LOGISTICARE INC, SB-2/A, 1998-06-18

LOGISTICARE INC
SB-2/A, 1998-06-18
TRANSPORTATION SERVICES

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 18, 1998

REGISTRATION NO. 333-52327
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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AMENDMENT NO.1

TO
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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LOGISTICARE, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE 4729 13-3765416
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NUMBER)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)

ONE CROWN CENTER
SUITE 306
1895 PHOENIX BOULEVARD
COLLEGE PARK, GEORGIA 30349
(770) 907-7596
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

JOHN L. SHERMYEN
ONE CROWN CENTER
SUITE 306
1895 PHOENIX BOULEVARD
COLLEGE PARK, GEORGIA 30349
(770) 907-7596
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)

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COPIES OF COMMUNICATIONS TO:

ROBERT A. CANTONE, ESQ. JEFFREY R. PATT, ESQ.
PROSKAUER ROSE LLP KATTEN MUCHIN & ZAVIS
1585 BROADWAY 525 WEST MONROE STREET
NEW YORK, NEW YORK 10036-8299 CHICAGO, ILLINOIS 60661
(212) 969-3000 (312) 902-5604

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effectiveness of this Registration Statement.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, 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, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]

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

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]

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CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE AMOUNT TO OFFERING PRICE OFFERING REGISTRATION
REGISTERED BE REGISTERED(1) PER UNIT(2) PRICE(2) FEE
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<S> <C> <C> <C> <C>
Common Stock, par value
$.01 per share........ 2,645,000 shares $12.00 $31,740,000 $9,363.30
</TABLE>
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(1) Includes 345,000 shares of Common Stock that the Underwriters have the
option to purchase to cover over-allotments, if any.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o) under the Securities Act of 1933.

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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<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

SUBJECT TO COMPLETION, DATED JUNE , 1998

PROSPECTUS

2,300,000 SHARES

LOGISTICARE, INC.

COMMON STOCK

All of the 2,300,000 shares of Common Stock offered hereby are being sold by
the Company. Prior to this offering, there has been no public market for the
Common Stock of the Company. It is currently estimated that the initial public
offering price will be between $10.00 and $12.00 per share. See "Underwriting"
for a discussion of the factors considered in determining the initial public
offering price. The Common Stock has been approved for quotation on the Nasdaq
Stock Market under the symbol LGTC, subject to official notice of issuance.

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THE SHARES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" COMMENCING ON PAGE 5.

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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.

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<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNTS(1) COMPANY(2)
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<S> <C> <C> <C>
Per Share.................................... $ $ $
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Total(3)..................................... $ $ $
</TABLE>
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(1) See "Underwriting" for indemnification arrangements with the several
Underwriters.
(2) Before deducting expenses payable by the Company estimated at $ .
(3) The Selling Stockholders have granted to the Underwriters a 30-day option
to purchase up to 345,000 additional shares of Common Stock solely to cover
over-allotments, if any. If all such shares are purchased, the total Price
to Public, Underwriting Discount, Proceeds to Company and Proceeds to
Selling Stockholders will be $ , $ , $ , and $ , respectively. See
"Underwriting."

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The shares of Common Stock are offered by the several Underwriters subject to
prior sale, receipt and acceptance by them and subject to the right of the
Underwriters to reject any order in whole or in part and certain other
conditions. It is expected that certificates for such shares will be available
for delivery on or about , 1998, at the office of the agent of Hambrecht &
Quist LLC in New York, New York.

HAMBRECHT & QUIST EVEREN SECURITIES, INC.
, 1998
<PAGE>

[Diagram]

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
OF THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET, IN
THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY
BE DISCONTINUED AT ANY TIME.

LogistiCare(TM), the LogistiCare(TM) logo and RealTime(TM) are trademarks of
the Company.

2
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PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and Financial Statements and Notes thereto appearing elsewhere in
this Prospectus. The Common Stock offered hereby involves a high degree of
risk. See "Risk Factors." Unless otherwise indicated, all information in this
Prospectus (i) gives effect to the five-for-one stock split of the Common Stock
effected as of March 30, 1998, (ii) gives effect to the two-for-one stock split
of the Common Stock effected as of June 11, 1998, (iii) gives effect to the
conversion of each outstanding share of the Company's preferred stock, par
value $.01 per share (the "Preferred Stock"), into 10 shares of Common Stock
which will occur upon the effectiveness of the Registration Statement and (iv)
assumes no exercise of the Underwriters' over-allotment option. See
"Description of Capital Stock," "Underwriting" and Notes to Financial
Statements.

THE COMPANY

LogistiCare, Inc. ("LogistiCare" or the "Company") manages non-emergency
transportation services for government health and human service agencies and
for managed care organizations ("MCOs"). The Company seeks to establish itself
as the central contact for three constituencies: third-party payors,
transportation carriers and individuals eligible for transportation benefits
("Recipients"). The Company believes that its management expertise and
RealTime(TM) software system ("RealTime") enable it to provide sophisticated
and efficient transportation management services. The Company currently
conducts its business through centralized operations centers ("Operations
Centers") in Georgia, Florida and Connecticut, and intends to expand into
selected new regional markets.

The Company's brokerage logistics services, contracted under both capitated
and, to a lesser extent, fee-for-service arrangements, provide third-party
payors with an outsourcing alternative for their transportation requirements.
These services include: processing requests for transportation from Recipients,
determining their eligibility for such services, coordinating and purchasing
transportation, reporting encounter data and performing other logistical and
quality-assurance activities associated with non-emergency transportation. The
Company does not own or operate any vehicles for the transportation of
individuals. Instead, the Company establishes cost-effective networks of
carriers by selecting, negotiating and contracting with qualified
transportation carriers within each region. Such independent transportation
carriers are assisted and evaluated by the Company on an ongoing basis to
ensure conformity with the Company's quality standards.

Currently, in geographic markets in which the Company does not operate, non-
emergency transportation is provided in large measure through a fragmented
delivery system consisting primarily of small transportation companies that
frequently provide only one class of service (i.e., ambulatory, wheelchair or
ambulance). In a typical transaction, an individual schedules a trip with a
transportation carrier who subsequently submits a receipt for the cost of the
trip to a third-party payor for reimbursement. The Company believes that this
system is highly inefficient and provides no incentive to manage utilization or
contain costs, while at the same time it provides an opportunity for abuses by
passengers and transportation carriers that the Company believes are difficult
for third-party payors to effectively identify and prevent.

The Company believes that the growing demand for non-emergency
transportation, combined with third-party payors' increasing dissatisfaction
with the fragmented delivery system, has created the need for a more
sophisticated alternative to manage utilization and contain costs while
providing transportation services at or above existing levels of quality. The
Company believes that government agencies, MCOs and other third-party payors
will increasingly turn to third parties, such as the Company, that are not
affiliated with transportation carriers to coordinate and manage all classes of
non-emergency transportation services.

The Company was incorporated in Delaware in March 1994. In January 1996, the
Company acquired all of the outstanding shares of Automated Dispatch Systems,
Inc. ("Systems") and subsequently merged Systems into itself. The Company's
executive offices are located at 1895 Phoenix Boulevard, Suite 306, College
Park, Georgia 30349, and its telephone number is (770) 907-7596.

3
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THE OFFERING

<TABLE>
<S> <C>
Common Stock offered by the Company.... 2,300,000 shares
Common Stock to be outstanding after
the Offering.......................... 11,321,510 shares(1) (2)
Use of proceeds........................ For working capital and general
corporate purposes, including providing
collateral security for performance
bonds in connection with new contracts,
business development, operations
expansion, internal software
development and potential acquisitions.
See "Use of Proceeds."
Proposed Nasdaq National Market symbol. LGTC
</TABLE>

SUMMARY FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED
ENDED DECEMBER 31, MARCH 31,
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1995 1996 1997 1997 1998
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<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues............................ $ 392 $3,636 $11,502 $1,362 $11,715
Operating expenses.................. 501 3,722 15,714 1,586 11,494
Income (loss) from operations....... (109) (86) (4,212) (224) 221
Other income (expense), net......... (18) (33) (2) (2) 7
Net income (loss)................... $ (127) $ (119) $(4,214) $ (226) $ 228
Basic net income (loss) per share... $(0.03) $(0.02) $ (0.59) $(0.04) $ 0.03
Weighted average shares outstanding. 5,000 5,550 7,189 5,797 8,047
Diluted net income (loss) per share. $(0.03) $(0.02) $ (0.59) $(0.04) $ 0.02
Weighted average shares and
potentially dilutive shares
outstanding........................ 5,000 5,550 7,189 5,797 10,256
</TABLE>

<TABLE>
<CAPTION>
MARCH 31, 1998
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ACTUAL AS ADJUSTED(2)
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<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents............................ $ 3,681 $26,460
Working capital...................................... (3,367) 19,412
Total assets......................................... 6,875 29,654
Short-term debt including current portion of long-
term debt........................................... 149 149
Long-term debt, less current maturities.............. 242 242
Total stockholders' equity (deficit)................. (2,450) 20,329
</TABLE>
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(1) Based on the number of shares outstanding as of March 31, 1998. Excludes
(i) 1,000,000 shares of Common Stock reserved for issuance under the
Company's 1998 Stock Option Plan and (ii) 1,533,330 shares of Common Stock
reserved for issuance under the Company's 1995 Stock Option Plan and
subject to outstanding options as of March 31, 1998 at a weighted average
exercise price of $0.93 per share. See "Capitalization," "Management--Stock
Option Plans" and Note 7 of Notes to Financial Statements.

(2) As adjusted to reflect the sale of shares of Common Stock offered hereby at
an assumed initial public offering price of $11.00 per share and the
receipt of the estimated proceeds therefrom as if such transactions had
occurred on March 31, 1998. See "Use of Proceeds" and "Capitalization."

4
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RISK FACTORS

An investment in the Common Stock offered hereby involves a high degree of
risk. Prospective investors should carefully consider the following risk
factors, in addition to the other information contained in this Prospectus,
before purchasing the securities offered hereby. This Prospectus contains
forward-looking statements. Discussions containing such forward-looking
statements may be found in the material set forth below and under
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business," as well as in the Prospectus generally.
Prospective investors are cautioned that any such forward-looking statements
are not guarantees of future performance and involve risks and uncertainties.
Actual events or results may differ materially from those discussed in the
forward-looking statements as a result of various factors, including, without
limitation, the risk factors set forth below and the matters set forth in this
Prospectus generally.

Limited Operating History; History of Operating Losses. The Company was
formed in 1994 and, therefore, has had a limited operating history upon which
an evaluation of the Company and its prospects can be based. From its
inception to July 1997, the Company executed five contracts with MCOs and
three contracts with transportation carriers. Since July 1997, the Company has
also executed four contracts with government agencies. The Company has had
limited experience in managing these contracts. The Company's prospects must
be considered in light of the risks, expenses and difficulties frequently
encountered by companies in their early stage of development, particularly
companies in new and evolving markets. There can be no assurance that the
Company will be successful in addressing such risks. The Company has incurred
net losses since inception, including losses of $4.2 million in the year ended
December 31, 1997. Although the Company has experienced revenue growth in
recent periods, such growth rates may not be sustainable and are not
indicative of future operating results.

Dependence on Limited Number of Contracts. In July 1997, the Company
executed three contracts with the Georgia Department of Administrative
Services (on behalf of the Georgia Department of Medical Assistance) ("GDMA"),
pursuant to which the Company manages, on a capitated basis, non-emergency
transportation services to Medicaid beneficiaries in certain regions of
Georgia. In February 1998, the Company began providing services under a
written memorandum of understanding with the Connecticut Department of Social
Services ("CDSS") and executed a final contract with the CDSS for such
services in May 1998. Under this contract, the Company manages, on a capitated
basis, non-emergency transportation services to Medicaid beneficiaries in
certain regions of Connecticut. The GDMA contracts accounted for approximately
48.4% of the Company's revenues in 1997 and approximately 78.8% of the
Company's revenues in the first quarter of 1998. The CDSS contract accounted
for 12.0% of the Company's revenues in the first quarter of 1998. The Company
anticipates that these contracts will continue to represent a significant
portion of its revenues in the remainder of 1998 and for the foreseeable
future. However, the capitation rates in effect under the GDMA contracts for
service periods subsequent to June 30, 1998 will be 23% to 26% lower than
rates in effect for the period from February 1, 1998 through June 30, 1998.
See "Management's Discussion and Analysis of Financial Condition and Results
of Operations--Overview." Each of the GDMA contracts was originally scheduled
to expire on June 30, 1998, subject to two successive one year options to
renew, exercisable solely in the discretion of the GDMA. In May 1998, the GDMA
exercised the first option to renew with respect to each of the GDMA
contracts. The GDMA contracts are terminable by the GDMA upon notice to the
Company in certain circumstances, including if the GDMA determines that such
termination is in the best interest of the State of Georgia or that sufficient
funds no longer exist to pay its obligations under such contracts. The CDSS
contract expires on January 31, 1999 and is subject to two successive one year
options to renew, exercisable solely in the discretion of the CDSS. The CDSS
contract is terminable by the CDSS upon 90-days notice to the Company for any
reason, and upon lesser notice to the Company in certain circumstances, and
the CDSS may terminate the contract or reduce the contracted amount of
compensation at any time in the event that sufficient funds no longer exist to
pay its obligations. There can be no assurance that any of these contracts
will be retained, renewed or not terminated. The loss of any of these
contracts would have a material adverse effect on the Company's business,
financial condition and results of operations.

5
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Capitated Nature of Revenue. Approximately 80.4% of the Company's revenues
in 1997 and approximately 97.6% of the Company's revenues in the first quarter
of 1998 relate to capitated contracts, and the Company anticipates that the
revenues received under capitated contracts will continue to represent a
substantial majority of the Company's total revenues as it expands and
implements its business strategies. The Company believes that government
agencies, MCOs and other third-party payors will continue to seek discounted
fee structures and the assumption by providers, through capitation
arrangements, of all or a portion of the financial risks relating to health
care related services, including transportation services. In a capitation
arrangement, the Company makes certain demographic, statistical and other
assumptions concerning anticipated utilization, carrier services and cost
incurred per trip. Such assumptions are based upon the Company's limited
experience in providing services under other capitated arrangements, publicly-
available information and information furnished by the party requesting a bid
or proposal from the Company. If the Company secures a capitated contract, the
Company typically agrees, in advance and often for multi-year periods, to
accept a fixed monthly fee for services based upon the number of eligible
Recipients and various transportation-related criteria. The failure of the
Company to make accurate assumptions with respect to a contract could have a
material adverse effect on the Company's business, financial condition and
results of operations. For example, if MCO enrollees covered by such contracts
require more frequent transportation than anticipated by the Company upon
entering into such a contract, there could be a material adverse effect on the
Company. Fees negotiated under such capitated contracts could be insufficient
to cover the costs of the services provided.

The Company's acceptance of risk contracts may entail the business of
insurance, to which state licensure laws apply. If the Company's activities
are deemed to require licensure, the Company may not be able to qualify for
such licensure and may be subject to penalties for its failure to obtain
licensure. If the Company were required to and did obtain licensure, it would
be subject to potentially onerous regulatory requirements. To the extent the
Company accepts capitation and is not regulated as an insurer, regulatory
provisions that might mitigate losses by insurers will not apply to reduce the
Company's risk. See "Business--Government Regulation and Supervision--
Insurance Laws."

Risks Associated with Proposed Growth Strategy. The Company's business
strategy is to expand into new and existing markets either through entering
into new contracts and forming new Operations Centers or acquiring existing
businesses. The Company does not anticipate opening a new Operations Center in
a geographic region unless and until it has one or more contracts in such
region sufficient to support a new Operations Center. There can be no
assurance that the Company will be successful in obtaining new contracts
sufficient to form new Operations Centers. Upon the execution of a contract
requiring the formation of a new Operations Center, it may be necessary for
the Company within a brief time period to lease office space, purchase office
equipment, hire and train sufficient qualified personnel, and negotiate and
execute contracts with transportation carriers in geographic regions in which
the Company has no prior experience. The Company may also be required to
modify its software system to integrate new Operations Centers. There can be
no assurance that the Company will be able to complete such activities within
the time period necessary to perform under the applicable contract. These
activities may also occur prior to the Company's receipt of any payments under
a new contract and the Company may experience a several month lag in the
collection of its accounts receivables. Integrating newly-formed and acquired
business units with the Company's operations, identifying and pursuing
opportunities for expansion, funding the formation of new Operations Centers
and managing growth will require a significant amount of management time and
skill and financial resources. There can be no assurance that the Company will
be successful in achieving and managing growth. The Company currently has no
pending agreements or understandings regarding the acquisition of any business
or the formation of new Operations Centers.

Termination of Significant Contracts. The Company's contracts typically
contain provisions that permit the third-party payor to terminate its contract
with the Company on little or no notice, with or without cause. Termination of
a significant contract between the Company and a third-party payor, whether by
expiration or otherwise, will not only cause a loss of revenue to the Company,
but may also cause the Company to expend significant resources in closing the
applicable Operations Center. Actions necessary to close an Operations

6
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Center may include buying-out office leases, terminating or reassigning
personnel and selling or re-deploying office equipment. Both the loss of
revenue resulting from the termination of a significant contract and the
related costs of closing an Operations Center could have a material adverse
effect on the Company's business, financial condition and results of
operations.

Risks Associated with RFPs. A high percentage of the Company's prospective
clients are state or local government authorities. Effective marketing of the
Company's services to government clients requires the ability to respond to
government requests for proposals ("RFPs"). To succeed in the RFP process, the
Company must estimate its costs for servicing the proposed contract, the time
required to establish operations and the likely terms of the proposals
submitted by competitors. The Company's ability to successfully respond in the
RFP process in the future depends in large measure upon the availability of
sufficient financial and management resources, and will have an important
impact on the Company's business, financial condition and results of
operations. There can be no assurance that the Company will have sufficient
financial and management resources to successfully respond in the RFP process
in the future or that it will secure profitable contracts pursuant to RFPs .

Risks Associated With Government Contracting. In order to establish and
maintain relationships with government agencies, the Company occasionally
engages marketing consultants, including lobbyists. In the event of a
significant political change, such consultants may lose their ability to
effectively assist the Company. The failure of the Company to manage its
relationships effectively with political consultants may have a material
adverse effect on its business, financial condition and results of operations.
No assurance can be given that the Company will be successful in managing such
relationships.

Government contracts generally are subject to audits and investigations by
appropriate government agencies. These audits and investigations involve a
review of the government contractor's performance of its contracts as well as
its compliance with applicable laws, regulations and standards. If improper or
illegal activities are discovered in the course of any audits or
investigations, the contractor may be subject to various civil, criminal and
administrative sanctions, including termination of contracts, forfeiture of
profits, suspension of payments, fines and suspension or disqualification from
doing business with the government. If the Company becomes subject to
sanctions, such sanctions could have a material adverse effect on the
Company's business, financial condition and results of operations.

Risks Associated with the Company's Inability or Failure to Perform Under
Contracts. The Company's inability or failure to satisfy its contractual
obligations in a manner consistent with the terms of a contract could have a
material adverse effect on the Company's business, financial condition and
operating results because the Company is often required to indemnify third-
party payors for its failure to meet performance standards. For example, the
Company's contracts with the GDMA contain liquidated damages provisions and
financial penalties related to performance failures. In addition, in order for
the Company to bid for certain government contracts, the Company has been, and
may continue to be, required to secure its obligations by obtaining a
performance bond from an insurer, posting a cash performance bond or obtaining
a letter of credit from a suitable financial institution. In the event that a
government agency makes a claim against such performance bond or letter of
credit, the premiums demanded by the insurers for such bonds could increase,
thereby limiting the Company's ability to bid for contracts in the future. In
addition, the Company's failure to meet a third-party payor's expectations in
the performance of its contractual obligations could have a material adverse
effect on the Company's reputation, thereby adversely affecting its business,
financial condition and results of operations.

Legislative Change and Political Development. The market for the Company's
services is largely dependent on federal and state legislative programs, any
of which may be modified or terminated by acts of the legislative or executive
branches of federal and state governments. There can be no assurance that such
legislative change will not occur or that the Company will be able to
anticipate and respond in a timely manner to any such legislative change. The
Company's failure to effectively manage its business in light of anticipated

7
<PAGE>

or unanticipated legislative change could have a material adverse effect on
the Company's business, financial condition and results of operations.

Government Regulation. The federal government and all states in which the
Company operates regulate various aspects of the businesses with which the
Company contracts, such as MCOs and transportation carriers, by establishing
licensing requirements and operating standards. Although these regulations do
not currently have a direct impact on the Company's business, changes in these
regulations or their interpretation could affect the Company's business, by,
for example, increasing the cost of transportation carrier services.
Additionally, existing and future federal and state regulation of health care
could have a material adverse effect on the Company's financial condition and
results of operations. While the Company believes that its operations are
conducted in material compliance with applicable laws, the laws applicable to
the Company are subject to evolving interpretations, and therefore there can
be no assurance that a review of the Company's operations by federal or state
judicial or regulatory authorities would not result in a determination that
the Company has violated one or more provisions of federal or state law. Any
such determination could have a material adverse effect on the Company.
Expansion of the Company into, or the continuation of the Company's operations
within, certain jurisdictions may depend on the Company's ability to modify
its operational structure to conform to such jurisdictions' regulatory
framework. Any limitation on the Company's ability to expand could have a
material adverse effect on the Company. See "Business--Government Regulation
and Supervision."

Fraud and Abuse. The anti-kickback provisions of the Social Security Act
prohibit the solicitation, payment, receipt or offering of any direct or
indirect remuneration in return for, or as an inducement for, certain
referrals of patients for items, services or equipment covered by health
benefits programs, including Medicare and Medicaid. In addition to federal
law, anti-kickback laws have been adopted by many states, including the states
in which the Company conducts business. For example, the State of Florida
prohibits kickbacks and states that "[i]t is unlawful for any health care
provider or any provider of health care services to offer, pay, solicit, or
receive a kickback, directly or indirectly, overtly or covertly, in cash or in
kind, for referring or soliciting patients." In addition, federal law and some
state laws impose significant penalties for false and improper billings. These
anti-kickback and false claims laws are commonly referred to as the fraud and
abuse laws. Violations of any of these laws may result in substantial civil or
criminal penalties, and, in the case of violations of federal laws, exclusion
from participation in the Medicare and Medicaid programs. Such exclusion and
penalties, if applied to the Company, would have a material adverse effect on
the Company. Further, the application of these laws is subject to modification
by statutory amendment or promulgation of regulations and any such change
could have a material adverse effect on the Company.

Non-emergency transportation is one of many services identified by states
and the Office of Inspector General ("OIG") of the Department of Health and
Human Services as being a source of fraud and abuse activity in the Medicaid
program. Such allegations of fraud and abuse and the resulting increasing
costs have led members of Congress to consider eliminating non-emergency
transportation as a covered Medicaid service. The elimination of non-emergency
transportation as a covered Medicaid service would have a material adverse
effect on the Company. See "Business--Government Regulation and Supervision--
False and Improper Claims."

Health Care Reform. As a result of the continued escalation of health care
costs and the inability of many individuals to obtain insurance, numerous
proposals have been or may be introduced in Congress and state legislatures
relating to health care reform. There can be no assurance as to the ultimate
content, timing or effect of any health care reform legislation, nor is it
possible at this time to estimate the impact of potential legislation, which
may be material, on the Company. Aspects of certain of these proposals, such
as reduction in funding of Medicaid programs, changes in reimbursement
regulations, and increased pressure by Medicaid and other third-party payors
to contain health care costs, could eliminate or limit the use of
transportation carriers and consequently reduce both the demand for the
Company's services and the amount of funds available for such use. In the
recently enacted Balanced Budget Act of 1997 (the "1997 Budget Bill") and

8
<PAGE>

Health Insurance Portability and Accountability Act of 1996 ("HIPAA"),
Congress has responded to perceived fraud and abuse in health care programs.
This legislation has fortified the government's enforcement authority with
increased resources and greater civil and criminal penalties for offenses. The
Company anticipates that there will be further restrictive legislative and
regulatory measures to reduce fraud, waste and abuse in the health care
programs. There can be no assurance that any such legislation will not have a
material adverse effect on the Company. See "Business--Government Regulations
and Supervision--Federal and State Initiatives."

Dependence on Software System. The successful operation of the Company's
software system, RealTime, is critical to its ability to manage transportation
services and to secure, and operate profitably under, capitated contracts. The
software industry is characterized by rapid technological changes and advances
which can result in relatively short product lifecycles. The Company's future
success may depend, in large part, on its ability to enhance RealTime and
develop new software that keeps pace with technological developments in the
marketplace. Over the next year, the Company intends to expand RealTime's data
management and interface capabilities. There can be no assurance that the
Company will be successful in developing new software products or product
enhancements, including the proposed enhancements, or that such new products
or enhancements will keep pace with competitive innovations.

Dependence on Third-Party Carriers for Transportation. The Company does not
own or operate vehicles and is therefore dependent upon third-party
transportation carriers to fulfill the Company's obligations under its
transportation management contracts. There can be no assurance that the
Company will be able to execute and maintain contracts with third-party
carriers to provide transportation services on behalf of the Company in
accordance with the Company's standards at acceptable prices. The inability of
the Company to enter into satisfactory relationships with third-party carriers
or the failure of such carriers to furnish transportation services according
to the Company's standards at acceptable prices could have a material adverse
effect on the Company's business, financial condition and results of
operations.

Variability of Quarterly Operating Results. Variations in the Company's
revenues and operating results occur from quarter to quarter as a result of a
number of factors, including the progress of contracts, levels of revenues
earned on contracts (including any adjustments in expectations of revenue
recognition on fixed price contracts), the commencement, completion or
termination of contracts during any particular quarter, the schedule of
government agencies for awarding contracts and general economic conditions.
Because a significant portion of the Company's expenses are relatively fixed,
successful contract performance and variation in the volume of activity, as
well as in the number of contracts commenced or completed during any quarter,
may cause significant variations in operating results from quarter to quarter.
Furthermore, the Company has experienced, and anticipates that it may in the
future experience, a pattern in its results of operation in which it incurs
greater operating expenses during the start-up and early stages of significant
contracts.

Competition. The market for transportation management services is new,
highly competitive and rapidly evolving. Increased outsourcing of
transportation services, low barriers to entry and other factors may attract
new entrants into the transportation management industry and result in
increased competition for the Company. Potential competitors include
independent transportation carriers, logistics companies and other companies
who currently provide unrelated services to government agencies and other
third-party payors. Many of the Company's competitors and potential
competitors have significantly greater financial, technological and marketing
resources than the Company. There can be no assurance that the Company will be
able to compete successfully against current and future sources of competition
or that competition will not have a material adverse effect on the Company's
business, financial condition and results of operations.

Reliance on Key Personnel. The success of the Company is highly dependent
upon the efforts, abilities, business generation and project execution
capabilities of certain of its executive officers and other senior employees,
most of whom have worked together for only a short period of time. The loss of
the services of

9
<PAGE>

any of its executive officers or other key employees could have a material
adverse effect on the Company's business, financial condition and results of
operations. The Company maintains a key-man life insurance policy on John L.
Shermyen in the amount of $2,000,000, with the proceeds payable to the
Company.

The Company's future success also depends on its continuing ability to
identify, hire, train and retain other highly qualified technical and
managerial personnel. Competition for such personnel is significant and there
can be no assurance that the Company will be able to attract, assimilate or
retain other highly qualified technical and managerial personnel in the
future. The inability to attract and retain the necessary personnel could have
a material adverse effect upon the Company's business, financial condition and
results of operations.

Adverse Publicity. The Company has received, and expects to continue to
receive, media attention as a result of its contracts with state and local
government authorities. There can be no assurance that the Company will not
receive adverse media attention as the result of the types of services
provided by the Company or the activities of displaced transportation
carriers. Negative coverage relating to the Company could influence government
officials, slow the issuance of RFPs or cause the termination of existing
contracts. In addition, there can be no assurance that media attention focused
on the Company will be accurate or that the Company will be able to anticipate
and respond in a timely manner to all media contacts. Adverse media coverage
or the Company's failure to manage such coverage could have a material adverse
effect on the Company's reputation or the transportation management industry,
thereby adversely affecting the Company's business, financial condition and
results of operations.

