a "Settlement Agreement") as of the
Closing Date, and neither the Company nor any Subsidiary has any obligation to
make payments under any Settlement Agreement. There are no outstanding
agreements entered into with any taxing authority that would have a continuing
adverse effect on the Company or any Company Subsidiary after the Closing Date.
Company and each Company Subsidiary have complied with the provisions of Code
ss.ss. 1441 through 1464, 3401, 3406, 6041 and 6049. Neither the Company nor any
Company Subsidiary has filed (or will file prior to the Closing) a consent
pursuant to Code ss. 341(f) or agreed to have Code ss. 341(f)(2) apply to any
disposition of a subsection (f) asset (as that term is defined in Code ss.
341(f)(4)) owned by the Company or any Company Subsidiary.

For purposes of this Agreement, "Taxes" means any federal, state, county,
local or foreign taxes, charges, fees, levies, or other assessments, including
all net income, gross income, sales and use, ad valorem, transfer, gains,
profits, excise, franchise, real and personal property, gross receipt, capital
stock, production, business and occupation, disability, employment, payroll,
license, estimated, stamp, custom duties, severance or withholding taxes or
charges imposed by any governmental entity, including any interest and penalties
(civil or

A-12

criminal) on or additions to any such taxes and any expenses incurred in
connection with the determination, settlement or litigation of any Tax
liability. "Tax Return" means a report, return or other information required to
be supplied to a governmental entity with respect to Taxes including, where
permitted or required, combined or consolidated returns for any group of
entities that include Company or any Subsidiary.

3.13 Employee Benefit Plans; ERISA.

(a) Schedule 3.13 lists each Company Employee Benefit Plan. Except as
disclosed in Schedule 3.13 hereto:

(i) with respect to any Company Employee Benefit Plan subject to
Section 406 or 407 of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA") or Sections 4975 of the Code, no non-exempt prohibited
transaction within the meaning of Section 406 or 407 of ERISA, or Section
4975 of the Code with respect to any Company Employee Benefit Plan (as
defined below) has occurred during the five-year period preceding the date
of this Agreement;

(ii) neither the Pension Benefit Guaranty Corporation (the "PBGC"),
the Company nor any of its Subsidiaries has instituted proceedings to
terminate any Company Employee Benefit Plan;

(iii) all contributions, premiums and other payments required by law
or any Plan or applicable collective bargaining agreement to have been made
under any such Plan (without regard to any waivers granted under Section
412 of the Code) to any fund, trust or account established thereunder or in
connection therewith have been made by the due date thereof, and no amounts
are or will be due to the Pension Benefit Guaranty Corporation (except for
premiums in the ordinary course of business); and any and all
contributions, premiums and other payments with respect to compensation or
service before and through the Closing, or otherwise with respect to
periods before and through the Closing, due from any of the Company or its
affiliates to, under or on account of each Company Employee Benefit Plan
shall have been paid prior to Closing or shall have been fully reserved and
provided for on the Company Financial Statements;

(iv) no such Company Employee Plan that is or has been subject to Part
III of Subtitle B of Title I of ERISA or Section 412 of the Code has
incurred any "accumulated funding deficiency" (as defined therein), whether
or not waived, no liability under Title IV of ERISA has been incurred or is
expected to be incurred with respect to any such Plan subject thereto
(other than premiums incurred and paid when due), nor has there been any
"reportable event" within the meaning of Section 4043(c) of ERISA with
respect to any such Plan;

(v) each of the Company Employee Benefit Plans which is intended to be
"qualified" within the meaning of Section 401(a) of the Code has been
determined by the IRS to be so qualified and such determination has not
been modified, revoked or limited, and no circumstances have occurred that
would adversely affect the tax-qualified status of any such Plan;

A-13

(vi) each of the Company Employee Benefit Plans is, and its
administration is and has been in compliance with, and none of the Company
nor any of its Subsidiaries has received any claim or notice that any such
Company Employee Benefit Plan is not in compliance with, its terms and all
applicable laws and orders and prohibited transaction exemptions,
including, without limitation, the requirements of ERISA and all tax rules
for which favorable tax treatment is intended, bonding requirements and
requirements for the filing of applicable reports, documents, and notices
with the Secretary of Labor or the Secretary of the Treasury and the
furnishing of documents to the participants or beneficiaries of each such
Plan;

(vii) there is no suit, action, dispute, claim, arbitration or legal,
administrative or other proceeding or governmental investigation pending,
or threatened, alleging any breach of the terms of any such Plan or of any
fiduciary duties thereunder or violation of any applicable law with respect
to any such Plan;

(viii) none of the Company or any of its Subsidiaries is in default in
performing any of its contractual obligations under any of the Company
Employee Benefit Plans or any related trust agreement or insurance
contract;

(ix) none of the Company or any Subsidiary, or any "party in interest"
(as defined in Section 3(14) of ERISA) or any "disqualified person" (as
defined in Section 4975 of the Code) with respect to any such Plan, has
engaged in a non-exempt "prohibited transaction" within the meaning of
Section 4975 of the Code or Section 406 of ERISA;

(x) (i) no Company Employee Benefit Plan that is a "welfare benefit
plan" as defined in Section 3(1) of ERISA provides for continuing benefits
or coverage for any participant or beneficiary of a participant after such
participant's termination of employment, except to the extent required by
law; (ii) there has been no violation of Section 4980B of the Code or
Sections 601 through 608 of ERISA with respect to any such Plan that could
result in any liability; (iii) no such Plans are "multiple employer welfare
arrangements" within the meaning of Section 3(40) of ERISA; (iv) none of
the Company or any Subsidiary maintains or has any obligation to contribute
to any "voluntary employees' beneficiary association" within the meaning of
Section 501(c)(9) of the Code or other funding arrangement for the
provision of welfare benefits (such disclosure to include the amount of any
such funding); and (v) all Company Employee Benefit Plans which provide
medical, dental health or long-term disability benefits are fully insured
and claims with respect to any participant or covered dependent under such
Company Employee Benefit Plan could not result in any uninsured liability
to Parent or the Surviving Corporation;

(xi) none of the Company, any Subsidiary or any ERISA Affiliate has at
any time: (a) had any obligation to contribute to any "multiemployer plan"
as defined in Section 3(37) of ERISA and (b) withdrawn in any complete or
partial withdrawal from any "multiemployer plan" as defined in Section
3(37) of ERISA;

A-14

(xii) none of the Company Employee Benefit Plans, or other Plan
maintained, sponsored or contributed to by the Company or any affiliate
thereof, is or has ever been subject to Part III of Subtitle B of Title I
or ERISA, Section 412 of the Code or Title IV of ERISA;

(xiii) with respect to each such Plan, true, correct, and complete
copies of the applicable following documents have been delivered to Parent:
(a) all current Plan documents and related trust documents, and any
amendment thereto; (b) Forms 5500, financial statements, and actuarial
reports for the last three Plan years for any Plan for which the filing of
such forms or reports is required by the Code or ERISA; (c) for any Plan
intended to be "qualified" within the meaning of Section 401(a) of the
Code, the most recently issued IRS determination letter; (d) summary plan
descriptions; and (e) the Company's employee manual and all other written
communications that establish benefit obligations not reflected in employee
plan documents; and

(xiv) without limiting any other provision of this Section 3.13, no
event has occurred and no condition exists, with respect to any Plan, that
has subjected or could subject the Surviving Corporation, the Company or
any Subsidiary, or any Company Employee Benefit Plan or any successor
thereto, to any tax, fine, penalty or other liability (other than, in the
case of the Company, the Surviving Corporation and the Company Employee
Benefit Plans, a liability arising in the normal course to make
contributions or payments, as applicable, when ordinarily due under a
Company Employee Benefit Plan with respect to employees of the Company and
the Subsidiaries). No event has occurred and no condition exists, with
respect to any Plan that could subject Parent or any of its affiliates, or
the Surviving Corporation, or any Plan maintained by Parent or any
affiliate thereof, to any tax, fine, penalty or other liability, that would
not have been incurred by Parent or any of its affiliates, or any such
Plan, but for the transactions contemplated hereby. No Plan other than a
Company Employee Benefit Plan is or will be directly or indirectly binding
on Parent or the Surviving Corporation by virtue of the transactions
contemplated hereby. Parent, and its affiliates, including on and after the
Closing, the Surviving Corporation and any Subsidiary, shall have no
liability for, under, with respect to or otherwise in connection with any
Plan, which liability arises under ERISA or the Code, by virtue of the
Company or any Subsidiary being aggregated in a controlled group or
affiliated service group with any ERISA Affiliate purposes of ERISA or the
Code at any relevant time prior to the Closing. Except as set forth in
Schedule 3.13 hereto, no Plan exists which could result in the payment of
money or any other property or rights, or accelerate or provide any other
rights or benefits, to any current or former employee of the Company or any
Subsidiary (or other current or former service provider thereto) that would
not have been required but for the transactions provided for herein, and
none of the Company or any Subsidiary, nor any of their respective
affiliates, is a party to any Plan, program, arrangement or understanding
that would result, separately or in the aggregate, in the payment (whether
in connection with any termination of employment or otherwise) of any
"excess parachute payment" within the meaning of Section 280G of the Code
with respect to a current or former employee of, or current or former
independent contractor to, any of the Company or any Subsidiary. Except as
set forth in Schedule 3.13 hereto, none of the Company or any Subsidiary
maintains any Plan which provides severance benefits

A-15

to current or former employees or other service providers. Each Company
Employee Benefit Plan may be amended and terminated in accordance with its
terms, and, each such Plan provides for the unrestricted right of the
Company or any Subsidiary (as applicable) to amend or terminate such Plan.
Neither the Surviving Corporation nor Parent will have any liability under
the Workers Adjustment and Retraining Notification Act, as amended, with
respect to any events occurring or conditions existing on or prior to
Closing.

(b) Except as set forth in Schedule 3.13 hereto, neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
hereby constitutes a change in control or has or will accelerate benefits under
any Company Employee Benefit Plan.

(i) "Company Employee Benefit Plan" means a Plan which the Company or
any Subsidiary, or any entity required to be aggregated with any of the
Company or any S ubsidiary under Sections 414(b), (c), (m) or (o) of the
Code or Section 4001 of ERISA (an "ERISA Affiliate"), sponsors, maintains,
has any obligation to contribute to, has liability under or is otherwise a
party to, or which otherwise provides benefits for employees, former
employees, independent contractors or former independent contractors (or
their dependents and beneficiaries) of the Company or any Subsidiary any
Plan entered into, established, maintained, contributed to or required to
be contributed to by the Company or any of its Subsidiaries and existing on
the date of this Agreement or at any time subsequent thereto and on or
prior to the Effective Time; and

(ii) "Plan" means any employment, bonus, incentive compensation,
deferred compensation, pension, profit sharing, retirement, stock purchase,
stock option, stock ownership, stock appreciation rights, phantom stock,
equity (or equity-based) leave of absence, layoff, vacation, day or
dependent care, legal services, cafeteria, life, health, medical, accident,
disability, workmen's compensation or other insurance, severance,
separation, termination, change of control or other benefit plan, agreement
(including any collective bargaining agreement), practice, policy or
arrangement of any kind, whether written or oral, including, but not
limited to any "employee benefit plan" within the meaning of Section 3(3)
of ERISA.

3.14 Insurance. Attached hereto in Schedule 3.14 is a true and complete
list of all liability, property, workers' compensation, directors' and officers'
liability and other insurance policies currently in effect that insure the
business, operations, properties, assets or employees of the Company or any of
its Subsidiaries, insurance certificates for each of which have been delivered
to Parent prior to the date of this Agreement.

3.15 Labor Matters. Except as disclosed in Schedule 3.15 hereto, there are
no controversies pending or, to the knowledge of the Company and its
Subsidiaries, threatened between the Company or any of its Subsidiaries and any
representatives of its employees, and, to the knowledge of the Company and its
Subsidiaries, there are no organizational efforts

A-16

presently being made involving any of the now unorganized employees of the
Company or any of its Subsidiaries. There has been no work stoppage, strike or
other concerted action by employees of the Company or any of its Subsidiaries.

3.16 Tangible Property and Assets. The Company and its Subsidiaries have
good and marketable title to, or have valid leasehold interests in or valid
rights under contract to use, all tangible property and assets used in and,
individually or in the aggregate, material to the conduct of the businesses of
the Company and its Subsidiaries taken as a whole, free and clear of all Liens
other than: (i) any statutory Lien arising in the ordinary course of business by
operation of law with respect to a liability that is not yet due or delinquent
and (ii) any minor imperfection of title or similar Lien which individually or
in the aggregate with other such Liens does not impair the value of the property
or asset subject to such Lien or the use of such property or asset in the
conduct of the business of the Company or any such Subsidiary. All such property
and assets having a fair market value of Ten Thousand Dollars ($10,000) or more
as of the date hereof are in good working order and condition, ordinary wear and
tear excepted, and adequate and suitable for the purposes for which they are
presently being used. To the Company's knowledge, all such property and assets
having a fair market value of less than Ten Thousand Dollars ($10,000) as of the
date hereof are in good working order and condition, ordinary wear and tear
excepted, and adequate and suitable for the purposes for which they are
presently being used. Neither the Company nor any Company Subsidiary owns any
real property. Upon the consummation of the Merger, the Surviving Corporation
will own or have the use of all assets which are necessary and appropriate to
operate the businesses of the Company and the Company Subsidiaries as currently
conducted or as currently contemplated to be conducted.

3.17 Intellectual Property Rights. The Company and its Subsidiaries have
all right, title and interest in, or a valid and binding license to use, all
Intellectual Property (as defined below) individually or in the aggregate
material to the conduct of the businesses of the Company and its Subsidiaries
taken as a whole as currently conducted or as currently contemplated to be
conducted. Neither the Company nor any Company Subsidiary is in default (or with
the giving of notice or lapse of time or both, would be in default), and neither
the Company nor any Company Subsidiary has knowledge of any third party being in
default, under any license to use such Intellectual Property, such Intellectual
Property is not being infringed by any third party, and neither the Company nor
any Company Subsidiary is infringing any Intellectual Property of any third
party. For purposes of this Agreement, "Intellectual Property" means patents and
patent rights, trademarks and trademark rights, trade names and trade name
rights, service marks and service mark rights, service names and service name
rights, copyright and copyright rights and other proprietary intellectual
property rights and all pending applications for and registrations of any of the
foregoing.

3.18 Vote Required. The affirmative vote of the holders of record of at
least two-thirds (2/3) of the outstanding Company Common Shares with respect to
the adoption of this Agreement is the only vote of the holders of any class or
series of the capital stock of the Company required to adopt this Agreement and
approve the Merger and the other transactions contemplated hereby.