Dependence Upon Third-Party Reimbursement. A substantial majority of the
Company's revenues are attributable to reimbursement by third-party payors,
particularly government agencies who administer state Medicaid programs and
MCOs. During the year ended December 31, 1997 and the three months ended March
31, 1998, the Company derived approximately 48.4% and 90.8%, respectively, of
its total revenues from government agencies who administer state Medicaid
programs, and approximately 51.6% and 9.2%, respectively, of its total
revenues from MCOs and other non-governmental third-party payors. The
revenues, cash flows and profitability of the Company, like those of other
companies in the health care industry, are affected by the continuing efforts
of third-party payors to control expenditures for health care. In addition,
reimbursement can be influenced by the financial instability of private third-
party payors and by budget pressures and cost shifting by governmental payors.
Furthermore, any change in reimbursement regulations, policies,
interpretations or statutes could adversely affect the operations of the
Company. The health care industry is experiencing a trend toward cost
containment as third party payors, such as governmental programs (e.g.,
Medicare and Medicaid), private insurance plans and managed care plans, seek
to impose lower reimbursement and utilizations rates and to negotiate reduced
capitated payment schedules with service providers. Further reductions in
payments to health care providers or other changes in reimbursement for health
care services could have a material adverse effect on the Company. These
reductions could result from changes in current reimbursement rates. There can
be no assurance that the effect of any or all of these changes in third-party
reimbursement could be offset by the Company through cost reductions,
increased volume, introduction of new services and systems or otherwise.

Risk of Liability Claims. The Company is subject to liability claims in the
event a Recipient fails to receive, or suffers harm in connection with,
transportation arranged through the Company. Even unsuccessful claims could
result in expenditure of funds in litigation, diversion of management time and
resources or damage to the Company's reputation and the marketability of the
Company's services and systems. Although the Company takes contractual steps
to obtain indemnification for certain liabilities and maintains general
commercial liability insurance, there can be no assurance that a successful
claim could not be made against the Company, that the amount of
indemnification payments or insurance would be adequate to cover the costs of
defending against or paying such a claim or that the costs of defending
against such a claim or the payment of damages by the Company would not have a
material adverse effect on the Company.

10
<PAGE>

Broad Discretion Over Use of Proceeds. The principal purposes of the
Offering are to obtain additional capital to support anticipated growth,
expand the public market for the Common Stock, facilitate future access for
the Company to public equity markets and enhance the Company's ability to use
its Common Stock as consideration for potential acquisitions and as a means of
attracting and retaining key employees. The Company expects to use the net
proceeds from the Offering primarily for working capital and general corporate
purposes, including marketing, sales force expansion, formation of new
Operations Centers, acquisitions and providing collateral security for
performance bonds in connection with new contracts. The cost, timing and
amount of funds required for such uses by the Company cannot be precisely
determined and will be based upon, among other things, market conditions and
other factors beyond the control of the Company. Accordingly, management will
retain discretion over the use of the proceeds. See "Use of Proceeds."

No Prior Market; Possible Volatility of Stock Price. Prior to the Offering,
there has been no public market for the Common Stock, and there can be no
assurance that an active public market for the Common Stock will develop or
continue after the Offering. The initial public offering price of the Common
Stock will be determined by negotiation between the Company and the
Underwriters and may not be indicative of the market price for the Common
Stock after the Offering. See "Underwriting" for factors considered in
determining the initial public offering price. From time to time after the
Offering, there may be significant volatility in the market price of the
Common Stock. Deviations in results of operations from estimates of securities
analysts, changes in general conditions in the economy or the health care
industry or other developments affecting the Company or its competitors could
cause the market price of the Common Stock to fluctuate substantially. The
equity markets have, on occasion, experienced significant price and volume
fluctuations that have affected the market prices for many companies'
securities and have often been unrelated to the operating performance of these
companies. Concerns about the potential effects of health care reform measures
have contributed to the volatility of stock prices of companies in health care
and related industries and may similarly affect the price of the Common Stock
following the Offering. Any such fluctuations that occur following the
completion of the Offering may adversely affect the market price of the Common
Stock.

Shares Eligible for Future Sale. Immediately after completion of the
Offering, the Company will have 11,321,510 shares of Common Stock outstanding,
of which the 2,300,000 shares sold pursuant to the Offering will be freely
tradeable without restriction or further registration under the Securities
Act, except those shares acquired by affiliates of the Company. Holders of the
remaining shares will be eligible to sell such shares pursuant to Rule 144
under the Securities Act at prescribed times and subject to the manner of
sale, volume, notice and information restrictions of Rule 144. In addition,
1,533,330 shares of Common Stock are issuable upon the exercise of outstanding
stock options, the issuance of which shares is expected to be registered by
the Company under the Securities Act and become freely tradeable without
restriction. The Company and its current stockholders (holding an aggregate of
9,021,510 shares of Common Stock upon the closing of the Offering) have agreed
not to offer, sell, contract to sell or otherwise dispose of, directly or
indirectly, any shares of Common Stock or any securities convertible into or
exchangeable or exercisable for shares of Common Stock, until 180 days after
the effective date of the Registration Statement, without the prior consent of
Hambrecht & Quist LLC. Sales of substantial amounts of these shares in the
public market or the availability of such shares for future sale could
adversely affect the market price of the shares of Common Stock and the
Company's ability to raise additional capital at a price favorable to the
Company. See "Shares Eligible for Future Sale" and "Underwriting."

Potential Anti-Takeover Effects of Charter and By-laws Provisions. Certain
provisions of the Restated Certificate of Incorporation (the "Certificate of
Incorporation") and the Amended and Restated By-laws (the "By-laws") of the
Company may be deemed to have anti-takeover effects and may delay, deter or
prevent a change in control of the Company that a stockholder might consider
in his/her best interest. These provisions (i) provide that only the Board of
Directors or certain members thereof or officers of the Company may call
special meetings of the stockholders and (ii) authorize the issuance of "blank
check" preferred stock having such designations, rights and preferences as may
be determined from time to time by the Board of Directors. See "Description of
Capital Stock."

11
<PAGE>

Control by Existing Stockholders. Following the completion of the Offering,
the officers and directors of the Company will beneficially own approximately
56.6% of the outstanding shares of Common Stock. Following the offering, such
persons may effectively be able to control the affairs of the Company,
including the ability to delay or prevent a change of control of the Company.
See "Principal and Selling Stockholders."

Immediate and Substantial Dilution. Purchasers of the Common Stock in the
Offering will incur immediate and substantial dilution in the net tangible
book value per share of Common Stock of $9.21 per share. See "Dilution."

12
<PAGE>

USE OF PROCEEDS

The net proceeds to the Company from the sale of the 2,300,000 shares of
Common Stock offered by the Company hereby at an assumed initial public
offering price of $11.00 per share, and after deducting the underwriting
discounts and estimated offering expenses, are estimated to be $22,779,000.
The Company intends to use the net proceeds from the Offering approximately as
follows:

<TABLE>
<CAPTION>
APPLICATION OF PROCEEDS AMOUNT PERCENT
----------------------- ----------- -------
<S> <C> <C>
Internal software development........................ $ 2,500,000 11%
Expansion of existing Operations Centers............. 1,000,000 5%
Working capital and general corporate purposes,
including marketing, sales force expansion,
formation of new Operations Centers, acquisitions
and providing collateral security for performance
bonds in connection with new contracts.............. 18,779,000 84%
</TABLE>

The cost, timing and amount of funds required for such uses by the Company
cannot be precisely determined and will be based upon, among other things,
market conditions and other factors beyond the control of the Company.

The Company may use a portion of such net proceeds to acquire businesses,
but the Company does not have any commitments or agreements with respect to
any such transaction. Pending such uses, the net proceeds of the Offering will
be invested in short-term, interest-bearing, investment-grade securities.

Certain stockholders of the Company (the "Selling Stockholders") have
granted the Underwriters a 30-day option to purchase up to 345,000 additional
shares of Common Stock to cover over-allotments, if any. If the over-allotment
option is exercised, the Company will not receive any proceeds from the sale
of Common Stock by the Selling Stockholders. See "Principal and Selling
Stockholders."

DIVIDEND POLICY

To date, the Company has neither declared nor paid any cash dividends on
shares of its Common Stock. The Company currently intends to retain its
earnings for future growth and, therefore, does not anticipate paying any cash
dividends in the foreseeable future.

13
<PAGE>

CAPITALIZATION

The following table sets forth the capitalization of the Company as of March
31, 1998 (i) on an actual basis, (ii) the pro forma capitalization of the
Company at March 31, 1998 assuming the conversion of the Preferred Stock, and
(iii) as adjusted to give effect to the sale of 2,300,000 shares of Common
Stock offered hereby at an assumed offering price of $11.00 per share and the
application of the net proceeds therefrom. This table should be read in
conjunction with the Financial Statements of the Company and Notes thereto
included elsewhere in this Prospectus. See "Use of Proceeds."

<TABLE>
<CAPTION>
MARCH 31, 1998
------------------------------------
PRO FORMA
ACTUAL PRO FORMA(2) AS ADJUSTED(3)
------- ------------ --------------
(UNAUDITED, IN THOUSANDS)
<S> <C> <C> <C>
Short-term obligations, including current
maturities of long-term obligations...... $ 149 $ 149 $ 149
------- ------- -------
Long-term obligations, less current
maturities............................... $ 242 $ 242 $ 242
------- ------- -------
Stockholders' equity (deficit):
Preferred stock, $.01 par value, 100,000
shares authorized; 97,415 issued and
outstanding............................ 1 -- --
Common stock, $.01 par value, 30,000,000
shares authorized; 8,047,360 shares
issued and outstanding actual;
11,321,510 shares issued and
outstanding as adjusted(1)............. 80 90 113
Additional paid-in capital................ 2,285 2,276 25,032
Deferred option plan compensation......... (450) (450) (450)
Retained deficit.......................... (4,366) (4,366) (4,366)
------- ------- -------
Total stockholders' equity (deficit).. (2,450) (2,450) 20,329
------- ------- -------
Total capitalization................ $(2,059) $(2,059) $20,720
======= ======= =======
</TABLE>
- ---------------------
(1) Excludes (i) 1,000,000 shares of Common Stock reserved for issuance under
the Company's 1998 Stock Option Plan and (ii) 1,533,330 shares of Common
Stock reserved for issuance under the Company's 1995 Stock Option Plan and
subject to outstanding options as of March 31, 1998 at a weighted average
exercise price of $0.93 per share. See "Management--Stock Option Plans"
and Note 7 of Notes to Financial Statements.
(2) Gives effect to the conversion of the issued and outstanding shares of
Preferred Stock into 974,150 shares of Common Stock, in the aggregate.
(3) Gives effect to the sale of 2,300,000 shares of Common Stock and the
application of the estimated net proceeds of $22,779,000 (after deducting
underwriting discounts and estimated offering expenses) as set forth in
"Use of Proceeds."

14
<PAGE>

DILUTION

As of March 31, 1998, the Company had pro forma net tangible book value
(deficit) of approximately $(2,513,000), or $(0.28) per share of Common Stock.
Pro forma net tangible book value (deficit) represents the amount of total
tangible assets less total liabilities divided by the number of shares of
Common Stock outstanding. Without taking into account any other changes in the
net tangible book value after March 31, 1998, other than to give effect to the
receipt by the Company of the net proceeds from the sale of the 2,300,000
shares of Common Stock offered by the Company hereby at an assumed initial
public offering price of $11.00 per share (after deducting underwriting
discounts and estimated offering expenses), the pro forma net tangible book
value of the Company as of March 31, 1998 would have been approximately
$20,266,000, or $1.79 per share. This represents an immediate increase in net
tangible book value of $2.07 per share to existing stockholders and an
immediate dilution of $9.21 per share to new investors. The following table
illustrates this per share dilution:

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share.............. $11.00
Net tangible book value (deficit) per share before the Of-
fering.................................................... $(0.28)
Increase per share attributable to new investors........... 2.07
------
Pro forma net tangible book value per share after the Offer-
ing......................................................... 1.79
------
Dilution per share to new investors.......................... $ 9.21
======
</TABLE>

The following table summarizes, on a pro forma basis as of March 31, 1998,
the differences between existing stockholders and the new investors with
respect to the number of shares of Common Stock purchased from the Company,
the total consideration paid and the average price per share paid:

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
------------------ ------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
---------- ------- ----------- ------- -------------
<S> <C> <C> <C> <C> <C>
Existing stockholders.. 9,021,510 79.68% $ 1,915,648 7.04% $ 0.21
New investors.......... 2,300,000 20.32% $25,300,000 92.96% $11.00
---------- ------ ----------- ------
Total.............. 11,321,510 100.00% $27,215,648 100.00%
========== ====== =========== ======
</TABLE>

Other than as noted above, the foregoing computations assume no exercise of
stock options under the Company's 1998 Stock Option Plan and 1995 Stock Option
Plan after March 31, 1998. As of March 31, 1998, there were no options
outstanding under the 1998 Stock Option Plan and there were options
outstanding to purchase 1,533,330 shares of Common Stock under the 1995 Stock
Option Plan at a weighted average exercise price of $0.93 per share. To the
extent options granted under the Company's 1995 Stock Option Plan are
exercised, there will be further dilution to new investors. See "Management--
Stock Option Plans" and Note 7 of Notes to Financial Statements.

15
<PAGE>

SELECTED FINANCIAL INFORMATION

The following data has been derived from financial statements audited by
Price Waterhouse LLP, independent certified public accountants. Balance sheets
at December 31, 1996 and 1997 and the related statements of operations and of
cash flows for the three years ended December 31, 1997 and Notes thereto
appear elsewhere in this Prospectus. The financial data at March 31, 1998 and
for the three months ended March 31, 1997 and 1998 has been derived from
unaudited financial statements also appearing elsewhere herein and which, in
the opinion of management, include all adjustments, consisting only of normal
recurring adjustments, necessary for a fair presentation of the financial
position and results of operations for the unaudited interim periods. The
historical results are not necessarily indicative of results of any future
period.

<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------- ---------------
1994 1995 1996 1997 1997 1998
------ ------ ------ ------- ------ -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Transportation management
services .................. $ -- $ -- $1,530 $10,768 $ 988 $11,715
Related party............... -- -- 1,668 603 374 --
Other....................... -- 392 438 131 -- --
------ ------ ------ ------- ------ -------
Total revenues............ -- 392 3,636 11,502 1,362 11,715
------ ------ ------ ------- ------ -------
Operating expenses:
Purchased transportation.... -- -- 1,296 11,213 899 9,503
Direct labor................ -- -- 1,178 1,836 369 902
Selling, general and admin-
istrative.................. 126 311 1,043 2,665 318 1,089
Other....................... -- 190 205 -- -- --
------ ------ ------ ------- ------ -------
Total operating expenses.. 126 501 3,722 15,714 1,586 11,494
------ ------ ------ ------- ------ -------
Income (loss) from opera-
tions....................... (126) (109) (86) (4,212) (224) 221
Other income (expense) net... (8) (18) (33) (2) (2) 7
------ ------ ------ ------- ------ -------
Net income (loss)............ $ (134) $ (127) $ (119) $(4,214) $ (226) $ 228
====== ====== ====== ======= ====== =======
Basic net income (loss) per
share...................... $(0.03) $(0.03) $(0.02) $ (0.59) $(0.04) $ 0.03
Weighted average shares out-
standing................... 5,000 5,000 5,550 7,189 5,797 8,047
Diluted net income (loss)
per share.................. $(0.03) $(0.03) $(0.02) $ (0.59) $(0.04) $ 0.02
Weighted average shares and
potentially dilutive shares
outstanding................ 5,000 5,000 5,550 7,189 5,797 10,256
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31
-------------- --------
1996 1997 1998
----- ------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents........................... $ 71 $ 640 $ 3,681
Working capital..................................... (427) (3,519) (3,367)
Total assets........................................ 968 2,258 6,875
Long-term debt, less current maturities............. 32 239 242
Total stockholders' deficit......................... (298) (2,678) (2,450)
</TABLE>

16
<PAGE>

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

The following discussion and analysis should be read in conjunction with
"Selected Financial Information" and the Company's Financial Statements and
Notes thereto included elsewhere in this Prospectus. Except for the historical
information contained herein, the discussion in this Prospectus contains
certain forward-looking statements that involve risks and uncertainties such
as statements of the Company's plans, objectives, expectations and intentions.
The cautionary statements made in this Prospectus should be read as being
applicable to all related forward-looking statements where they appear in this
Prospectus. The Company's actual results could differ materially from those
discussed herein. Factors that could cause or contribute to such differences
include those discussed in "Risk Factors" as well as those discussed elsewhere
herein.

OVERVIEW

LogistiCare provides non-emergency transportation management services to
government health and human service agencies and MCOs. The Company seeks to
establish itself as the central contact for three constituencies: third-party
payors, transportation carriers and individuals eligible for transportation
benefits ("Recipients"). The Company does not own any transportation carriers
or operate any vehicles for the transportation of individuals. The Company
provides services in which the Company coordinates, and through contracts with
unaffiliated transportation carriers provides, non-emergency transportation
for Recipients who are eligible to receive such transportation pursuant to
agreements with, or plans of, government health and human service agencies and
MCOs ("Brokerage Logistics"). In addition, a small percentage of the Company's
current revenues are generated from services in which the Company manages the
internal logistics requirements of independent transportation carriers and
carrier networks ("Service Bureau Logistics").

The Company was incorporated in March 1994 in Delaware. In April 1994, the
Company acquired for $150,000 from Automated Dispatch Services, Inc.
("Services"), the owner of RealTime, royalty-free rights to use, and exclusive
rights to modify and sublicense, RealTime, a computer-aided dispatch and
transportation logistics software system, for general transportation dispatch
purposes. RealTime was first conceptualized by, and designed and developed
under the supervision of, John L. Shermyen, the President of Services at such
time and the current President and Chief Executive Officer of the Company.
During 1995, the Company realized its first revenues through the performance
of transportation management consulting services and the resale of two-way
land mobile radio equipment. In January 1996, the Company purchased all of the
outstanding shares of Automated Dispatch Systems, Inc. ("Systems") for a
combination of cash, stock and debt and subsequently merged Systems into
itself. Systems' previous operations have become the Company's Florida
Operations Center. In May 1996, the Company established its Connecticut
Operations Center through which it provides non-emergency transportation
management services to various MCOs. In October 1997, the Company established
its Georgia Operations Center through which it provides non-emergency
transportation management services under three contracts with the Georgia
Department of Medical Assistance ("GDMA") with respect to approximately
500,000 Medicaid beneficiaries in certain regions of Georgia. These contracts
were awarded in July 1997 pursuant to a competitive bidding process. In
November 1997, the Company was awarded the right, pursuant to a competitive
bidding process, to negotiate with the Connecticut Department of Social
Services ("CDSS") to provide non-emergency transportation management services
with respect to approximately 40,000 beneficiaries in certain regions of
Connecticut. The Company began providing such services under a written
memorandum of understanding with the CDSS in February 1998 through the
Connecticut Operations Center and executed a final contract with the CDSS for
such services in May 1998.

The Company's revenues are generated principally from transportation
management services. The majority of these revenues are generated from
Brokerage Logistics contracts which are structured as capitated arrangements
under which the Company receives a fixed fee per eligible Recipient and, to a
lesser extent, fee-for-service arrangements under which the Company is paid a
predetermined amount per trip which includes the total cost of transportation.
The Company also generates revenues from Service Bureau Logistics

17
<PAGE>

contracts under which the Company is compensated on a fee-for-transaction
basis in which the Company receives a payment for every transportation event
processed. The Company does not earn revenues or incur costs with respect to
purchased transportation in connection with the provision of Service Bureau
Logistics. However, the Company does earn revenues and incur costs with
respect to purchased transportation in connection with the provision of
Brokerage Logistics. Revenues from transportation management services
accounted for 100% of total revenues in the quarter ended March 31, 1998 and
approximately 93.6% of total revenues in the year ended December 31, 1997.
Revenues under capitated contracts are recognized over the capitation period,
generally one month. Revenues earned under fee-for-service and fee-for-
transaction arrangements are recognized when the service is provided.

The Company's operations for the three month period ended December 31, 1997
resulted in losses of $3,546,000 on total revenues of $6,789,000. This loss
was primarily the result of costs associated with the contracts between the
Company and the GDMA under which the Company began providing transportation
management services on October 1, 1997. Shortly after the Company began
performing under the GDMA contracts, management realized that the
transportation utilization requirements under these contracts were materially
greater than indicated by the utilization data that was provided to the
Company by the GDMA as part of the competitive bidding process. To address
this issue, the Company conducted a series of negotiations with the GDMA from
October 1997 through February 1998 that resulted in amendments to the original
contracts. The amendments provide for substantial price increases in the
capitated rates received by the Company for the period from February 1, 1998
to June 30, 1998, substantial price increases for each of the two one-year
contract renewal periods, and the modification of certain operating
requirements in favor of the Company. In May 1998, the GDMA exercised the
first option to renew with respect to each of the GDMA contracts.

The capitation rates during the two one-year contract renewal periods, while
substantially higher than the rates in effect from October 1997 through
January 1998, will be 23% to 26% lower than the rates in effect for the five-
month period beginning February 1, 1998. As a result, management anticipates
that revenues under the contracts between the Company and the GDMA will be
substantially greater during the three-month periods ended March 31 and June
30, 1998 than any other quarter of the current contract period or the two
subsequent one-year contract renewal periods. The pricing structure negotiated
as part of the amendments to the original contracts was developed with a
higher capitation rate in the initial months to allow, among other things,
Company management the opportunity to implement operational changes to more
aggressively control utilization and negotiate lower prices with
transportation carriers. If the capitation rates which go into effect under
the GDMA contracts as of July 1, 1998 were in effect as of January 1, 1998,
revenues for the three month period ended March 31, 1998 would have been
approximately $700,000 less than actual revenues for such period.

The Company's most significant expenses are purchased transportation and
direct labor. Purchased transportation expenses are paid under capitated and
fee-for-service contracts. The Company either purchases transportation on a
per trip basis, or subcontracts with transportation carriers to gain access to
a certain number of vehicles for a fixed fee. The price of purchased
transportation is negotiated between the Company and the transportation
carrier and is based upon (among other things) labor, gasoline and vehicle
costs. Contemporaneous with the renegotiation of the GDMA contracts, the
Company renegotiated the prices it would pay to most transportation carriers
at substantially lower rates than under the original arrangements.

Direct labor costs consist of wages paid by the Company to customer service
representatives and other individuals servicing contracts. The Company's
ability to control costs associated with purchased transportation and direct
labor will have the most direct impact on profitability under current and
future capitated and fee-for-service contracts. The Company is subject to
potential cost overruns and there can be no assurance that the Company will
maintain profitability under its current or future contracts.

18
<PAGE>

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, selected
statement of operations data as a percentage of revenues:
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED
DECEMBER 31, MARCH 31,
--------------------- ---------------
1995 1996 1997 1997 1998
----- ----- ----- ------ ------
<S> <C> <C> <C> <C> <C>
Revenues:
Transportation management services
.................................. -- 42.1% 93.6% 72.5% 100.0%
Related Party...................... -- 45.9% 5.3% 27.5% --
Other.............................. 100.0% 12.0% 1.1% -- --
----- ----- ----- ------ ------
Total revenues................. 100.0% 100.0% 100.0% 100.0% 100.0%
----- ----- ----- ------ ------
Operating expenses:
Purchased transportation........... -- 35.7% 97.4% 66.0% 81.1%
Direct labor....................... -- 32.4% 16.0% 27.1% 7.7%
Selling, general and
administrative.................... 79.4% 28.7% 23.2% 23.3% 9.3%
Other.............................. 48.5% 5.6% -- -- --
----- ----- ----- ------ ------
Total operating expenses......... 127.9% 102.4% 136.6% 116.4% 98.1%
----- ----- ----- ------ ------
Income (loss) from operations...... (27.9)% (2.4)% (36.6)% (16.4)% 1.9%
Other income (expense):
Interest income.................... -- -- 0.2% -- 0.2%
Interest expense................... (4.5)% (0.9)% (0.2)% (0.2)% (0.2)%
----- ----- ----- ------ ------
Net income (loss).................... (32.4)% (3.3)% (36.6)% (16.6)% 1.9%
===== ===== ===== ====== ======
</TABLE>

COMPARISON OF THREE MONTHS ENDED MARCH 31, 1998 AND 1997

Revenues. Total revenues increased 760.0% to $11,715,000 for the three month
period ended March 31, 1998 as compared to $1,362,000 for the same period for
1997. This increase was primarily a result of (i) revenues of $9,230,000 from
the contracts between the Company and the GDMA, and (ii) revenues of
$1,400,000 from the contract between the Company and the CDSS. Operations
under these contracts began producing revenues for the Company on October 1,
1997 and February 1, 1998, respectively. Total revenues from transportation
management services for the three months ended March 31, 1998 also reflect an
increase in the capitation rates under the GDMA contracts, effective February
1, 1998. After June 30, 1998, the capitation rates in effect under the GDMA
contracts will be 23% to 26% lower than rates in effect for the period prior
to July 1, 1998.

As of May 31, 1998, the Company had $1,588,000 of deferred revenue. Deferred
revenue relates to funds received from the GDMA in November 1997 and March
1998 in the amounts of $1,250,000 and $5,236,000, respectively. The Company
received the $1,250,000 payment pursuant to a written memorandum of
understanding entered into in November 1997 between the Company and the GDMA
in connection with the Company's claim that the data provided by the GDMA
under the original contracts between the parties understated the number of
passengers to be transported under the contracts. The $5,236,000 payment was
received from the GDMA for similar reasons. Based on the increased capitation
rates, effective February 1, 1998, included in the amended contract with the
GDMA, which superseded the prior memorandum of understanding, the Company
recognized as revenue $2,257,000 of amounts previously deferred in the first
quarter of 1998, and $950,000 and $1,691,000 in April and May 1998,
respectively. The Company expects to recognize the balance of deferred revenue
as revenue in June 1998.

Purchased Transportation. The cost of purchased transportation increased
957.7% to $9,503,000 for the three month period ended March 31, 1998 as
compared to $899,000 for the same period for 1997. This increase was primarily
a result of the purchase by the Company of additional transportation services
as required to meet the Company's obligations under the GDMA and CDSS
contracts. As a percentage of revenues, purchased transportation increased to
81.1% for the three month period ended March 31, 1998 from 66.0% for the same
period in 1997 due, in large part, to the Company's increase in Brokerage
Logistics contracts.

19
<PAGE>

Direct Labor. The cost of direct labor increased 144.1% to $902,000 for the
three months ended March 31, 1998 as compared to $369,000 for the same period
for 1997. This increase was primarily a result of the additional direct labor
required to meet the Company's obligations under the GDMA and CDSS contracts.
As a percentage of revenues, direct labor decreased to 7.7% for the three
month period ended March 31, 1998 from 27.1% for the same period in 1997. This
is due in large part to a change in the Company's product mix from primarily
Service Bureau Logistics, pursuant to which the Company does not earn revenues
or incur costs with respect to purchased transportation, to primarily
Brokerage Logistics, pursuant to which the Company earns revenues and incurs
costs with respect to purchased transportation.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased 242.1% to $1,089,000 for the three months
ended March 31, 1998 as compared to $318,000 for the same period for 1997.
This increase was primarily a result of the additional selling, general and
administrative expenses required to meet the Company's obligations under the
GDMA and CDSS contracts and increased marketing efforts. As a percentage of
revenues, selling, general and administrative expenses decreased to 9.3% for
the three month period ended March 31, 1998 from 23.3% for the same period in
1997. This is due in large part to a change in the Company's product mix from
primarily Service Bureau Logistics, pursuant to which the Company does not
earn revenues or incur costs with respect to purchased transportation, to
primarily Brokerage Logistics, pursuant to which the Company earns revenues
and incurs costs with respect to purchased transportation.

COMPARISON OF YEARS ENDED DECEMBER 31, 1997 AND 1996

Revenues. Total revenues increased 216.3% to $11,502,000 for the year ended
December 31, 1997 as compared to $3,636,000 for the same period for 1996. This
increase was primarily a result of revenues of $5,572,000 from the contracts
between the Company and the GDMA. Operations under the GDMA contracts began
producing revenues for the Company in October 1997. Total revenues from the
sale of communications equipment decreased 100% for the year ended December
31, 1997 as compared to $226,000 for the same period for 1996. This decrease
resulted from the Company's decision in June 1997 to no longer engage in the
sale of communications equipment.

Purchased Transportation. The cost of purchased transportation increased
765.0% to $11,213,000 for the year ended December 31, 1997 as compared to
$1,296,000 for the same period for 1996. This increase was primarily a result
of the purchase by the Company of additional transportation services as
required to meet the Company's obligations under the GDMA contract. As a
percentage of revenues, purchased transportation increased to 97.5% for the
year ended December 31, 1997 from 35.7% for the same period in 1996 due, in
large part, to a change in product mix. Further, the purchased transportation
required under the contracts between the Company and the GDMA was
significantly greater than indicated by the statistical data used to develop
the contract pricing. The Company conducted a series of negotiations with the
GDMA from October 1997 through February 1998 which resulted in an increase in
the pricing under the contracts beginning February 1, 1998 which more closely
reflects the demographic makeup of the Recipient population.

Direct Labor. The cost of direct labor increased 55.8% to $1,836,000 for the
year ended December 31, 1997 as compared to $1,178,000 for the same period for
1996. This increase was primarily a result of the additional direct labor
required to meet the Company's obligations under the GDMA contracts. As a
percentage of revenues, direct labor decreased to 16.0% for the year ended
December 31, 1997 from 32.4% for the same period in 1996. This is due in large
part to a change in the Company's product mix from primarily Service Bureau
Logistics, pursuant to which the Company does not earn revenues or incur costs
with respect to purchased transportation, to primarily Brokerage Logistics,
pursuant to which the Company earns revenues and incurs costs with respect to
purchased transportation.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased 155.6% to $2,665,000 for the year ended
December 31, 1997 as compared to $1,043,000 for the same period for 1996. This
increase was primarily a result of the additional selling, general and
administrative expenses, such as hiring additional employees, required to meet
the Company's obligations under the GDMA contracts

20
<PAGE>

and increased marketing efforts. As a percentage of revenues, selling, general
and administrative expenses decreased to 23.1% for 1997 from 28.7% for the
same period in 1996. This is due in large part to a change in the Company's
product mix from primarily Service Bureau Logistics, pursuant to which the
Company does not earn revenues or incur costs with respect to purchased
transportation, to primarily Brokerage Logistics, pursuant to which the
Company earns revenues and incurs costs with respect to purchased
transportation.

SELECTED QUARTERLY RESULTS OF OPERATIONS

Set forth below are selected quarterly statement of operations data for the
five fiscal quarters ended March 31, 1998. This information is derived from
unaudited quarterly financial data which include, in the opinion of
management, all adjustments, consisting only of normal recurring adjustments,
necessary for a fair statement of operating results for such periods. This
information should be read in conjunction with the Financial Statements and
related Notes thereto contained elsewhere in this Prospectus. Results of
operations for any quarter are not necessarily indicative of results for any
future period.

Selling, general and administrative expenses decreased 20.2% to $1,089,000
for the three month period ended March 31, 1998 from $1,364,000 for the three
month period ended December 31, 1997 primarily as a result of costs incurred
to start operations under the GDMA contracts in the fourth quarter of 1997.

<TABLE>
<CAPTION>
QUARTER ENDED
-----------------------------------------------------------
MAR. 31, JUNE 30, SEPT. 30, DEC. 31, MAR. 31,
1997 1997 1997 1997 1998
--------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Revenues:
Transportation
management services.. $ 987,519 $1,250,896 $1,740,561 $ 6,789,264 $11,714,962
Related Party......... 374,744 227,991 -- -- --
Other................. -- 131,000 -- -- --
--------- ---------- ---------- ----------- -----------
Total revenues....... 1,362,263 1,609,887 1,740,561 6,789,264 11,714,962
--------- ---------- ---------- ----------- -----------
Operating expenses:
Purchased
transportation....... 898,526 1,051,528 969,972 8,293,379 9,503,377
Direct labor.......... 369,471 374,879 413,322 677,833 901,837
Selling, general and
administrative....... 318,339 372,204 611,164 1,363,740 1,088,916
--------- ---------- ---------- ----------- -----------
Total operating
expenses............ 1,586,336 1,798,611 1,994,458 10,334,952 11,494,130
--------- ---------- ---------- ----------- -----------
Income (loss) from
operations.......... (224,073) (188,724) (253,897) (3,545,688) 220,832
Other income (expense):
Interest income....... -- 268 7,242 18,419 26,822
Interest expense...... (1,493) (5,540) (1,198) (19,306) (20,113)
--------- ---------- ---------- ----------- -----------
Net income (loss) ...... $(225,566) $ (193,996) $ (247,853) $(3,546,575) $ 227,541
========= ========== ========== =========== ===========
Revenues:
Transportation
management services.. 72.5% 77.7% 100.0% 100.0% 100.0%
Related Party......... 27.5% 14.2% -- -- --
Other................. -- 8.1% -- -- --
--------- ---------- ---------- ----------- -----------
Total revenues....... 100.0% 100.0% 100.0% 100.0% 100.0%
--------- ---------- ---------- ----------- -----------
Operating expenses:
Purchased
transportation....... 66.0% 65.3% 55.7% 122.1% 81.1%
Direct labor.......... 27.1% 23.3% 23.7% 10.0% 7.7%
Selling, general and
administrative....... 23.3% 23.1% 35.2% 20.1% 9.3%
--------- ---------- ---------- ----------- -----------
Total operating
expenses............ 116.4% 111.7% 114.6% 152.2% 98.1%
--------- ---------- ---------- ----------- -----------
Income (loss) from
operations (16.4)% (11.7)% (14.6)% (52.2)% 1.9%
Other income (expense):
Interest income....... -- % -- % 0.4% 0.3% 0.2%
Interest expense...... (0.2)% (0.4)% -- % (0.3)% (0.2)%
--------- ---------- ---------- ----------- -----------
Net income (loss) ...... (16.6)% (12.1)% (14.2)% (52.2)% 1.9%
========= ========== ========== =========== ===========
</TABLE>

21
<PAGE>

The Company's revenues and operating results are subject to significant
variation from quarter to quarter depending on a number of factors, including
the commencement and completion of contracts during any particular quarter,
schedules of the customers awarding the contracts, and period to period
changes in contract pricing. See "Risk Factors."

LIQUIDITY AND CAPITAL RESOURCES

At March 31, 1998, and the years ended December 31, 1997 and 1996 the
Company had $3,681,000, $640,000 and $71,000 respectively, in cash and cash
equivalents. The Company's principal sources of liquidity as of March 31,
1998, and the years ended December 31, 1997 and 1996 consisted of cash and
cash equivalents and net accounts receivable of $5,686,000, $1,155,000 and
$536,000, respectively.

The Company's working capital deficit as of March 31, 1998 and December 31,
1997 was $3,367,000 and $3,519,000, respectively, and the ratio of current
assets to current liabilities was 0.63:1 and 0.25:1 on such dates,
respectively. The working capital deficit at both dates related to the
Company's contracts to provide Brokerage Logistics services to the GDMA. As of
March 31, 1998 and December 31, 1997, the Company had $4,229,000 and
$1,250,000, respectively, of deferred revenue in respect of such contracts.
The Company recognized $2,257,000 as revenue in respect of such amounts in the
first quarter of 1998 and expects to recognize the balance thereof in the
second quarter of 1998. The working capital deficit as of December 31, 1997
was also due to expenses incurred in the quarter then ended as the Company
commenced the performance of services under the GDMA contracts.

Accounts receivable increased for the three months ended March 31, 1998
primarily as a result of amounts due to the Company under its contract with
the CDSS. Although the Company has been providing services to the CDSS under a
written memorandum of understanding since February 1998, payments to the
Company for such services were delayed by the CDSS until the final contract
was executed in May 1998. As of June 18, 1998, the total accounts receivable
due to the Company under its contract with the CDSS was approximately
$100,000.

Cash provided by operating activities for the three months ended March 31,
1998 was $3,148,000 which primarily reflects net income for the quarter and
deferred revenue of $3,209,000. Cash used in operating activities of $424,000
for the year end December 31, 1997 was affected by increased deferred revenue
of $1,119,000, a net loss, and non-cash items.

The Company has financed its growth, capital expenditures and working
capital needs since inception primarily through a series of private placements
of capital stock. The Company has also borrowed funds from stockholders on a
short-term basis from time to time, all of which borrowings have been repaid.
In May 1998, the Company entered into a $1 million revolving line of credit
with NationsBank, N.A., which bears interest at a floating rate of prime plus
1%, to provide funds for working capital and general corporate purposes. As of
June 15, 1998, the Company had not borrowed any funds under such line of
credit.

The Company's principal commitments as of March 31, 1998 were leases on its
facilities. The Company's principal capital needs are for working capital and
the expansion of its business. The Company believes that the net proceeds from
the sale of Common Stock offered hereby, together with funds generated by
operations, will provide adequate cash to fund its operations for at least the
next 18 months, which may include start-up costs associated with new contract
awards, obtaining additional office space, establishing new offices, expanding
marketing efforts, purchasing computer and telephone equipment, developing
software enhancements and providing collateral security for performance bonds
in connection with new contracts.

REIMBURSEMENT RATES

The health care industry is experiencing a trend toward cost containment as
third-party payors seek to obtain lower reimbursement and utilization rates
with health care providers. Further reductions in payments

22
<PAGE>

to health care providers or other changes in reimbursement for health care
services could adversely affect the Company's business and results of
operations.

YEAR 2000 COMPLIANCE

The Company believes that its computer systems are currently Year 2000
compliant. The Company does not anticipate any material disruption in its
operations as a result of any failure by the Company to be in compliance. The
Company does not have any information concerning the Year 2000 compliance
status of its clients or the transportation carriers with whom it contracts.

23
<PAGE>

BUSINESS

LogistiCare manages non-emergency transportation services for government
health and human service agencies and managed care organizations ("MCOs"). The
Company seeks to establish itself as the central contact for three
constituencies: third-party payors, transportation carriers and individuals
eligible for transportation benefits ("Recipients"). The Company believes that
its management expertise and RealTime software system enable it to provide
sophisticated and efficient transportation management services. The Company
currently conducts its business through centralized Operations Centers in
Georgia, Florida and Connecticut, and intends to expand into selected new
regional markets.

The Company's Brokerage Logistics services, contracted under both capitated
and, to a lesser extent, fee-for-service arrangements, provide third-party
payors with an outsourcing alternative for their transportation requirements.
These services include: processing requests for transportation from
Recipients, determining their eligibility for such services, coordinating and
purchasing transportation, reporting encounter data and performing other
logistical and quality-assurance activities associated with non-emergency
transportation. The Company does not own or operate any vehicles for the
transportation of individuals. Instead, the Company establishes cost-effective
networks of carriers by selecting and negotiating with qualified
transportation carriers within each region under contract. Such independent
transportation carriers are assisted and evaluated by the Company on an
ongoing basis to ensure conformity with the Company's quality standards.

The Company was incorporated in Delaware in March 1994 as RadioSoft, Inc. In
January 1996, the Company acquired all of the outstanding shares of Automated
Dispatch Systems, Inc., a Florida corporation ("Systems"). Systems had
previously acquired certain assets of Automated Dispatch Services, Inc., a
Delaware corporation. In September 1996, the Company changed its name to
Automated Dispatch Solutions, Inc. and subsequently merged Systems into itself
in January 1997. In October 1997, the Company changed its name to LogistiCare,
Inc.

INDUSTRY OVERVIEW

The provision of non-emergency transportation to the poor, elderly,
handicapped and other Recipients among residences, nursing homes, hospitals,
workplaces, retail outlets and other sites is subsidized by third-party payors
in certain circumstances. Third-party payors include both government entities,
such as state agencies that administer Medicaid programs, programs that
provide transportation mandated by the Americans with Disabilities Act,
programs that implement welfare-to-work initiatives and private payors, such
as MCOs, that provide non-emergency transportation benefits to commercial and
Medicare beneficiaries.

Currently, in geographic markets in which the Company does not operate, non-
emergency transportation is provided in large measure through a fragmented
delivery system consisting primarily of small transportation companies that
frequently provide only one class of service (e.g., ambulatory, wheelchair or
ambulance) to local markets. In a typical transaction, an individual schedules
a trip with a transportation carrier who subsequently submits a receipt for
the cost of the trip to a third-party payor for reimbursement. The Company
believes that this system is highly inefficient and provides no incentive to
manage utilization or contain costs, while at the same time it provides an
opportunity for abuses by passengers and transportation carriers that the
Company believes are difficult for third-party payors to effectively identify
and prevent.

The Company believes that the growing demand for non-emergency
transportation, combined with third-party payors' increasing dissatisfaction
with the current system, has created the need for a more sophisticated
alternative to manage utilization and contain costs while providing
transportation services at or above existing levels of quality. The Company
believes that government agencies, MCOs and other third-party payors will
increasingly turn to third parties, such as the Company, that are independent
of transportation carriers to coordinate and manage all classes of non-
emergency transportation services.

STRATEGY

The Company's goal is to become the nation's leading provider of non-
emergency transportation management services to government agencies, MCOs and
other third-party payors by establishing itself as the

24
<PAGE>

central contact for three constituencies: third-party payors, transportation
carriers and Recipients. Key components of the Company's strategy for
achieving these objectives include:

Build Recurring Revenue. The Company seeks to generate recurring revenue by
entering into long-term arrangements with third-party payors, including
government agencies and MCOs, to provide transportation management services.
The Company believes that the quality of its services and advanced software
system will enable it to attract such payors, and that there are opportunities
to acquire from transportation carriers existing management service contracts
with other payors. Once the Company has entered into such arrangements or
acquired such contracts, these factors, combined with the inherent costs of
switching to another organization, will enable it to retain these clients.

Expand Within New and Existing Regional Markets. Through the establishment
of additional Operations Centers, the Company can efficiently expand its
capabilities within existing markets as well as enter new regional markets.
The Company has developed an implementation program that allows it to quickly
and inexpensively establish Operations Centers. As a result, the Company is
able to negotiate and execute a contract in a new market before it begins
incurring the costs of operating a center in that market. The Company has
demonstrated the ability to open new Operations Centers in less than 45 days
for a cost of under $400,000 per center.

Pursue Long-Term Capitated Contracts. The Company believes that government
agencies, MCOs and other third-party payors are increasingly looking to
outsource transportation management services on a capitated basis to third
parties, such as the Company, who are independent of transportation carriers.
The Company believes that its advanced software system, management expertise
and access to a substantial Recipient database enable it to accurately assess
and profitably manage these contracts.

Create Networks of Transportation Carriers. The Company coordinates and
manages transportation services through a network of unaffiliated
transportation carriers. The Company's contracts with government agencies and
MCOs enable it to gain financial control over purchasing transportation
services from local transportation carriers. As a result, the Company can
negotiate favorable long-term arrangements with the carriers it selects and
establish cost-effective networks of carriers in each region. This also
enables the Company to more effectively manage the quality and cost of
services provided to Recipients.

Realize Operational Efficiencies. As part of opening each new Operations
Center, the Company undergoes an extensive training program with its customer
service representatives and transportation carriers, which allows the Company
to recognize operational efficiencies over time. For example, a new customer
service representative can typically process 70 requests for transportation
per day. After 90 days of employment, the same customer service representative
is typically able to process 130 requests for transportation per day.
Similarly, the Company is able to use the initial results from an Operations
Center to refine its Recipient utilization database and provide more cost-
effective services. The Company believes that these efforts allow it to
provide high-quality services, to better leverage its personnel,
transportation carrier network and database resources and to improve
profitability.

TRANSPORTATION MANAGEMENT SERVICES

The Company believes that it has been a pioneer in offering government
agencies and MCOs an outsourcing alternative for managing transportation
services on a capitated basis. The Company believes that its current clients
benefit from, and its prospective clients will be attracted by, the following
strengths and differentiating characteristics:

. Capitation Contracts. The Company believes that by offering services on
a capitated basis, it allows clients to contain costs and minimize risks
associated with fluctuation in volume of transportation requests.

. Centralized Function. The Company serves as a central contact for third-
party payors, transportation carriers and Recipients. The Company
contracts with both third-party payors that have transportation-related
needs and with a selected network of transportation carriers that will

25
<PAGE>

service such needs. The geographic area covered by the third-party payor
contract is generally larger than most transportation carriers could
service individually. The Company coordinates the provision of such
services to the Recipients in a cost-effective and efficient manner.

. Quality Assurance Services. The Company provides services such as driver
and attendant training, vehicle mechanical and safety maintenance
monitoring, utilization reporting for program assessment, and federal
and state reporting compliance assessment to ensure that the highest
quality of service is furnished by transportation carriers and that
third-party payors receive the maximum benefit.

. Enhanced Perception of Health Care Services. The Company believes that a
Recipient's perception of the health care services that he or she
receives is enhanced by the Company's provision of reliable, courteous
and appropriate transportation to and from medical appointments, which
reduces defections by Recipients to other MCO plans and contributes to
an MCO's ability to attract enrollees.

. Technical Resources and Expertise. The Company believes it has the
technical resources and expertise necessary to manage large and complex
transportation programs efficiently while controlling costs. In
addition, the Company believes that its software system, RealTime,
allows it to more efficiently process and effectively analyze data and,
therefore, to provide more sophisticated transportation management
services than independent transportation carriers.

The Company provides two principal types of transportation management
services: (i) Brokerage Logistics and (ii) Service Bureau Logistics.

Brokerage Logistics

The Company principally offers non-emergency transportation management
services to government agencies, MCOs and other third-party payors in which the
Company coordinates and purchases transportation for Recipients. The Company's
broad range of services includes: processing requests for transportation from
Recipients, determining their eligibility for such services, coordinating and
purchasing transportation, reporting encounter data and performing other
logistical and quality assurance services associated with non-emergency
transportation. Transportation is furnished to Recipients pursuant to contracts
between the Company and independent transportation carriers that are selected,
assisted and evaluated on an ongoing basis. The Company does not own any
transportation carriers or operate any vehicles itself. The Company is
compensated for these services primarily on a capitated basis and, to a lesser
extent, on a fee-for-service basis.

The Company uses RealTime to monitor and analyze Recipient usage within the
service limitation parameters, which allows the Company to quickly identify and
prevent unauthorized travel. The Company's projection of the costs to be
incurred in servicing a contract is based upon, among other considerations,
relevant demographic information relating to the covered population, including
number of potential Recipients, age, residence distance from medical facilities
and information derived from their collective medical histories, as well as the
contractual conditions that restrict actual travel. Through use of its
proprietary database and independent research of publicly-available resources,
the Company believes that it can properly analyze the cost implications of the
various demographic considerations and contractual conditions applicable to
capitated contracts. Certain demographic information relating to the covered
population and used by the Company in its analysis of projected costs generally
is made available to the Company by the government agency or MCO that is
soliciting proposals.

Currently, the Company has eight contracts to provide Brokerage Logistics for
government agencies and MCOs covering approximately 700,000 persons who are
eligible under certain circumstances for some type of transportation benefits.

Three of the Company's largest contracts by revenue are with the Georgia
Department of Medical Assistance ("GDMA"). Under these contracts, the Company
coordinates and administers non-emergency transportation services with respect
to approximately 500,000 individuals in the Central, Southwest and East

26
<PAGE>

regions of Georgia who are eligible for such services under the Georgia
Medical Assistance Program (Medicaid). To ensure that transportation resources
are used in conformance with Medicaid guidelines, each contract contains
specific service parameters and Recipient eligibility criteria. The Company is
compensated for these services on a monthly basis based on negotiated
capitated rates. Each of these contracts was originally scheduled to expire on
June 30, 1998, subject to two successive one year options to renew,
exercisable solely by the GDMA in its discretion. In May 1998, the GDMA
exercised the first option to renew with respect to each of the GDMA
contracts. Following June 30, 1998, capitation rates under the GDMA contracts
will be 23% to 26% lower than the rates in effect from February 1, 1998
through June 30, 1998. See "Management's Discussion and Analysis of Financial
Condition and Results of Operation--Overview." The GDMA may terminate these
contracts in certain circumstances, including if it determines that such
termination is in the State of Georgia's best interest or that sufficient
funds no longer exist to pay its obligations under such contracts.

In February 1998, the Company began providing services to the Connecticut
Department of Social Services ("CDSS"), under a written memorandum of
understanding with the CDSS and executed a final contract for such services in
May 1998. Under this contract, the Company coordinates and administers non-
emergency transportation services with respect to approximately 40,000
individuals in the South West and South Central regions of Connecticut who are
eligible for such services under the Connecticut Medicaid and General
Assistance Programs and who are not enrolled in a Medicaid Managed Care plan.
To ensure that transportation resources are used in conformance with Medicaid
guidelines, this contract contains specific service parameters and Recipient
eligibility criteria. The Company is compensated for these services on a
monthly basis based on capitated rates resulting from the RFP bidding process
and the CDSS' estimate of monthly enrollment and transportation costs that
would otherwise be incurred on a fee-for-service basis. The CDSS contract
expires on January 31, 1999 and is subject to two successive one year options
to renew, exercisable solely in the discretion of the CDSS. The CDSS contract
is terminable by the CDSS upon 90-days notice to the Company for any reason,
and upon lesser notice to the Company in certain circumstances, and the CDSS
may terminate the contract or reduce the contracted amount of compensation at
any time in the event that sufficient funds no longer exist to pay its
obligations.

Service Bureau Logistics

The Company also offers transportation management services directly to
independent transportation carriers and carrier networks where the Company
manages the internal logistics requirements of the carrier or carrier network.
The Company is compensated for these services on a fee-for- transaction basis
(i.e., based on a fixed fee for each trip administered by the Company).

Currently, the Company provides Service Bureau Logistics only through its
Florida Operations Center. The Company has three contracts under which it
manages and administers the order entry, radio dispatching, routing,
accounting, billing and other internal logistics and quality-assurance
activities for local transportation carriers that furnish non-emergency
transportation to Medicaid beneficiaries and MCO members. During 1997, the
Company managed approximately 1,300,000 trips for these clients, which
generated approximately $18,000,000 in revenues for such clients.

INFORMATION TECHNOLOGY

The Company uses a proprietary software system, RealTime, in each of its
Operations Centers to assist in the management of transportation services.
RealTime contains the program modules necessary for the Company to integrate,
and provide the services associated with, each element of its transportation
management services. These modules are as follows: order entry, dispatch,
routing, operations control and analysis, graphical mapping, mobile data
control and external interface facility.

Currently, RealTime processes approximately 18,000 calls from Recipients per
day through the Company's three Operations Centers. RealTime performs all of
the operation functions associated with the delivery of non-emergency
transportation services on a demand basis and, in the past, has been used by
the

27
<PAGE>

Florida Operations Center to manage ambulance services. However, the Company
intends to limit its application primarily to services relating to the
transportation of individuals in connection with their receipt of non-
emergency medical care. The Company believes that RealTime's sophistication
and focus on services relating to the transportation of Recipients gives the
Company a competitive advantage in this market.

The Company intends to expand RealTime's capability to (i) establish
telephonic interface, thereby improving customer service representative
efficiency, (ii) enhance internet integration, better enabling transportation
providers and Recipients to access scheduling and other information, and
better enabling client payors to access the Company's utilization and customer
service data regarding relevant Recipients, and (iii) enlarge its database
capacity to provide greater data management and analysis capabilities.

RealTime was developed by Automated Dispatch Services, Inc. ("Services")
under the supervision of John Shermyen, the President of Services at such time
and the current President and Chief Executive Officer of the Company. In 1994,
the Company entered into a license agreement with Services pursuant to which
it acquired for a lump sum payment of $150,000 royalty-free rights to use, and
exclusive rights to modify and sublicense the use of, RealTime for general
transportation dispatch purposes and for private ambulance dispatch purposes
after April 1, 1997. However, such license excludes the right to use, or
sublicense the use of, RealTime for general transportation dispatch purposes
in the counties of Monroe, Dade, Broward and Palm Beach, Florida. Such license
also excludes the right to use, or sublicense the use of, RealTime for private
ambulance dispatch purposes other than single-site usages subject to certain
limitations. In January 1996, in connection with its acquisition of Automated
Dispatch Systems, Inc., the Company acquired, for a lump sum payment of
$80,000, exclusive and royalty-free rights to use RealTime for general
transportation dispatch purposes in the counties of Monroe, Dade, Broward and
Palm Beach, Florida. Each of these licenses will terminate automatically upon
the expiration of the RealTime patent, which is scheduled to expire in 2012.
Services has no right to further license RealTime other than for private
ambulance dispatch purposes.

In March 1995, the Company entered into an agreement with E.F. Johnson
Company, a former affiliate of TGIS Partners and a manufacturer of mobile
radio equipment ("E.F. Johnson"), pursuant to which (i) the Company agreed to
assist E.F. Johnson in obtaining leads for the sale by E.F. Johnson of mobile
radio equipment and provided E.F. Johnson with 15 end-user licenses of
RealTime, with the right to resell such licenses to third parties, and (ii)
E.F. Johnson paid the Company a prepayment fee of $150,000 (the "Prepayment
Fee") for potential fees which could be earned by the Company upon the
consummation of such sales of mobile radio equipment. In June 1997, the
Company and E.F. Johnson terminated the agreement in accordance with its
terms. In connection with such termination, the Company provided E.F. Johnson
with an additional 13 end-user licenses of RealTime in lieu of returning the
unearned portion of the Prepayment Fee, bringing the total number of end-user
licenses of RealTime provided to E.F. Johnson to 28. In February 1996, the
Company entered into a license agreement with a transportation carrier,
Curtain Motor Livery Service, Inc., pursuant to which the Company granted to
the carrier for $39,000 a perpetual, non-exclusive and royalty-free license to
use RealTime at a single site in Connecticut for its internal business
purposes, without rights of modification or sublicense. Under the agreement,
the Company agreed to provide the carrier with technical support services for
an annual fee of $6,413, training services for a fee of $5,000 and
installation services. See "Certain Transactions" and Note 3 of Notes to
Financial Statements.

PRINCIPAL MARKETS SERVED

Medicaid

Medicaid, which is jointly funded by federal and state governments and
administered by state governments, represents the largest program providing
health care related services to poor residents of the United States. Most
state Medicaid programs provide beneficiaries with transportation to and from
medically necessary appointments. The Health Care Financing Administration
("HCFA") reported that the Medicaid beneficiary population in 1995 was 36.3
million. The Community Transportation Association of America estimated that
Medicaid outlays by the Federal and state governments in 1995 totaled $176
billion, of which approximately 1%, or $1.2 billion, was expended for non-
emergency transportation.

28
<PAGE>

MCOs

MCOs are managed health care companies that typically provide a
comprehensive range of health care services to individuals, employers and
association groups. Many MCO plans include some level of non-emergency
transportation services to medical facilities as a benefit for its enrolled
members. The Company believes that MCOs increasingly view transportation as an
attractive enrollment incentive for Medicare beneficiaries who are not
otherwise entitled to receive such services under Medicare. To control the
increasing costs of Medicare, the Federal government has encouraged, but not
required, Medicare beneficiaries to enroll in MCO plans. The MCOs compete for
Medicare enrollees on the basis of many factors, including their reputation
for quality services, reduced co-payments and availability of greater
benefits, such as transportation to and from medical facilities. The Company
believes that, by offering transportation management services on a capitated
basis, it is well-positioned to support the marketing efforts of MCOs and
provide a cost-effective outsourcing alternative for the management of
transportation services.

Carrier and Carrier Networks

The Company believes that its management expertise, advanced software system
and its ability to leverage these resources presents a cost-effective
alternative to transportation carriers and carrier networks to outsource
transportation management services. Once the Company has established an
Operations Center in a regional market, local carriers and carrier networks
may elect to utilize the Company's Service Bureau Logistics to manage their
internal logistics requirements. This represents an attractive opportunity for
the Company to expand its Service Bureau Logistics business into these
established markets and generate additional revenues without incurring
significant additional overhead.

Carrier and carrier networks who are potential clients of the Company's
Service Bureau Logistics business include taxi, limousine, ambulance,
ambulette and coach operators. The International Taxi Livery Association
estimated that the U.S. market for taxi and limousine services is
approximately $10 billion annually. The American Ambulance Association
estimates that the U.S. market for ambulance and ambulette services is
approximately $7 billion annually. The Company believes that transportation
logistics accounts for approximately 10% (or $1.7 billion) of the combined
U.S. markets for taxi, limousine, ambulance and ambulette services, annually.

SALES AND MARKETING

Government Agencies

The Company pursues contracts from state and local authorities by responding
to RFPs issued by such authorities. Whenever possible, prior to the issuance
of an RFP, the Company's senior executives meet with senior government
representatives, such as heads of health and human service agencies, to
encourage them to outsource their transportation-related service requirements.
When an RFP is issued by a government agency, the agency ordinarily seeks
comments on the RFP from potential service providers. The Company usually
participates in the comment process, taking the opportunity to demonstrate its
knowledge and understanding of the market to help shape the RFP. Following the
comment period, the RFP is reissued in modified form. In all cases in which
the Company has responded to an RFP, the contracting government agencies have
advised the Company that they gave greater weight to factors, such as the
experience and technical qualifications of the proposed service providers,
than to comparative costs.

MCOs

The Company pursues contracts with MCOs through direct contact by senior
executives of the Company with the marketing and member services personnel of
such organizations. Prospective client MCOs are identified by the Company on
the basis of total number and concentration of enrolled members in a
geographic area. The Company obtains from prospective client MCOs data that
helps it to make a detailed proposal directed to the cost-savings and
marketing opportunities represented by the Company's Brokerage Logistics
Services and capitated contract approach.

29
<PAGE>

OPERATIONS CENTERS

The Company's centralized Operations Centers are designed to maximize
efficiency, reliability and effectiveness. In each Operations Center, incoming
calls from Recipients requesting transportation services are routed through an
automatic call director that optimizes call queuing and records all
communications with digital taping equipment to create a verbal record for the
purposes of accountability and message verification. Customer service
representatives convert requests for transportation into orders that they
enter, through a computer keyboard at each work station, into the RealTime
system to maintain a computerized record of all transportation-related
activities managed by the Operations Center. Requests requiring immediate
attention are automatically routed to the dispatch area or to mobile data
terminals, as appropriate. Reservations for next-day or later transportation
are analyzed for optimal routing, stored, and electronically transferred to
transportation carriers daily to create vehicle manifests for the following
day.