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3.19 Articles of Incorporation and Code of Regulations; Minute Books. The
Company has delivered to Parent copies of the articles of incorporation of the
Company and each Company Subsidiary, all amendments thereto and the code of
regulations of the Company and each Company Subsidiary as in effect on the date
hereof, which copies are complete and correct. The minute books of the Company,
which contain complete and accurate records of all meetings and other corporate
actions of its Board of Directors and shareholders, have been made available to
Parent for review. No corporate action has been taken by any committee of the
Board of Directors other than recommendations to the Board of Directors, which
recommendations, if acted on by the Board of Directors, are reflected in the
records of the Board of Directors.

3.20 Contracts.

(a) Except as set forth in Schedule 3.20, neither the Company nor any of
its Subsidiaries is a party, or otherwise subject to:

(i) any contract, agreement, arrangement or understanding or series of
related contracts, agreements, arrangements or understandings, which
itnvolves expenditures or receipts by the Company or any of its
Subsidiaries in an amount in excess of Ten Thousand Dollars ($10,000);

(ii) any contract, agreement, arrangement or understanding not made in
the ordinary course of business and consistent with past practice;

(iii) any note, indenture, credit facility, mortgage, security
agreement or other contract, agreement, arrangement or understanding
relating to or evidencing indebtedness for borrowed money or a security
interest or mortgage in the property or assets of the Company or any of its
Subsidiaries;

(iv) any guaranty issued by the Company, any of its Subsidiaries or
any other arrangement under which the Company or any of its Subsidiaries
assumes any liability or obligation (including indebtedness) of any other
person or entity;

(v) any power of attorney granting any person or entity authority to
execute agreements or otherwise act on behalf of the Company or any of its
Subsidiaries;

(vi) any contract, agreement, arrangement or understanding granting to
any person the right to use any property or property right of the Company
or any of its Subsidiaries;

(vii) any contract, agreement, arrangement or understanding
restricting the Company's or any of its Subsidiaries' right to engage in
any business activity or compete with any business;

A-18

(viii) any contract, agreement, arrangement or understanding with a
Related Person (as used herein, "Related Person" means: (i) one or more of
the Principal Shareholders; (ii) the spouses, children and other lineal
descendants and any other member of the immediate family, as defined in
Rule 16a-1 under the Exchange Act, of any of the Principal Shareholders;
(iii) any corporation, partnership, joint venture or other entity or other
enterprise owned or controlled by any of the Principal Shareholders or by
any person in (ii); and (iv) any trust of which any Principal Shareholder
or member of the immediate family, as defined in Rule 16a-1 under the
Exchange Act, of a Principal Shareholder is a grantor or beneficiary); or

(ix) any outstanding offer, agreement, commitment or obligation to
enter into any contract or arrangement of the nature described in
subsections (i) through (viii) of this subsection 3.20(a) outside of the
ordinary course of business.

(b) The Company and its Subsidiaries have made available to Parent complete
and correct copies (or, in the case of oral contracts, a complete and correct
description) of each contract (and any amendments or supplements thereto) listed
in Schedule 3.20. Except as set forth in Schedule 3.20 (i) each contract listed
in Schedule 3.20 is in full force and effect; (ii) neither the Company, any of
its Subsidiaries nor (to the knowledge of the Company or any of the Principal
Shareholders) any other party is in default under any contract listed in
Schedule 3.20 or under any other Contract to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries or
any of their respective assets or properties is bound, and no event has occurred
which constitutes, or with the lapse of time, the giving of notice, or both
would constitute, a default by either the Company, any of its Subsidiaries or
(to the knowledge of the Company or any of the Principal Shareholders) a default
by any other party under any such contract; and (iii) there are no disputes or
disagreements between either the Company or any of its Subsidiaries and any
other party with respect to any such contract. Schedule 3.20 sets forth a list
of each such contract where notice to, and/or the consent of, and/or the
approval of, any other party is necessary for such contract to remain in full
force and effect following the consummation of the transactions contemplated by
this Agreement without modification in the rights or obligations of the Company
or any of its Subsidiaries thereunder.

(c) Except as set forth in Schedule 3.20, none of the Company or any of its
Subsidiaries is a party to any contract, agreement, arrangement or understanding
which includes any agreement or commitment to indemnify any persons for an
amount in excess of Ten Thousand Dollars ($10,000).

(d) The consummation of the Merger will not cause any default or
acceleration of any payment under any contract, agreement, arrangement or
understanding or series of related contracts, agreements, arrangements or
understandings, whether or not set forth in Schedule 3.20.

3.21 Bank Accounts. Schedule 3.21 contains a list of all bank accounts of
the Company and its Subsidiaries together with, in respect of each account, the
account number, the names of all signatories thereto and the powers of each such
signatory.

A-19

3.22 Pooling of Interests Representations. The representations made by the
Company to Ernst & Young LLP in the Letter of Representations dated the date
hereof and in the Letter of Representations to be given as of the Closing Date
with respect to the accounting of the Merger as a pooling of interests, are, and
as of the Closing Date will be, true and correct. Neither the Company nor any
Company Subsidiary, nor, to the knowledge of the Company, any of its affiliates
has taken, agreed to take or will take any action that would prevent: (a) the
Merger from constituting a reorganization qualifying under the provisions of
Section 368 of the Code or (b) the Merger from being treated for financial
accounting purposes as a pooling of interests.

3.23 Opinion of Financial Advisor. The Company has received the opinion of
McDonald & Company Securities, Inc. ("McDonald") to the effect that, as of the
date of this Agreement, the Merger Consideration is fair from a financial point
of view to the shareholders of the Company, and a true and complete copy of such
opinion has been made available to Parent prior to the execution of this
Agreement.

3.24 Company Not an Interested Stockholder or an Acquiring Person. Neither
the Company nor, to the knowledge of the Company, any of its affiliates or
associates (as such terms are defined in Section 203 of the General Corporation
Law of the State of Delaware (the "DGCL")) is an "interested stockholder" (as
such term is defined in Section 203 of the DGCL) of Parent.

3.25 Environmental Matters. Each of the Company and its Subsidiaries has
obtained all licenses, permits, authorizations, approvals and consents from
Governmental or Regulatory Authorities which are required in respect of its
business, operations, assets or properties under any applicable Environmental
Law (as defined below). To the knowledge of the Company, each of the Company and
its Subsidiaries is in compliance in all material respects with the terms and
conditions of all such licenses, permits, authorizations, approvals and consents
and with any applicable Environmental Law. Except as disclosed in Schedule 3.25
hereto:

(a) No Order has been issued, no complaint has been filed, no penalty has
been assessed and no investigation or review is pending or, to the knowledge of
the Company and its Subsidiaries, threatened by any Governmental or Regulatory
Authority with respect to any alleged failure by the Company or any of its
Subsidiaries to have any license, permit, authorization, approval or consent
from Governmental or Regulatory Authorities required under any applicable
Environmental Law in connection with the conduct of the business or operations
of the Company or any of its Subsidiaries or with respect to any treatment,
storage, recycling, transportation, disposal or "release" as defined in 42
U.S.C. ss. 9601(22) ("Release"), by the Company or any of its Subsidiaries of
any Hazardous Material (as defined below), and neither the Company nor any of
its Subsidiaries is aware of any facts or circumstances which could be
reasonably expected to form the basis for any such Order, complaint, penalty or
investigation.

(b) Neither the Company nor any of its Subsidiaries nor, to the knowledge
of the Company and its Subsidiaries, any prior owner or lessee of any property
now or previously

A-20

owned or leased by the Company or any of its Subsidiaries has handled any
Hazardous Material on any property now or previously owned or leased by the
Company or any such Subsidiary; and, without limiting the foregoing, (i) no
polychlorinated biphenyl is or has been present, (ii) no asbestos is or has been
present, (iii) there are no underground storage tanks, active or abandoned and
(iv) no Hazardous Material has been Released in a quantity reportable under, or
in violation of, any Environmental Law, at, on or under any property now or
previously owned or leased by the Company or any such Subsidiary, during any
period that the Company or any of its Subsidiaries owned or leased such property
or, to the knowledge of the Company and its Subsidiaries, prior thereto.

(c) Neither the Company nor any of its Subsidiaries has transported or
arranged for the transportation of any Hazardous Material to any location which
is the subject of any action, suit, arbitration or proceeding that could be
reasonably expected to lead to claims against the Company or any of its
Subsidiaries for clean-up costs, remedial work, damages to natural resources or
personal injury claims, including, but not limited to, claims under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, and the rules and regulations promulgated thereunder ("CERCLA").

(d) No oral or written notification of a Release of a Hazardous Material
has been filed by or on behalf of the Company or any of its Subsidiaries and no
property now or previously owned or leased by the Company or any of its
Subsidiaries is listed or proposed for listing on the National Priorities List
promulgated pursuant to CERCLA or on any similar state list of sites requiring
investigation or clean-up.

(e) There are no Liens arising under or pursuant to any Environmental Law
on any real property owned or leased by the Company or any of its Subsidiaries,
and no action of any Governmental or Regulatory Authority has been taken or, to
the knowledge of the Company and its Subsidiaries, is in process which could
subject any of such properties to such Liens, and neither the Company nor any of
its Subsidiaries would be required to place any notice or restriction relating
to the presence of Hazardous Material at any such property owned by it in any
deed to such property.

(f) There have been no environmental investigations, studies, audits,
tests, reviews or other analyses conducted by, or which are in the possession
of, the Company or any of its Subsidiaries in relation to any property or
facility now or previously owned or leased by the Company or any of its
Subsidiaries which have not been delivered to Parent prior to the execution of
this Agreement.

(g) As used herein:

(i) "Environmental Law" means any Law of any Gotvernmental or
Regulatory Authority relating to human health, safety or protection of the
environment or to emissions, discharges, releases or threatened releases of
pollutants, contaminants or Hazardous Materials in the environment
(including, without limitation, ambient air,

A-21

surface water, ground water, land surface or subsurface strata), or
otherwise relating to the treatment, storage, disposal, transport or
handling of any Hazardous Material; and

(ii) "Hazardous Material" means (A) any petroleum or petroleum
products, radioactive materials, asbestos in any form that is or could
become friable, urea formaldehyde foam insulation and transformers or other
equipment that contain dielectric fluid containing levels of
polychlorinated biphenyls (PCBs); (B) any chemicals, materials, substances
or wastes which are now or hereafter become defined as or included in the
definition of "hazardous substances," "hazardous wastes," "hazardous
materials," "extremely hazardous wastes," "restricted hazardous wastes,"
"toxic substances," "toxic pollutants" or words of similar import, under
any Environmental Law; and (C) any other chemical, material, substance or
waste, exposure to which is now or hereafter prohibited, limited or
regulated by any Governmental or Regulatory Authority.

ARTICLE III.A

REPRESENTATIONS AND WARRANTIES OF PRINCIPAL SHAREHOLDERS

Each of the Principal Shareholders hereby severally, but not jointly,
represents and warrants to Parent and Sub with respect to himself or herself as
follows:

3.01.A Capacity and Authority. Such Principal Shareholder has full legal
capacity and authority to execute, deliver and perform his or her obligations
under this Agreement. This Agreement has been duly executed and delivered by
such Principal Shareholder and constitutes the legal, valid and binding
obligation of such Principal Shareholder, enforceable against him or her in
accordance with its terms.

3.02.A Government Approvals and Filings. Except as set forth in Schedule
3.02.A, no approval, authorization, consent, license, clearance or order of,
declaration or notification to, or filing, registration or compliance with, any
Governmental or Regulatory Authority is required to permit such Principal
Shareholder to enter into this Agreement or to consummate the transactions
contemplated herein.

3.03.A Investment Representation. Each of the Principal Shareholders
represents that its shares of Parent Common Stock are being acquired by it with
the present intention of holding such shares of Parent Common Stock for purposes
of investment and not with a view towards sale or any other distribution. Each
of the Principal Shareholders recognizes that it may be required to bear the
economic risk of an investment in the shares of Parent Common Stock for an
indefinite period of time. Each of the Principal Shareholders represents that it
is an "accredited investor" within the meaning of Rule 501 of Regulation D under
the Securities Act, and has such knowledge and experience in financial and
business matters so as to be fully capable of evaluating the merits and risks of
an investment in the shares of Parent Common Stock. Each of the Principal
Shareholders represents that it has (i) been afforded the opportunity to ask
questions of those persons they consider appropriate and to obtain

A-22

any additional information they desire in respect of the shares of Parent Common
Stock and the business, operations, conditions (financial and otherwise) and
current prospects of Parent and (ii) consulted its own financial, legal and tax
advisors with respect to the economic, legal and tax consequences of delivery of
the shares of Parent Common Stock and have not relied on any informational
materials supplied by Parent, Parent or any of its officers, directors,
affiliates or professional advisors for such advice as to such consequences.

3.04.A Non-Contravention; Approvals and Consents. The execution and
delivery of this Agreement by such Principal Shareholder do not, and the
performance by such Principal Shareholder of its obligations hereunder and the
consummation of the transactions contemplated hereby will not, conflict with,
result in a violation or breach of, constitute (with or without notice or lapse
of time or both) a default under, result in or give to any person any right of
payment or reimbursement, termination, cancellation, modification or
acceleration of, or result in the creation or imposition of any Lien upon any of
the assets or properties of such Principal Shareholder under, any of the terms,
conditions or provisions of (i) the limited partnership agreement of such
Principal Shareholder, if applicable, or (ii) subject to the taking of the
actions described in Section 3.02.A, (x) any Laws or Orders of any Governmental
or Regulatory Authority, applicable to such Principal Shareholder or any of its
assets or properties, or (y) any Contracts to which such Principal Shareholder
is a party or by which such Principal Shareholder or any of its assets or
properties is bound, excluding from the foregoing clauses (x) and (y) conflicts,
violations, breaches, defaults, terminations, modifications, accelerations and
creations and impositions of Liens which, individually or in the aggregate,
could not reasonably be expected to have a material adverse effect on the
ability of such Principal Shareholder to consummate the transactions
contemplated by this Agreement.

3.05.A Legal Proceedings. (i) There are no actions, suits, arbitrations or
proceedings pending or, to the knowledge of such Principal Shareholder,
threatened against, relating to or affecting, nor to the knowledge of such
Principal Shareholder are there any Governmental or Regulatory Authority
investigations or audits pending or threatened against, relating to or
affecting, such Principal Shareholder or any of its assets and properties,
which, individually or in the aggregate, could reasonably be expected to have a
material adverse effect on the ability of such Principal Shareholder to
consummate the transactions contemplated by this Agreement, and there are no
facts or circumstances known to such Principal Shareholder that could be
reasonably expected to give rise to any such action, suit, arbitration,
proceeding, investigation or audit, and (ii) such Principal Shareholder is not
subject to any Order of any Governmental or Regulatory Authority, which,
individually or in the aggregate, could reasonably be expected to have a
material adverse effect on the ability of such Principal Shareholder to
consummate the transactions contemplated by this Agreement.

ARTICLE IV.

REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB

Parent and Sub represent and warrant to the Company as follows:

A-23

4.01 Organization and Qualification. Each of Parent, its "significant
subsidiaries" (as such term is defined in Rule 405 under the Securities Act) and
Sub is an entity duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation and has all requisite power and
authority to conduct its business as and to the extent now conducted and to own,
use, lease and operate its assets and properties. Sub was formed solely for the
purpose of engaging in the transactions contemplated by this Agreement, has
engaged in no other business activities and has conducted its operations only as
contemplated hereby. Each of Parent and Sub is duly qualified, licensed or
admitted to do business and is in good standing in each jurisdiction in which
the ownership, use or leasing of its assets and properties, or the conduct or
nature of its business, makes such qualification, licensing or admission
necessary, except for such failures to be so qualified, licensed or admitted and
in good standing which, individually or in the aggregate, could not be
reasonably expected to have a material adverse effect on the validity or
enforceability of this Agreement or on the ability of Parent or Sub to perform
its obligations hereunder.

4.02 Capitalization. (a) The authorized capital stock of Parent consists
solely of 40,000,000 shares of Parent Common Stock and 5,000,000 shares of
preferred stock, par value $.0001 per share ("Parent Preferred Stock"). As of
January 20, 1998, 13,342,650 shares of Parent Common Stock were issued and
outstanding, no shares were held in the treasury of Parent and 3,156,150 shares
were reserved for issuance pursuant to Options. There has been no change in the
number of issued and outstanding shares of Parent Common Stock or shares of
Parent Common Stock held in treasury or reserved for issuance since such date.
As of the date hereof, no shares of Parent Preferred Stock are issued and
outstanding. All of the issued and outstanding shares of Parent Common Stock
are, and all shares reserved for issuance will be, upon issuance in accordance
with the terms specified in the instruments or agreements pursuant to which they
are issuable, duly authorized, validly issued, fully paid and nonassessable.
Except pursuant to this Agreement and except as set forth in the Parent SEC
Reports (as defined herein) or in Schedule 4.02 hereto, there are no outstanding
Options obligating Parent or any of its Subsidiaries to issue or sell any shares
of capital stock of Parent or to grant, extend or enter into any Option with
respect thereto.

(b) Except as disclosed in Schedule 4.02 hereto, all of the outstanding
shares of capital stock of each Subsidiary of Parent are duly authorized,
validly issued, fully paid and nonassessable and are owned, beneficially and of
record, by Parent or a Subsidiary wholly owned, directly or indirectly, by
Parent, free and clear of any Liens. Except as disclosed in Schedule 4.02
hereto, there are no: (i) outstanding Options obligating Parent or any of its
Subsidiaries to issue or sell any shares of capital stock of any Subsidiary of
Parent or to grant, extend or enter into any such Option or (ii) voting trusts,
proxies or other commitments, understandings, restrictions or arrangements in
favor of any person other than Parent or a Subsidiary wholly owned, directly or
indirectly, by Parent with respect to the voting of or the right to participate
in dividends or other earnings on any capital stock of any Subsidiary of Parent.

(c) Except as disclosed in Schedule 4.02 hereto, there are no outstanding
contractual obligations of Parent or any Subsidiary of Parent to repurchase,
redeem or otherwise

A-24

acquire any shares of Parent Common Stock or any capital stock of any Subsidiary
of Parent or to provide funds to, or make any investment (in the form of a loan,
capital contribution or otherwise) in, any Subsidiary of Parent or any other
person.

4.03 Authority Relative to this Agreement. Each of Parent and Sub has full
corporate power and authority to enter into this Agreement and, subject to
obtaining the Parent Stockholders' Approval (as defined in Section 6.03), to
perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
by each of Parent and Sub and the consummation by each of Parent and Sub of the
transactions contemplated hereby have been duly and validly approved by its
Board of Directors and by Parent in its capacity as the sole shareholder of Sub,
the Board of Directors of Parent has recommended adoption of this Agreement by
the stockholders of Parent and directed that this Agreement be submitted to the
stockholders of Parent for their consideration, and no other corporate
proceedings on the part of Parent or Sub or their stockholders are necessary to
authorize the execution, delivery and performance of this Agreement by Parent or
Sub and the consummation by Parent or Sub of the transactions contemplated
hereby. This Agreement has been duly and validly executed and delivered by
Parent and Sub and constitutes legal, valid and binding obligation of Parent and
Sub enforceable against Parent and Sub in accordance with its terms.

4.04 Non-Contravention; Approvals and Consents.

(a) The execution and delivery of this Agreement by Parent and Sub do not,
and the performance by Parent and Sub of their obligations hereunder and the
consummation of the transactions contemplated hereby will not, conflict with,
result in a violation or breach of, constitute (with or without notice or lapse
of time or both) a default under, result in or give to any person any right of
termination, cancellation, modification or acceleration of, or result in the
creation or imposition of any Lien upon any of the assets or properties of
Parent or any of its Subsidiaries under, any of the terms, conditions or
provisions of: (i) the certificates or articles of incorporation or bylaws (or
other comparable charter documents) of Parent or any of its Subsidiaries, or
(ii) subject to the obtaining of the Parent Stockholders' Approval and the
taking of the actions described in paragraph (b) of this Section, (x) any Law or
Order of any Governmental or Regulatory Authority applicable to Parent or any of
its Subsidiaries or any of their respective assets or properties, or (y) any
Contract to which Parent or any of its Subsidiaries is a party or by which
Parent or any of its Subsidiaries or any of their respective assets or
properties is bound, excluding from the foregoing clauses (x) and (y) conflicts,
violations, breaches, defaults, terminations, modifications, accelerations and
creations and impositions of Liens which, individually or in the aggregate,
could not be reasonably expected to have a material adverse effect on the
ability of Parent and Sub to consummate the transactions contemplated by this
Agreement.

(b) Except: (i) for the filing of a premerger notification report by Parent
under the HSR Act, (ii) for the filing of the Certificate of Merger and other
appropriate merger documents required by the Ohio GCL with the Secretary of
State and appropriate documents with the relevant authorities of other states in
which the Constituent Corporations are qualified

A-25

to do business, (iii) for the filing of the Form S-4 and Proxy Statement with
the SEC pursuant to the Securities Act and Exchange Act, the declaration of the
effectiveness of the Form S-4 by the SEC and filings with various state
securities authorities that are required in connection with the transactions
contemplated by this Agreement, and (iv) as disclosed in Schedule 4.04 hereto,
no consent, approval or action of, filing with or notice to any Governmental or
Regulatory Authority or other public or private third party is necessary or
required under any of the terms, conditions or provisions of any Law or Order of
any Governmental or Regulatory Authority or any Contract to which Parent or any
of its Subsidiaries is a party or by which Parent or any of its Subsidiaries or
any of their respective assets or properties is bound for the execution and
delivery of this Agreement by Parent and Sub, the performance by Parent and Sub
of their obligations hereunder or the consummation of the transactions
contemplated hereby, other than such consents, approvals, actions, filings and
notices which the failure to make or obtain, as the case may be, individually or
in the aggregate, could not be reasonably expected to have a material adverse
effect on the ability of Parent and Sub to consummate the transactions
contemplated by this Agreement.

4.05 Legal Proceedings. Except as disclosed in the Parent SEC Reports or in
Schedule 4.05: (i) there are no actions, suits, arbitrations or proceedings
pending or, to the knowledge of Parent and its Subsidiaries, threatened against,
relating to or affecting, nor to the knowledge of Parent and its Subsidiaries
are there any Governmental or Regulatory Authority investigations or audits
pending or threatened against, relating to or affecting, Parent or any of its
Subsidiaries or any of their respective assets and properties which,
individually or in the aggregate, could be reasonably expected to have a
material adverse effect on the ability of Parent and Sub to consummate the
transactions contemplated by this Agreement, and (ii) neither Parent nor any of
its Subsidiaries is subject to any Order of any Governmental or Regulatory
Authority which, individually or in the aggregate, could be reasonably expected
to have a material adverse effect on the ability of Parent and Sub to consummate
the transactions contemplated by this Agreement.

4.06 Merger Consideration. The shares of Parent Common Stock to be issued
in the Merger will be duly authorized, validly issued, fully paid and
nonassessable and free and clear of all Liens and preemptive rights. The
certificates representing such shares will be in proper form.

4.07 Reports and Financial Statements. Parent has previously furnished to
the Company true and complete copies of the following reports as filed with the
SEC and Nasdaq, as the case may be: (i) Annual Report on Form 10-K for the
fiscal year ended December 31, 1996; (ii) Quarterly Reports on Form 10-Q for the
quarters ended March 31, June 30 and September 30, 1997; (iii) all current
reports on Form 8-K filed since December 31, 1996 and (iv) the definitive proxy
statement relating to the annual meeting of its shareholders for the year ended
December 31, 1997 (collectively, the "Parent SEC Reports"). As of their
respective dates, the Parent SEC Reports were prepared in all material respects
in accordance with the requirements of the Securities Act or the Exchange Act,
as the case may be, and did not, when filed, contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under

A-26

which they were made, not misleading. The audited consolidated financial
statements and unaudited consolidated interim financial statements included in
such reports, or other filings have been prepared in accordance with GAAP and
all SEC requirements applied on a consistent basis (except as may be indicated
therein or in the notes thereto and except for the absence of notes in the
unaudited interim financial statements) and fairly present the consolidated
financial position of Parent and its Subsidiaries as of the dates thereof and
the consolidated results of operations and changes in cash flow of Parent and
its Subsidiaries for each of the periods then ended, subject, in the case of
unaudited interim financial statements, to normal year-end adjustments.

4.08 Absence of Certain Changes or Events. Except as disclosed in the
Parent SEC Reports or in Schedule 4.08 hereto, since September 30, 1997, there
has not been any change, event or development having, or that could be
reasonably expected to have, individually or in the aggregate, a material
adverse effect on Parent and its Subsidiaries taken as a whole, other than those
occurring as a result of general economic or financial conditions or other
developments which are not unique to Parent and its Subsidiaries but also
generally affect other persons who participate or are engaged in the lines of
business in which Parent and its Subsidiaries participate or are engaged.

4.09 S-4; Proxy Statement. Neither the information supplied or to be
supplied by or on behalf of Parent or Sub for inclusion in any document to be
filed by Parent or Sub with the SEC, including the Form S-4 and the Proxy
Statement, or any other Governmental or Regulatory Authority in connection with
the Merger and the other transactions contemplated hereby, will on the date of
its filing, and in the case of the Proxy Statement, at the time the Proxy
Statement or any amendment or supplement thereto is first mailed or delivered to
stockholders of Parent and shareholders of the Company, and at the time of the
Parent Stockholders' Meeting, at the time of the Company Shareholders' Meeting
and at the Effective Time, and, in the case of the Registration Statement, when
it becomes effective under the Securities Act, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.

4.10 Pooling of Interests Representations. The representations made by
Parent to Arthur Andersen LLP in the Letter of Representations dated the date
hereof and in the Letter of Representations to be given as of the Closing Date
with respect to the accounting of the Merger as a pooling of interests, are, and
as of the Closing Date will be, true and correct. Neither Parent nor any of its
Subsidiaries, nor, to the knowledge of Parent, any of its affiliates has taken,
agreed to take or will take any action that would prevent: (a) the Merger from
constituting a reorganization qualifying under the provisions of Section 368 of
the Code or (b) the Merger from being treated for financial accounting purposes
as a pooling of interests.

4.11 Opinion of Financial Advisor. Parent has received the opinion of SBC
Warburg Dillon Read Inc. ("SBC WDR") to the effect that, as of the date of this
Agreement, the Merger Consideration is fair from a financial point of view to
Parent, and a true and

A-27

complete copy of such opinion has been made available to the Company prior to
the execution of this Agreement.

4.12 Vote Required. Assuming the accuracy of the representation and
warranty contained in Section 3.24, the affirmative vote of the holders of
record of at least a majority of the outstanding shares of Parent Common Stock
with respect to the adoption of this Agreement is the only vote of the holders
of any class or series of the capital stock of Parent required to adopt this
Agreement and approve the Merger and the other transactions contemplated hereby.

ARTICLE V.

COVENANTS OF THE COMPANY
AND THE PRINCIPAL SHAREHOLDERS

The Company and the Principal Shareholders (but, as to the Principal
Shareholders, only with respect to Section 5.02, 5.03, 5.05 and 5.06) covenant
and agree that:

5.01 Conduct of Business. At all times from and after the date hereof until
the Effective Time, the Company covenants and agrees as to itself and its
Subsidiaries that (except as expressly contemplated or permitted by this
Agreement, or to the extent that Parent shall otherwise consent in writing):

(a) Ordinary Course. The Company and its Subsidiaries shall conduct their
respective businesses only in, and the Company and such Subsidiaries shall not
take any action except in, the ordinary course consistent with past practice.