The following table sets forth the location of the Company's primary
Operations Centers and the type of services provided by the Company, the basis
for compensation for such services, the approximate number of eligible
Recipients serviced and the approximate number of trips processed per month
through each Operations Center.

<TABLE>
<CAPTION>
APPROXIMATE APPROXIMATE
NUMBER OF NUMBER OF
TYPE OF SERVICE COMPENSATION ELIGIBLE TRIPS PROCESSED
OPERATIONS CENTER PROVIDED BASIS RECIPIENTS PER MONTH
----------------- ------------------------ ------------------- ----------- ---------------
<S> <C> <C> <C> <C>
College Park, Georgia Brokerage Logistics Capitation 500,000 165,000
Yalesville, Connecticut Brokerage Logistics Capitation, 200,000 50,000
Fee-for-Service
Miami, Florida Service Bureau Logistics Fee-per-Transaction N/A 110,000
</TABLE>

POTENTIAL NEW MARKETS

In addition to its current markets, the Company believes that there is
significant potential presented by the Americans with Disabilities Act (the
"ADA") and recent "welfare-to-work" initiatives.

Americans with Disabilities Act. The ADA requires municipalities to give
disabled persons equal access to public transportation or provide
complementary paratransit services. Under the ADA, those communities that
offer public transportation must furnish handicapped-accessible transportation
to all individuals who are eligible under ADA guidelines and who live within
3/4 mile of a public transit route. The Company believes that a number of
municipalities will comply with this law by contracting with the private
sector for carrier service and related transportation logistics. The
President's Committee on Employment of People with Disabilities estimates
that, in 1996, there were approximately 49 million people with disabilities in
the United States. The Company estimates that expenditures in that year for
ADA-related transportation totaled $1.1 billion and will increase
substantially as additional municipalities come into compliance. The Company
intends to capitalize on this market by contracting with municipalities to
provide Brokerage Logistics and Service Bureau Logistics for the
transportation of ADA eligible individuals.

Welfare-to-Work Initiatives. Legislation also has been adopted or is
proposed in a number of states to compel welfare recipients to work as a
condition of their receiving continuing benefits. Government furnished or
subsidized transportation to and from the workplace is an element of some of
this legislation. The Company intends to capitalize on this market by
contracting with states to provide services as contemplated by such
legislation on a fee-for-service basis.

GOVERNMENT REGULATION AND SUPERVISION

The delivery of health care services is regulated at both the federal and
state levels. As a participant in the health care industry and as a result of
its involvement with Medicare, Medicaid and other third party payors, the
Company's operations and relationships are subject to extensive and increasing
regulation by a number of governmental entities at the federal, state and
local levels. The laws applicable to the Company

30
<PAGE>

are subject to evolving interpretations, and therefore there can be no
assurance that a review of the Company's operations by federal or state
judicial or regulatory authorities would not result in a determination that
the Company has violated one or more provisions of federal or state law. Any
such determination could have a material adverse effect on the Company.

False and Improper Claims. Under numerous federal laws, including the
Federal False Claims Act (the "False Claims Act"), the federal government is
authorized to impose criminal, civil and administrative penalties on any
health care provider that files a false claim for reimbursement from a federal
health care program. A "federal health care program" is any plan or program
that provides health benefits, whether directly, through insurance, or
otherwise, which is funded directly, in whole or in part, by the United States
Government (e.g., Medicare, Medicaid, and CHAMPUS). Excluded from the
definition of federal health care program is the Federal Employee Health
Benefits Program. The False Claims Act provides for a civil penalty of not
less than $5,000 and not more than $10,000 per false claim and between two or
three times the amount of damages depending on the facts and circumstances.
Recently enacted federal legislation also imposes federal criminal penalties
on persons who file false or fraudulent claims with private insurers. While
the criminal statutes are generally reserved for instances of fraud, the civil
and administrative penalty statutes are being applied by the government in an
increasingly broad range of circumstances. Civil sanctions may be imposed if
the claimant knew or should have known that billing was improper. The
government also has taken the position that claiming reimbursement for
services that are substandard is a violation of these false claims statutes if
the claimant knew or should have known that the care was substandard or
rendered under improper circumstances. Private persons may also bring civil
actions to enforce the False Claims Act under a qui tam or "whistle-blower"
action. If successful, the qui tam plaintiff may receive a percentage of the
government's recovery thereby increasing the incentive for such suits. Under
certain lower court decisions, claims derived from a violation of the Anti-
Kickback Statute (as defined herein) have been deemed to be, or may under
certain circumstances be construed to be, false claims.

The risk of exposure to civil actions under the False Claims Act exists
whether the contractual arrangement is fee-for-service or capitated. In a fee-
for-service system, the government has and continues to prosecute health care
providers alleging that health care providers overutilized the services and
committed fraudulent activities which include, but are not limited to, billing
for services never rendered, fictitious enrollment and illegal solicitations
and remunerations. While utilizing a managed care capitated payment system may
reduce the risks of overutilization and certain fraudulent activities, the
government is similarly active in prosecuting providers who are providing
services through a capitated arrangement and alleging claims of
underutilization and other types of fraudulent activities, including
fraudulent subcontracts and kickbacks. Furthermore, under federal law, an
entity which is found to submit requests for payment for claims which involve
excessive charges or unnecessary services or which fails to furnish medically
necessary services may be excluded from participating in a federal health care
program.

Non-emergency transportation is one of many services identified by states
and the Office of Inspector General ("OIG") as being a source of fraud and
abuse activity in the Medicaid program. Several states have reported a variety
of fraudulent activities which include billing Medicaid for more miles than
actually provided, billing Medicaid for trips never provided, and billing for
Medicaid covered transportation when the beneficiaries had other means of
transportation. Because these states concluded that such activities result in
increasing non-emergency transportation costs, HCFA created a Medicaid
Transportation Technical Advisory Group to study how such services can be
provided more efficiently and the states themselves are intensifying their
scrutiny of non-emergency transportation claims. Such allegations of fraud and
abuse and the resulting increasing costs have led members of Congress to
consider eliminating non-emergency transportation as a covered Medicaid
service. The OIG has recommended that states use brokers, such as the Company,
where appropriate to help manage non-emergency transportation.

Federal Anti-Kickback Statute. A federal law commonly known as the "Anti-
Kickback Statute" prohibits the offer, solicitation, payment or receipt of
anything of value (direct or indirect, overt or covert, in cash or in

31
<PAGE>

kind) which is intended to induce business for which payment may be made under
a federal health care program. The type of remuneration covered by the Anti-
Kickback Statute is very broad. It includes not only kickbacks, bribes and
rebates, but also proscribes any such remuneration, whether made directly or
indirectly, overtly or covertly, in cash or in kind. Moreover, prohibited
conduct includes not only remuneration intended to induce referrals, but also
remuneration intended to induce the purchasing, leasing, arranging or ordering
of any goods, facilities, services, or items paid for by a federal health care
program. The Anti-Kickback Statute has been interpreted broadly by a number of
courts to prohibit remuneration that is offered or paid for otherwise
legitimate purposes if one purpose of the payment is to induce referrals.
Payments in return for participating in a network may, under certain
circumstances, be deemed to violate the Anti-Kickback Statute. Many states,
including those in which the Company does business, have adopted similar
prohibitions against payments intended to induce referrals of Medicaid and
other third-party payor patients.

In part to address concerns regarding the implementation of the Anti-
Kickback Statute, the federal government has published regulations that
provide exceptions or "safe harbors" for certain transactions that are deemed
not to violate the Anti-Kickback Statute. Among the safe harbors included in
the regulations are transactions involving discounts offered to health plans
by providers, such as ambulance companies. Congress recently added a
significant new statutory exception related to "remuneration between an
organization and an individual or entity" if the organization is a Medicare
risk contracting organization or if the remuneration is provided pursuant to a
written agreement that places the individual or entity at substantial
financial risk for the cost or utilization of services. Regulations
implementing the foregoing statute have not yet been adopted, but are expected
to be enacted soon. Based on the Company's relationship with providers, the
Company may not satisfy all the requirements necessary to qualify for
protection under the safe harbor regulations described above. The failure of
an activity to qualify under a safe harbor provision, while potentially
leading to greater regulatory scrutiny, does not render the activity
automatically illegal under the Anti-Kickback Statute. Conduct falling outside
the safe harbors will be judged by government regulators on a case-by-case
basis based on the specific facts and circumstances.

To the extent the Company is deemed to be a referral source, the financial
arrangements under such agreements could be subject to scrutiny and
prosecution under the Anti-Kickback Statute. Each offense under the Anti-
Kickback Statute is classified as a felony and is punishable by a criminal
fine of up to twenty-five thousand dollars ($25,000) and/or imprisonment of up
to five (5) years; a civil money penalty of fifty thousand dollars ($50,000)
for each violation and/or civil damages of not more than three times the total
amount of remuneration offered, paid, solicited or received may be imposed
without regard to whether any portion of such remuneration was for a lawful
purpose. Both the offeror and the recipient of the illegal remuneration are
potentially liable. In addition, violators are subject to exclusion from
participation in the federal health care programs, regardless of whether they
also have been convicted under the criminal penalty provisions or have been
found liable under the civil monetary penalty provisions of the Anti-Kickback
Statute. Also, there is a risk that, in a civil lawsuit to enforce a contract
that contains a structure in violation of the Anti-Kickback Statute, a court
might conclude that the contract is unenforceable as against public policy.

There are several aspects of the Company's arrangements to which the Anti-
Kickback Statute may be relevant. For example, the government may construe
some of the Company's managed care contracting activities as arranging for the
referral of patients to the entities with whom the Company is providing non-
emergency transportation management services.

As a component of the recently enacted HIPAA, Congress directed the
Secretary of the U.S. Department of Health and Human Services to issue
advisory opinions regarding compliance with the Anti-Kickback Statute. The
advisory opinion mechanism is authorized for a trial period, beginning six
months after the date of enactment, August 21, 1996. Advisory opinions are
available concerning what constitutes prohibited remuneration within the
meaning of the Anti-Kickback Statute, whether an arrangement satisfies the
statutory exceptions to the Anti-Kickback Statute, whether an arrangement
meets a safe harbor, what constitutes an illegal inducement to reduce or limit
services to individuals entitled to benefits covered by the Anti-Kickback

32
<PAGE>

Statute, and whether an activity constitutes grounds for the imposition of a
civil or criminal penalty under the applicable exclusion, civil money penalty
and criminal provisions. Advisory opinions, however, will not assess fair
market value for any goods, services or property or determine whether an
individual is a bona fide employee within the meaning of the Internal Revenue
Code. The statutory language makes clear that advisory opinions are available
for both proposed and existing arrangements. The failure of a party to seek an
advisory opinion, however, may not be introduced into evidence to prove that
the party intended to violate the Anti-Kickback Statute. The Company has not
sought, and has no present intention to seek, an advisory opinion regarding
any aspect of its current operations or arrangements and physicians.

State Fraud and Abuse Laws. Numerous states have adopted laws that are
substantially similar to the federal Anti-Kickback Statute, and a few have
enacted laws similar to the False Claims Act. Virtually all states prohibit
false claims and fraudulent billing practices connected with insurance
payments, and impose substantial penalties for such insurance fraud.

Insurance Laws. Laws in all states regulate the business of insurance and
the operation of MCOs. Many states also regulate the establishment and
operation of networks of health care providers as well as utilization review
and claims adjudication activities. While these laws do not generally apply to
companies that provide management services to government agencies, MCOs and
transportation carriers, they have been construed in some states to apply to
companies which provide management services to physician networks,
particularly if there is an assumption of risk for the provision of services,
and there can be no assurance that regulatory authorities of the states in
which the Company operates would not apply these laws to require licensure of
the Company's operations as an insurer, as an MCO, as a provider network or
other regulated entity. The Company believes that its current operations are
in compliance with these laws in the states which it currently does business,
but there can be no assurance that future interpretations of insurance and
health care network laws by regulatory authorities in these states or in the
states into which the Company may expand will not require licensure or a
restructuring of some or all of the Company's operations.

The National Association of Insurance Commissioners ("NAIC"), a non-binding
advisory group, in 1995 endorsed a policy proposing the state regulation of
risk assumption by providers and opined that certain risk-transferring
arrangements may entail the business of insurance, to which state licensure
laws apply, but that licensure laws should not apply where an unlicensed
entity contracts to assume "downstream risk" from a duly licensed health
insurer or MCO for health care provided to that carrier's enrollees. The
policy proposes prohibiting providers from entering into capitated payment or
other risk sharing contracts except through MCOs, insurance companies or other
regulated entities. Several states have adopted legislation or regulations
implementing the NAIC policy in some form. In some states where such
legislation or regulations have been adopted, health care providers are
precluded from entering into capitated contracts directly with employers,
individuals and benefit plans unless they qualify to do business as MCOs or
insurance companies. The Company may not be deemed a health care provider, in
which case it may still be subject to licensure as an insurance company but
may be able to accept downstream risk from other entities, such as state
government agencies.

FEDERAL AND STATE INITIATIVES

Fraud and Abuse. In the recently enacted 1997 Budget Bill and HIPAA,
Congress has responded to perceived fraud and abuse in the Medicare and
Medicaid programs. Such legislation has fortified the government's enforcement
authority with increased resources and greater civil and criminal penalties
for offenses. The Company anticipates that there will be further restrictive
legislative and regulatory measures to reduce fraud, waste and abuse in the
Medicare and Medicaid programs. Due to uncertainties regarding the ultimate
features of reform initiatives and their enactment and implementation, the
Company cannot predict which, if any, of such reform proposals will be
adopted, when they may be adopted or what impact they may have on the Company.

Numerous Reform Initiatives. The Company anticipates that Congress and state
legislatures will continue to review and assess alternative health care
delivery and payment systems. In addition to extensive

33
<PAGE>

government health care regulations, there are numerous initiatives on the
federal and state levels for comprehensive reforms affecting the payment for,
and availability of, health care services. These initiatives include
reductions in Medicare and Medicaid payments, trends in adopting managed care
for Medicare, Medicaid and workers' compensation patients, and regulation of
entities that provide managed care.

FACILITIES

The Company's headquarters are located in College Park, Georgia in a 2,075
square foot suite leased by the Company in an office building. The Company
conducts its operations from three leased Operations Centers in College Park,
Georgia, Yalesville, Connecticut and Miami, Florida, totaling 11,545 square
feet. The Company also utilizes two leased field offices in Savannah and
Albany, Georgia to support the Georgia Operations Center, totaling 3,700
square feet. The lease terms vary from 1 to 5 years, with options to renew,
and are at market rates. The Company intends to lease an additional space in
College Park, Georgia for its operations. The Company believes that its
facilities are well-maintained and in good operating condition and, together
with such additional space in College Park, Georgia, are adequate for their
present level of operations.

EMPLOYEES

As of March 31, 1998, the Company had 155 full-time employees. None of the
Company's employees are represented by a union. The Company considers its
employee relations to be good.

LEGAL PROCEEDINGS

The Company is a defendant in two pending legal proceedings which management
believes are incidental to the Company's business. The Company does not
believe that either of these actions will have a material adverse effect on
the Company's financial position or results of operations.

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<PAGE>

MANAGEMENT

DIRECTORS, EXECUTIVE OFFICERS AND OTHER KEY EMPLOYEES

Executive officers, directors and key employees of the Company and their
ages are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
William Weksel (1)...... 61 Chairman of the Board of Directors and Director
John L. Shermyen........ 44 President, Chief Executive Officer and Director
Michael E. Weksel....... 34 Vice President, Chief Financial Officer and Director
Albert Cortina.......... 34 Corporate Controller
William C. Walter, Jr... 37 Implementation Director
Andrew Winner........... 38 Senior Software Engineer
John Pappajohn (1)(2)... 69 Director
Derace L. Schaffer, M.D.
(1)(2)................. 50 Director
</TABLE>
- ----------------
(1) Member of the Compensation Committee
(2) Member of the Audit Committee

William Weksel is one of the founders of the Company and is the managing
partner of TGIS Partners, a New York general partnership and the controlling
stockholder of the Company. He has been the Chairman of the Board of Directors
of the Company since 1994. From 1992 to 1997, he was Chairman and Chief
Executive Officer of E.F. Johnson Company, a manufacturer of mobile radio
communications equipment. Mr. Weksel received a B.A. from Queens College and a
Ph.D. in communications from the University of Illinois, and was a National
Science Foundation Post Doctoral Fellow at the Massachusetts Institute of
Technology. William Weksel is the father of Michael Weksel.

John L. Shermyen is one of the founders of the Company's business and has
been the President and Chief Executive Officer of the Company since 1994. From
1987 to 1995, he was President and Chief Executive Officer of Automated
Dispatch Services, Inc. He conceptualized, and managed the design and
development of, RealTime prior to his employment with the Company. Mr.
Shermyen received a B.A. and a Master of Science degree in geography and
geographic information systems from the University of Florida.

Michael E. Weksel is one of the founders of the Company and has been its
Vice President and Chief Financial Officer since 1994. From 1993 to 1994, he
was Vice President of Viking Mobile Communications, Inc., a radio spectrum
development and trading company. From 1992 to 1993, he provided consulting
services to E.F. Johnson Company, directing the implementation of a closed
loop MRII enterprise computing system. From 1991 to 1992, he worked as a self-
employed financial and computer consultant. Mr. Weksel received a B.S. in
computer science from the State University of New York in Albany and an M.B.A.
from Columbia University Business School. Michael Weksel is the son of William
Weksel.

Albert Cortina has been the Corporate Controller of the Company since
November 1997. Prior to joining the Company, he worked for five years in
various executive positions at Premier Practice Management, a physician
practice management organization, and its successor, Caremark/MedPartners
Physicians Services, Inc. He received his B.S. from Florida State University
and is a certified public accountant.

William C. Walter, Jr. has been the Implementation Director of the Company
since September 1997. Prior to joining the Company, he served for five years
as Director of Communications at AMR West, a transportation services company,
where he developed and implemented a regional call center for emergency and
non-emergency transportation services and managed multiple operational units
in California.

Andrew Winner has been the Senior Software Engineer of the Company since
1996. From 1994 to 1996, he worked as a computer programmer at The Arbitrage
Group, L.P. Prior to 1994, he worked for five years as a software engineer at
Automated Dispatch Services, Inc., where he assisted in the design and
development

35
<PAGE>

of RealTime. He received a B.S.E. in computer and information sciences and an
M.E. in computer software engineering from the University of Florida.

John Pappajohn has been a Director of the Company since March 1997. Since
1969, Mr. Pappajohn has been the sole owner of Pappajohn Capital Resources, a
venture capital firm, and the President of Equity Dynamics, Inc., a financial
consulting firm, both based in Des Moines, Iowa. Mr. Pappajohn currently
serves as a director of the following public companies: American Physican
Partners, Inc., The Care Group, Inc., Core, Inc., HealthDesk Corporation, PACE
Health Systems, Inc. and Patient Infosystems, Inc.. Mr. Pappajohn received a
B.A. from the University of Iowa.

Derace L. Schaffer, M.D. has been a Director of the Company since March
1997. He is also President of The Lan Group, a venture capital firm
specializing in health care investments, and The Ide Imaging Group, P.C., a
large multispecialty medical practice. Dr. Schaffer presently serves on the
board of directors of American Physician Partners, Inc., The Care Group, Inc.
and Oncor, Inc., and he is the Chairman of Patient InfoSystems, Inc. He
received his postgraduate radiology training at the Harvard Medical School and
Massachusetts General Hospital, where he was Chief Resident. Dr. Schaffer is a
member of Alpha Omega Alpha, the national medical honor society, and is
Clinical Professor of Radiology at the University of Rochester School of
Medicine.

DIRECTORS COMPENSATION AND COMMITTEES

The Board of Directors has five directors, two of whom--John L. Shermyen and
Michael E. Weksel--are also officers of the Company and three of whom--William
Weksel, John Pappajohn and Derace L. Schaffer--are not officers of the
Company. Each director serves a one-year term that expires at each annual
meeting of stockholders.

The directors currently receive no annual compensation for their service on
the Board of Directors. Following completion of the Offering, the Company will
pay its directors $500 for each directors' meeting attended (plus
reimbursement for out-of-pocket expenses). Under the Company's 1998 Stock
Option Plan, future non-employee directors will automatically be granted
options to purchase 10,000 shares of Common Stock at the commencement of their
service on the Board of Directors and options to purchase 7,500 shares of
Common Stock on the first and second anniversaries of the commencement of
their service on the Board of Directors, subject to certain terms regarding
vesting, exercisability and other material terms. Future non-employee
directors are not eligible to receive any awards under the 1998 Stock Option
Plan other than the automatic grants of stock options. Current non-employee
directors are not eligible to receive any awards under the Company's 1998
Stock Option Plan. In 1997, the Company granted options under the 1995 Stock
Option Plan (i) to John L. Shermyen to purchase 200,000 shares of Common Stock
at an exercise price of $0.26 per share, (ii) to Michael E. Weksel to purchase
93,330 shares of Common Stock at an exercise price of $0.26 per share, (iii)
to John Pappajohn to purchase 80,000 shares of Common Stock at an exercise
price of $2.50 per share, (iv) to Derace L. Schaffer to purchase 80,000 shares
of Common Stock at an exercise price of $2.50 per share and (v) to William
Weksel to purchase 80,000 shares of Common Stock at an exercise price of $2.50
per share. See "--Stock Option Plans."

The Board of Directors currently includes a Compensation Committee and an
Audit Committee. The Compensation Committee is composed of three directors,
Messrs. William Weksel, Pappajohn and Schaffer, and it determines compensation
for executive officers of the Company and administers the Company's Stock
Option Plans. The Audit Committee is composed of two directors, Messrs.
Pappajohn and Schaffer, and it reviews the scope and results of audits and
internal accounting controls and all other tasks performed by independent
public accountants of the Company.

36
<PAGE>

EXECUTIVE COMPENSATION

The following table sets forth certain summary information concerning
compensation paid to the Company's President and Chief Executive Officer and
the Company's Vice-President and Chief Financial Officer during the fiscal
years ended December 31, 1995, 1996 and 1997. No other executive officer
received a salary exceeding $100,000 in any such fiscal year.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------------
1997 ANNUAL COMPENSATION(1) AWARDS PAYOUTS
------------------------------------ ---------- -------
NAME AND OTHER ANNUAL SECURITIES LTIP ALL OTHER
PRINCIPAL FISCAL COMPENSATION UNDERLYING PAYOUTS COMPENSATION
POSITION YEAR SALARY ($) BONUS ($)(3) ($) OPTIONS ($) ($)
--------- ------ ---------- ------------ ------------ ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
John L. Shermyen........ 1997 155,630 -- -- 200,000 -- --
President and Chief 1996 140,000 -- -- -- -- --
Executive Officer 1995 110,000 -- -- 1,000,000 -- --
Michael E. Weksel (2)... 1997 140,000 -- -- 93,330 -- --
Vice-President and 1996 110,000 -- -- -- -- --
Chief Financial Officer 1995 110,000 -- -- 200,000 -- --
</TABLE>
- ---------------------
(1) The compensation described in this table does not include medical, dental
or other benefits generally available to all salaried employees of the
Company, as well as certain perquisites and other personal benefits, the
value of which does not exceed the lesser of $50,000 or 10% of the named
executive officers total salary and bonus reported in this table.
(2) During fiscal 1995 and 1996 and the period from January 1, 1997 to June
15, 1997, the salary for Mr. Weksel was paid by an affiliate of the
Company's controlling stockholder.

(3) This does not include bonuses of $50,000 and $45,000 granted by the
Company to Messrs. Shermyen and Weksel, respectively, in March 1998, which
are payable by the Company in December 1998. These bonuses were granted by
the Company's Board of Directors in its discretion and were not formula-
based.

OPTION GRANTS IN 1997

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS GRANTED
UNDERLYING TO EMPLOYEES IN EXERCISE PRICE EXPIRATION
NAME OPTIONS GRANTED 1997 PER SHARE DATE
- ---- --------------- --------------- -------------- ----------
<S> <C> <C> <C> <C>
John L. Shermyen..... 200,000 27.6% $0.26 2007
Michael E. Weksel.... 93,330 12.9% $0.26 2007
</TABLE>

1997 YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY IN-THE-MONEY OPTIONS AT
SHARES OPTIONS AT FISCAL YEAR-END FISCAL YEAR-END(1)
ACQUIRED ON VALUE ---------------------------------- -------------------------
NAME EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- --------------- ---------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John L. Shermyen........ 400,000 $999,200 200,000 600,000 $499,600 $1,447,800
Michael E. Weksel....... 80,000 $199,840 40,000 173,330 $ 99,920 $ 409,179
</TABLE>
- --------
(1) Based upon a value of $2.50 per share, the fair market value determined by
the Company's Board of Directors with respect to the exercise price of
employee stock options granted in November 1997.

37
<PAGE>

STOCK OPTION PLANS

1998 Stock Option Plan. In June 1998, the Board of Directors and the
stockholders of the Company approved the establishment of the Company's 1998
Stock Option Plan. Under the 1998 Plan, the Company provides for the granting
of options to key employees, non-employee directors, consultants and
independent contractors who provide services to the Company to purchase not
more than an aggregate of 1,000,000 shares of Common Stock, subject to
adjustment under certain circumstances. The 1998 Stock Option Plan is divided
into two components: (i) a discretionary option grant program and (ii) an
automatic option grant program.

Under the discretionary option grant program, both "incentive stock options"
within the meaning of Section 422 of the Internal Revenue Code of 1986 and
non-qualified stock options to purchase shares of the Common Stock may be
granted to employees, consultants and independent contractors, although
"incentive stock options" may only be granted to employees. The Compensation
Committee will, with regard to each option, determine the number of shares
subject to the option, the term of the option (which shall not exceed ten
years), the exercise price per share of Common Stock subject to the option,
the vesting schedule and other material terms of the option. The vesting
period for an option will automatically accelerate upon the acquisition of the
Company as a result of a stockholder-approved merger or asset sale, subject to
certain conditions. In addition, the 1998 Stock Option Plan authorizes the
Compensation Committee to automatically accelerate the vesting of an option in
connection with a change in control of the Company or the optionholder's
grant. The 1998 Stock Option Plan authorizes the Compensation Committee to
grant to eligible officers limited stock appreciation rights which allow them
to surrender outstanding options, to the extent those options are exercisable
for vested shares of Common Stock, in the event of a hostile takeover. For
each option surrendered, such officer will receive a payment in cash in an
amount equal to the excess of the take-over price of the vested shares subject
to the surrendered option over the aggregate exercise price payable for such
vested shares.

Under the automatic grant program, future non-employee directors will
automatically be granted options to purchase 10,000 shares of Common Stock at
the commencement of the term of their service on the Board of Directors and
options to purchase 7,500 shares of Common Stock on the first and second
anniversaries of the commencement of their service on the Board of Directors.
The exercise price shall be the fair market value of the Common Stock on the
date that the option is granted and each option fully vests on the first
anniversary of the date of its grant. Future non-employee directors are not
eligible to receive any awards under the 1998 Stock Option Plan other than the
automatic grants of stock options. Current non-employee directors are not
eligible to receive any awards under the 1998 Stock Option Plan. The shares
subject to each option will vest immediately during the non-employee
director's service on the Board of Directors of the Company upon the
acquisition of the Company as a result of a stockholder-approved merger or
asset sale or a change in control. Each option has a maximum term of ten years
from the date of its grant. Upon cessation of a non-employee director's
service on the Board of Directors for any reason, the option granted to such
non-employee director will remain exercisable for a twelve-month period and,
during such period, such option may only be exercised for the number of shares
vested at the time of the non-employee's cessation of service. Under the 1998
Stock Option Plan, each non-employee director has limited stock appreciation
rights pursuant to which such non-employee director has a thirty-day period
upon the successful completion of a hostile tender offer for more than 50% of
the outstanding voting securities of the Company in which to surrender such
non-employee director's option. For each option surrendered, such non-employee
director will receive a payment in cash in an amount equal to the excess of
the tender offer price of the shares subject to the surrendered option over
the aggregate exercise price payable for such vested shares.

1995 Incentive Stock Option Plan. The Company's 1995 Incentive Stock Option
Plan, as amended (the "1995 Stock Option Plan" and, together with the 1998
Stock Option Plan, the "Stock Option Plans"), provides for the granting of
options to key employees and non-employee directors to purchase not more than
an aggregate of 2,166,670 shares of Common Stock, subject to adjustment under
certain circumstances. Some or all of the options granted to key employees
under the 1995 Stock Option Plan are "incentive stock options"

38
<PAGE>

within the meaning of Section 422 of the Internal Revenue Code of 1986, and
the options granted to non-employee directors are non-qualified stock options.
No option is exercisable until the first to occur of (i) any Sale Transaction
(as defined in the 1995 Stock Option Plan) and (ii) the first date on or after
which the Company becomes subject to the requirements of Section 13 or 15(d)
of the Securities Exchange Act of 1934, as amended. Notwithstanding the
foregoing, options vested prior to June 2, 1997 are exercisable at any time
after June 2, 1997 and prior to the tenth anniversary of the date of their
grant. Each option expires ten years after the date of its grant or, if
granted to a Substantial Stockholder (as defined in the 1995 Stock Option
Plan), 5 years after the date of its grant.