(b) Without limiting the generality of paragraph (a) of this Section: (i)
the Company and its Subsidiaries shall use all commercially reasonable efforts
to preserve intact in all material respects their present business organizations
and reputation, to keep available the services of their key officers and
employees, to maintain their assets and properties in good working order and
condition, ordinary wear and tear excepted, to maintain insurance on their
tangible assets and businesses in such amounts and against such risks and losses
as are currently in effect, to preserve their relationships with customers and
suppliers and others having significant business dealings with them and to
comply in all material respects with all Laws and Orders of all Governmental or
Regulatory Authorities applicable to them, and (ii) neither the Company nor any
of its Subsidiaries shall:

(A) amend or propose to amend its certificate or articles of
incorporation or code of regulations (or other comparable corporate charter
documents);

(B) (w) declare, set aside or pay any dividends on or make other
distributions in respect of any of its capital stock, except for the
declaration and payment of dividends by a wholly-owned Subsidiary solely to
its parent corporation, (x) split, combine, reclassify or take similar
action with respect to any of its capital stock or issue or

A-28

authorize or propose the issuance of any other securities in respect of, in
lieu of or in substitution for shares of its capital stock, (y) adopt a
plan of complete or partial liquidation or resolutions providing for or
authorizing such liquidation or a dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization or (z) directly or
indirectly redeem, repurchase or otherwise acquire any shares of its
capital stock or any Option with respect thereto;

(C) issue, deliver or sell, or authorize or propose the issuance,
delivery or sale of, any shares of its capital stock or any Option with
respect thereto, or modify or amend any right of any holder of outstanding
shares of capital stock or Options with respect thereto;

(D) acquire (by merging or consolidating with, or by purchasing a
substantial equity interest in or a substantial portion of the assets of,
or by any other manner) any business or any corporation, partnership,
association or other business organization or division thereof or otherwise
acquire or agree to acquire any assets other than assets used in the
ordinary course of its business consistent with past practice;

(E) other than dispositions of assets which are not, individually or
in the aggregate, material to the Company and its Subsidiaries taken as a
whole, sell, lease, grant any security interest in or otherwise dispose of
or encumber any of its assets or properties;

(F) except to the extent required by applicable law or auditing
standards, (x) permit any material change in (A) any pricing, marketing,
purchasing, investment, accounting, financial reporting, inventory, credit,
allowance or tax practice or policy or (B) any method of calculating any
bad debt, contingency or other reserve for accounting, financial reporting
or tax purposes or (y) make any material tax election or settle or
compromise any material income tax liability with any Governmental or
Regulatory Authority;

(G) except with respect to the Company's current borrowing and/or
financing arrangements to which the Company and/or its Subsidiaries are
obligated, which, at the Effective Time, shall not exceed the sum of
$5,000,000 and any obligations of the Company contemplated by Section 6.07,
(x) incur any indebtedness for borrowed money or guarantee any such
indebtedness (excluding trade payables incurred in the ordinary course of
business), or (y) voluntarily purchase, cancel, prepay or otherwise provide
for a complete or partial discharge in advance of a scheduled repayment
date with respect to, or waive any right under, any indebtedness for
borrowed money, except, with Parent's consent (which shall not be
unreasonably withheld), for refinancing of existing indebtedness in amounts
not to exceed the prior amount of indebtedness being refinanced;

(H) enter into, adopt, amend in any material respect (except as may be
required by applicable law) or terminate any Company Employee Benefit Plan
or other

A-29

agreement, arrangement, plan or policy between the Company or one of its
Subsidiaries and one or more of its directors, officers or employees, or
increase in any manner the compensation or fringe benefits of any director,
officer or employee or pay any benefit not required by any plan or
arrangement in effect as of the date hereof;

(I) enter into any contract or amend or modify any existing contract
for an amount in excess of Ten Thousand Dollars ($10,000), or enter into
any contract or engage in any new transaction outside the ordinary course
of business or not otherwise consistent with past practice or not on an
arm's length basis or with any affiliate of the Company or any of its
Subsidiaries;

(J) make any capital expenditures or commitments for additions to
plant, property or equipment constituting capital assets for an amount in
excess of Ten Thousand Dollars ($10,000);

(K) make any change in the lines of business in which it participates
or is engaged; or

(L) enter into any contract, agreement, commitment or arrangement to
do or engage in any of the foregoing.

(c) Advice of Changes. The Company shall confer on a regular and frequent
basis (and in any event not less than weekly) with Parent with respect to its
business and operations and other matters relevant to the Merger, and shall
promptly advise Parent, orally and in writing, of any change or event,
including, without limitation, any complaint, investigation or hearing by any
Governmental or Regulatory Authority (or communication indicating the same may
be contemplated) or the institution or threat of litigation, having, or which,
insofar as can be reasonably foreseen, could have, a material adverse effect on
the Company and its Subsidiaries taken as a whole or on the ability of the
Company to consummate the transactions contemplated hereby.

5.02 No Solicitations. None of the Company, any of its Subsidiaries or any
Principal Shareholder shall, nor shall they authorize or permit any officer,
director, employee, investment banker, financial advisor, attorney, accountant
or other agent or representative (each, a "Representative") retained by or
acting for or on behalf of the Company, any of its Subsidiaries or any Principal
Shareholder to, directly or indirectly, initiate, solicit, encourage,
participate in any negotiations regarding, furnish any confidential information
in connection with, endorse or otherwise cooperate with, assist, participate in
or facilitate the making of any proposal or offer for, or which may reasonably
be expected to lead to, an Acquisition Transaction (as defined below), by any
person, corporation, partnership or other entity or group (a "Potential
Acquiror"). The Company shall promptly inform Parent, orally and in writing, of
the material terms and conditions of any proposal or offer for, or which may
reasonably be expected to lead to, an Acquisition Transaction that it receives
and the identity of the Potential Acquiror. The Company will immediately cease
and cause to be terminated any existing activities, discussions or negotiations
with any parties conducted heretofore with respect to any

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Acquisition Transaction. As used in this Agreement, "Acquisition Transaction"
means any merger, consolidation or other business combination involving the
Company or any of its Subsidiaries, or any acquisition in any manner of all or a
substantial portion of the equity of, or all or a substantial portion of the
assets of, the Company or any of its Subsidiaries, whether for cash, securities
or any other consideration or combination thereof other than pursuant to the
transactions contemplated by this Agreement.

5.03 Approval of the Company's Shareholders. The Company shall, through its
Board of Directors, duly call, give notice of, convene and hold a meeting of its
shareholders (the "Company Shareholders' Meeting") for the purpose of voting on
the adoption of this Agreement and the transactions contemplated hereby (the
"Company Shareholders' Approval"). The Company shall use its best efforts to
cause the Company Shareholders' Meeting to be held as soon as practicable after
the date hereof. At such meeting, the Principal Shareholders shall cause all
Company Common Shares then owned by them to be voted in favor of the adoption of
this Agreement. Each of the Principal Shareholders hereby waives all rights
available to him, her or it under the Ohio GCL to demand appraisal of his, her
or its Company Common Shares in connection with the Merger as contemplated by
this Agreement as it may be amended from time to time. The Company has provided
the Principal Shareholders with, or given the Principal Shareholders access to,
and prior to the Company Shareholders' Meeting the Company shall provide the
other shareholders of the Company with, or give them access to, all material
information about the Company its business and all material information about
the transactions contemplated by this Agreement. Such written information
provided to the Principal Shareholders and such other shareholders was and will
be, when so provided, true and accurate in all material respects, and such
information did not and will not, when so provided, contain any untrue statement
of a material fact or omit to state a material fact with respect to such written
information. Copies of all written information delivered or to be delivered to
such shareholders shall be provided to Parent prior to their delivery to such
shareholders.

5.04 Auditors' Letters. The Company shall cause to be delivered to Parent
and Sub "comfort letters" of Ernst & Young LLP, the Company's independent
auditors, one dated a date within two business days before the date of the Proxy
Statement and one dated the Closing Date, addressed to Parent and Sub, in form
and substance reasonably satisfactory to Parent, stating the conclusions and
findings of such firm with respect to the financial information and other
matters ordinarily covered by accountants letters in connection with
transactions similar to the Merger.

5.05 Standstill. The Company and the Principal Shareholders agree that, if
this Agreement is terminated and the Merger is not effected, then until the
expiration of two years from the date of termination of this Agreement, without
the prior written consent of Parent, neither the Company nor the Principal
Shareholders will: (a) in any manner acquire, agree to acquire or make any
proposal to acquire, directly or indirectly (i) a substantial portion of the
assets of Parent and its Subsidiaries taken as a whole or (ii) 10 percent or
more of the issued and outstanding shares of Parent Common Stock, (b) make or in
any way participate, directly or indirectly, in any "solicitation" of "proxies"
(as such terms are used in the proxy rules of the SEC) to vote, or seek to
advise or influence any person with respect to the voting of, any voting

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securities of Parent or any of its Subsidiaries or (c) form, join or in any way
participate in a "group" (within the meaning of Section 13(d) of the Exchange
Act) with respect to any voting securities of Parent or any of its Subsidiaries.

ARTICLE VI.

ADDITIONAL AGREEMENTS

6.01 Access to Information; Confidentiality; Advice of Changes. (a) Each of
Parent and the Company shall, and shall cause each of its Subsidiaries to,
throughout the period from the date hereof to the Effective Time: (i) provide
the other party and its Representatives with full access, upon reasonable prior
notice and during normal business hours, to all officers, employees, agents and
accountants of the other party and its Subsidiaries and their respective assets,
properties, books and records, and (ii) furnish promptly to such persons (x) a
copy of each report, statement, schedule and other document filed or received by
Parent or the Company, as the case may be, or any of its Subsidiaries pursuant
to the requirements of federal or state securities laws or filed with any other
Governmental or Regulatory Authority, and (y) all other information and data
(including, without limitation, copies of Contracts, Company Employee Benefit
Plans and other books and records) concerning the business and operations of
Parent or the Company, as the case may be, and its Subsidiaries as Parent, the
Company or any of such other persons reasonably may request. No investigation
pursuant to this paragraph or otherwise shall affect any representation or
warranty contained in this Agreement or any condition to the obligations of the
parties hereto.

(b) Parent, the Company and each Principal Shareholder will hold, and will
use its best efforts to cause its Representatives to hold, in strict confidence,
unless: (i) compelled to disclose by judicial or administrative process or by
other requirements of applicable Laws of Governmental or Regulatory Authorities
(including, without limitation, in connection with obtaining the necessary
approvals of this Agreement or the transactions contemplated hereby of
Governmental or Regulatory Authorities), or (ii) disclosed in an action or
proceeding brought by a party hereto in pursuit of its rights or in the exercise
of its remedies hereunder, all documents and information concerning the other
party and its Subsidiaries furnished to it by the other party or its
Representatives in connection with this Agreement or the transactions
contemplated hereby, except to the extent that such documents or information can
be shown to have been (x) previously known by Parent, the Company or such
Principal Shareholder, as the case may be, or its Representatives, (y) in the
public domain (either prior to or after the furnishing of such documents or
information hereunder) through no fault of Parent, the Company or such Principal
Shareholder, as the case may be, and its Representatives or (z) later acquired
by Parent, the Company or such Principal Shareholder, as the case may be, or its
Representatives from another source if the recipient is not aware that such
source is under an obligation to keep such documents and information
confidential. If Parent, the Company or any Principal Shareholder, or their
respective Representatives are requested to disclose any information pursuant to
clauses (i) or (ii) above, the disclosing party will promptly notify Parent

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or the Company, as the case may be, to permit Parent or the Company, as the case
may be, to seek a protective order or to take other appropriate action. The
disclosing party will also reasonably cooperate in efforts to obtain a
protective order or other reasonable assurance that confidential treatment will
be accorded the information. If the disclosing party or any of its
Representatives are, in the opinion of their counsel, compelled as a matter of
law to disclose the information or else stand liable for contempt or suffer
other censure or significant penalty, the disclosing party may disclose to the
party compelling disclosure only the part of the information as is required to
be disclosed, and will use its reasonable efforts to obtain confidential
treatment therefor. In the event that this Agreement is terminated without the
transactions contemplated hereby having been consummated, upon the request of
Parent or the Company, as the case may be, the other party will, and will cause
its Representatives to, promptly redeliver or cause to be redelivered all copies
of documents and information furnished by Parent or the Company, as the case may
be, or its Representatives to the other party and its Representatives in
connection with this Agreement or the transactions contemplated hereby and
destroy or cause to be destroyed all notes, memoranda, summaries, analyses,
compilations and other writings related thereto or based thereon prepared by it
or its Representatives.

(c) Parent shall confer on a regular and frequent basis (and in any event
not less than weekly) with the Company with respect to its business and
operations and other matters relevant to the Merger, and shall promptly advise
the Company, orally and in writing, of any change or event, including, without
limitation, any complaint, investigation or hearing by any Governmental or
Regulatory Authority (or communication indicating the same may be contemplated)
or the institution or threat of litigation, having, or which, insofar as can be
reasonably foreseen, could have, a material adverse effect on Parent and its
significant subsidiaries taken as a whole or on the ability of Parent to
consummate the transactions contemplated hereby.

6.02 Preparation of Form S-4 and Proxy Statement. Parent shall prepare (and
the Company and Principal Shareholders shall cooperate in the preparation of)
and file with the SEC as soon as reasonably practicable after the date hereof a
registration statement on Form S-4 (the "Form S-4") under the Securities Act,
with respect to the shares of Parent Common Stock to be issued in connection
with the Merger, a portion of which registration statement shall also serve as
the proxy statement with respect to the Parent Stockholder Meeting and the
prospectus in respect of the shares of Parent Common Stock to be exchanged for
Company Common Shares in the Merger (the "Proxy Statement"), and shall use its
commercially reasonable efforts, and the Company and Principal Shareholders will
cooperate with Parent, to have the Form S-4 declared effective by the SEC and to
keep the Form S-4 effective as long as necessary to consummate the Merger. If at
any time prior to the Effective Time any event shall occur that should be set
forth in an amendment of or a supplement to the Form S-4, Parent shall, with the
cooperation of the Company, prepare and file with the SEC such amendment or
supplement as soon thereafter as is reasonably practicable. Parent, Sub, the
Company and the Principal Shareholders shall cooperate with each other in the
preparation of the Form S-4, and Parent shall notify the Company of the receipt
of any comments of the SEC with respect to the Form S-4 and of any requests by
the SEC for any amendment or supplement thereto or for additional information,
and shall provide to the Company promptly copies of all correspondence between

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Parent or any representative of Parent and the SEC with respect to the Form S-4.
Parent shall give the Company and its counsel the opportunity to review the Form
S-4 and all responses to requests for additional information by and replies to
comments of the SEC before their being filed with, or sent to, the SEC. Each of
the Company, each Principal Shareholder, Parent and Sub agrees to use its best
efforts, after consultation with the other parties hereto, to respond promptly
to all such comments of and requests by the SEC and to cause the Proxy Statement
to be mailed to the holders of shares of Parent Common Stock entitled to vote at
the Parent Stockholders' Meeting at the earliest practicable time.

6.03 Approval of Parent Stockholders and Board Recommendation. Parent
shall, through its Board of Directors, duly call, give notice of, convene and
hold a meeting of its stockholders (the "Parent Stockholders' Meeting") for the
purpose of voting on the adoption of this Agreement and the transactions
contemplated hereby (the "Parent Stockholders' Approval"). Parent's Board of
Directors shall recommend to its stockholders the adoption of this Agreement.
Parent shall use its best efforts to cause the Parent Stockholders' Meeting to
be held as soon as practicable after the date hereof.

6.04 Regulatory and Other Approvals. Subject to the terms and conditions of
this Agreement and without limiting the provisions of Sections 6.02 and 6.03,
each of the Company and Parent will proceed diligently and in good faith and
will use all commercially reasonable efforts to do, or cause to be done, all
things necessary, proper or advisable to, as promptly as practicable: (a) obtain
all consents, approvals or actions of, make all filings with and give all
notices to Governmental or Regulatory Authorities or any other public or private
third parties required of Parent, the Company or any of their Subsidiaries to
consummate the Merger and the other matters contemplated hereby, and (b) provide
such other information and communications to such Governmental or Regulatory
Authorities or other public or private third parties as the other party or such
Governmental or Regulatory Authorities or other public or private third parties
may reasonably request. In addition to and not in limitation of the foregoing,
each of the parties will (x) take promptly all actions necessary to make the
filings required of Parent and the Company or their affiliates under the HSR
Act, (y) comply at the earliest practicable date with any request for additional
information received by such party or its affiliates from the Federal Trade
Commission (the "FTC") or the Antitrust Division of the Department of Justice
(the "Antitrust Division") pursuant to the HSR Act, and (z) cooperate with the
other party in connection with such party's filings under the HSR Act and in
connection with resolving any investigation or other inquiry concerning the
Merger or the other matters contemplated by this Agreement commenced by either
the FTC or the Antitrust Division or state attorneys general.

6.05 Company Stock Plan. (a) At the Effective Time, each outstanding Option
to purchase Company Common Shares under the Company Option Plan on the date
hereof, as identified on Schedule 6.05, whether vested or unvested, shall be
deemed to constitute an Option to acquire (under Parent's stock option plan), on
the same terms and conditions as were applicable on the date of this Agreement,
the same number of shares of Parent Common Stock as the holder of such Option
would have been entitled to receive pursuant to the Merger had such holder
exercised such Option in full immediately prior to the Effective Time, at a
price per

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share of Parent Common Stock equal to $2.442; provided, however, that, in the
case of any Option to which Sections 421 of the Code applies by reason of its
qualification under any of Sections 422-424 of the Code ("qualified stock
options"), the option price, the number of shares purchasable pursuant to such
option and the terms and conditions of exercise of such option shall be further
adjusted to the extent necessary in order to comply with Section 425(a) of the
Code.

(b) At the Effective Time, Parent shall deliver to the holders of Options
appropriate notices and agreements setting forth such participants' rights
pursuant thereto and the grants pursuant to the Company Option Plan shall
continue in effect on the same terms and conditions (subject to the adjustments
required by this Section after giving effect to the Merger).

(c) Parent shall take all corporate action necessary to reserve for
issuance a sufficient number of shares of Parent Common Stock for delivery under
the Company Option Plan as adjusted in accordance with this Section. As soon as
practicable after the Effective Time, Parent shall amend its effective
registration statement on Form S-8 promulgated by the SEC under the Securities
Act, or file a new registration statement, with respect to the Parent Common
Stock subject to such options and shall use its best efforts to maintain the
effectiveness of such registration statement or registration statements (and
maintain the current status of the prospectus or prospectuses contained therein)
for so long as such options remain outstanding. With respect to those
individuals who subsequent to the Merger will be subject to the reporting
requirements under Section 16(a) of the Exchange Act, where applicable, Parent
shall administer the Company Option Plan in a manner that complies with Rule
16b-3 promulgated under the Exchange Act.

6.06 Expenses. Except as set forth in Section 8.02, whether or not the
Merger is consummated, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such cost or expense (Parent or Sub, on the one hand, and the Company
or any of its Subsidiaries, on the other). All expenses incurred in connection
with filing of the Form S-4 and printing and mailing the Proxy Statement, as
well as any filing fees relating thereto, shall be paid exclusively by Parent.

6.07 Brokers or Finders. Each of Parent and the Company represents, as to
itself and its affiliates, that, except for McDonald, George S. Benson and John
R. Lazarczyk, whose fees will be paid solely by the Company, and SBC WDR, whose
fees will be paid solely by Parent, no agent, broker, investment banker,
financial advisor or other firm or person is or will be entitled to any broker's
or finder's fee or any other commission, fee or consideration in connection with
any of the transactions contemplated by this Agreement, and each of Parent and
the Company shall indemnify and hold the other harmless from and against any and
all claims, liabilities or obligations with respect to any other such fee or
commission or expenses related thereto asserted by any person on the basis of
any act or statement alleged to have been made by such party or its affiliate.

6.08 Notice and Cure. Each of Parent and the Company will notify the other
promptly in writing of, and contemporaneously will provide the other with true
and complete copies of any and all information or documents relating to, and
will use all commercially

A-35

reasonable efforts to cure before the Closing, any event, transaction or
circumstance occurring after the date of this Agreement that causes or will
cause any covenant or agreement of Parent or the Company, as the case may be,
under this Agreement to be breached or that renders or will render untrue any
representation or warranty of Parent or the Company, as the case may be,
contained in this Agreement as if the same were made on or as of the date of
such event, transaction or circumstance. Each of Parent and the Company also
will notify the other promptly in writing of, and will use all commercially
reasonable efforts to cure, before the Closing, any violation or breach of any
representation, warranty, covenant or agreement made by Parent or the Company,
as the case may be, in this Agreement, whether occurring or arising prior to, on
or after the date of this Agreement. No notice given pursuant to this Section
shall have any effect on the representations, warranties, covenants or
agreements contained in this Agreement for purposes of determining satisfaction
of any condition contained herein.

6.09 Fulfillment of Conditions. Subject to the terms and conditions of this
Agreement, each of Parent and the Company will take or cause to be taken all
commercially reasonable steps necessary or desirable and proceed diligently and
in good faith to satisfy each condition to the other's obligations contained in
this Agreement and to consummate and make effective the transactions
contemplated by this Agreement, and neither Parent nor the Company will, nor
will it permit any of its Subsidiaries to, take or fail to take any action that
could be reasonably expected to result in the nonfulfillment of any such
condition.

6.10 Director and Officer Liability.

(a) The Regulations of the Surviving Corporation shall contain the
provisions with respect to indemnification set forth in the Regulations of the
Company, which provisions shall not be amended, repealed or otherwise modified
in any manner that would adversely affect the rights thereunder of individuals
who at the Effective Time were directors, officers, employees or agents of the
Company for acts arising prior to the Effective Time, unless such modification
is required by law.

(b) From and after the Effective Time, Parent shall, and shall cause the
Surviving Corporation to, indemnify, defend and hold harmless the present and
former directors and officers of the Company and its Subsidiaries against all
losses, claims, damages and liability and amounts paid in settlement in
connection with any claim, action, suit, proceeding, or investigation, whether
civil, criminal, administrative, or investigative, (x) in respect of acts or
omissions occurring at or prior to the Effective Time to the fullest extent that
the Company or Subsidiary would have been permitted to indemnify such Person
under applicable law and the articles of incorporation and regulations of the
Company or such Subsidiary in effect on the date hereof or (y) in any event
arising out of or pertaining to the transaction contemplated by this Agreement.
In addition, Parent shall take or cause the Surviving Corporation to take all
actions necessary to extend the coverage under the provisions of Section E.2 of
the Company's existing directors' and officers' liability insurance policy
(policy no. DOC365660200)(the "Policy"), or, in the alternative, Parent shall
use all reasonable efforts to acquire tail insurance to provide officers' and
directors' liability insurance in respect of acts or omissions occurring prior
to the

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Effective Time covering each such Person currently covered by the Policy on
terms with respect to coverage and amount no less favorable than those of the
Policy.

ARTICLE VII.

CONDITIONS

7.01 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party to effect the Merger is subject to the
fulfillment, at or prior to the Closing, of each of the following conditions:

(a) Shareholder Approval. This Agreement shall have been adopted by (i) the
requisite vote of the shareholders of the Company under the Ohio GCL and (ii)
the requisite vote of the stockholders of Parent pursuant to the rules of the
Nasdaq.

(b) HSR Act. Any waiting period (and any extension thereof) applicable to
the consummation of the Merger under the HSR Act shall have expired or been
terminated.

(c) No Injunctions or Restraints. No court of competent jurisdiction or
other competent Governmental or Regulatory Authority shall have enacted, issued,
promulgated, enforced or entered any Law or Order (whether temporary,
preliminary or permanent) which is then in effect and has the effect of making
illegal or otherwise restricting, preventing or prohibiting consummation of the
Merger or the other transactions contemplated by this Agreement.

(d) "Pooling of Interests" Accounting Treatment. Each of the Company and
Parent shall have received letters, dated the date of Closing, from their
respective independent public accountants, reaffirming the statements made in
such independent public accountants' letters dated the date of this Agreement,
to the effect that the Merger will qualify for "pooling of interests" under
GAAP.

(e) Form S-4. The Form S-4 shall have become effective and shall be
effective at the Effective Time, and no stop order suspending effectiveness of
the Form S-4 shall have been issued, no action, suit, proceeding or
investigation by the SEC to suspend the effectiveness thereof shall have been
initiated and be continuing, or, to the knowledge of the Company or Parent,
threatened, and all necessary approvals under state securities laws relating to
the issuance or trading of the Parent Common Stock to be issued or reserved in
connection with the Merger shall have been received.

7.02 Conditions to Obligation of Parent and Sub to Effect the Merger. The
obligation of Parent and Sub to effect the Merger is further subject to the
fulfillment, at or prior to the Closing, of each of the following additional
conditions (all or any of which may be waived in whole or in part by Parent and
Sub in their sole discretion):

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(a) Representations and Warranties. Each of the representations and
warranties made by the Company and the Principal Shareholders in this Agreement
shall be true and correct in all material respects as of the Closing Date as
though made on and as of the Closing Date or, in the case of representations and
warranties made as of a specified date earlier than the Closing Date, on and as
of such earlier date, and the Company and the Principal Shareholders shall have
delivered to Parent a certificate, dated the Closing Date and executed on behalf
of the Company by its President or any Senior Vice President and by each
Principal Shareholder, to such effect.

(b) Performance of Obligations. The Company and the Principal Shareholders
shall have performed and complied with, in all material respects, each
agreement, covenant and obligation required by this Agreement to be so performed
or complied with by the Company or the Principal Shareholders at or prior to the
Closing, and the Company and the Principal Shareholders shall have delivered to
Parent a certificate, dated the Closing Date and executed on behalf of the
Company by its President or any Senior Vice President and by each Principal
Shareholder, to such effect.

(c) Governmental and Regulatory Consents and Approvals. Other than the
filing provided for by Section 1.02, all consents, approvals and actions of,
filings with and notices to any Governmental or Regulatory Authority, the
failure of which to be obtained or taken could be reasonably expected to have a
material adverse effect on Parent and its Subsidiaries or the Surviving
Corporation and its Subsidiaries, in each case taken as a whole, or on the
ability of Parent and the Company to consummate the transactions contemplated
hereby shall have been obtained, all in form and substance reasonably
satisfactory to Parent, and no such consent, approval or action shall contain
any term or condition which could be reasonably expected to result in a material
diminution of the benefits of the Merger to Parent.

(d) Contractual Consents. The Company and its Subsidiaries shall have
received, all in form and substance reasonably satisfactory to Parent, all
consents (or in lieu thereof waivers) from parties to each Contract disclosed or
which should have been disclosed pursuant to Section 3.04(b), and no such
consent or waiver shall contain any term or condition which could be reasonably
expected to result in a material diminution of the benefits of the Merger to
Parent.

(e) Cancellation of Contracts. At the Effective Time: (i) the Company's
agreement to pay commissions to Cost Controls, Inc., dated January 3, 1994 (but
not the Prescription Drug Program Service Agreement between the Company and Cost
Controls, Inc. dated August 1, 1997), and (ii) the consulting agreement with
Benson and Associates, Inc., dated December 1, 1994, each as amended to date,
shall each be terminated effective immediately, unless otherwise instructed by
Parent.

(f) Proceedings. All proceedings to be taken on the part of the Company in
connection with the transactions contemplated by this Agreement and all
documents incident thereto shall be reasonably satisfactory in form and
substance to Parent, and Parent shall have received copies of all such documents
and other evidences as Parent may reasonably request in

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order to establish the consummation of such transactions and the taking of all
proceedings in connection therewith.

(g) Dissenters. Dissenting Shares shall represent no more than 5% of all
Company Common Shares (other than treasury shares) outstanding on the date
hereof.

(h) Resignation of the Company's Officers and Directors. All officers and
directors of the Company and of each Company Subsidiary shall resign at the
Effective Time, unless otherwise instructed by Parent.

(i) Company Indebtedness. At the Effective Time, the Company's total
indebtedness (which shall be limited to long-term and revolver debt) shall not
exceed Five Million Dollars ($5,000,000) plus amounts contemplated by Section
6.07. At the Effective Time, the Company shall have received a waiver, in form
and substance satisfactory to Parent, from Ronald Kimes, waiving the
acceleration of each of the Promissory Notes of the Company in the original
principal amounts of $234,000 and $216,000, each dated June 30, 1994.

(j) Company Capital Stock. The issued and outstanding Company Common Shares
and the outstanding Options to purchase Company Common Shares shall be as
described in Section 3.02.

(k) Stock Certificates. Parent shall have received from each holder of a
certificate or certificates that immediately prior to the Effective Time
represent the outstanding Company Common Shares (except for certificates
representing Dissenting Shares), properly endorsed or otherwise in proper form
for transfer.

7.03 Conditions to Obligation of the Company to Effect the Merger. The
obligation of the Company to effect the Merger is further subject to the
fulfillment, at or prior to the Closing, of each of the following additional
conditions (all or any of which may be waived in whole or in part by the Company
in its sole discretion):

(a) Representations and Warranties. Each of the representations and
warranties made by Parent and Sub in this Agreement shall be true and correct in
all material respects as of the Closing Date as though made on and as of the
Closing Date or, in the case of representations and warranties made as of a
specified date earlier than the Closing Date, on and as of such earlier date,
and Parent and Sub shall each have delivered to the Company a certificate, dated
the Closing Date and executed on behalf of Parent by its Chairman of the Board,
President or any Executive or Senior Vice President and on behalf of Sub by its
Chairman of the Board, President or any Vice President, to such effect.

(b) Performance of Obligations. Parent and Sub shall have performed and
complied with, in all material respects, each agreement, covenant and obligation
required by this Agreement to be so performed or complied with by Parent or Sub
at or prior to the Closing, and Parent and Sub shall each have delivered to the
Company a certificate, dated the Closing Date and executed on behalf of Parent
by its Chairman of the Board, President or any Executive or

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Senior Vice President and on behalf of Sub by its Chairman of the Board,
President or any Vice President, to such effect.

(c) Governmental and Regulatory Consents and Approvals. Other than the
filing provided for by Section 1.02, all consents, approvals and actions of,
filings with and notices to any Governmental or Regulatory Authority, the
failure of which to be obtained or taken could be reasonably expected to have a
material adverse effect on the Company and its Subsidiaries or the Surviving
Corporation and its Subsidiaries, in each case taken as a whole, or on the
ability of Parent and the Company to consummate the transactions contemplated
hereby shall have been obtained, all in form and substance reasonably
satisfactory to the Company, and no such consent, approval or action shall
contain any term or condition which could be reasonably expected to result in a
material diminution of the benefits of the Merger to the Company.