Grants of options under the Stock Option Plans and all questions of
interpretation with respect to the Stock Option Plans are determined by the
Board of Directors of the Company. The Board of Directors has appointed the
Compensation Committee to administer matters under the 1998 Stock Option Plan
and the 1995 Stock Option Plan relating to key employees. As of the date of
this Prospectus, no options to purchase shares of Common Stock have been
granted under the 1998 Stock Option Plan, and options to purchase 2,013,330
shares of Common Stock have been granted under the 1995 Stock Option Plan.
Although options under the 1995 Stock Option Plan to purchase 153,340 shares
of Common Stock are still available, no further grants will be made pursuant
to the 1995 Stock Option Plan.

EMPLOYMENT AGREEMENTS

The Company entered into employment agreements (each, an "Agreement"), each
dated June , 1998, with John L. Shermyen and Michael E. Weksel (the
"Executives"), pursuant to which Mr. Shermyen serves as President and Chief
Executive Officer and Mr. Weksel serves as Vice President and Chief Financial
Officer. Under the Agreements, Mr. Shermyen receives $200,000 and Mr. Weksel
receives $185,000 as their respective annual base salaries, subject to
periodic increases (if any) by amounts as determined by the Company's Board of
Directors in its sole discretion. The Executives are also entitled to
incentive compensation in the form of bonuses and stock option grants pursuant
to the terms of the Company's 1998 Stock Option Plan and any other plans
adopted by the Company, as determined by the Board of Directors in its sole
discretion. They are also entitled to participate in all benefit, pension,
retirement, savings, welfare and other employee benefit plans and policies in
which members of the Company's senior management are entitled to participate.

The initial term of each Agreement is three years, commencing on June ,
1998 and terminating on June , 2001. Such initial term is automatically
renewed for successive one-year terms unless notice of non-renewal is given by
the Company or the Executive at least three months prior to the end of the
then current term. Each Agreement provides for a severance payment in an
amount equal to the Executive's annual base salary at the time of termination,
payable in equal monthly installments for twelve months, in the event the
Executive is terminated by the Company without Cause (as defined in the
Agreement) or he resigns for Good Reason (as defined in the Agreement) or
following a Change of Control (as defined in the Agreement). In the event that
the Executive is terminated for Cause or he dies, becomes disabled or
voluntarily terminates his employment (without Good Reason), he is not
entitled to any severance payment. In addition, each Agreement prohibits the
Executive from competing with the Company or soliciting any employees of the
Company during his employment and for a period of one year thereafter or
disclosing any of the Company's confidential information acquired during his
employment at any time. Each Agreement also provides that all designs,
inventions and improvements that the Executive develops during his employment
and which relate to the Company's business belong solely to the Company. No
assurance can be given that the restrictive covenants contained in the
Agreements would be enforceable by the Company, in whole or in part, under
applicable state law.

39
<PAGE>

CERTAIN TRANSACTIONS

From March 1994 to August 1995, TGIS Partners, a New York partnership of
which William Weksel and Robert Davies were partners prior to its dissolution
in June 1998, loaned the Company an aggregate amount of $270,000, evidenced by
a promissory note bearing interest at a rate of 7% per annum and maturing on
January 31, 2002. In March 1997, TGIS Partners canceled the note and
contributed the remaining principal balance consisting of $270,000 and accrued
interest consisting of $46,000 to the Company.

In March 1995, the Company entered into an agreement with E.F. Johnson
Company, a company of which William Weksel was Chairman and Chief Executive
Officer and a manufacturer of mobile radio equipment ("E.F. Johnson"),
pursuant to which (i) the Company agreed to assist E.F. Johnson in obtaining
leads for the sale by E.F. Johnson of mobile radio equipment and provided E.F.
Johnson with 15 end-user licenses of RealTime, with the right to resell such
licenses to third parties, and (ii) E.F. Johnson paid the Company a prepayment
fee of $150,000 (the "Prepayment Fee") for potential fees which could be
earned by the Company upon the consummation of such sales of mobile radio
equipment. In June 1997, the Company and E.F. Johnson terminated the agreement
in accordance with its terms. In connection with such termination, the Company
provided E.F. Johnson with an additional 13 end-user licenses of RealTime in
lieu of returning the unearned portion of the Prepayment Fee, bringing the
total number of end-user licenses of RealTime provided to E.F. Johnson to 28.

To raise additional working capital, the Company entered into a Stock
Purchase Agreement (the "Stock Purchase Agreement") in March 1997 with John
Pappajohn and Derace L. Schaffer, M.D. (the "Purchasers") pursuant to which
the Company sold an aggregate of 1,948,300 shares of Common Stock to six
investors, including Messrs. Pappajohn and Schaffer. Such investors paid an
aggregate purchase price of $500,000 for the shares. Under the Stock Purchase
Agreement, the Purchasers also agreed to purchase an aggregate of 97,415
shares of Preferred Stock or designate substitute purchasers for some or all
of such shares of Preferred Stock. In June 1997, Mr. Pappajohn and certain
other investors designated by the Purchasers and the Company, including Mr.
Shermyen, purchased the 97,415 shares of Preferred Stock. Such investors paid
an aggregate purchase price of $1,000,000 for the shares of Preferred Stock.
Upon the effectiveness of the Registration Statement, such shares of Preferred
Stock shall convert into 974,150 shares of Common Stock.

In March 1997, the Company issued 16,250 shares of Common Stock to Mr.
Shermyen for a purchase price of $4,170.

The Company provides dispatch services to an entity (the "Client") which was
controlled by certain of the Company's minority stockholders until May 1997.
Dispatch services are provided pursuant to an agreement with the Client in
connection with a transportation contract between the Client and a
municipality in South Florida (the "Florida Contract"). Under the terms of the
agreement, the Company earned $2.65 per trip processed on behalf of the Client
under the Florida Contract. In a related agreement, the Company paid to the
principal stockholders of the Client a fee of $1.00 for each trip processed by
the Company under the Florida Contract. Effective May 31, 1997, the Company,
the Client and the principal stockholders of the Client agreed to amend the
terms of the previously described agreements. Under the revised terms
beginning in June 1997, the Company earns $1.65 per trip processed on behalf
of the Client and pays no fees to the Client or the principal stockholders of
the Client. Under the agreements, the Company recorded gross revenues from the
Client of approximately $1,925,000 and $553,000 in 1996 and 1997,
respectively, and paid fees to the principal stockholders of the Client of
approximately $726,000 and $211,000 in 1996 and 1997, respectively. Such fees
have been recorded as a reduction of revenues under the Florida Contract.

The Company provides dispatch services to another entity ("Health Trans")
which was controlled by certain of the minority stockholders until May 1997.
The agreement with Health Trans expires in December 2025. Under the terms of
the agreement, the Company earns $125 per week for each of Health Trans'
vehicles for which the Company provides dispatch services. During 1996 and
1997, the Company recorded revenues of approximately $200,000 and $271,000,
respectively in connection with this agreement.

The Company has adopted a policy providing that all future material
transactions between the Company and its officers, directors and other
affiliates must (i) be approved by a majority of the members of the Company's
Board of Directors and by a majority of the disinterested members of the
Company's Board of Directors and (ii) be on terms no less favorable to the
Company than could be obtained from unaffiliated third parties.

40
<PAGE>

PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth certain information regarding the beneficial
ownership of the Common Stock of the Company as of March 31, 1998 and as
adjusted to reflect the sale of the shares of Common Stock offered hereby with
respect to (i) each person known by the Company to own beneficially more than
5% of the outstanding shares of Common Stock, (ii) each of the Company's
directors, (iii) each Selling Stockholder, and (iv) all directors and
executive officers as a group.

<TABLE>
<CAPTION>
NUMBER BENEFICIAL OWNERSHIP
OF SHARES --------------------------------
BENEFICIALLY BEFORE AFTER
BENEFICIAL OWNER(1) OWNED OFFERING(2)(3) OFFERING(2)(4)(5)
- ------------------- ------------ -------------- -----------------
<S> <C> <C> <C>
William Weksel (6)............... 3,710,775 38.4% 31.0%
John Pappajohn (7)............... 1,030,360 11.3% 9.0%
Derace L. Schaffer, M.D. (8)..... 1,004,150 11.0% 8.8%
Robert H. Davies................. 752,556 7.8% 6.3%
John L. Shermyen (9)............. 723,370 7.8% 6.3%
Michael E. Weksel (10)........... 514,706 5.7% 4.5%
Directors and Executive Officers
as Group (five persons)......... 6,983,361 69.5% 56.6%
Edgewater Private Equity Fund II,
L.P. (11)....................... 705,910 7.8% 6.2%
Deanna Weksel and Warren
Firstenberg, as Trustees under
Trust made April 2, 1998........ 496,150 5.2% 4.2%
Edward Steinberg (12)............ 245,960 2.6% 2.1%
Martin Zilber.................... 232,880 2.6% 2.1%
Ann Pappajohn Inter Vivos Trust
1989............................ 100,000 1.1% *
Halkis, Ltd. (13)................ 100,000 1.1% *
Thebes, Ltd. (14)................ 100,000 1.1% *
Goldfield Partners............... 100,000 1.1% *
Steven B. Pilavin (15)........... 48,710 * *
Scott J. Weinstein (16).......... 48,710 * *
David Weksel (17)................ 32,000 * *
Robert S. Hirsch (18)............ 28,350 * *
James W. Manzari (19)............ 13,740 * *
W.E.B. Associates, LLC........... 11,000 * *
Henry Hardy...................... 10,000 * *
Kari Steinberg (20).............. 8,000 * *
Dana Steinberg (21).............. 8,000 * *
Bertrand H. Weidberg............. 7,000 * *
Leonard Levine................... 6,000 * *
Joseph Handy..................... 4,000 * *
Charles P. Krokel................ 4,000 * *
Deanna G. Weksel (22)............ 4,000 * *
Gregory A. Weksel (23)........... 4,000 * *
Francis M. Sassano............... 4,000 * *
William B. McLiverty............. 4,000 * *
Joseph Rubino.................... 2,000 * *
Eliot Abbot...................... 2,000 * *
</TABLE>
- ---------------------
* Less than 1%.
(1) Unless otherwise indicated, the address for each stockholder is c/o
LogistiCare, Inc., One Crown Center, 1895 Phoenix Boulevard, Suite 306,
College Park, Georgia 30349.
(2) The persons and entities named in the table have sole voting and
investment powers with respect to all of the Common Stock shown as
beneficially owned by them, except as noted below.

41
<PAGE>

(3) The 9,590,176 shares of Common Stock deemed outstanding prior to the
Offering include:
(a) 8,047,360 shares of Common Stock outstanding;

(b) 974,150 shares of Common Stock issuable upon completion of the
Offering pursuant to the conversion of 97,415 issued and outstanding
shares of Preferred Stock; and
(c) 568,666 shares of Common Stock issuable pursuant to the exercise of
options held by the respective person or group, which may be exercised
within 60 days after the date of this Prospectus.

(4) The 11,890,176 shares of Common Stock deemed outstanding after the
Offering include:
(a) an additional 2,300,000 shares of Common Stock which are being offered
for sale by the Company in the Offering and assumes no exercise of the
over-allotment option;

(b) 974,150 shares of Common Stock issued upon completion of the Offering
pursuant to the conversion of 97,415 issued and outstanding shares of
Preferred Stock; and

(c) 568,666 shares of Common Stock issuable pursuant to the exercise of
options held by the respective person or group, which may be exercised
within 60 days after the date of this Prospectus.

(5) This assumes that the Underwriters do not exercise the over-allotment
option. If the Underwriters do exercise the over-allotment option in
full, up to an additional 345,000 shares of Common Stock may be sold as
follows: TGIS Partners-- shares; Edgewater Private Equity Fund II,
L.P.-- shares; John L. Shermyen-- shares; Michael E. Weksel--
shares; John Pappajohn-- shares; Derace L. Schaffer, M.D.-- shares;
Robert S. Hirsch-- shares; James W. Manzari-- shares; Steven B.
Pilavin-- shares; Edward Steinberg-- shares; Scott J. Weinstein--
shares; Martin Zilber-- shares; Ann Pappajohn Inter Vivos Trust 1989 --
shares; Halkis, Ltd.-- shares; Thebes, Ltd.-- shares; Goldfield
Partners shares; Joseph Handy-- shares; Charles P. Krokel--
shares; David Weksel-- shares; Deanna G. Weksel-- shares; Gregory A.
Weksel-- shares; Bertrand H. Weidberg-- shares; Henry Hardy--
shares; W.E.B. Associates, LLC-- shares; Leonard Levine-- shares;
Francis M. Sassano-- shares; William B. McLiverty-- shares; Deanna
Weksel and Warren Firstenberg, as Trustees under Trust made April 2,
1998-- shares; Kari Steinberg-- shares; Dana Steinberg-- shares;
Joseph Rubino-- shares; and Eliot Abbot-- shares.

(6) William Weksel is the Chairman of the Board of Directors of the Company
and the father of Michael Weksel. This includes 496,150 shares held by
Deanna Weksel and Warren Firstenberg, as Trustees under Trust made April
2, 1998, of which Mr. Weksel is one of the beneficiaries. Also includes
80,000 shares issuable pursuant to stock options held by Mr. Weksel.

(7) Includes:
(a) 624,150 shares for which Mr. Pappajohn is the direct beneficial owner;
(b) 80,000 shares issuable pursuant to the exercise of stock options held
by Mr. Pappajohn;
(c) 126,210 shares issuable upon completion of the Offering pursuant to
the conversion of 12,621 shares of Preferred Stock owned by Mr.
Pappajohn; and
(d) 100,000 shares of Common Stock held by Halkis, Ltd., of which Mr.
Pappajohn is the sole stockholder, and Thebes, Ltd., of which Mr.
Pappajohn's wife is the sole stockholder. Mr. Pappajohn disclaims
beneficial ownership of these shares.

(8) Includes 80,000 shares issuable pursuant to the exercise of stock options
held by Dr. Schaffer.

(9) Includes:
(a) 240,000 shares issuable upon the exercise of stock options held by Mr.
Shermyen; and
(b) 8,120 shares issuable upon completion of the Offering pursuant to the
conversion of 812 shares of Preferred Stock owned by Mr. Shermyen.

(10) Includes 58,666 shares issuable pursuant to the exercise of stock options
held by Mr. Weksel. Mr. Weksel is the Vice President, Chief Financial
Officer and a director of the Company, and the son of William Weksel, the
Chairman of the Board of Directors of the Company.

(11) Includes 681,910 shares issuable upon completion of the Offering pursuant
to the conversion of 68,191 shares of Preferred Stock owned by Edgewater
Private Equity Fund II, L.P.

(12) Includes 26,400 shares issuable upon completion of the Offering pursuant
to the conversion of 2,640 shares of Preferred Stock owned by Mr.
Steinberg. Mr. Steinberg is the father of Dana and Kari Steinberg.

(13) Halkis, Ltd. is wholly-owned by Mr. Pappajohn, a director of the Company.

42
<PAGE>

(14) Thebes, Ltd. is wholly-owned by the wife of Mr. Pappajohn, a director of
the Company.

(15) These shares are issuable upon completion of the Offering pursuant to the
conversion of 4,871 shares of Preferred Stock owned by Mr. Pilavan.

(16) These shares are issuable upon completion of the Offering pursuant to the
conversion of 4,871 shares of Preferred Stock owned by Mr. Weinstein.

(17) David Weksel is the son of William Weksel, the Chairman of the Board of
Directors of the Company, and the brother of Michael Weksel, the Vice
President, Chief Financial Officer and a director of the Company.

(18) Includes 24,350 shares issuable upon completion of the Offering pursuant
to the conversion of 2,435 shares of Preferred Stock owned by Mr. Hirsch.

(19) Includes 9,740 shares issuable upon completion of the Offering pursuant
to the conversion of 974 shares of Preferred Stock owned by Mr. Manzari.

(20) Kari Steinberg is the daughter of Edward Steinberg and sister of Dana
Steinberg.

(21) Dana Steinberg is the daughter of Edward Steinberg and sister of Kari
Steinberg.

(22) Deanna G. Weksel is the wife of William Weksel, the Chairman of the Board
of Directors of the Company, and step-mother of Michael Weksel, the Vice
President, Chief Financial Officer and a director of the Company.

(23) Gregory A. Weksel is the son of William Weksel, the Chairman of the Board
of Directors of the Company, and the brother of Michael Weksel, the Vice
President, Chief Financial Officer and a director of the Company.

43
<PAGE>

DESCRIPTION OF CAPITAL STOCK

Upon consummation of the Offering, the Company's authorized capital stock
will consist of 30,000,000 shares of Common Stock, par value $.01 per share,
and 1,000,000 shares of Preferred Stock, par value $.01 per share, which are
subject to future issuance as determined by the Board of Directors of the
Company.

COMMON STOCK

The holders of Common Stock are entitled to one vote per share on all
matters to be voted upon by stockholders and are entitled to receive such
dividends, if any, as may be declared from time to time by the Board of
Directors from funds legally available therefor. Upon liquidation or
dissolution of the Company, the holders of Common Stock are entitled to
receive all assets available for distribution, subject to any preferential or
other rights of holders of Preferred Stock. The Common Stock has no preemptive
or other subscription rights, except as set forth below in "Certain Provisions
Affecting Stockholders," and there are no conversion rights or redemption or
sinking fund provisions with respect to such shares. The holders of Common
Stock do not have cumulative voting rights in the election of directors, which
means that the holders of more than 50% of the shares of Common Stock voting
for the election of directors can elect all of the directors of the Company if
they choose to do so. All shares of Common Stock are, and the shares of Common
Stock in the Offering will be, when issued, validly issued, fully paid and
non-assessable.

PREFERRED STOCK

The Company is authorized to issue up to 1,000,000 shares of Preferred
Stock. Upon the effectiveness of the Registration Statement, the 97,415 shares
of Preferred Stock outstanding will be converted into 974,150 shares of Common
Stock. The Board of Directors may, without future action of the stockholders
of the Company, issue the remaining 982,585 shares of the Preferred Stock in
one or more classes or series and fix the rights and preferences thereof,
including the dividend rights, dividend rates, conversion rights, voting
rights, terms of redemption (including sinking fund provisions), redemption
price or prices, liquidation preferences and the number of shares constituting
any class or series, and the designations of such class or series.

The voting and other rights of Common Stock will be subject to, and may be
adversely affected by, the rights of holders of Preferred Stock that may be
issued in the future. Issuances of Preferred Stock, while providing desirable
flexibility in connection with possible acquisitions and other corporate
purposes, could have the effect of making it more difficult for a third party
to acquire, or of discouraging a third party from acquiring, a majority of the
outstanding voting stock of the Company. The Company has no present plans to
reissue shares of Preferred Stock.

CERTAIN PROVISIONS OF DELAWARE LAW

Section 203 of the Delaware General Corporation Law ("DGCL") prohibits a
Delaware corporation from engaging in a wide range of specified transactions
with any interested stockholder, which is defined to include, among others,
any person or entity who in the last three years obtained 15% or more of any
class or series of stock entitled to vote in the election of directors,
unless, among other exceptions, the transaction is approved by (i) the Board
of Directors prior to the date the interested stockholder obtained such status
or (ii) the holders of two-thirds of the outstanding shares of each class or
series of stock entitled to vote generally in the election of directors, not
including those shares owned by the interested stockholder. Because the
Company did not elect out of the statute's provisions, this statute applies to
the Company.

CERTAIN ANTI-TAKEOVER PROVISIONS OF THE CERTIFICATE OF INCORPORATION AND
BYLAWS

Upon completion of the Offering, the Company's Amended and Restated Bylaws
will provide that special meetings of stockholders of the Company may be
called only by the Board of Directors or the Chairman of the Board of
Directors. This provision could have the effect of delaying, until the next
annual stockholders meeting, holder actions that are favored by the holders of
a majority of the outstanding voting securities of the Company.

44
<PAGE>

The foregoing provisions could have the effect of making it more difficult
for a third party to acquire, or of discouraging a third party from acquiring,
control of the Company.

LIMITATION OF LIABILITY

The Restated Certificate of Incorporation contains provisions that eliminate
the personal liability of its directors for monetary damages resulting from
breaches of their fiduciary duty other than liability for breaches of the duty
of loyalty, acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, violations under Section 174 of the
DGCL or any transaction from which the director derived an improper personal
benefit. The Company's Amended and Restated Bylaws contain provisions
requiring the indemnification of the Company's directors and officers to the
fullest extent permitted by Section 145 of the DGCL.

45
<PAGE>

SHARES ELIGIBLE FOR FUTURE SALE

After giving effect to the shares of Common Stock offered hereby, the
Company will have outstanding 11,321,510 shares of Common Stock. Of these
shares, all of the shares of Common Stock sold in the Offering will be freely
tradeable without restriction under the Securities Act, except for any shares
purchased by "affiliates," as that term is defined under the Securities Act,
of the Company. Upon the expiration of the lock-up agreements described below,
the remaining 9,021,550 shares of Common Stock will be eligible for sale,
subject to compliance with Rule 144 promulgated pursuant to the Securities Act
("Rule 144").

The Company and certain existing stockholders of the Company, including the
Company's directors and executive officers, have agreed that it/he/she will
not, subject to certain specified exceptions, without the prior written
consent of Hambrecht & Quist LLC, for a period of 180 days from the effective
date of the Registration Statement, directly or indirectly, (i) sell, offer,
contract to sell, make any short sale, pledge, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or
warrant to purchase or otherwise transfer or dispose of any shares of Common
Stock or any securities convertible into or exchangeable or exercisable for or
any rights to purchase or acquire Common Stock or (ii) enter into any swap or
other agreement that transfers, in whole or in part, any of the economic
consequences or ownership of Common Stock, whether any such transaction
described in clause (i) or (ii) above is to be settled by delivery of Common
Stock or such other securities, in cash or otherwise. Hambrecht & Quist LLC
may, in its sole discretion, release any of the shares subject to lock-up
agreements at any time, without prior notice.

In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated), including any person who may be deemed to be an
"affiliate" of the Company, is entitled to sell within any three-month period
"restricted" shares beneficially owned by him or her in an amount that does
not exceed the greater of (i) 1% of the then outstanding shares of Common
Stock or (ii) the average weekly trading volume in shares of Common Stock
during the four calendar weeks preceding such sale, provided that at least one
year has elapsed since such shares were acquired from the Company or an
affiliate of the Company. Sales are also subject to certain requirements as to
the manner of sale, notice and the availability of current public information
regarding the Company. However, a person who has not been an "affiliate" of
the Company at any time within three months prior to the sale is entitled to
sell his or her shares without regard to the volume limitations or other
requirements of Rule 144, provided that at least two years have elapsed since
such shares were acquired from the Company or an affiliate of the Company.

In general, under Rule 701 as currently in effect, any employee, officer,
director, consultant or advisor of the Company who purchased shares from the
Company pursuant to a written compensatory benefit plan or written contract
relating to compensation is eligible to resell such shares 90 days after the
effective date of the Offering. Shares of Common Stock obtained pursuant to
Rule 701 may be sold by non-affiliates without regard to the holding period,
volume limitations, or information or notice requirements of Rule 144, and by
affiliates without regard to the holding period requirements.

The Company intends to file a registration statement on Form S-8 under the
Securities Act to register all shares of Common Stock issuable under its Stock
Option Plans, as well as certain of the shares of Common Stock previously
issued under its Stock Option Plans. This registration statement is expected
to be filed as soon as practicable after the date of this Prospectus and is
expected to become effective immediately upon filing. Shares of Common Stock
covered by this registration statement will be eligible for sale in the public
market after the effective date of such registration statement, subject to
Rule 144 limitations applicable to affiliates of the Company. See
"Management--Stock Option Plans."

Prior to the Offering, there has been no public market for the Common Stock
and it is impossible to predict with certainty the effect, if any, that market
sales of shares or the availability of such shares for sale will have on the
market price of the Common Stock. Nevertheless, sales of substantial amounts
of Common Stock in the public market may have an adverse impact on such market
price and could impair the Company's ability to raise capital through the sale
of its equity securities.

46
<PAGE>

UNDERWRITING

Subject to the terms and conditions of the Underwriting Agreement, the
Underwriters named below (the "Underwriters") through their representatives
Hambrecht & Quist LLC and EVEREN Securities, Inc. (the "Representatives"),
have severally agreed to purchase from the Company the following respective
numbers of shares of Common Stock set forth opposite the name of each such
Underwriter below at the initial public offering price less the underwriting
discounts set forth on the cover page of this Prospectus:

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS SHARES
------------ ---------
<S> <C>
Hambrecht & Quist LLC............................................
EVEREN Securities, Inc...........................................
---
Total............................................................
===
</TABLE>

The following summaries of certain provisions of the Underwriting Agreement
are subject to, and qualified in their entirety by reference to, all of the
provisions of the Underwriting Agreement, including definitions of certain
terms. The form of Underwriting Agreement has been filed with the Commission
as an exhibit to the Registration Statement. The Underwriting Agreement
provides that the obligations of the Underwriters are subject to certain
conditions precedent, including the absence of any material adverse change in
the Company's business and the receipt of certain certificates, opinions and
letters from the Company, its counsel and the Company's independent auditors.
The nature of the Underwriters' obligation is such that they are committed to
purchase all shares of Common Stock offered hereby if any such shares are
purchased.

The Underwriters propose to offer the shares of Common Stock to the public
at the initial public offering price set forth on the cover page of this
Prospectus and to certain dealers at such price less a concession not in
excess of $ per share. The Underwriters may allow, and such dealers may
reallow, a concession not in excess of $ per share to certain other dealers.
The Representatives have advised the Company that the Underwriters do not
intend to confirm discretionary sales in excess of 5% of the shares of Common
Stock offered hereby. After the initial public offering of the shares, the
offering price and other selling terms may be changed by the Representatives
of the Underwriters.

The Selling Stockholders have granted to the Underwriters an option,
exercisable no later than 30 days after the date of this Prospectus, to
purchase up to 345,000 additional shares of Common Stock at the initial public
offering price, less the underwriting discounts set forth on the cover page of
this Prospectus. To the extent the Underwriters exercise this option, each of
the Underwriters will have a firm commitment to purchase approximately the
same percentage thereof which the number of shares of Common Stock to be
purchased by it shown in the above table bears to the total number of shares
of Common Stock offered hereby. The Selling Stockholders will be obligated,
pursuant to the option, to sell shares to the Underwriters to the extent the
option is exercised. The Underwriters may exercise such option only to cover
over-allotments made in connection with the sale of Common Stock offered
hereby.

The offering of the shares is made for delivery when, as and if accepted by
the Underwriters and subject to prior sale and to withdrawal, cancellation or
modification of the Offering without notice. The Underwriters reserve the
right to reject an order for the purchase of shares in whole or in part.

The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act, and to contribute to payments the Underwriters may be required
to make in respect thereof.

47
<PAGE>

Prior to the Offering, there has been no public market for the Common Stock.
The initial public offering price for the Common Stock has been determined by
negotiation among the Company and the Representatives. Among the factors
considered in determining the initial public offering price were prevailing
market and economic conditions, revenues and earnings of the Company, market
valuations of other companies engaged in activities similar to those of the
Company, estimates of the business potential and prospects of the Company, the
present state of the Company's business operations, the Company's management
and other factors deemed relevant.

Certain persons participating in the Offering may over-allot or effect
transactions which stabilize, maintain or otherwise affect the market price of
the Common Stock at levels above those which might otherwise prevail in the
open market, including by entering stabilizing bids, effecting syndicate
covering transactions or imposing penalty bids. A stabilizing bid means
placing of any bid or effecting of any purchase, for the purpose of pegging,
fixing or maintaining the price of the Common Stock. A syndicate covering
transaction means the placing of any bid on behalf of the underwriting
syndicate or the effecting of any purchase to reduce a short position created
in connection with the Offering. A penalty bid means an arrangement that
permits the Underwriters to reclaim a selling concession from a syndicate
member in connection with the Offering when shares of Common Stock sold by the
syndicate member are purchased in syndicate covering transactions. Such
transaction may be effected on the Nasdaq Stock Market, in the over-the-
counter market, or otherwise. Such stabilizing, if commenced, may be
discontinued at any time.

Hambrecht & Quist California, a wholly-owned subsidiary of Hambrecht & Quist
LLC ("H&Q California"), and certain employees and spouses of employees of the
Representatives own an aggregate of 190,000 shares of Common Stock, which
shares were purchased on April 22, 1998 from a general partner of an affiliate
of the Company in a privately-negotiated arm's-length transaction. None of the
shares of Common Stock held by H&Q California or the employees and spouses of
employees of the Representatives are being offered hereby.