(d) Proceedings. All proceedings to be taken on the part of Parent and Sub
in connection with the transactions contemplated by this Agreement and all
documents incident thereto shall be reasonably satisfactory in form and
substance to the Company, and the Company shall have received copies of all such
documents and other evidences as the Company may reasonably request in order to
establish the consummation of such transactions and the taking of all
proceedings in connection therewith.

(e) Stock Certificates. The Company shall have received the certificates
representing the Merger Consideration for each shareholder of the Company as
contemplated in Section 2.01.

(f) Listing. Shares of the Parent Common Stock to be issued as the Merger
Consideration shall have been approved for listing on the National Market tier
of Nasdaq, subject only to official notice of issuance.

(g) Sierra Contract. The Company shall be reasonably satisfied with the
then financial operating performance under the PBM Services Agreement, dated as
of August 6, 1997 and effective on October 1, 1997, between Pro-Mark Holdings,
Inc., and Health Plan of Nevada, Inc., HMO Texas, L.L.C., Sierra Health and Life
Insurance Company, Inc., and Sierra Healthcare Options, Inc.

ARTICLE VIII.

TERMINATION, AMENDMENT AND WAIVER

8.01 Termination. This Agreement may be terminated, and the transactions
contemplated hereby may be abandoned, at any time prior to the Effective Time,
whether prior to or after the Company Shareholders' Approval or the Parent
Stockholders' Approval:

A-40

(a) by mutual written agreement of Parent, Sub and the Company duly
authorized by action taken by or on behalf of their respective Boards of
Directors;

(b) by either the Company or Parent upon notification to the
non-terminating party by the terminating party:

(i) at any time after June 1, 1998 if the Merger shall not have been
consummated on or prior to such date and such failure to consummate the
Merger is not caused by a breach of this Agreement by the terminating
party;

(ii) if the Company Shareholders' Approval shall not be obtained by
reason of the rejection of the transaction at a meeting of such
shareholders, or any adjournment thereof, called therefor;

(iii) if the Parent Stockholders' Approval shall not be obtained by
reason of the rejection of the transaction at a meeting of such
stockholders, or any adjournment thereof, called therefor;

(iv) if any Governmental or Regulatory Authority, the taking of action
by which is a condition to the obligations of either the Company or Parent
to consummate the transactions contemplated hereby, shall have determined
not to take such action and all appeals of such determination shall have
been taken and have been unsuccessful;

(v) if there has been a material breach of any representation,
warranty, covenant or agreement on the part of the non-terminating party
set forth in this Agreement which breach has not been cured within 10
business days following receipt by the non-terminating party of notice of
such breach from the terminating party or assurance of such cure reasonably
satisfactory to the terminating party shall not have been given by or on
behalf of the non-terminating party within such 10 business day period; or

(vi) if any court of competent jurisdiction or other competent
Governmental or Regulatory Authority shall have issued an Order making
illegal or otherwise restricting, preventing or prohibiting the Merger and
such Order shall have become final and nonappealable.

8.02 Effect of Termination. If this Agreement is validly terminated by
either the Company or Parent pursuant to Section 8.01, this Agreement will
forthwith become null and void and there will be no liability or obligation on
the part of the Company, the Principal Shareholders, Parent or Sub (or any of
their respective Representatives or affiliates), except: (i) that the provisions
of Sections 5.05, 6.01(b), 6.01(c) and 6.06 will continue to apply following any
such termination and (ii) that nothing contained herein shall relieve any party
hereto from liability for willful breach of its representations, warranties,
covenants or agreements contained in this Agreement.

A-41

8.03 Amendment. This Agreement may be amended, supplemented or modified by
action taken by or on behalf of the respective Boards of Directors of the
parties hereto at any time prior to the Effective Time, whether prior to or
after adoption of this Agreement at the Company Shareholders' Meeting and the
Parent Stockholders' Meeting, but after such adoption only to the extent
permitted by applicable law. No such amendment, supplement or modification shall
be effective unless set forth in a written instrument duly executed by or on
behalf of each party hereto.

8.04 Waiver. At any time prior to the Effective Time any party hereto, by
action taken by or on behalf of its Board of Directors, may to the extent
permitted by applicable law (i) extend the time for the performance of any of
the obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties of the other parties hereto
contained herein or in any document delivered pursuant hereto or (iii) waive
compliance with any of the covenants, agreements or conditions of the other
parties hereto contained herein. No such extension or waiver shall be effective
unless set forth in a written instrument duly executed by or on behalf of the
party extending the time of performance or waiving any such inaccuracy or
non-compliance. No waiver by any party of any term or condition of this
Agreement, in any one or more instances, shall be deemed to be or construed as a
waiver of the same or any other term or condition of this Agreement on any
future occasion.

8.05 Remedies. Notwithstanding any provision of this Agreement to the
contrary, unless a party breaching this Agreement shall have engaged in willful
fraud, the sole remedy for the breach of any representation, warranty, covenant
or other provision of this Agreement shall be the rights of termination provided
by Section 8.01 and the effects thereof provided in Section 8.02; provided,
however, that the foregoing shall not apply to any such breach of the provisions
of Sections 2.01, 2.02, 5.05, 6.01(b), 6.06, 6.07 and 6.10. In no event shall
the liability of any Principal Shareholder under this Agreement exceed an amount
equal to the product of the following three factors: (i) the number of Company
Common Shares held by such Principal Shareholder on the date of this Agreement,
(ii) 327.59 and (iii) the Sales Price on the date of this Agreement.

ARTICLE IX.

GENERAL PROVISIONS

9.01 Non-Survival of Representations, Warranties, Covenants and Agreements.
The representations, warranties, covenants and agreements contained in this
Agreement or in any instrument delivered pursuant to this Agreement shall not
survive the Merger but shall terminate at the Effective Time, except for the
agreements contained in Article II and in Sections 1.07, 6.01(b), 6.06, 6.07 and
6.10, which shall survive the Effective Time.

9.02 Knowledge. With respect to any representations or warranties contained
herein which are made to the knowledge of the Company or Parent or any of their
respective

A-42

Subsidiaries, as the case may be, the knowledge of the officers and directors of
the Company or Parent, as the case may be, and of the officers and directors of
its respective Subsidiaries, shall be imputed to the Company or Parent, as the
case may be, and such Subsidiaries.

9.03 Notices. All notices, requests and other communications hereunder must
be in writing and will be deemed to have been duly given only if delivered
personally or by facsimile transmission or mailed (first class postage prepaid)
to the parties at the following addresses or facsimile numbers:

If to Parent or Sub, to:

MIM Corporation
One Blue Hill Plaza, 15th Floor
Pearl River, NY 10965
Telephone No.: 914-735-3555
Facsimile No.: 914-735-3599
Attn: Barry Posner, Esq.

with a copy to:

Rogers & Wells
200 Park Avenue
New York, NY 10166
Telephone No.: 212-878-8000
Facsimile No.: 212-878-8375
Attn: Robert E. King, Jr., Esq.

If to the Company or any Principal Shareholder, to:

Continental Managed Pharmacy Services, Inc.
1400 Schaaf Road
Cleveland, OH 44131
Telephone No.: 216-459-2025
Facsimile No.: 216-459-0932
Attn: George Benson, Chief Executive Officer and President

with a copy to:

A-43

Arter & Hadden LLP
925 Euclid Avenue
1100 Huntington Building
Cleveland, OH 44115-1475
Telephone No.: 216-696-1100
Facsimile No.: 216-696-2645
Attn: Robert B. Tomaro, Esq.

All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile number as
provided in this Section, be deemed given upon receipt, and (iii) if delivered
by mail in the manner described above to the address as provided in this
Section, be deemed given upon receipt (in each case regardless of whether such
notice, request or other communication is received by any other person to whom a
copy of such notice is to be delivered pursuant to this Section). Any party from
time to time may change its address, facsimile number or other information for
the purpose of notices to that party by giving notice specifying such change to
the other parties hereto.

9.04 Entire Agreement. This Agreement supersedes all prior discussions and
agreements among the parties hereto with respect to the subject matter hereof,
including, without limitation, that certain letter of intent dated December 12,
1997 between the Company and Parent, and contains the sole and entire agreement
among the parties hereto with respect to the subject matter hereof.

9.05 Public Announcements. Except as otherwise required by law or the rules
of any applicable securities exchange or national market system, so long as this
Agreement is in effect, Parent and the Company will not, and will not permit any
of their respective Representatives to, issue or cause the publication of any
press release or make any other public announcement with respect to the
transactions contemplated by this Agreement without the consent of the other
party, which consent shall not be unreasonably withheld. Parent and the Company
will cooperate with each other in the development and distribution of all press
releases and other public announcements with respect to this Agreement and the
transactions contemplated hereby, and will furnish the other with drafts of any
such releases and announcements as far in advance as practicable.

9.06 No Third Party Beneficiary. The terms and provisions of this Agreement
are intended solely for the benefit of each party hereto and their respective
successors or permitted assigns, and it is not the intention of the parties to
confer third-party beneficiary rights upon any other person, except as provided
in Sections 6.02(b), 6.02(c) and 6.10.

9.07 No Assignment; Binding Effect. Neither this Agreement nor any right,
interest or obligation hereunder may be assigned by any party hereto without the
prior written consent of the other parties hereto and any attempt to do so will
be void, except that Sub may assign any or all of its rights, interests and
obligations hereunder to another direct or indirect wholly-owned Subsidiary of
Parent, provided that any such Subsidiary agrees in writing to be

A-44

bound by all of the terms, conditions and provisions contained herein. Subject
to the preceding sentence, this Agreement is binding upon, inures to the benefit
of and is enforceable by the parties hereto and their respective successors and
assigns.

9.08 Headings. The headings used in this Agreement have been inserted for
convenience of reference only and do not define or limit the provisions hereof.

9.09 Invalid Provisions. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under any present or future law, and if the
rights or obligations of any party hereto under this Agreement will not be
materially and adversely affected thereby, (i) such provision will be fully
severable, (ii) this Agreement will be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part hereof,
(iii) the remaining provisions of this Agreement will remain in full force and
effect and will not be affected by the legal, invalid or unenforceable provision
or by its severance herefrom and (iv) in lieu of such illegal, invalid or
unenforceable provision, there will be added automatically as a part of this
Agreement a legal, valid and enforceable provision as similar in terms to such
illegal, invalid or unenforceable provision as may be possible.

9.10 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to a contract
executed and performed in such State, without giving effect to the conflicts of
laws principles thereof.

9.11 Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.

A-45

IN WITNESS WHEREOF, each party hereto has caused this Agreement to be
signed by its officer thereunto duly authorized as of the date first above
written.

Attest: MIM CORPORATION

/s/ Barry A. Posner By: /s/ John H. Klein
- ---------------------------- ----------------------------------
Secretary John H. Klein
Chief Executive Officer

Attest: CMP ACQUISITION CORP.

/s/ Richard H. Friedman By: /s/ Barry A. Posner
- ---------------------------- ----------------------------------
Secretary Barry A. Posner
[President]

Attest: CONTINENTAL MANAGED PHARMACY SERVICES,
INC.

/s/ Robert B. Tomaro By: /s/ John L. Lazarczyk
- ---------------------------- ----------------------------------
Assistant Secretary John L. Lazarczyk
Vice President - Finance,
CFO and Treasurer

PRINCIPAL SHAREHOLDERS:

/s/ Michael Ehrlenbach
--------------------------------------
Michael Ehrlenbach

ROULSTON INVESTMENT TRUST L.P.,

By: Thomas H. Roulston, its general
partner

By: /s/ Thomas H. Roulston
----------------------------------
Thomas H. Roulston
General Partner

A-46

ROULSTON VENTURES L.P.,

By: Thomas H. Roulston, its general
partner

By: /s/ Thomas H. Roulston
----------------------------------
Thomas H. Roulston
General Partner

A-47

GLOSSARY OF DEFINED TERMS

The following terms, when used in this Agreement, have the meanings
ascribed to them in the corresponding Sections of this Agreement listed below:

"Acquisition Transaction" -- Section 5.02
"Affiliate" -- Section 3.01
"Agreement" -- Preamble
"Antitrust Division" -- Section 6.04
"Average Closing Price" -- Section 2.02(d)
"Certificate of Merger" -- Section 1.02
"Certificates" -- Section 2.02(a)
"Closing" -- Section 1.03
"Closing Date" -- Section 1.03
"Code" -- Preamble
"Company" -- Preamble
"Company Common Shares" -- Section 2.01(b)
"Company Employee Benefit Plan" -- Section 3.13(c)(i)
"Company Financial Statements" -- Section 3.05
"Company Option Plan" -- Section 2.01(e)
"Company Permits" -- Section 3.10
"Company Shareholders' Approval" -- Section 5.03
"Company Shareholders' Meeting" -- Section 5.03
"Company Subsidiaries" -- Section 3.01
"Constituent Corporations" -- Section 1.01
"Contracts" -- Section 3.04(a)
"Dissenting Share" -- Section 2.01(d)
"Effective Time" -- Section 1.02
"ERISA" -- Section 3.13(a)(i)
"Exchange Act" -- Section 3.01
"FTC" -- Section 6.04
"Form S-4" -- Section 6.02
"GAAP" -- Preamble
"Governmental or Regulatory Authority" -- Section 3.04(a)
"HSR Act" -- Section 3.04(b)
"Intellectual Property" -- Section 3.17]
"Laws" -- Section 3.04(a)
"Lien" -- Section 2.02(a)
"material adverse effect" -- Section 3.01
"material" -- Section 3.01
"materially adverse" -- Section 3.01
"McDonald" -- Section 3.23
"Merger" -- Preamble

A-48

"Merger Consideration" -- Section 2.01(c)
"Nasdaq" -- Section 2.02(d)
"Ohio GCL" -- Section 1.01
"Options" -- Section 3.02
"Orders" -- Section 3.04(a)
"Parent" -- Preamble
"Parent Common Stock" -- Section 2.01(c)
"Parent SEC Reports" -- Section 4.07
"Parent Stockholders' Approval" -- Section 6.03
"Parent Stockholders' Meeting" -- Section 6.03
"PBGC" -- Section 3.13(a)(ii)
"Plan" -- Section 3.13(c)(ii)
"Potential Acquiror" -- Section 5.02
"Principal Shareholders" -- Preamble
"Proxy Statement" -- Section 6.02
"qualified stock options" -- Section 6.07
"Representative" -- Section 5.02
"Sales Price" -- Section 2.02(d)
"SBC WDR" -- Section 4.11
"SEC" -- Preamble
"Secretary of State" -- Section 1.02
"Securities Act" -- Section 3.09
"Sub Common Shares" -- Section 2.01(a)
"Sub" -- Preamble
"Subsidiary" -- Section 2.01(b)
"Surviving Corporation" -- Section 1.01
"Surviving Corporation Common Shares" -- Section 2.01(a)

A-49

FIRST AMENDMENT TO
AGREEMENT AND PLAN OF MERGER

This FIRST AMENDMENT TO AGREEMENT AND PLAN OF MERGER dated as of May 18,
1998 ("Amendment") is made and entered into by and among MIM CORPORATION, a
Delaware corporation ("Parent"), CMP Acquisition Corp., an Ohio corporation
wholly owned by Parent ("Sub"), CONTINENTAL MANAGED PHARMACY SERVICES, INC., an
Ohio corporation (the "Company") and the individuals named as "Principal
Shareholders" on the signature pages to this Amendment (the "Principal
Shareholders").

RECITALS

A. The parties hereto are parties to that certain Agreement and Plan of
Merger dated as of January 27, 1998 (the "Agreement"); and

B. The parties hereto desire to amend and restate certain provisions of the
Agreement as set forth below. Capitalized terms used but not otherwise defined
herein have the meanings set forth in the Agreement.

AGREEMENT

NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth in the Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

1. Amendment of Section 6.05. Subsection (a) of Section 6.05 of the
Agreement is hereby amended and restated in its entirety to read as follows:

(a) At the Effective Time, each outstanding Option to purchase Company
Common Shares under the Company Option Plan on the date hereof, as
identified on Schedule 6.05, whether vested or unvested, shall be deemed to
constitute an Option to acquire, on the same terms and conditions as were
applicable on the date of this Agreement, the same number of shares of
Parent Common Stock as the holder of such Option would have been entitled
to receive pursuant to the Merger had such holder exercised such Option in
full immediately prior to the Effective Time, at a price per share of
Parent Common Stock equal to $2.442; provided, however, that, in the case
of any Option to which Sections 421 of the Code applies by reason of its
qualification under any of Sections 422-424 of the Code ("qualified stock
options"), the option price, the number of shares purchasable pursuant to
such option and the terms and conditions of exercise of such option shall
be further adjusted to the extent necessary in order to comply with Section
425(a) of the Code.

A-50

2. Amendment of Section 7.01. Subsection (d) of Section 7.01 of the
Agreement is hereby amended and restated in its entirety to read as follows:

[INTENTIONALLY LEFT BLANK]

3. Amendment of Section 7.03. Subsection (g) of Section 7.03 of the
Agreement is hereby deleted in its entirety.

4. Amendment of Section 8.01. Subsection (b)(i) of Section 8.01 of the
Agreement is hereby amended and restated in its entirety to read as follows:

(i) at any time after July 31, 1998 if the Merger shall not have been
consummated on or prior to such date and such failure to consummate the
Merger is not caused by a breach of this Agreement by the terminating
party;

5. Other Provisions. This Amendment shall be governed by and construed in
accordance with the laws of the State of New York applicable to a contract
executed and performed in such State, without giving effect to the conflicts of
laws principles thereof. This Amendment may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument. In all other respects, the
Agreement shall continue in full force and effect as amended hereby.

A-51

IN WITNESS WHEREOF, each party hereto has caused this Amendment to be
signed by its officer thereunto duly authorized as of the date first above
written.

Attest: MIM CORPORATION

/s/ Barry A. Posner By: /s/ Richard H. Friedman
- -------------------------- ----------------------------------
Secretary Name: Richard H. Friedman
Title: Chairman and CEO

Attest: CMP ACQUISITION CORP.

/s/ Richard H. Friedman By: /s/ Barry A. Posner
- -------------------------- ----------------------------------
Secretary Name: Barry A. Posner
Title: President

Attest: CONTINENTAL MANAGED PHARMACY SERVICES,
INC.

/s/ Michael Ehrlenbach By: /s/ Thomas H. Roulston
- -------------------------- ----------------------------------
Secretary Name:
Title:

PRINCIPAL SHAREHOLDERS:

/s/ Michael Ehrlenbach
----------------------------------
Michael Ehrlenbach

ROULSTON INVESTMENT TRUST L.P.,

By: Thomas H. Roulston, its general
partner

By: /s/ Thomas H. Roulston
------------------------------
Thomas H. Roulston
General Partner

A-52

ROULSTON VENTURES L.P.,

By: Thomas H. Roulston, its general
partner

By:/s/ Thomas H. Roulston
------------------------------
Thomas H. Roulston
General Partner

A-53

SECOND AMENDMENT TO
AGREEMENT AND PLAN OF MERGER

This SECOND AMENDMENT TO AGREEMENT AND PLAN OF MERGER dated as of July 20,
1998 ("Amendment") is made and entered into by and among MIM CORPORATION, a
Delaware corporation ("Parent"), CMP Acquisition Corp., an Ohio corporation
wholly owned by Parent ("Sub"), CONTINENTAL MANAGED PHARMACY SERVICES, INC., an
Ohio corporation (the "Company") and the individuals named as "Principal
Shareholders" on the signature pages to this Amendment (the "Principal
Shareholders").

RECITALS

A. The parties hereto are parties to that certain Agreement and Plan of
Merger dated as of January 27, 1998, as amended on May 18, 1998 (as so amended,
the "Agreement"); and

AGREEMENT

NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in the Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:

1. Amendment of Section 8.01. Subsection (b)(i) of Section 8.01 of the
Agreement is hereby amended and restated in its entirety to read as follows:

(i) at any time after August 30, 1998 if the Merger shall not have
been consummated on or prior to such date and such failure to consummate
the Merger is not caused by a breach of this Agreement by the terminating
party;

2. Other Provisions. This Amendment shall be governed by and construed in
accordance with the laws of the State of New York applicable to a contract
executed and performed in such State, without giving effect to the conflicts of
laws principles thereof. This Amendment may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument. In all other respects, the
Agreement shall continue in full force and effect as amended hereby.

A-54

IN WITNESS WHEREOF, each party hereto has caused this Amendment to be
signed by its officer thereunto duly authorized as of the date first above
written.

Attest: MIM CORPORATION

/s/ Barry A. Posner By:/s/ Richard H. Friedman
- -------------------------- -----------------------------------
Secretary Name: Richard H. Friedman
Title: President

Attest: CMP ACQUISITION CORP.

/s/ Richard H. Friedman By:/s/ Barry A. Posner
- -------------------------- -----------------------------------
Secretary Name: Barry A. Posner
Title: President

Attest: CONTINENTAL MANAGED PHARMACY SERVICES,
INC.

/s/Michael Erlenbach By:/s/ John A. Lazarczyk
- -------------------------- -----------------------------------
Secretary Name: John A. Lazarczyk
Title: Treasurer

PRINCIPAL SHAREHOLDERS:

/s/Michael Erlenbach
-----------------------------------
Michael Erlenbach

ROULSTON INVESTMENT TRUST L.P.,

By: Thomas H. Roulston, its general partner

By:/s/ Thomas H. Roulston
-----------------------------------
Thomas H. Roulston
General Partner

A-55

ROULSTON VENTURES L.P.,

By: Thomas H. Roulston, its general partner

By:/s/ Thomas H. Roulston
-----------------------------------
Thomas H. Roulston
General Partner

A-56

[LOGO] SBC Warburg Dillon Read SBC Warburg Dillon Read Inc.
535 Madison Avenue
New York, NY 10022
Tel. 212-906-7000

January 23, 1998

Board of Directors
MIM Corporation
One Blue Hill Plaza
Pearl River, NY 10965

Gentlemen:

We understand that MIM Corporation (the "Company") intends to enter into a
transaction whereby a wholly owned subsidiary of the Company will be merged with
and into Continental Managed Pharmacy Services, Inc., an Ohio corporation
("Continental"), pursuant to the terms of an Agreement and Plan of Merger, to be
dated as of January 26, 1998 (the "Merger Agreement"), such that Continental
will become a wholly owned subsidiary of the Company (the "Transaction").
Pursuant to the Transaction, each outstanding share of Continental's no par
Common Stock, will be converted into 327.59 shares of the Company's Common
Stock, par value $0.0001 per share (the "Merger Consideration"). The terms and
conditions of the Transaction are more fully set forth in the Merger Agreement.

You have requested our opinion as to whether the Merger Consideration to be
paid by the Company in the Transaction is fair to the Company, from a financial
point of view.

SBC Warburg Dillon Read Inc. has acted as financial advisor to the Company
in connection with the Merger and will receive a fee upon the consummation
thereof. We are familiar with the Company, having provided financial advisory
services to the Company in the past. In the ordinary course of business, we may
trade securities of the Company for our own account and for the accounts of our
customers and, accordingly, may at any time hold a long or short position in
such securities.

A-57

SBC Warburg Dillon Read Inc. is a subsidiary of Swiss Bank Corporation and a
member of the New York Stock Exchange.

[LOGO] SBC Warburg Dillon Read Inc.

In arriving at our opinion, we have, among other things: (i) reviewed
certain publicly available business and historical financial information
relating to the Company, (ii) reviewed certain financial information and other
data provided to us by the Company that is not publicly available relating to
the business and prospects of the Company, including financial projections
prepared by the management of the Company, (iii) reviewed certain financial
information and other data provided to us by Continental that is not publicly
available relating to the business and prospects of Continental, including
financial projections prepared by the management of Continental, (iv) conducted
discussions with members of the senior managements of the Company and
Continental, (v) reviewed publicly available financial and stock market data
with respect to certain other companies in lines of business we believe to be
generally comparable to those of the Company and Continental, (vi) considered
the pro forma effects of the Transaction on the Company's financial statements
and reviewed certain estimates of synergies prepared by the management of the
Company and Continental, (vii) reviewed the historical market prices and trading
volumes of the common stock of the Company, (viii) compared the financial terms
of the Transaction with the financial terms of certain other transactions which
we believe to be generally comparable to the Transaction, (ix) reviewed the
Merger Agreement, and (x) conducted such other financial studies, analyses and
investigations, and considered such other information as we deemed necessary or
appropriate.

In connection with our review, we have not independently verified any of
the foregoing information and have, with your consent, relied on its being
complete and accurate in all material respects. In addition, we have not made
any evaluation or appraisal of any of the assets or liabilities (contingent or
otherwise) of the Company or Continental, nor have we been furnished with any
such evaluation or appraisal. With respect to the financial projections referred
to above, we have assumed, with your consent, that they have been reasonably
prepared on bases reflecting the best currently available estimates and
judgments of the Company's and Continental's management as to the future
financial performance of each company. Further, our opinion is based on
economic, monetary and market conditions existing on the date hereof.

Based upon and subject to the foregoing, it is our opinion that, as of the
date hereof, the Merger Consideration to be paid by the Company in the
Transaction is fair to the Company from a financial point of view.

Very truly yours,

SBC Warburg Dillon Read Inc.

A-58

McDONALD & COMPANY
SECURITIES, INC.

MEMBER NEW YORK STOCK EXCHANGE

McDONALD INVESTMENT CENTER
800 SUPERIOR AVENUE
CLEVELAND, OHIO 44114-2603

216-443-2300

January 19, 1998

PERSONAL & CONFIDENTIAL
- -----------------------

The Board of Directors
Continental Managed Pharmacy Services
1400 Schaaf Road
Cleveland, Ohio 44131

ATTN: Mr. Thomas H. Roulston, II, Chairman of the Board

Dear Members of the Board of Directors:

You have requested our opinion as to the fairness, from a financial point of
view, of the consideration to be received by the shareholders of Continental
Managed Pharmacy Services ("Continental") pursuant to the terms and subject to
the conditions set forth in the proposed Agreement and Plan of Merger ("Merger
Agreement") to be entered into by and among MIM Corporation, a Delaware
Corporation ("MIM"), CMP Acquisition Corp., an Ohio corporation wholly owned by
MIM and Continental. As more fully described in the Merger Agreement,
shareholders of Continental will receive at the effective time of the Merger
327.59 shares of MIM's Common Stock in exchange for each of Continental's issued
and outstanding common shares.

McDonald & Company, as part of its investment banking business, is regularly
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, secondary distributions of
listed and unlisted securities, private placements and valuations for estate,
corporate and other purposes.

In arriving at our opinion, we reviewed the Merger Agreement and held
discussions with certain senior officers, directors and other representatives
and advisors of Continental. In addition, we reviewed historical financial
statements of Continental and certain financial forecasts and other data
provided to us by the management of Continental. We examined certain publicly
available business and financial information relating to MIM and to the pharmacy
benefit management industry, including various investment reports by securities
analysts who Follow MIM. We

A-59

The Board of Directors
Continental Managed Pharmacy Services
January 19, 1998
Page 2

reviewed the financial terms of the merger as set forth in the Merger Agreement
in relation to, among other things: current and historical market prices and
trading volumes of MIM's Common Stock; Continental and MIM's historical and
projected earnings; and the capitalization and financial conditions of
Continental and MIM. We also considered, to the extent publicly available, the
financial terms of certain other similar transactions recently effected which we
considered comparable to those of Continental and MIM. In addition to the
foregoing, we conducted such other analyses and examinations and considered such
other financial, economic and market criteria as we deemed appropriate to
arriving at our opinion.

In rendering our opinion, we have assumed and relied, without independent
verification, upon the accuracy and completeness of all financial and other
information publicly available or furnished to or otherwise received by or
discussed with us. We also assumed, in accordance with the Merger Agreement
provided to us, that the merger will be treated as a pooling of interests in
accordance with generally accepted accounting principles and as a tax-free
reorganization for federal income tax purposes. Our opinion, as set forth
herein, relates to the relative values of Continental and MIM. We are not
expressing any opinion as to what the value of MIM's Common Stock actually will
be when issued to Continental shareholders pursuant to the merger or the price
at which MIM's Common Stock will trade subsequent to the merger. We have not
been asked to consider, and our opinion does not address, the relative merits of
the merger as compared to any alternative business strategy that might exist for
Continental. Our opinion is necessarily based upon information available to us,
and financial, stock market and other conditions and circumstances existing and
disclosed to us, as of the date hereof.

This opinion has been prepared solely for the use of the Board of Directors of
Continental in its evaluation of the proposed merger and shall not be published
or otherwise referred to without the prior written consent of McDonald & Company
Securities, Inc. We understand that the consent of McDonald & Company
Securities, Inc. will be requested for inclusion of this opinion in the
registration statement and related joint proxy statement/prospectus prepared in
connection with the Merger Agreement.

Based upon and subject to the foregoing, our experience as investment bankers,
our work as described above and other factors we deemed relevant, we are of the
opinion that as of the date hereof, the consideration described in the Merger
Agreement which will be received by the shareholders of Continental, is fair
from a financial point of view.