LEGAL MATTERS

The validity of the Common Stock offered hereby has been passed upon by
Proskauer Rose, LLP, New York, New York. Certain legal matters will be passed
upon for the Underwriters by Katten Muchin & Zavis, Chicago, Illinois.

EXPERTS

The financial statements as of December 31, 1996 and 1997 and for each of
the three years in the period ended December 31, 1997 included in this
Prospectus have been so included in reliance upon the report of Price
Waterhouse LLP, independent certified public accountants, given on the
authority of such firm as experts in auditing and accounting.

48
<PAGE>

ADDITIONAL INFORMATION

A Registration Statement on Form SB-2 under the Securities Act of 1933, as
amended (the "Securities Act"), including amendments thereto, relating to the
Common Stock offered hereby has been filed by the Company with the Securities
and Exchange Commission (the "Commission"). This Prospectus does not contain
all of the information set forth in the Registration Statement and the
exhibits and schedules thereto. For further information with respect to the
Company and the Common Stock offered hereby, reference is made to such
Registration Statement and exhibits and schedules filed as a part thereof. A
copy of the Registration Statement may be inspected by anyone without charge
at the Public Reference Section of the Commission at Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the regional
offices of the Commission located at 7 World Trade Center, Suite 1300, New
York, New York 10048 and Northwest Atrium Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661. Copies of all or any portion of the
Registration Statement may be obtained from the Public Reference Section of
the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, upon payment
of prescribed fees. The Commission maintains a WorldWide Web site that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission. Such
reports, proxy and information statements and other information may be found
on the Commission's site address, http://www.sec.gov. Copies of such material
also can be obtained from the Company upon request.

Statements made in this Prospectus as to the contents of any contract,
agreement or other document referred to are not necessarily complete. With
respect to each such contract, agreement or other document filed as an exhibit
to the Registration Statement, reference is made to the exhibit for a more
complete description of the matter involved, and each such statement shall be
deemed qualified in its entirety by such reference.

As a result of the Offering, the Company will become subject to the
information and periodic reporting requirements of the Securities Exchange
Act, as amended, and, in accordance therewith, will file periodic reports,
proxy statements and other information with the Commission. Such periodic
reports, proxy statements and other information will be available for
inspection and copying at the public reference facilities, regional offices
and Web site referred to above.

49
<PAGE>

INDEX TO FINANCIAL STATEMENTS

CONTENTS

<TABLE>
<S> <C>
Report of Independent Certified Public Accountants......................... F-2
Balance Sheets as of December 31, 1996, 1997 and March 31, 1998 (Unau-
dited).................................................................... F-3
Statements of Operations for each of the years ended December 31, 1995,
1996, and 1997, and the three month periods ended March 31, 1997 and 1998
(Unaudited)............................................................... F-4
Statement of Changes in Stockholders' Deficit for the three years ended De-
cember 31, 1997, and the three month period ended March 31, 1998 (Unau-
dited).................................................................... F-5
Statements of Cash Flows for each of the years ended December 31, 1995,
1996 and 1997, and the three month periods ended March 31, 1997 and 1998
(Unaudited)............................................................... F-6
Notes to Financial Statements.............................................. F-8
</TABLE>

F-1
<PAGE>

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors and Stockholders of LogistiCare, Inc.

In our opinion, the accompanying balance sheets and the related statements
of operations, of changes in stockholders' deficit and of cash flows present
fairly, in all material respects, the financial position of LogistiCare, Inc.
(formerly Automated Dispatch Solutions, Inc.) at 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. 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. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for the opinion expressed above.

PRICE WATERHOUSE LLP

Ft. Lauderdale, Florida

May 7, 1998, except as to Notes 1,

7 and 10 which are as of June 11, 1998

F-2
<PAGE>

LOGISTICARE, INC.

BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31, 1998
----------------------- ------------------------
1996 1997 HISTORICAL PRO FORMA
---------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents. $ 70,704 $ 639,598 $ 3,680,573 $ 3,680,573
Accounts receivable, net
of allowance of $17,000
and $95,000 at December
31, 1996 and 1997,
respectively............. 464,811 515,495 2,005,649 2,005,649
Prepaid expenses and other
current assets........... 2,300 22,282 30,003 30,003
---------- ----------- ----------- -----------
Total current assets.... 537,815 1,177,375 5,716,225 5,716,225
Property and equipment, net. 301,883 849,732 933,396 933,396
Proprietary software, net of
accumulated amortization of
$140,000 and $176,666 at
December 31, 1996 and 1997,
respectively............... 110,472 73,806 63,249 63,249
Other assets................ 18,154 156,593 161,935 161,935
---------- ----------- ----------- -----------
$ 968,324 $ 2,257,506 $ 6,874,805 $ 6,874,805
========== =========== =========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable.......... $ 584,433 $ 3,216,819 $ 4,459,430 $ 4,459,430
Accrued expenses.......... 92,040 94,554 245,084 245,084
Notes payable............. 50,524 -- -- --
Notes payable to stock-
holders and officers..... 100,000 -- -- --
Current portion of
obligations under capital
leases................... 6,350 134,927 149,340 149,340
Deferred revenue.......... 131,000 1,250,000 4,229,406 4,229,406
---------- ----------- ----------- -----------
Total current liabili-
ties................... 964,347 4,696,300 9,083,260 9,083,260
Long term note payable to
principal stockholder...... 270,000 -- -- --
Obligations under capital
leases, net of current
portion.................... 32,369 238,880 241,678 241,678
---------- ----------- ----------- -----------
Total liabilities....... 1,266,716 4,935,180 9,324,938 9,324,938
---------- ----------- ----------- -----------
Commitments and contingen-
cies (Note 10)
Stockholders' deficit:
Series A preferred stock,
$.01 par value, 100,000
shares authorized; 97,415
shares issued and
outstanding at December
31, 1997................. -- 974 974 --
Common stock, $.01 par
value, 30,000,000 shares
authorized; 5,550,000 and
8,047,360 shares issued
and outstanding at
December 31, 1996 and
1997, respectively....... 55,500 80,474 80,474 90,215
Additional paid in capi-
tal...................... 25,440 1,834,200 2,284,200 2,275,433
Deferred option plan com-
pensation................ -- -- (450,000) (450,000)
Retained deficit.......... (379,332) (4,593,322) (4,365,781) (4,365,781)
---------- ----------- ----------- -----------
Total stockholders' def-
icit................... (298,392) (2,677,674) (2,450,133) (2,450,133)
---------- ----------- ----------- -----------
$ 968,324 $ 2,257,506 $ 6,874,805 $ 6,874,805
========== =========== =========== ===========
</TABLE>

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

F-3
<PAGE>

LOGISTICARE, INC.

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
----------------------------------- ----------------------
1995 1996 1997 1997 1998
---------- ---------- ----------- --------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues:
Transportation manage-
ment services........ -- $1,529,817 $10,768,239 $987,519 $11,714,962
Related party......... -- 1,667,683 602,735 374,744 --
Other................. $391,702 438,602 131,000 -- --
---------- ---------- ----------- --------- -----------
391,702 3,636,102 11,501,975 1,362,263 11,714,962
---------- ---------- ----------- --------- -----------
Operating expenses:
Purchased transporta-
tion................. -- 1,296,334 11,213,405 898,526 9,503,377
Direct labor.......... -- 1,177,805 1,835,505 369,471 901,837
Selling, general and
administrative....... 311,061 1,042,670 2,665,447 318,339 1,088,916
Other................. 189,814 205,379 -- -- --
---------- ---------- ----------- --------- -----------
500,875 3,722,188 15,714,357 1,586,336 11,494,130
---------- ---------- ----------- --------- -----------
Income (loss) from op-
erations............. (109,173) (86,086) (4,212,382) (224,073) 220,832
Other income (expense):
Interest income....... -- 585 25,929 -- 26,822
Interest expense...... (17,735) (33,289) (27,537) (1,493) (20,113)
---------- ---------- ----------- --------- -----------
Net income (loss)..... $ (126,908) $ (118,790) $(4,213,990) $(225,566) $ 227,541
========== ========== =========== ========= ===========
Basic net income
(loss) per share..... $ (0.03) $ (0.02) $ (0.59) $ (0.04) $ 0.03
========== ========== =========== ========= ===========
Weighted average
shares outstanding... 5,000,000 5,550,000 7,188,589 5,796,566 8,047,360
========== ========== =========== ========= ===========
Diluted net income
(loss) per share..... $ (0.03) $ (0.02) $ (0.59) $ (0.04) $ 0.02
========== ========== =========== ========= ===========
Weighted average
shares and
potentially dilutive
shares outstanding... 5,000,000 5,550,000 7,188,589 5,796,566 10,256,459
========== ========== =========== ========= ===========
Unaudited pro forma
basic net income per
share................ $ 0.03
===========
Unaudited pro forma
weighted average
shares outstanding... 9,021,510
===========
Unaudited pro forma
diluted net income
per share............ $ 0.02
===========
Unaudited pro forma
weighted average
shares and
potentially dilutive
shares outstanding... 10,256,459
===========
</TABLE>

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

F-4
<PAGE>

LOGISTICARE, INC.

STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT

<TABLE>
<CAPTION>
PREFERRED STOCK COMMON STOCK ADDITIONAL DEFERRED
---------------- ----------------- PAID OPTION PLAN RETAINED
SHARES AMOUNT SHARES AMOUNT IN CAPITAL COMPENSATION DEFICIT TOTAL
-------- ------- --------- ------- ---------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, January 1,
1995................... -- -- 5,000,000 $50,000 $ (45,000) -- $ (133,634) $ (128,634)
Net loss................ -- -- -- -- -- -- (126,908) (126,908)
-------- ------ --------- ------- ---------- --------- ----------- -----------
Balance December 31,
1995................... -- -- 5,000,000 50,000 (45,000) -- (260,542) (255,542)
Acquisition of Automated
Dispatch Systems, Inc.. -- -- 550,000 5,500 18,440 -- -- 23,940
Management services
contributed by
principal stockholder.. -- -- -- -- 52,000 -- -- 52,000
Net loss................ -- -- -- -- -- -- (118,790) (118,790)
-------- ------ --------- ------- ---------- --------- ----------- -----------
Balance, December 31,
1996................... -- -- 5,550,000 55,500 25,440 -- (379,332) (298,392)
Issuance of common
stock.................. -- -- 2,017,360 20,174 497,550 -- -- 517,724
Note contributed by
stockholder............ -- -- -- -- 316,024 -- -- 316,024
Issuance of preferred
stock.................. 97,415 $ 974 -- -- 999,026 -- -- 1,000,000
Issuance of common stock
under option plan...... -- -- 480,000 4,800 (3,840) -- -- 960
Net loss................ -- -- -- -- -- -- (4,213,990) (4,213,990)
-------- ------ --------- ------- ---------- --------- ----------- -----------
Balance, December 31,
1997................... 97,415 974 8,047,360 80,474 1,834,200 -- (4,593,322) (2,677,674)
Options granted under
stock option plan...... -- -- -- -- 450,000 (450,000) -- --
Net income.............. -- -- -- -- -- -- 227,541 227,541
-------- ------ --------- ------- ---------- --------- ----------- -----------
Balance, March 31, 1998
(unaudited)............ 97,415 $ 974 8,047,360 $80,474 $2,284,200 $(450,000) $(4,365,781) $(2,450,133)
======== ====== ========= ======= ========== ========= =========== ===========
</TABLE>

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

F-5
<PAGE>

LOGISTICARE, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31
--------------------------------- ----------------------
1995 1996 1997 1997 1998
--------- --------- ----------- --------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from
operating activities:
Net income (loss)..... $(126,908) $(118,790) $(4,213,990) $(225,566) $ 227,541
Adjustments to
reconcile net income
(loss) to net cash
provided by (used in)
operating activities:
Depreciation and
amortization......... 51,154 96,958 154,126 29,367 51,231
Loss on disposal of
property and
equipment............ -- -- 45,088 -- --
Management services
contributed by
principal
shareholder.......... -- 52,000 -- -- --
Changes in assets and
liabilities:
Increase in accounts
receivable.......... -- (433,164) (50,684) (113,883) (1,490,154)
(Increase) decrease
in prepaid expenses
and other current
assets.............. (17,000) 11,700 (19,982) -- (7,721)
Increase in other
assets.............. -- (3,279) (138,438) -- (5,342)
Increase in accounts
payable............. 13,386 556,196 2,632,386 83,539 1,012,587
Increase (decrease)
in accrued expenses. 26,198 (4,231) 48,537 13,118 150,530
Decrease in due to
affiliate........... (34,000) -- -- -- --
Increase (decrease)
in deferred revenue. 140,000 (9,000) 1,119,000 -- 3,209,430
--------- --------- ----------- --------- -----------
Net cash provided by
(used in) operating
activities......... 52,830 148,390 (423,957) (213,425) 3,148,102
--------- --------- ----------- --------- -----------
Cash flows from
investing activities:
Purchases of property
and equipment........ (5,769) (111,190) (329,141) (48,516) (80,939)
Purchase of Automated
Dispatch Systems,
Inc., net of cash
acquired............. -- 5,148 -- -- --
--------- --------- ----------- --------- -----------
Net cash used in
investing
activities......... (5,769) (106,042) (329,141) (48,516) (80,939)
--------- --------- ----------- --------- -----------
Cash flows from
financing activities:
Repayments on notes
payable.............. -- (161,222) (145,524) (25,524) --
Repayment of
obligations under
capital leases....... -- (2,112) (46,168) (2,882) (26,188)
Proceeds from line of
credit............... -- 25,000 -- -- --
Proceeds from issuance
of notes payable to
officer.............. -- 50,000 -- -- --
Proceeds from issuance
of note payable to
principal
stockholder.......... 25,000 -- -- -- --
Proceeds from sale of
common stock......... -- -- 517,724 517,724 --
Proceeds from sale of
preferred stock...... -- -- 1,000,000 -- --
Proceeds from exercise
of stock options..... -- -- 960 -- --
--------- --------- ----------- --------- -----------
Net cash (used in)
provided by
financing
activities......... 25,000 (88,334) 1,321,992 489,318 (26,188)
--------- --------- ----------- --------- -----------
Net (decrease) increase
in cash............... 72,061 (45,986) 568,894 227,377 3,040,975
Cash and cash
equivalents, beginning
of period............. 44,629 116,690 70,704 70,704 639,598
--------- --------- ----------- --------- -----------
Cash and cash
equivalents, end of
period................ $ 116,690 $ 70,704 $ 639,598 $ 298,081 $ 3,680,573
========= ========= =========== ========= ===========
</TABLE>

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

F-6
<PAGE>

LOGISTICARE, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31
------------------------ -------------------
1995 1996 1997 1997 1998
------- ------- -------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Supplemental disclosure of cash
flow information:
Cash paid during the year for
interest.......................... $ -- $14,389 $ 69,183 $ 1,548 $ 20,113
======= ======= ======== ========= ========
Supplemental disclosure of noncash
investing and financing
activities:
Note payable issued in connection
with acquisition of Automated
Dispatch Systems, Inc............. $ -- $50,000 $ -- $ -- $ --
======= ======= ======== ========= ========
Common stock issued in connection
with acquisition of Automated
Dispatch Systems, Inc............. $ -- $23,940 $ -- $ -- $ --
======= ======= ======== ========= ========
Contribution of note payable and
accrued interest to additional
paid in capital................... $ -- $ -- $316,024 $ 316,024 $ --
======= ======= ======== ========= ========
Property and equipment acquired un-
der capital leases................ $ -- $40,831 $385,803 $ 33,376 $ 43,399
======= ======= ======== ========= ========
Exchange of note payable for common
stock............................. $ -- $ -- $ 5,000 $ -- $ --
======= ======= ======== ========= ========
</TABLE>

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

F-7
<PAGE>

LOGISTICARE, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1995, 1996 AND 1997

1. NATURE OF THE BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

LogistiCare, Inc. (the "Company" or "LogistiCare," formerly known as
Automated Dispatch Solutions, Inc.) was organized in March 1994 as a Delaware
corporation. On January 1, 1996, LogistiCare acquired 100% of the outstanding
common stock of Automated Dispatch Systems, Inc. ("Systems"). LogistiCare and
Systems were merged into a single legal entity on December 31, 1996. The
financial statements presented for 1996 are consolidated to include the
accounts of LogistiCare and Systems. All significant intercompany transactions
and balances have been eliminated in the consolidated financial statements for
1996.

The Company provides transportation management services: brokerage logistics
and service bureau logistics. Brokerage logistics consists of non-emergency
transportation management services to government agencies and managed health
care organizations ("MCOs") where the Company coordinates and, through
contracts with unaffiliated transportation carriers provides, non-emergency
transportation for individuals eligible for transportation benefits
("Recipients"). Transportation of Recipients is furnished pursuant to
contracts between the Company and independent transportation carriers. The
Company is compensated for these services primarily on a capitated basis and,
to a lesser extent, on a fee-for-service basis. Service bureau logistics are
offered directly to independent transportation carriers and carrier networks
where the Company manages the carrier's or the network's internal logistics
requirements. The Company is compensated for these services on a fee-for-
transaction basis.

A summary of the significant accounting policies followed in the preparation
of the accompanying financial statements is presented below.

INTERIM FINANCIAL STATEMENTS (UNAUDITED)

The interim financial data as of March 31, 1998 and for the three months
ended March 31, 1997 and March 31, 1998 is unaudited; however, in the opinion
of the Company, the interim data includes all adjustments, consisting only of
normal recurring adjustments, necessary for a fair statement of the results
for the interim periods. The results of operations for the three month periods
are not necessarily indicative of the results for the full year.

REVENUE RECOGNITION

Revenues under capitation contracts are recognized over the capitation
period, generally one month. Revenues earned under fee-for-service and fee-
for-transaction contracts are recognized when the related service is provided.

STARTUP COSTS FOR OPERATIONS CENTERS

The Company recognizes costs associated with the startup of its operations
centers as such costs are incurred. The Company generally negotiates fees to
enable it to open new operations centers when such centers are required by the
terms of contracts with its customers. The Company recognizes the fees as
earned in accordance with contract terms. The Company recognized $600,000 of
fees in 1997 which are included in brokerage logistics revenues.

CASH AND CASH EQUIVALENTS

The Company considers those short term, highly liquid investments with
original maturities of three months or less as cash and cash equivalents.

F-8
<PAGE>

LOGISTICARE, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1995, 1996 AND 1997

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost less accumulated depreciation.
Expenditures for replacements and betterment are capitalized while maintenance
and repairs are charged to expense as incurred. Depreciation is provided using
the straight line and declining balance methods over estimated useful lives of
five to seven years. Equipment held under capital lease obligations is
amortized using the straight-line method over the shorter of the lease term or
estimated life of the asset.

PROPRIETARY SOFTWARE

Proprietary software represents the purchase of RealTime(TM) ("RealTime"), a
computer aided vehicle dispatch system, for non-emergency transportation
management services. The software is stated at cost less accumulated
amortization. Amortization is provided using the straight line method over an
estimated useful life of 68 months. During 1996, the Company changed its
estimate of the remaining useful life of the software from 36 months to 68
months. As a result, the Company prospectively adjusted its amortization
expense in connection with the software. The effect was to reduce the
amortization from $50,000 in 1995 to $36,666 in 1996 and 1997.

In connection with its acquisition of Systems in January 1996 (see Note 2),
the Company allocated approximately $80,000 of its acquisition price to
proprietary software related to the rights obtained in the acquisition to use
RealTime in Dade, Broward, Palm Beach and Monroe counties in Florida.

USE OF ESTIMATES

The preparation of financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts
of revenue and expenses during the reporting period. Actual results could
differ from those estimates.

STOCK BASED COMPENSATION

The Company accounts for stock based compensation using the intrinsic value
method and discloses certain fair market value information with respect to its
stock option activity in the notes to the financial statements (see Note 7).
In cases where the exercise price of stock options issued to employees is less
than the estimated fair market value of the underlying shares at the date of
grant, compensation expense is recognized over the vesting period.

PER SHARE DATA

Basic net income (loss) per share is computed by dividing net income (loss)
by the weighted average number of shares of common stock outstanding during
each period. Diluted net income per share is computed by dividing net income
by the weighted average number of shares of common stock and potentially
dilutive securities outstanding during each period. All per share data have
been adjusted to reflect the Company's 5-for-1 and 2-for-1 common stock splits
(see Note 10).

Potentially dilutive shares in the amount of 500,000, 1,153,846, and
1,641,789 for the years ended December 31, 1995, 1996 and 1997, respectively,
have been excluded from the computation of diluted earnings per share as the
effect of their inclusion is antidilutive. For the three months ended March
31, 1998, 1,234,949 and 974,150 potentially dilutive shares, representing
stock options and convertible preferred stock, respectively, have been added
to the weighted average shares outstanding to compute diluted net income per
share.

F-9
<PAGE>

LOGISTICARE, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1995, 1996 AND 1997

INCOME TAXES

The Company provides income taxes using the liability method under which
deferred tax assets and liabilities are recognized for the expected future tax
consequences of temporary differences between the financial statement and
income tax bases of the Company's assets and liabilities. An allowance is
recorded, based upon currently available information, when it is more likely
than not that any or all of a deferred tax asset will not be realized. The
provision for income taxes includes taxes currently payable, if any, plus the
net change during the year in deferred tax assets and liabilities recorded by
the Company.

FAIR VALUE OF FINANCIAL INSTRUMENTS AND CONCENTRATIONS OF CREDIT RISK

The carrying value of the Company's financial instruments, including cash
and cash equivalents, accounts receivable, accounts payable, accrued expenses
and notes payable approximated fair value because of the short maturity of
these instruments. Accounts receivable result from contracts with a limited
number of customers in Georgia, Connecticut and Florida. At December 31, 1996
and 1997, contracts with two customers accounted for approximately 29.0% and
40.1%, respectively, of accounts receivable, and approximately 54.2% and
20.8%, respectively, of consolidated revenues. Additionally, a third customer
accounted for approximately 48.4% of consolidated revenues in 1997. The
Company routinely assesses the financial strength of its customers and records
an allowance for doubtful accounts when it determines that collection of a
particular amount is unlikely.

UNAUDITED PRO FORMA BALANCE SHEET AT MARCH 31, 1998

Upon completion of the offering, the Company will convert its preferred
stock into 974,150 shares of common stock. The unaudited pro forma balance
sheet information is presented as if such conversions had occurred as of March
31, 1998.

UNAUDITED PRO FORMA NET INCOME PER SHARE FOR THE THREE MONTHS ENDED MARCH 31,
1998

Unaudited pro forma basic net income per share for the three months ended
March 31, 1998 is computed by dividing net income by the weighted average
number of shares of common stock outstanding plus 974,150 shares of common
stock which, on a pro forma basis, are assumed to have been converted from
preferred stock during the period. Unaudited pro forma diluted net income per
share for the three months ended March 31, 1998, is computed by dividing net
income by the weighted average number of shares of common stock plus 974,150
shares of common stock which, on a pro forma basis, are assumed to have been
converted from preferred stock during the period plus 1,234,949 potentially
dilutive shares representing common stock options.

RECAPITALIZATION AND COMMON STOCK SPLIT

In connection with the contemplated initial public offering of the Company's
common stock as described in Note 10, in June 1998, the Company's Board of
Directors and stockholders approved an increase in authorized common shares to
30,000,000 and authorized a 2-for-1 common stock split, effected as of June
11, 1998 . All share and per share data have been adjusted to reflect the
common stock split.

RECENT ACCOUNTING PRONOUNCEMENTS

In June 1997, the Financial Accounting Standards Board issued FAS
("Financial Accounting Standard") No. 130, "Reporting Comprehensive Income,"
("FAS 130") and FAS No. 131 "Disclosures About Segments of an Enterprise and
Related Information," ("FAS 131"). FAS 130 requires an additional statement
presenting certain adjustments to equity. FAS 131 established standards for
related disclosures about products and services, geographic locations and
major customers. The Company will adopt FAS 130 and FAS 131, effective

F-10
<PAGE>

LOGISTICARE, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1995, 1996 AND 1997

December 31, 1998. The Company believes that the adoption of these standards
will not have a material impact on the disclosure of net income (loss) per
share or on the disclosures in the Company's financial statements.

2. PURCHASE OF SUBSIDIARY

On January 1, 1996, LogistiCare acquired 100% of the outstanding common
stock of Systems in exchange for $50,000 in cash, promissory notes totaling
$50,000 and 55,000 shares of the Company's common stock. The acquisition was
accounted for as a purchase and, accordingly, the results of operations of
Systems are included in the accompanying statements of operations from January
1, 1996. The following unaudited pro forma statement of operations data for
the year ended December 31, 1995 gives effect to the acquisition as if it had
occurred on January 1, 1995:

<TABLE>
<S> <C>
Revenues.......................................................... $1,822,081
Loss from operations.............................................. $ (12,089)
Net loss.......................................................... $ (45,648)
Loss per share.................................................... $ (0.01)
</TABLE>

3. RELATED PARTY TRANSACTIONS

The Company provides dispatch services to an entity (the "Client") which was
controlled by certain of the Company's minority stockholders until such
minority stockholders sold their entire interest in the Client to an unrelated
entity in May 1997. Dispatch services are provided pursuant to an agreement
with the Client in connection with a transportation contract between the
Client and a municipality in South Florida (the "Florida Contract"). Under the
terms of the agreement, the Company earned $2.65 per trip processed on behalf
of the Client under the Florida Contract. In a related agreement, the Company
paid to the principal stockholders of the Client a fee of $1.00 for each trip
processed by the Company under the Florida Contract. Effective May 31, 1997,
the Company, the Client and the principal stockholders of the Client agreed to
amend the terms of the previously described agreements. Under the revised
terms beginning in June 1997, the Company earns $1.65 per trip processed on
behalf of the Client and pays no fees to the Client or the principal
stockholders of the Client. Under the agreements the Company recorded gross
revenues from the Client of approximately $1,925,000 and $553,000 in 1996 and
1997, respectively, and paid fees to the principal stockholders of the Client
of approximately $726,000 and $211,000 in 1996 and 1997, respectively. Such
fees have been recorded as a reduction of revenues under the Florida Contract.

The Company provides dispatch services to another entity ("Health Trans")
which was controlled by certain of the minority stockholders until such
minority stockholders sold their entire interest in Health Trans to an
unrelated entity in May 1997. The agreement with Health Trans expires in
December 2025. Under the terms of the agreement, the Company earns $125 per
week for each of Health Trans' vehicles for which the Company provides
dispatch services. During 1996 and 1997, the Company recorded revenues of
approximately $200,000 and $271,000, respectively in connection with this
agreement.

During 1995, the Company entered into an agreement (the "Sales and Software
Agreement") with an affiliate of the Company's principal stockholder under
which the Company received $150,000 for 15 end-user licenses to the Company's
RealTime software, and future sales and marketing services to be provided by
the Company. In June 1997, the Company and its affiliate terminated all
commitments under the Sales and Software Agreement in accordance with its
terms. In connection with the termination, the Company made available to its
affiliate rights to an additional 13 end-user licenses of RealTime and
recognized approximately $131,000 in income during 1997 which had been
recorded as deferred revenue in the Company's balance sheet at December 31,
1996.

F-11
<PAGE>

LOGISTICARE, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1995, 1996 AND 1997

During 1995, 1996 and 1997, the Company recorded administrative charges of
$44,000, $66,000 and $0, respectively, for services provided by an affiliate
of the Company's principal stockholder. Such services were primarily
management services provided by the Company's current Chief Financial Officer
whose salary was paid by such affiliate during those years. Of the total
administrative charge of $144,000, including $34,000 in administrative charges
recorded in 1994, the Company paid $92,000 while the remainder was recorded as
a capital contribution during 1996.

During 1995, the Company paid Systems $42,000 for the rental of certain
office facilities.

During the period from March 1994 to August 1995, the Company's principal
stockholder loaned the Company a total of $270,000, evidenced by a promissory
note with interest at 7%, principal and interest due on January 31, 2002. In
March 1997, the shareholder canceled the note and contributed the principal
balance and accrued interest of $46,024 to the Company. The Company recorded
the contribution of the note as additional paid in capital.

4. PROPERTY AND EQUIPMENT, NET

At December 31, the Company's property and equipment consists of the
following:

<TABLE>
<CAPTION>
1996 1997
-------- ---------
<S> <C> <C>
Computer equipment...................................... $298,086 $ 450,771
Office furniture and fixtures........................... 7,654 43,212
Leasehold improvements.................................. 16,471 32,181
Equipment under capital lease (see Note 9).............. 40,831 426,635
-------- ---------
363,042 952,799
Less accumulated depreciation........................... (61,159) (103,067)
-------- ---------
$301,883 $ 849,732
======== =========
</TABLE>

During 1995, 1996 and 1997, the Company recorded depreciation expense
related to its property and equipment of $1,154, $60,292 and $117,458,
respectively.