Very truly yours,

/s/McDonald & Company Securities, Inc.
McDONALD & COMPANY SECURITIES, INC.

A-60

McDONALD & COMPANY
SECURITIES, INC.

MEMBER NEW YORK STOCK EXCHANGE

McDONALD INVESTMENT CENTER
800 SUPERIOR AVENUE
CLEVELAND, OHIO 44114-2603

216-443-2300

Supplement to Opinion of McDonald & Company Securities, Inc. --
Financial Advisor to Continental

May 18, 1998

The Board of Directors
Continental Managed Pharmacy Services, Inc.
1400 Schaaf Road.
Cleveland, Ohio 44131

ATTN: Mr. Thomas H. Roulston, II, Chairman of the Board

Dear Members of the Board of Directors:

You have requested and received our opinion as to the fairness, from a financial
point of view, of the consideration to be received by the shareholders of
Continental Managed Pharmacy Services, Inc. ("Continental") pursuant to the
terms and subject to the conditions set forth in the Agreement and Plan of
Merger ("Merger Agreement") by and among MIM Corporation, a Delaware Corporation
("MIM"), CMP Acquisition Corp., an Ohio corporation wholly owned by MIM, and
Continental.

This opinion is expressed in our letter to you dated January 19, 1998 (the
"Opinion Letter"). Please be advised that the Opinion Letter is modified as
follows:

1) You have advised us that the transaction will be treated as a purchase
transaction rather than as a pooling of interests in accordance with
generally accepted accounting principles. This change of accounting method
will not affect the conclusion reached in our Opinion Letter.

2) The sentence that reads "This opinion has been prepared solely for the use
of the Board of Directors of Continental in its evaluation of the proposed
merger and shall not be published or otherwise referred to without the
prior written consent of McDonald & Company Securities, Inc." is hereby
modified to read "This opinion shall not be published or otherwise referred
to without the prior written consent of McDonald & Company Securities,
Inc."

A-61

The Board of Directors
Continental Managed Pharmacy Services
May 18, 1998
Page 2

3) We consent to the references to us under the caption "Role of Financial
Advisors" in the Form S-4 Registration Statement and related prospectus and
proxy statement filed in connection with the Merger Agreement and to the
inclusion of our Opinion Letter and this supplement in such Registration
Statement.

Very truly yours,

/s/ McDonald & Company Securities, Inc.
McDONALD & COMPANY SECURITIES, INC.

A-62

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 20. Indemnification of Directors and Officers.

Subsection (a) of Section 145 of the Delaware General Corporation Law (the
"DGCL") empowers a corporation to indemnify any director or officer, or former
director or officer, 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 (other than an action by or in
the right of the corporation), against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
in connection with such action, suit or proceeding provided that such director
or officer acted in good faith and in a manner reasonably believed to be in or
not opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, provided that such director or officer had no
cause to believe his or her conduct was unlawful.

Subsection (b) of Section 145 of the DGCL empowers a corporation to
indemnify any director or officer, or former director or officer, who was or is
a party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that such person acted in any of the
capacities set forth above, against expenses actually and reasonably incurred in
connection with the defense or settlement of such action or suit provided that
such director or officer acted in good faith and in a manner reasonably believed
to be in or not opposed to the best interests of the corporation, except that no
indemnification may be made in respect of any claim, issue or matter as to which
such director or officer shall have been adjudged to be liable to the
corporation unless and only to the extent that the Court of Chancery or the
court in which such action was brought shall determine that despite the
adjudication of liability such director or officer is fairly and reasonably
entitled to indemnity for such expenses as the court shall deem proper.

Section 145 of the DGCL further provides that to the extent a director or
officer of a corporation has been successful in the defense of any action, suit
or proceeding referred to in subsections (a) and (b) or in the defense of any
claim, issue or matter therein, he or she shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him or her in
connection therewith; that indemnification provided for in Section 145 shall not
be deemed exclusive of any other rights to which the indemnified party may be
entitled; and that the corporation shall have power to purchase and maintain
insurance on behalf of a director or officer of the corporation against any
liability asserted against him or her or incurred by him or her in any such
capacity or arising out of his or her status as such whether or not the
corporation would have the power to indemnify him or her against such
liabilities under Section 145.

The eighth paragraph of MIM's Certificate of Incorporation provides that no
director shall be personally liable to MIM or to its stockholders for monetary
damages for breach of fiduciary duty as a director, except to the extent that
Section 102(b)(7), as amended from time to time (or any successor or additional
provision), expressly provides that the liability of a director may not be
eliminated or limited. In addition, MIM maintains director and officer liability
insurance policies.

II-1

Item 21. Exhibits and Financial Statement Schedules.

(a) Exhibits

The following Exhibits are filed as part of this Registration Statement:

Exhibit
No. Description
--- -----------

2.1 -- Plan and Agreement of Merger, dated as of January 27, 1998, by
and among MIM Corporation, CMP Acquisition Corp. and Continental
Managed Pharmacy Services, Inc., as amended (included as Annex A
to the Proxy Statement/Prospectus)

3.1 -- Certificate of Incorporation of the Company(2)

3.2 -- Amended and Restated By-Laws of the Company(7)

4.1 -- Specimen Common Stock Certificate of the Company(1)

5.1 -- Opinion of Barry A. Posner, Esq. regarding legality of securities
to be issued(1)

8.1 -- Opinion of Rogers & Wells LLP regarding federal income tax
matters(1)

10.1 -- Drug Benefit Program Services Agreement between Pro-Mark
Holdings, Inc. and RxCare of Tennessee, Inc. dated as of March 1,
1994, as amended January 1, 1995(2)

10.2 -- Pharmaceutical Services Agreement between Tennessee Primary Care
Network, Inc. and RxCare of Tennessee, Inc.(2)

10.3 -- Provider Network Agreement (Agent) between Tennessee Health
Partnership and RxCare of Tennessee, Inc. dated February 26,
1996(3)

10.4 -- Marketing Services Agreement between Zenith Goldline
Pharmaceuticals, Inc. and MIM Strategic Marketing, LLC dated as
of December 8, 1995(2)

10.5 -- Pharmaceutical Reimbursement Agreement between Pro-Mark Holdings,
Inc. and Zenith Goldline Pharmaceuticals, Inc. dated as of
December 8, 1995(2)

10.6 -- Software Licensing and Support Agreement between ComCoTec, Inc.
and Pro-Mark Holdings, Inc. dated November 21, 1994(2)

10.7 -- Amendment to Promissory Note among E. David Corvese, Nancy
Corvese and Pro-Mark Holdings, Inc. dated as of June 15, 1997(6)

10.8 -- Amendment to Promissory Note among E. David Corvese, Nancy
Corvese and Pro-Mark Holdings, Inc. dated as of June 15, 1997(6)

10.9 -- Promissory Note of Alchemie Properties, LLC in favor of Pro-Mark
Holdings, Inc. dated August 14, 1994(2)

10.10 -- Promissory Note of MIM Holdings, LLC in favor of MIM Strategic,
LLC dated December 31, 1996(3)

II-2

10.11 -- Promissory Note of MIM Holdings, LLC in favor of MIM Strategic,
LLC dated March 31, 1996(2)

10.12 -- Promissory Note of MIM Holdings, LLC in favor of MIM Strategic,
LLC dated December 31, 1996, replacing Promissory Note of MIM
Holdings, LLC in favor of MIM Strategic, LLC dated March 31,
1996(3)

10.13 -- Indemnity letter from MIM Holdings, LLC dated August 5, 1996(2)

10.14 -- Assignment from MIM Holdings, LLC to MIM Corporation dated as of
December 31, 1996(3)

10.15 -- Guaranty of E. David Corvese in favor of MIM Corporation dated as
of December 31, 1996(3)

10.16 -- Separation Agreement, dated as of March 31, 1998 between E. David
Corvese and MIM Corporation(7)

10.17 -- Employment Agreement, dated as of April 17, 1998, between
Scott R. Yablon and MIM Corporation(1)

10.18 -- Employment Agreement, dated February 1, 1998, between MIM
Corporation and Larry E. Edelson-Kayne(7)

10.19 -- Separation Agreement, dated as of May 15, 1998, between MIM
Corporation and John H. Klein(1)

10.20 -- Employment Agreement between MIM Corporation and Barry A. Posner
dated as of March 26, 1997(5)

10.21 -- Employment Agreement between MIM Corporation and Richard H.
Friedman dated as of May 30, 1996(2)

10.22 -- Stock Option Agreement between E. David Corvese and John H. Klein
dated as of May 30, 1996(2)

10.23 -- Stock Option Agreement II between E. David Corvese and John H.
Klein dated as of May 30, 1996(2)

10.24 -- Amendment No. 1 dated July 29, 1996 to Stock Option Agreement II
between E. David Corvese and John H. Klein dated as of May 30,
1996(2)

10.25 -- Repurchase Agreement between E. David Corvese and John H. Klein
dated as of May 30, 1996(2)

10.26 -- Amendment No. 1 dated July 29, 1996 to Repurchase Agreement
between E. David Corvese and John H. Klein dated as of May 30,
1996(2)

10.27 -- Stock Option Agreement between E. David Corvese and Richard H.
Friedman dated as of May 30, 1996(2)

10.28 -- Stock Option Agreement between E. David Corvese and Leslie B.
Daniels dated as of May 30, 1996(2)

10.29 -- Stock Option Agreement between E. David Corvese and John H. Klein
dated July 31, 1996(2)

II-3

10.30 -- Amendment No. 1 dated August 12, 1996 to Stock Option Agreement
between E. David Corvese and John H. Klein dated July 31, 1996(2)

10.31 -- Registration Rights Agreement-IV between MIM Corporation and John
H. Klein, Richard H. Friedman, Leslie B. Daniels, E. David
Corvese and MIM Holdings, LLC dated July 31, 1996(2)

10.32 -- Registration Rights Agreement-V between MIM Corporation and
Richard H. Friedman and Leslie B. Daniels dated July 31, 1996(2)

10.33 -- Amended and Restated MIM Corporation 1996 Stock Incentive Plan,
as amended December 9, 1996(3)

10.34 -- MIM Corporation 1996 Non-Employee Directors Stock Incentive
Plan(2)

10.35 -- Lease between Alchemie Properties, LLC and Pro-Mark Holdings,
Inc. dated as of December 1, 1994(2)

10.36 -- Lease Agreement between Mutual Properties Stonedale L.P. and MIM
Corporation dated April 23, 1997(4)

10.37 -- Agreement between Mutual Properties Stonedale L.P. and MIM
Corporation dated as of April 23, 1997(4)

10.38 -- Lease Amendment and Extension Agreement between Mutual Properties
Stonedale L.P. and MIM Corporation dated December 10, 1997(4)

10.39 -- Lease Amendment and Extension Agreement-II between Mutual
Properties Stonedale L.P. and MIM Corporation dated March 27,
1998(4)

10.40 -- Lease Agreement between Mutual Properties Stonedale L.P. and
Pro-Mark Holdings, Inc. dated as of December 23, 1997(4)

10.41 -- Lease Amendment and Extension Agreement between Mutual Properties
Stonedale L.P. and Pro-Mark Holdings, Inc. dated March 27,
1998(4)

21 -- Subsidiaries of the registrant*

23.1 -- Consent of Barry A. Posner, Esq. (contained in Exhibit 5.1)

23.2 -- Consent of Rogers & Wells LLP (contained in Exhibit 8.1)

23.3 -- Consent of Arthur Andersen LLP (relating to financial statements
of MIM Corporation)(1)

23.4 -- Consent of Ernst & Young LLP (relating to financial statements of
Continental Managed Pharmacy Services, Inc.)(1)

23.5 -- Consent of McDonald & Company Securities, Inc. (contained in
Annex C to the Proxy Statement/Prospectus which forms part of
this Registration Statement)

23.6 -- Consent of SBC Warburg Dillon Read Inc.(1)

24.1 -- Powers of Attorney for the Company(1)

99.1 -- Form of MIM's Proxy Card(1)

- ----------
II-4

* Filed herewith.

(1) Previously filed.

(2) Incorporated by reference to the indicated exhibit to the Company's
Registration Statement on Form S-1 (File No. 333-05327) which became
effective on August 14, 1996.

(3) Incorporated by reference to the indicated exhibit to the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1996.

(4) Incorporated by reference to the indicated exhibit to the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1997.

(5) Incorporated by reference to the indicated exhibit to the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 1997.

(6) Incorporated by reference to the indicted exhibit to the Company's
Quarterly Report on Form 10- Q for the fiscal quarter ended June 30, 1997.

(7) Incorporated by reference to the indicated exhibit to the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 1998.

II-5

Item 22. Undertakings.

The undersigned registrant hereby undertakes:

(a) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:

(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high and of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement.

(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration;

(1) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

(2) To remove from registration by means of post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.

(b) The undersigned Registrant hereby undertakes as follows: that prior to
any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.

(c) The Registrant undertakes that every prospectus: (i) that is filed
pursuant to paragraph (b) immediately preceding or (ii) that purports to meet
the requirements of Section 10(a)(3) of the Securities Act and is used in
connection with an offering of securities subject to Rule 415, will be filed as
a part of an amendment to the Registration Statement and will not be used until
such amendment is effective, and that, for purpose of determining any liability
under the Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.

(d) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described in Item 20 hereof, or otherwise,
the Registrant has been advised that in the opinion of the Securities and

II-6

Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless,
in the opinion of its counsel, the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.

(e) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first-class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to this request.

(f) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.

II-7

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, MIM
Corporation has duly caused this Amendment No. 1 to Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of New York, State of New York, on the 5th day of August, 1998.

MIM CORPORATION

By: /s/ Richard H. Friedman
-----------------------------
Richard H. Friedman
Chairman of the Board and
Chief Executive Officer

Signature Title Date
--------- ----- ----

/s/ Richard H. Friedman Chairman, Chief Executive
-------------------------------------- Officer and Director August 5, 1998
Richard H. Friedman (Principal Executive Officer)

/s/ Scott R. Yablon* Chief Financial Officer,
-------------------------------------- Chief Operating Officer, and August 5, 1998
Scott R. Yablon Director
(Principal Accounting Officer)

/s/ Richard A. Cirillo* Director August 5, 1998
--------------------------------------
Richard A. Cirillo

/s/ Louis A. Luzzi, Ph.D* Director August 5, 1998
--------------------------------------
Louis A. Luzzi, Ph.D

/s/ Martin ("Michael") Kooper* Director August 5, 1998
--------------------------------------
Martin ("Michael") Kooper

/s/ Louis DiFazio* Director August 5, 1998
--------------------------------------
Louis DiFazio

* /s/ Richard H. Friedman
--------------------------------------
Attorney-in-Fact

II-8

INDEX TO EXHIBITS

Exhibit
No. Description