5. DEFERRED REVENUE

At December 31, 1997, the $1,250,000 deferred revenue represents an interim
payment from a customer under a memorandum of understanding in connection with
the Company's claims that the data provided by such customer relating to a
transportation brokerage contract understated the number of passengers to be
transported under such contract. The payment is to be reconciled after a
reevaluation by the customer of the data provided. In event it is determined
that the payment was not due the Company, the payment will be deducted from
future amounts due under the contract.

In March 1998, the Company received an additional payment from the customer
of $5,236,333. Based on the increased capitation rates, effective February 1,
1998, included in the amended contracts with the customer which superseded the
prior written memorandum of understanding (see Note 10), the Company
recognized $2,256,927 of the payment from the customer as revenue in the first
quarter of 1998.

F-12
<PAGE>

LOGISTICARE, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1995, 1996 AND 1997

6. NOTES PAYABLE

At December 31, 1996 notes payable were as follows:

<TABLE>
<CAPTION>
NON-
AFFILIATED STOCKHOLDERS
ENTITIES AND OFFICERS
---------- ------------
<S> <C> <C>
Unsecured notes payable to officer of $25,000 each,
interest at 10% and 15%, no stated repayment terms. $ -- $ 50,000
Unsecured notes payable to minority shareholders
(former shareholders of Systems), interest at 9%
per annum, repayable in five equal monthly
installments beginning January 1, 1997............. -- 50,000
Revolving credit facility with bank, maximum amount
of $50,000 payable on demand, interest at the
bank's prime lending rate plus 2 1/2% per annum due
monthly, secured by substantially all assets of the
Company............................................ 25,000 --
Other unsecured note payable, interest at 9% per
annum, repayable in monthly installments of $12,889
including interest through February 1997........... 25,524 --
------- --------
$50,524 $100,000
======= ========
</TABLE>

During 1997, the Company paid $145,524 of notes payable outstanding at
December 31, 1996 which included $95,000 paid to stockholders and officers.
Also during 1997 a stockholder exchanged a $5,000 note payable for common
stock.

7. CAPITAL STOCK

Series A Preferred Stock

In March 1997, the Company's Board of Directors authorized the issuance of
100,000 shares of Series A Preferred Stock, $.01 par value (the "Preferred
Stock"). The Preferred Stock has no stated rate; however, the Board may
declare dividends on the Preferred Stock and, if declared, no dividends or
redemptions on common or other stock that is ranking junior to the Preferred
Stock may be made until the declared dividends on the Preferred Stock are
paid.

The Preferred Stock shall convert to common stock upon the effectiveness of
a registration statement filed by the Company in connection with an initial
public offering. The conversion rate is the greater of one share of common
stock per share of Preferred Stock or a rate based on various formulae
depending on the timing and offering price of the initial public offering and
subject to adjustments for stock splits. The preferred shareholders may also
elect to convert their shares into common stock at the conversion price, as
defined.

The preferred stockholders have voting rights equal to one vote for each
share of common stock into which the Preferred Stock would be convertible on
the record date of the stockholder vote. In addition, a majority of the
preferred stockholders must approve certain corporate actions such as the
authorization of any class of stock that would be on a par or senior to the
Preferred Stock as to dividends, any increase in authorized shares of the
Preferred Stock, or any amendment of the Certificate of Incorporation that
would adversely affect the rights of the preferred stockholders.

F-13
<PAGE>

LOGISTICARE, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1995, 1996 AND 1997

Common Stock

In March 1997, the Company increased the number of authorized shares of
common stock from 1,000,000 to 1,500,000. In March 1998, the Company increased
the number of authorized shares of common stock from 1,500,000 to 7,500,000
(see Note 10). As of June 11, 1998, the Company increased the number of
authorized shares of common stock from 7,500,000 to 30,000,000 (see Note 10).

Stock Option Plan

The 1995 Incentive Stock Option Plan (the "Plan") provides for the granting
of incentive and nonqualified stock options to key employee and nonemployee
directors, respectively, to purchase shares of the Company's common stock. The
Plan authorizes the issuance of options to purchase up to an aggregate of
2,166,670 shares. Incentive stock options generally vest at an annual rate of
20% starting at the grant date or one year thereafter. Nonqualified options
are fully vested at the grant date. At December 31, 1997, 243,340 shares of
common stock were reserved and available for future grants under the Plan.

Stock option activity and information about stock options is summarized in
the following tables:

<TABLE>
<CAPTION>
FAIR MARKET
AVERAGE EXERCISE VALUE AT GRANT
SHARES PRICE DATE
--------- ---------------- --------------
<S> <C> <C> <C>
Balance, January 1, 1995............. --
Granted.............................. 1,200,000 $0.01 $0.01
Exercised............................ --
---------
Balance, December 31, 1995........... 1,200,000 0.01
Granted.............................. --
Exercised............................ --
---------
Balance, December 31, 1996........... 1,200,000 0.01
Granted.............................. 723,330 1.59 1.59
Exercised............................ (480,000) 0.01
---------
Balance, December 31, 1997........... 1,443,330 $1.07
=========
</TABLE>

<TABLE>
<CAPTION>
OUTSTANDING EXERCISABLE
------------------------------- ----------------
AVERAGE AVERAGE
EXERCISE EXERCISE
EXERCISE PRICE RANGE SHARES AVERAGE LIFE PRICE SHARES PRICE
-------------------- --------- ------------ -------- ------- --------
<S> <C> <C> <C> <C> <C>
$0.01--$0.26................ 1,013,330 5.3 years $0.08 -- --
$2.50 and above............. 430,000 9.6 years 2.50 270,000 $2.50
--------- -------
1,443,330 270,000
========= =======
</TABLE>

F-14
<PAGE>

LOGISTICARE, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1995, 1996 AND 1997

The Company uses the intrinsic value method of accounting for stock-based
compensation. Had the fair value based method been used to account for such
compensation, the effect would not have been significant in 1995 and 1996. The
net loss per share for 1997 would have been increased to the pro forma amounts
indicated below:

<TABLE>
<S> <C>
Net loss:
As reported.................................................. $(4,213,990)
Pro forma.................................................... (4,387,385)
Net loss per share (basic and diluted):
As reported.................................................. $ (1.17)
Pro forma.................................................... (1.22)
</TABLE>

Fair market value information for the Company's stock options for 1995, 1996
and 1997 was estimated using the Black-Scholes option pricing model assuming
risk free rates of 5.75% to 6.10%, no dividend yield, and expected terms of 2
to 4 years.

8. INCOME TAXES

During 1997, the Company changed its basis of accounting for income tax
purposes from a modified cash basis to the accrual basis. As a result, the
Company reversed approximately $173,000 of net deductible temporary
differences through its 1997 current income tax provision.

Additionally, during 1997 the Company changed its estimated tax rate from
approximately 19% to 38% as a result of the use of graduated tax rates in
1996. The effect of such change was an increase in net deferred tax assets of
approximately $51,000, prior to a corresponding increase in the valuation
allowance.

At December 31, 1996 and 1997, the Company had temporary differences between
the financial statement bases and the income tax bases of certain of its
assets and liabilities, resulting primarily from the use of the modified cash
basis of accounting for income tax purposes. Additionally, at December 31,
1996 and 1997, the Company had net operating loss carryforwards of
approximately $168,000 and $3,181,000, respectively, to offset future taxable
income. The significant components of the Company's deferred tax assets
(liabilities) are as follows:

<TABLE>
<CAPTION>
1996 1997
-------- -----------
<S> <C> <C>
Loss carryforwards................................... $ 28,926 $ 1,208,598
Effect of use of modified cash basis of accounting
for income tax purposes............................. 33,242 --
Depreciation and amortization........................ (9,666) (45,119)
Allowance for doubtful accounts...................... -- 36,100
Deferred revenue..................................... -- 475,000
Other................................................ -- 16,745
-------- -----------
Net deferred tax assets............................ 52,502 1,691,324
Valuation allowance.................................. (52,502) (1,691,324)
-------- -----------
$ -- $ --
======== ===========
</TABLE>

The Company's net operating losses at December 31, 1997 expire through 2017.

F-15
<PAGE>

LOGISTICARE, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1995, 1996 AND 1997
Presented below is a reconciliation between the Company's income tax
provision and the income tax provision which would result from applying the
federal statutory tax rate to the Company's loss before income taxes:

<TABLE>
<CAPTION>
1995 1996 1997
-------- -------- -----------
<S> <C> <C> <C>
Statutory tax benefit...................... $(19,036) $(17,818) $(1,432,757)
State and local income tax benefit......... (5,394) (5,049) (168,559)
Non-deductible contributed services........ -- 10,010 --
Other non-deductible expenses.............. 4,216 4,767 13,632
Change in valuation allowance.............. 20,214 8,090 1,587,684
-------- -------- -----------
Provision for income taxes................. $ -- $ -- $ --
======== ======== ===========
</TABLE>

9. COMMITMENTS AND CONTINGENCIES

The Company leases office space and equipment under noncancellable operating
leases with terms of two to five years. Rent expense for the years ended
December 31, 1995, 1996, and 1997 totaled $44,000, $167,000, and $287,000.

The Company leases computer and office equipment and a telephone system
under noncancellable leases classified as capital leases. The fair value of
the equipment was $40,831 and $385,803 for leases starting in 1996 and 1997,
respectively. The economic useful life of the equipment is five years.

<TABLE>
<CAPTION>
OPERATING CAPITAL
--------- --------
<S> <C> <C>
1998..................................................... $331,088 $164,280
1999..................................................... 342,932 161,072
2000..................................................... 276,233 123,999
2001..................................................... -- 6,776
-------- --------
Total minimum lease obligations.......................... 950,253 456,127
Less: imputed interest................................. -- (82,320)
-------- --------
Present value of net minimum lease obligations........... 950,253 373,807
Less: current maturities............................... -- 134,927
-------- --------
Capital lease obligations, net........................... $950,253 $238,880
======== ========
</TABLE>

The Company is a defendant in three pending legal proceedings which
management believes are incidental to the Company's business. The Company does
not believe that either of these actions will have a material adverse effect
on the Company's financial position or results of operations.

10. SUBSEQUENT EVENTS

In February 1998, the Company began operations under a written memorandum of
understanding with the Connecticut Department of Social Services (the "CDSS")
to provide transportation logistics and brokerage services for approximately
40,000 Medicaid recipients. In May 1998, the Company executed a final contract
with the CDSS for such services.

In March 1998, the Company amended its contracts with the Georgia Department
of Medical Assistance ( the "GDMA") for the provision of transportation
logistics and brokerage services. The amendments included provisions which
increased the capitation rate paid and modified certain operational
requirements. The amended capitation rates are effective as of February 1,
1998 and cover specific contract service periods.

F-16
<PAGE>

LOGISTICARE, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1995, 1996 AND 1997

Capitation rates in effect for the contract service period from February 1,
1998 through March 31, 1998 resulted in an increase in revenues for the first
quarter of 1998 of approximately $4,200,000 compared to the revenues which
would have been recognized based on the rates in effect immediately prior to
February 1, 1998. Under the amended contract which is subject to renewal by
GDMA, capitation rates in effect for the contract service periods subsequent
to June 30, 1998 will be 23% to 26% lower than the rates in effect for the
period before July 1, 1998.

In March 1998, the Company increased the number of authorized shares of
common stock from 1,500,000 to 7,500,000 and simultaneously effected a 5-for-1
stock split. In addition, in connection with the contemplated initial public
offering of the Company's common stock, in June 1998, the Company's Board of
Directors and stockholders approved an additional increase in the authorized
number of shares of common stock from 7,500,000 to 30,000,000 and authorized a
2-for-1 stock split, effected as of June 11, 1998 . The effect of the 5-for-1
stock split and the effect of the 2-for-1 stock split have been reflected for
all periods presented. All references to the number of common shares and per
share amounts elsewhere in the financial statements and the notes thereto have
been restated to reflect the effect of the 5-for-1 and 2-for-1 stock splits
for all periods presented.

F-17
<PAGE>

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

NO DEALER, SALESPERSON, OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY IN-
FORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY TO ANY PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICI-
TATION WOULD BE UNLAWFUL OR TO ANY PERSON TO WHOM IT IS UNLAWFUL. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY OFFER OR SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS
OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.

-----------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary..................................................... 3
Risk Factors........................................................... 5
Use of Proceeds........................................................ 13
Dividend Policy........................................................ 13
Capitalization......................................................... 14
Dilution............................................................... 15
Selected Financial Information......................................... 16
Management's Discussion and Analysis of Financial Condition and Results
of Operations......................................................... 17
Business............................................................... 24
Management............................................................. 35
Certain Transactions................................................... 40
Principal and Selling Stockholders..................................... 41
Description of Capital Stock........................................... 44
Shares Eligible for Future Sale........................................ 46
Underwriting........................................................... 47
Legal Matters.......................................................... 48
Experts................................................................ 48
Additional Information................................................. 49
Index to Consolidated Financial Statements............................. F-1
</TABLE>

-----------

UNTIL , 1998 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS
EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT PARTICIPATING IN
THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDI-
TION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UN-
DERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

2,300,000 SHARES

LOGISTICARE, INC.

COMMON STOCK

--------------
PROSPECTUS
--------------

HAMBRECHT & QUIST

EVEREN SECURITIES, INC.

, 1998

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>

PART II

INFORMATION NOT REQUIRED IN THE PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth the estimated expenses and costs (other than
underwriting discounts and commissions) expected to be incurred by the Company
in connection with the issuance and distribution of the securities being
registered under this registration statement. Except for the SEC and NASD
filing fees, all expenses have been estimated and are subject to future
contingencies.

<TABLE>
<S> <C>
SEC registration fee............................................... $ 9,370
NASD fee........................................................... 3,674
Nasdaq Entry Fee...................................................
Federal and State taxes............................................
Legal fees and expenses............................................
Printing and engraving expenses....................................
Accounting fees and expenses.......................................
Blue sky fees and expenses.........................................
Transfer agent and registrar fees and expenses.....................
Miscellaneous......................................................
--------
Total............................................................ $750,000
========
</TABLE>

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Article Seventh of the Company's Restated Certificate of Incorporation
provides that the Company shall indemnify and hold harmless, to the fullest
extent authorized by the Delaware General Corporation Law, its officers and
directors against all expenses, liability and loss actually and reasonably
incurred in connection with any civil, criminal, administrative or
investigative action, suit or proceeding. The Restated Certificate of
Incorporation also extends indemnification to those serving at the request of
the Company as directors, officers, employees or agents of other enterprises.

In addition, Article Seventh of the Company's Restated Certificate of
Incorporation provides that no director shall be personally liable for any
breach of fiduciary duty. Article Seventh does not eliminate a director's
liability (i) for a breach of his or her duty of loyalty to the Company or its
stockholders, (ii) for acts of intentional misconduct or knowing violations of
law, (iii) under Section 174 of the Delaware General Corporation Law for
unlawful declarations of dividends or unlawful stock purchases or redemptions,
or (iv) for any transactions from which the director derived an improper
personal benefit.

Section 145 of the General Corporation Law of the State of Delaware permits
a corporation to indemnify its directors and officers against expenses
(including attorney's fees), judgments, fines and amounts paid in settlements
actually and reasonably incurred by them in connection with any action, suit
or proceeding brought by third parties, if such directors or officers acted in
good faith and in a manner they reasonably believed to be in or not opposed to
the best interests of the corporation and, with respect to any criminal action
or proceeding, had no reason to believe their conduct was unlawful. In a
derivative action, i.e., one by or in the right of the corporation,
indemnification may be made only for expenses actually and reasonably incurred
by directors and officers in connection with the defense or settlement of an
action or suit, and only with respect to a matter as to which they shall have
acted in good faith and in a manner they reasonably believed to be in or not
opposed to the best interest of the corporation, except that no
indemnification shall be made if such person shall have been adjudged liable
to the corporation, unless and only to the extent that the court in which the
action or suit was brought shall determine upon application that the defendant
officers or directors are reasonably entitled to indemnity for such expenses
despite such adjudication of liability.

Section 102(b)(7) of the General Corporation Law of the State of Delaware
provides that a corporation may eliminate or limit the personal liability of a
director to the corporation or its stockholders for monetary damages for
breach of fiduciary duty as a director, provided that such provision shall not
eliminate or limit the liability of a director (i) for any breach of the
director's duty of loyalty to the corporation or its

II-1
<PAGE>

stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174
of the General Corporation Law of the State of Delaware, or (iv) for any
transaction from which the director derived an improper personal benefit. No
such provision shall eliminate or limit the liability of a director for any
act or omission occurring prior to the date when such provision becomes
effective.

The Underwriting Agreement provides for indemnification of directors and
officers of the Company by the Underwriters against certain liabilities.

Pursuant to Section 145 of the DGCL and the Restated Certificate of
Incorporation and the Amended and Restated By-laws of the Company, the Company
maintains directors' and officers' liability insurance coverage.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

Since January 1, 1995, the Company has issued unregistered securities in the
transactions described below, all of which were deemed to be exempt from
registration under the Securities Act. All discussions of transactions
occurring after March 30, 1998 in this Item 15 give effect to a 5-for-1 stock
split of Common Stock that was effected in at such time (the "Stock Split").
All references to "Common Shares" refer to shares of the Company's Common
Stock, $.01 par value per share. All references to "Preferred Shares" refer to
shares of the Company's Series A Preferred Stock, $.01 par value per share.

(1) On or about January 1, 1996, in connection with the purchase of all of
the outstanding shares of Automated Dispatch Systems, Inc. ("Systems"),
the Company issued a total of 275,000 Common Shares to John L.
Shermyen, Edward Steinberg, Sigmund Zilber and Martin Zilber. The
Company relied upon the representations by Messrs. Steinberg, Zilber
and Zilber concerning their knowledge and experience in financial and
business markets and net worth.

(2) On or about March 21, 1997, the Company issued a total of 974,150
Common Shares to Derace L. Schaffer, John Pappajohn and four investors
designated by Mr. Pappajohn pursuant to the terms of a Stock Purchase
Agreement dated March 21, 1997 (the "Purchase Agreement") for an
aggregate purchase price of $500,000. Messrs. Schaffer and Pappajohn
and such investors are Accredited Investors (as defined in Rule 501
under the Securities Act of 1933, as amended ("Rule 501")). The Company
provided Messrs. Schaffer and Pappajohn with a private placement
memorandum and afforded them access to senior management of the
Company.

(3) Between March 21, 1997 and June 6, 1997, the Company issued 16,250
Common Shares to John L. Shermyen, President and Chief Executive
Officer of the Company, for an aggregate purchase price of $4,170 upon
the exercise of certain contractual preemptive rights in connection
with the issuance of Common Shares referred to in paragraph (2) above.

(4) On or about March 21, 1997, the Company issued 52,810 Common Shares to
Edward Steinberg for an aggregate purchase price of $13,553 upon the
exercise of certain contractual preemptive rights in connection with
the issuance of Common Shares referred to in paragraph (2) above. The
Company relied upon representations made by Mr. Steinberg in connection
with the issuance of Common Shares referred to in paragraph (1) above.

(5) On or about June 6, 1997, the Company issued a total of 974,150
Preferred Shares to Pappajohn and seven investors designated by Messrs.
Schaffer and Pappajohn and the Company pursuant to the terms of the
Purchase Agreement for an aggregate purchase price of approximately
$1,000,000. Messrs. Schaffer and Pappajohn and such investors are
Accredited Investors (as defined in Rule 501). The Company provided
Messrs. Schaffer and Pappajohn with a private placement memorandum and
afforded them access to senior management of the Company.

(6) On or about November 18, 1997, the Company issued 80,000 Common Shares
to John L. Shermyen, President and Chief Executive Officer of the
Company, for an aggregate purchase price of $800 as a result of his
exercise of certain stock options.

(7) On or about November 18, 1997, the Company issued 80,000 Common Shares
to Michael E. Weksel, Vice President and Chief Financial Officer of the
Company, for an aggregate purchase price of $160 as a result of his
exercise of certain stock options.

II-2
<PAGE>

No underwriters were involved in the foregoing transactions and no
underwriting discounts or commissions were paid in connection therewith. The
issuances of securities sold in the transactions reference above were not
registered under the 1933 Act in reliance on the exemption in Section 4(2) of
the 1933 Act. The Company believes that Common Shares that were issued to
existing shareholders in connection with the Stock Split were, to the extent
that the Securities Act was applicable to such transaction, exempt from
registration under the Securities Act because they involved no "sales" within
the meaning of Section 2(3) of the Securities Act.

ITEM 16. EXHIBITS

<TABLE>
<C> <S>
1.1+ Form of Underwriting Agreement
3.1 Certificate of Incorporation of the Company (including all amendments)
3.2 By-Laws of the Company
3.3* Restated Certificate of Incorporation of the Company, adopted by the
Company on June 10, 1998
3.4* Amended and Restated By-Laws of the Company, adopted by the Company on
June 10, 1998
4.1 Certificate of Designations, Preferences and Rights of Series A
Convertible Preferred Stock of the Company, dated June 6, 1997
5+ Opinion of Proskauer Rose LLP re: validity of securities
9.1 Agreement between TGIS Partners, as nominee, and William B. McLiverty,
dated February 16, 1998
9.2 Agreement between TGIS Partners, as nominee, and Joseph Handy, dated
February 16, 1998
9.3 Agreement between TGIS Partners, as nominee, and Charles P. Krokel,
dated February 16, 1998
9.4 Agreement between TGIS Partners, as nominee, and Gregory Weksel, dated
February 16, 1998
9.5 Agreement between TGIS Partners, as nominee, and Leonard Levine, dated
February 16, 1998
9.6 Agreement between TGIS Partners, as nominee, and Bertrand H. Weidberg,
Esq., dated February 16, 1998
9.7 Agreement between TGIS Partners, as nominee, and Francis M. Sassano,
dated February 16, 1998
9.8 Agreement between TGIS Partners, as nominee, and David Weksel, dated
February 16, 1998
9.9 Agreement between TGIS Partners, as nominee, and Deanna Weksel, dated
February 16, 1998
9.10 Agreement between TGIS Partners, as nominee, and Leonor Firstenberg,
dated February 16, 1998
10.1+ Employment Agreement, dated June , 1998, between the Company and
John L. Shermyen
10.2 1995 Incentive Stock Option Plan of the Company (including all
amendments)
10.3 Agreement, dated June 20, 1996, between Automated Dispatch Systems, Inc.
and Health Trans, Inc.
10.4 Agreement, dated June 20, 1996, between Automated Dispatch Systems, Inc.
and Health Trans of South Florida, Inc.
10.5 Dispatch Services Agreement, dated June 20, 1996, between Automated
Dispatch Systems, Inc. and Comprehensive Paratransit Services
10.6 Management and Advisory Agreement, dated June 20, 1996, between
Automated Dispatch Systems, Inc. and SEM, Inc.
10.7 Agreement, dated June 20, 1996, among Automated Dispatch Systems, Inc.
Comprehensive Paratransit Services and SEM, Inc.
</TABLE>

II-3
<PAGE>

<TABLE>
<C> <S>
10.8* Agreement, dated May 29, 1998, between the Company and the Connecticut
Department of Social Services
10.9* Contract, dated July 17, 1997, between the Company and the Georgia
Department of Administrative Services with respect to the Central
region of Georgia (including all amendments and renewals)
10.10* Contract, dated July 17, 1997, between the Company and the Georgia
Department of Administrative Services with respect to the East region
of Georgia (including all amendments and renewals)
10.11* Contract, dated July 17, 1997, between the Company and the Georgia
Department of Administrative Services with respect to the Southwest
region of Georgia (including all amendments and renewals)
10.12 Lease Agreement, dated August 27, 1997, between the Company and
Principal Mutual Life Insurance Company (including all amendments)
10.13 Lease Agreement, dated August 7, 1997, between the Company and New
World Partners Joint Venture
10.14 Lease Agreement, dated October 8, 1996, between the Company and Gerald
A. Chase
10.15 License Agreement between Automated Dispatch Systems, Inc. and
Automated Dispatch Services, Inc., dated January 1, 1995
10.16 License Agreement between Automated Dispatch Services, Inc. and
RadioSoft, Inc. dated April 26, 1994 (including all amendments)
10.17* Agreement between E.F Johnson and RadioSoft, Inc. dated March 3, 1995
10.18* 1998 Stock Option Plan of the Company
10.19+ Employment Agreement, dated June , 1998, between the Company and
Michael E. Weksel
10.20+ Credit facility and related agreements with respect to NationsBank N.A.
line of credit
23.1* Consent of Price Waterhouse LLP
23.2+ Consent of Proskauer Rose LLP (contained in opinion to be filed as
Exhibit 5)
24.1 Power of Attorney (set forth on page II-22)
27.1 Financial Data Schedule
</TABLE>
- ---------------------

* Filed herewith

+ To be filed by amendment

II-4
<PAGE>

ITEM 17. UNDERTAKINGS

The Registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
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.

The Registrant hereby undertakes to provide to the Underwriters at the
closing specified in the Underwriting Agreement (filed herewith as Exhibit
1.1) certificates in such denominations and registered in such names as
required by the Underwriters to permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described in Item 14, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 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 of 1933 and will be governed by the final
adjudication of such issue.

II-5
<PAGE>

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE UNDERSIGNED
REGISTRANT CERTIFIES THAT IT HAS DULY CAUSED THIS 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 17TH DAY OF JUNE, 1998.

LogistiCare, Inc.

/s/ John L. Shermyen
By: _________________________________
John L. Shermyen
President and Chief Executive
Officer

SIGNATURES AND POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each director and officer whose
signature appears below hereby constitutes and appoints John L. Shermyen and
Michael E. Weksel, or either of them, as his true and lawful attorney-in-fact
and agent, with full power of substitution, to sign on his behalf individually
and in any and all capacities (until revoked in writing), any and all
amendments (including post-effective amendments) to this Registration
Statement on Form SB-2, and any registration statement to relating to the same
offering as this Registration Statement that is to be effective upon filing
pursuant to Rule 462(b) and the Securities Act of 1933, to file the same with
all exhibits thereto and all other documents in connection therewith with the
Securities and Exchange Commission, granting to such attorneys-in-fact and
agents, and each of them, full power and authority to do all such other acts
and things requisite or necessary to be done, and to execute all such other
documents as they, or either of them, may deem necessary or desirable in
connection with the foregoing, as fully as the undersigned might or could do
in person, hereby ratifying and confirming all that such attorneys-in-fact and
agents, or either of them, may lawfully do or cause to be done by virtue
hereof.

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.

SIGNATURE TITLE DATE

Chairman of the Board
/s/ William Weksel* June 17, 1998
_________________________
WILLIAM WEKSEL

President, Chief June 17, 1998
/s/ John L. Shermyen Executive Officer and
_________________________ Director
JOHN L. SHERMYEN

Vice President, Chief June 17, 1998
/s/ Michael E. Weksel Financial Officer and
_________________________ Director (Principal
MICHAEL E. WEKSEL Financial Officer)

Director
_________________________ June 17, 1998
JOHN PAPPAJOHN

_________________________ Director June 17, 1998
DERACE L. SCHAFFER

Corporate Controller
/s/ Albert Cortina* (Controller or Principal June 17, 1998
_________________________ Accounting Officer)
ALBERT CORTINA

/s/ Michael E. Weksel
*By: _______________
Michael E. Weksel
Attorney-in-Fact

II-6
<PAGE>

INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
------- ----------- ----
<C> <S> <C>
1.1+ Form of Underwriting Agreement
3.1 Certificate of Incorporation of the Company (including all
amendments)
3.2 By-Laws of the Company
3.3* Restated Certificate of Incorporation of the Company, adopted
by the Company on June 10, 1998
3.4* Amended and Restated By-Laws of the Company, adopted by the
Company on June 10, 1998
4.1 Certificate of Designations, Preferences and Rights of Series A
Convertible Preferred Stock of the Company, dated June 6, 1997
5+ Opinion of Proskauer Rose LLP re: validity of securities

9.1 Agreement between TGIS Partners, as nominee, and William B.
McLiverty, dated February 16, 1998
9.2 Agreement between TGIS Partners, as nominee, and Joseph Handy,
dated February 16, 1998
9.3 Agreement between TGIS Partners, as nominee, and Charles P.
Krokel, dated February 16, 1998
9.4 Agreement between TGIS Partners, as nominee, and Gregory
Weksel, dated February 16, 1998
9.5 Agreement between TGIS Partners, as nominee, and Leonard
Levine, dated February 16, 1998
9.6 Agreement between TGIS Partners, as nominee, and Bertrand H.
Weidberg, Esq., dated February 16, 1998
9.7 Agreement between TGIS Partners, as nominee, and Francis M.
Sassano, dated February 16, 1998
9.8 Agreement between TGIS Partners, as nominee, and David Weksel,
dated February 16, 1998
9.9 Agreement between TGIS Partners, as nominee, and Deanna Weksel,
dated February 16, 1998
9.10 Agreement between TGIS Partners, as nominee, and Leonor
Firstenberg, dated February 16, 1998
10.1+ Employment Agreement, dated June , 1998, between the Company
and John L. Shermyen
10.2 1995 Incentive Stock Option Plan of the Company (including all
amendments)
10.3 Agreement, dated June 20, 1996, between Automated Dispatch
Systems, Inc. and Health Trans, Inc.
10.4 Agreement, dated June 20, 1996, between Automated Dispatch
Systems, Inc. and Health Trans of South Florida, Inc.
10.5 Dispatch Services Agreement, dated June 20, 1996, between
Automated Dispatch Systems, Inc. and Comprehensive Paratransit
Services
10.6 Management and Advisory Agreement, dated June 20, 1996, between
Automated Dispatch Systems, Inc. and SEM, Inc.
10.7 Agreement, dated June 20, 1996, among Automated Dispatch
Systems, Inc. Comprehensive Paratransit Services and SEM, Inc.
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
------- ----------- ----
<C> <S> <C>
10.8* Agreement, dated May 29, 1998, between the Company and the
Connecticut Department of Social Services
10.9* Contract, dated July 17, 1997, between the Company and the
Georgia Department of Administrative Services with respect to
the Central region of Georgia (including all amendments and
renewals)
10.10* Contract, dated July 17, 1997, between the Company and the
Georgia Department of Administrative Services with respect to
the East region of Georgia (including all amendments and
renewals)
10.11* Contract, dated July 17, 1997, between the Company and the
Georgia Department of Administrative Services with respect to
the Southwest region of Georgia (including all amendments and
renewals)
10.12 Lease Agreement, dated August 27, 1997, between the Company and
Principal Mutual Life Insurance Company (including all
amendments)
10.13 Lease Agreement, dated August 7, 1997, between the Company and
New World Partners Joint Venture
10.14 Lease Agreement, dated October 8, 1996, between the Company and
Gerald A. Chase
10.15 License Agreement between Automated Dispatch Systems, Inc. and
Automated Dispatch Services, Inc., dated January 1, 1995
10.16 License Agreement between Automated Dispatch Services, Inc. and
RadioSoft, Inc., dated April 26, 1994 (including all
amendments)
10.17* Agreement between E.F Johnson and RadioSoft, Inc. dated March
3, 1995.
10.18* 1998 Stock Option Plan of the Company
10.19+ Employment Agreement, dated June , 1998, between the Company
and
Michael E. Weksel
10.20+ Credit facility and related agreements with respect to
NationsBank N.A. line of credit
23.1* Consent of Price Waterhouse LLP
23.2+ Consent of Proskauer Rose LLP (contained in opinion to be filed
as Exhibit 5)
24.1 Power of Attorney (set forth on page II-22)
27.1 Financial Data Schedule
</TABLE>
- ---------------------

* Filed herewith

+ To be filed by amendment

<PAGE>

Exhibit 3.3

RESTATED CERTIFICATE OF INCORPORATION

LOGISTICARE, INC

(PURSUANT TO SECTION 245 OF THE
GENERAL CORPORATION LAW OF THE STATE OF DELAWARE)

This Restated Certificate of Incorporation of LogistiCare, Inc. was
duly adopted by its Board of Directors and stockholders in accordance with the
provisions of Section 245 of the General Corporation Law of the State of
Delaware. The name under which the Corporation was originally incorporated was
RadioSoft, Inc., and the date of filing of the original Certificate of
Incorporation of the Corporation with the Secretary of State of the State of
Delaware was March 17, 1994. The Certificate of Incorporation is amended and
restated in its entirety to read as follows:

FIRST

The name of the Corporation is LogistiCare, Inc. (the "Corporation").

SECOND

The address of the Corporation's registered office is 1013 Centre
Road, Wilmington, County of New Castle, Delaware 19805. The name of its
registered agent at such address is Corporation Service Company.

THIRD

The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware (the "General Corporation Law").

FOURTH

The duration of the Corporation is to be perpetual.
<PAGE>

FIFTH

The total number of shares of all classes of stock which the
Corporation shall have authority to issue is Thirty-One Million (31,000,000),
consisting of Thirty Million (30,000,000) shares of common stock, par value $.01
per share ("Common Stock"), and One Million (1,000,000) shares of preferred
stock, par value $.01 per share ("Preferred Stock").

The Board of Directors may authorize, without further stockholder
approval, the issuance from time to time of one or more classes or series of
Preferred Stock with such designations and such powers, preferences and rights,
and such qualifications, limitations or restrictions (which may differ with
respect to each series) as the Board of Directors may fix by resolution. Shares
of capital stock of the Corporation may be issued for such consideration, not
less than the par value thereof, as shall be fixed from time to time by the
Board of Directors, and shares issued for such consideration shall be fully paid
and nonassessable.

The following is a statement of the powers, preferences and rights and
the qualifications, restrictions and limitations of the Common Stock of the
Corporation:

(1) Dividends. The holders of record of Common Stock shall be
---------
entitled to receive such dividends ratably as may from time to time be declared
by the Board of Directors out of funds legally available therefor.

(2) Liquidation. In the event of any liquidation, dissolution or
-----------
winding up of the affairs of the Corporation, voluntary or involuntary, the net
assets of the Corporation available to stockholders shall be distributed ratably
to the holders of Common Stock. Neither the merger or consolidation of the
Corporation with or into another corporation nor any sale, lease, conveyance or
other disposition of all or substantially all of the property, business or
assets of the Corporation shall be deemed to be a liquidation, dissolution or
winding up of the affairs of the Corporation within the meaning of this Article
FIFTH.

(3) Voting Rights. Except as otherwise required by law, the holders
-------------
of Common Shares shall be entitled to one vote in respect of each share held on
all matters voted upon by the stockholders of the Corporation.

(4) Other Rights. The Common Stock shall not bear any preferential,
------------
conversion or preemptive rights.

Page 2 of 7
<PAGE>

Upon the filing in the office of the Secretary of State of the State
of Delaware of this Restated Certificate of Incorporation, each issued and
outstanding share of Common Stock of the Corporation shall be automatically
reclassified as and changed into two (2) validly issued, fully paid and
nonassessable shares of Common Stock, without any action on the part of the
holder thereof. No scrip of fractional shares will be issued by reason of this
amendment.

Following the date the Corporation first has a class of securities
registered under Section 12 of the Securities Exchange Act of 1934, as amended,
no action required or permitted to be taken at any annual or special meeting of
the stockholders of the Corporation may be taken by written consent without a
meeting, except by a written consent signed by all stockholders of the
Corporation entitled to vote thereon.

SIXTH

(1) Unless a greater vote requirement in any matter is provided
in this Certificate of Incorporation or the By-Laws, the affirmative vote of a
majority of the directors present and acting at a duly constituted meeting at
which a majority of the entire Board of Directors is present and acting, is
sufficient for all action of the Board of Directors.

(2) Any action required or permitted to be taken by the Board of
Directors may be taken without a meeting if all members of the Board consent in
writing to the adoption of resolutions authorizing the action.

(3) Elections of directors need not be by ballot unless the By-
Laws of the Corporation shall so provide.

SEVENTH

No director shall be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty by such director
as a director, provided that this Article SEVENTH shall not eliminate or limit
the liability of a director (1) for any breach of such director's duty of
loyalty to the Corporation or its stockholders, (2) for acts or omissions of
such director not in good faith or which involve intentional misconduct or a
knowing violation of law, (3) under Section 174 of the General Corporation Law,
or (4) for any transaction from which such director derived an improper personal
benefit, in respect of which such breach of fiduciary duty occurred. If the
General Corporation Law is amended after approval by the stockholders of this
Article SEVENTH to authorize corporate action further eliminating or limiting
the

Page 3 of 7
<PAGE>

personal liability of directors, then the liability of a director of the
Corporation shall be eliminated or limited to the fullest extent permitted by
the General Corporation Law, as so amended from time to time.

(1) Right of Indemnification. Each person who was or is made a party
------------------------
or is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, or a person
of whom he or she is the legal representative, (a) is or was a director or
officer of the Corporation or (b) is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation or
of a partnership, joint venture, trust or other enterprise, including service
with respect to employee benefit plans (whether the basis of such proceeding is
alleged action in an official capacity as a director, officer, employee or agent
or in any other capacity while serving as a director, officer, employee or
agent), shall be indemnified and held harmless by the Corporation to the fullest
extent authorized by the General Corporation Law, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits the Corporation to provide broader indemnification
rights than said law permitted the Corporation to provide prior to such
amendment), against all expense, liability and loss (including attorneys' fees,
judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid
in settlement) actually and reasonably incurred or suffered by such person in
connection therewith and such indemnification shall continue as to a person who
has ceased to be a director, officer, employee or agent and shall inure to the
benefit of his or her heirs, executors and administrators; provided, however,
-------- -------
that, except as provided in paragraph (2) hereof the Corporation shall indemnify
any such person seeking indemnification in connection with a proceeding (or part
thereof) initiated by such person only if such proceeding (or part thereof) was
authorized by the Board of Directors of the Corporation.

The right to indemnification conferred in this Article SEVENTH shall
be a contract right and shall include the right to be paid by the Corporation
the expenses incurred in defending any such proceeding in advance of its final
disposition; provided, however, that, if the General Corporation Law requires,
-------- -------
the payment of such expenses incurred by a director or officer in his or her
capacity as such (and not in any other capacity in which service was or is
rendered by such person while a director or officer, including, without
limitation, service with respect to an employee benefit plan) in advance of the
final disposition of a proceeding, shall be made only upon delivery to the
Corporation of an undertaking, by or on behalf of such director or officer, to
repay all amounts so advanced if it shall ultimately be determined that such
director or officer is not entitled to be indemnified under this Article SEVENTH
or otherwise. The Corporation may, by action of its Board of Directors, provide
indemnification to employees and agents of the Corporation with the same scope
and effect as the foregoing indemnification of directors and officers.

Page 4 of 7
<PAGE>

(2) Right of Claimant to Bring Suit. If a claim under paragraph (1)
-------------------------------
of Section B of this Article SEVENTH is not paid in full by the Corporation
within thirty days after a written claim has been received by the Corporation,
the claimant may at any time thereafter bring suit against the Corporation to
recover the unpaid amount of the claim and, if successful in whole or in part,
the claimant shall be entitled to be paid also the expense of prosecuting such
claim. It shall be a defense to any such action (other than an action brought
to enforce a claim for expenses incurred in defending any proceeding in advance
of its final disposition where the required undertaking, if any is required, has
been tendered to the Corporation) that the claimant has not met the standards of
conduct which make it permissible under the General Corporation law for the
Corporation to indemnify the claimant for the amount claimed, but the burden of
proving such defense shall be on the Corporation.

Neither the failure of the Corporation (including its Board of
Directors, independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in the General Corporation Law, nor an
actual determination by the Corporation (including its Board of Directors,
independent legal counsel, or its stockholders) that the claimant has not met
such applicable standard of conduct, shall be a defense to the action or create
a presumption that the claimant has not met the applicable standard of conduct.

(3) Non-Exclusivity of Rights. The right to indemnification and the
-------------------------
payment of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this Article SEVENTH shall not be exclusive of any
other right which any person may have or hereafter acquire under any statute,
provision of the Certificate of Incorporation, by-law, agreement, vote of
stockholders or disinterested directors or otherwise.

(4) Insurance. The Corporation may maintain insurance, at its
---------
expense, to protect itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit plans, against
any such expense, liability or loss, whether or not the Corporation would have
the power to indemnify such person against such expense, liability or loss under
the General Corporation Law.

EIGHTH

The Corporation reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation, in the manner now
or hereafter prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation; provided, however, that
-------- -------
Paragraphs B and E of Article FIFTH herein shall be amended, altered or
repealed, and any provision inconsistent therewith shall be adopted, only by the
affirmative vote of not less than 80% of the aggregate voting power of the
outstanding stock.

Page 5 of 7
<PAGE>

NINTH

The directors of the Corporation may, by a vote of a majority of
directors present at a meeting in which a quorum is present, adopt, amend or
repeal any By-Law of the Corporation.

TENTH

Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this Corporation under
(S) 291 of Title 8 of the Delaware Code or on the application of trustees in
dissolution or of any receiver or receivers appointed for this Corporation under
(S) 279 of Title 8 of the Delaware Code order a meeting of the creditors or
class of creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, to be summoned in such manner as the said court
directs. If a majority in number representing three-fourths in value of the
creditors or class of creditors, and/or of the stockholders or class of
stockholders of this Corporation, as the case may be, agree to any compromise or
arrangement and to any reorganization of this Corporation as a consequence of
such compromise or arrangement, the said compromise or arrangement and the said
reorganization shall, if sanctioned by the court to which the said application
has been made, be binding on all the creditors or class of creditors, and/or on
all the stockholders or class of stockholders, of this Corporation, as the case
may be, and also on this Corporation.

Page 6 of 7
<PAGE>

IN WITNESS WHEREOF, the Corporation has caused this Restated
Certificate of Incorporation to be executed in its name by its President and
attested to by its Secretary this 10th day of June, 1998, and the statements
contained herein are affirmed as true under penalties of perjury.

LOGISTICARE, INC.

By: /s/ John L. Shermyen
---------------------
John L. Shermyen
President

ATTEST:

By: /s/ Michael E. Weksel
----------------------
Michael E. Weksel
Secretary

Page 7 of 7

<PAGE>

Exhibit 3.4

AMENDED AND RESTATED BY-LAWS

LOGISTICARE, INC.

----------

ARTICLE I
----------

OFFICES

The Corporation shall maintain a registered office in the State of
Delaware as required by law. The Corporation may also have offices at other
places, within and without the State of Delaware.

ARTICLE II
----------

MEETINGS OF STOCKHOLDERS

SECTION 1. PLACE OF MEETINGS. Meetings of stockholders shall be held
-----------------
at the principal office of the Corporation or such place within or without the
State of Delaware as the Board of Directors shall authorize.

SECTION 2. ANNUAL MEETINGS. The annual meeting of stockholders for
---------------
the election of directors and the transaction of such other business as may
properly come before the meeting shall be held at such times as may be fixed
from time to time by the Board of Directors. The Board of Directors acting by
resolution may postpone and reschedule any previously scheduled annual meeting
of stockholders.

SECTION 3. SPECIAL MEETINGS. Special meetings of stockholders may be
----------------
called by the Board of Directors or the Chairman of the Board of Directors.
Such request shall state the purpose or purposes of the proposed meeting.
Business transacted at a special meeting shall be confined to the purpose or
purposes stated in the notice. The Board of Directors acting by resolution may
postpone and reschedule any previously scheduled special meeting of
stockholders.

SECTION 4. NOTICE OF MEETINGS OF STOCKHOLDERS. Written notice,
----------------------------------
stating the place, date and time of the meeting, the purpose or purposes of the
meeting and, unless it is the annual meeting, an indication that it is being
issued by or at the direction of the person or persons calling the meeting,
shall be given to each stockholder entitled to vote thereat, except that (a) it
shall not be necessary to give notice to any stockholder who submits a
signed waiver of notice before or after the meeting, and (b) no notice of an
adjourned meeting need be given,
<PAGE>

except when required by law or if the time and place are announced at the
meeting at which the adjournment is taken, provided that, if adjournment is for
more than 30 days or if, after the adjournment, a new record date is fixed for
the meeting, notice of the adjourned meeting shall be given. Each notice of a
meeting shall be given, personally or by mail, not fewer than 10 or more than 60
days before the meeting and shall state the time and place of the meeting, and,
unless it is the annual meeting, shall state at whose direction or request the
meeting is called and the purposes for which it is called. If mailed, notice
shall be considered given when mailed to a stockholder at his address on the
Corporation's records. The attendance of any stockholder at a meeting, without
protesting at the beginning of the meeting that the meeting is not lawfully
called or convened, shall constitute a waiver of notice by him.

SECTION 5. FIXING RECORD DATE. In order that the Corporation may
------------------
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or to express consent to corporate
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or for the purpose of
any other lawful action, the Board of Directors may fix, in advance, a record
date for any such determination of stockholders. Such date shall not be more
than sixty nor less than ten days before the date of such meeting, nor more than
sixty days prior to any other action. If no record date is fixed it shall be
determined in accordance with the provisions of law. When a determination of
stockholders of record entitled to notice of or to vote at any meeting of
stockholders has been made as provided in this Section 5, such determination
shall apply to any adjournment thereof, unless the Board of Directors fixes a
new record date for the adjourned meeting or further notice is required by
statute.

SECTION 6. QUORUM. Except as otherwise required by law, by the
------
Certificate of Incorporation or by these By-Laws, the presence, in person or by
proxy, of stockholders holding a majority of the stock of the Corporation
entitled to vote shall constitute a quorum at all meetings of the stockholders.
When a quorum is once present to organize a meeting, it is not broken by the
subsequent withdrawal of any stockholders. In case a quorum shall not be
present at any meeting, a majority in interest of the stockholders entitled to
vote thereat, present in person or by proxy, shall have power to adjourn the
meeting from time to time, without notice other than an announcement at the
meeting of the place, date and hour of the adjourned meeting, until a quorum
shall be present, and at the adjourned meeting at which a quorum is present any
business may be transacted that might have been transacted at the meeting as
originally called.

SECTION 7. WAIVERS. Notice of meeting need not be given to any
-------
stockholder who signs a waiver of notice, in person or by proxy, whether before
or after the meeting. The attendance of a stockholder at a meeting shall
constitute a waiver of notice of such meeting, except when the stockholder
attends a meeting for the express purpose of objecting at the beginning of the
meeting to the transaction of any business because the meeting is not lawfully
called or convened.

SECTION 8. PROXIES. Each stockholder entitled to vote at a meeting
-------
of stockholders or to express consent or dissent without a meeting may authorize
another person or persons to act for him or her by proxy. Every proxy must be
signed by the stockholder or his or

Page 2 of 10
<PAGE>

her attorney-in-fact. No proxy shall be valid after expiration of three years
from the date thereof unless otherwise provided in the proxy. Every proxy shall
be revocable at the pleasure of the stockholder executing it, except as
otherwise provided by law.

SECTION 9. VOTING RIGHTS OF STOCKHOLDERS. Every stockholder of
-----------------------------
record shall be entitled at every meeting of the stockholders to one vote for
each share standing in such stockholder's name on the record of stockholders of
the Corporation, unless otherwise provided by statute, by the Certificate of
Incorporation or by these By-Laws.

SECTION 10. VOTING. Except as otherwise provided by law or by the
------
Certificate of Incorporation, all elections for directors shall be decided by a
plurality of the votes cast at a meeting of stockholders by the holders of
shares entitled to vote in the election, and all other corporate action to be
taken by stockholder vote shall be authorized by a majority of the votes cast at
a meeting of stockholders.

ARTICLE III
-----------

DIRECTORS

SECTION 1. NUMBER AND QUALIFICATION. Except as may otherwise be
------------------------
provided in the Certificate of Incorporation or By-Laws, the business and
affairs of the Corporation shall be managed by or under the direction of a Board
of Directors of five (5) directors, which number may from time to time be
increased or decreased by a vote of a majority of the Board of Directors. No
decrease in the number of directors shall shorten the term of any incumbent
director.

SECTION 2. NOMINATION OF DIRECTORS.
-----------------------

A. Only persons who are nominated in accordance with the
procedures set forth in this paragraph shall be eligible to serve as directors.
Nominations of persons for election to the Board of Directors of the Corporation
may be made at an annual meeting of stockholders (a) by or at the direction of
the Board of Directors or (b) by or on behalf of a stockholder of the
Corporation, or a duly authorized proxy for such stockholder, who is a
stockholder of record at the time of giving notice provided for in this
paragraph and who shall be entitled to vote for the election of directors at the
meeting.

B. Any nominations not made by or at the direction of the Board of
Directors must be made pursuant to a notice in writing to the Secretary of the
Corporation delivered or mailed to, and received at, the principal executive
offices of the Corporation not fewer than 60 days or more than 90 days prior to
the anniversary date of the immediately preceding annual meeting; provided,
--------
however, that in the event the annual meeting with respect to which such notice
- -------
is to be tendered is not held within 30 days before or after such anniversary
date, such notice by the stockholder must be received at the principal executive
offices of the Corporation

Page 3 of 10
<PAGE>

prior to the close of business on the tenth day following the date on which
notice of the meeting was first given or made to stockholders generally.

C. Such stockholder's notice shall set forth (a) as to each person
whom the stockholder proposes to nominate for election or reelection as a
director, all information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors, or is otherwise
required, in each case pursuant to Regulation 14A under the Securities Exchange
Act of 1934 (including such person's written consent to being named as a nominee
and to serving as a director, if elected); and (b) as to the stockholder giving
the notice (i) the name and address, as they appear on the Corporation's books,
of such stockholder, (ii) the class and number of shares of stock of the
Corporation beneficially owned by such stockholder and represented by proxy and
(iii) a description of all arrangements or understandings between such
stockholder and any other person or persons (including their names) in
connection with such nomination and any material interest of such stockholder in
such nomination.

D. At the request of the Board of Directors, any person nominated
by the Board of Directors for election as a director shall furnish to the
secretary of the Corporation that information required to be set forth in a
stockholder's notice of nomination that pertains to the nominee. If the Board
of Directors shall determine, based on the facts, that a nomination was not made
in accordance with the procedures of Section 2 of this Article III, the chairman
of the meeting shall so declare to the meeting and the defective nomination
shall be disregarded.]

SECTION 3. TERM OF OFFICE. Directors shall be elected at each annual
--------------
meeting of stockholders by a plurality of the votes cast. Each director shall
serve for an indefinite term that expires at each annual meeting of the
stockholders. A director shall hold office until a successor is elected and has
qualified or until the earlier death, resignation, removal or disqualification
of the director.

SECTION 4. PLACE OF BOARD MEETINGS. Meetings of the Board of
-----------------------
Directors, regular or special, may be held at the office of the Corporation or
at such other places, either within or without the State of Delaware, as it may
from time to time determine or as may be specified in the notice of any meeting.

SECTION 5. ANNUAL MEETINGS. An annual meeting of the Board of
---------------
Directors shall be held immediately following the annual meeting of stockholders
at the place of such annual meeting of stockholders for the purposes of electing
officers of the Corporation and the committees of the Board of Directors and
transacting any other business which may properly come before the meeting.
Notice of annual meetings of the Board of Directors need not be given in order
legally to constitute the meeting, provided a quorum shall be present.

SECTION 6. REGULAR MEETINGS. Regular meetings of the Board of
----------------
Directors may be held at such places and times as shall be determined from time
to time by resolution of the directors or at such other times and dates as the
Chairman of the Board or President shall determine and as shall be specified in
the notice of such meetings. Regular meetings may be held without notice if the
time and place of such meetings are fixed by the By-

Page 4 of 10
<PAGE>

Laws or the Board of Directors. Notice of regular meetings of the Board of
Directors need not be given except as otherwise required by statute or these By-
Laws.

SECTION 7. SPECIAL MEETINGS. Special meetings of the Board of
----------------
Directors may be called by the Secretary of the Corporation upon the written
request of the Chairman of the Board of Directors or any two directors.

SECTION 8. NOTICE OF MEETINGS. Notice of each special meeting of the
------------------
Board of Directors (and of each regular meeting for which notice shall be
required) shall be given by the Secretary as hereinafter provided in this
Section 8, which notice shall state the time, place and, if required by statute
or these By-Laws, the purposes of such meeting. Notice of each such meeting
shall be mailed, postage thereon prepaid, to each director, by first-class mail,
at least four days before the day on which such meeting is to be held, or shall
be sent by facsimile transmission or comparable medium, or be delivered
personally or by telephone, at least twenty-four hours before the time at which
such meeting is to be held. Any meeting of the Board of Directors shall be a
legal meeting without notice thereof having been given, if all the directors of
the Corporation then holding office shall be present thereat.

SECTION 9. WAIVERS. Notice of a meeting need not be given to any
-------
director who submits a waiver of notice whether before or after the meeting or
who attends the meeting without protesting at the beginning of the meeting to
the transaction of any business because of lack of notice of the meeting.

SECTION 10. QUORUM OF DIRECTORS. Unless otherwise provided in the
-------------------
Certificate of Incorporation or these By-Laws, a majority of the directors shall
constitute a quorum for the transaction of business or of any specified item of
business. If at any meeting of the Board of Directors there shall be less than
a quorum present, a majority of those present may adjourn the meeting from time
to time until a quorum is obtained, and no further notice thereof need be given
other than by announcement at the meeting which shall be so adjourned.

SECTION 11. PARTICIPATION IN MEETINGS WITHOUT PHYSICAL PRESENCE. Any
---------------------------------------------------
or all members of the Board of Directors or any committee of the Board of
Directors may participate in a meeting of the Board of Directors or the
committee by means of a conference telephone or similar communications equipment
allowing all persons participating in the meeting to hear each other at the same
time. Participation by such means shall constitute presence in person at the
meeting.

SECTION 12. BOARD ACTION. Unless otherwise provided in the
------------
Certificate of Incorporation or these By-Laws, the vote of a majority of the
directors present shall be the act of the Board of Directors. Each director
shall have one vote regardless of the number of shares, if any, which he or she
may hold.

SECTION 13. ACTION WITHOUT MEETING. Any action required or permitted
----------------------
to be taken at any meeting of the Board of Directors, or of any committee
thereof, may be taken without a meeting, if a written consent thereto is signed
by all members of the Board of

Page 5 of 10
<PAGE>

Directors, or of such committee, as the case may be. The written consent or
consents to each such action, including the resolutions adopted thereby, shall
be filed with the minutes of the proceedings of the Board of Directors or of the
committee taking such action.

SECTION 14. REMOVAL OF DIRECTORS. Any director or directors may be
--------------------
removed with cause at any time by the affirmative vote of the holders of a
majority of all the shares of stock outstanding and entitled to vote, at a
special meeting of the stockholders called for that purpose and the vacancies
thus created may be filled, at the meeting held for the purpose of removal,
pursuant to Section 16 of this Article III.

SECTION 15. RESIGNATION. Any director may resign at any time. Such
-----------
resignation shall be made in writing, and shall take effect at the time
specified therein, and if no time be specified, at the time of its receipt by
the Board of Directors, President or Secretary. The acceptance of a resignation
shall not be necessary to make it effective.

SECTION 16. NEWLY CREATED DIRECTORSHIPS AND VACANCIES. Newly created
-----------------------------------------
directorships resulting from an increase in the number of directors and
vacancies occurring in the Board of Directors for any reason may be filled for
the unexpired term by a majority vote of the remaining directors, though less
than a quorum, or by a sole remaining director; if there are no directors then
in office due to such a vacancy, the stockholders may elect a successor who
shall hold office for the unexpired term. A director elected to fill a vacancy
shall be elected to hold office until the next annual meeting of stockholders at
which the election of such director is in the regular order of business and
until his or her successor has been elected and qualified. No decrease in the
number of directors shall shorten the term of any incumbent directors.

ARTICLE IV
----------

OFFICERS

SECTION 1. OFFICERS. The Corporation shall have one or more natural
--------
persons exercising the functions of the offices of Chief Executive Officer and
Chief Financial Officer. The Board of Directors may elect or appoint such other
officers or agents as it deems necessary for the operation and management of the
Corporation, with such powers, rights, duties and responsibilities as may be
determined by the Board of Directors, including, without limitation, a
President, one or more Vice Presidents, a Secretary and a Treasurer, each of
whom shall have the powers, rights, duties and responsibilities set forth in
these By-Laws unless otherwise determined by the Board of Directors. Any of the
offices or functions of those offices may be held by the same person, except the
offices of President and Secretary.

SECTION 2. ELECTION OR APPOINTMENT AND TERM OF OFFICE. Each officer
------------------------------------------
shall be elected or appointed by the Board of Directors to hold office until the
next annual meeting of the Board of Directors and until such officer's successor
is elected or appointed and qualified, or until such earlier date as shall be
prescribed by the Board of Directors at the time

Page 6 of 10
<PAGE>

of his or her election or appointment or until an earlier resignation, removal
or displacement from office. Any officer may be removed at any time, with or
without cause, by vote of a majority of the Board of Directors.

SECTION 3. VACANCIES. In the event of the resignation, removal or
---------
other displacement from office of an officer elected or appointed by the Board
of Directors, the Board of Directors, in its sole discretion, may elect or
appoint a successor to fill the unexpired term.

SECTION 4. THE CHAIRMAN OF THE BOARD. The Chairman of the Board of
-------------------------
Directors shall, when present, preside as chairman at all meetings of the
stockholders and of the Board of Directors.

SECTION 5. CHIEF EXECUTIVE OFFICER. Unless provided otherwise by a
-----------------------
resolution adopted by the Board of Directors, the Chief Executive Officer (a)
shall have general active management of the business of the Corporation; (b)
shall, in the absence of the Chairman of the Board of Directors and when
present, preside at all meetings of the stockholders and Board of Directors; (c)
shall see that all orders and resolutions of the Board of Directors are carried
into effect; and (d) may maintain records of and certify proceedings of the
Board of Directors and stockholders; and (e) shall perform such other duties as
may from time to time be assigned by the Board of Directors.

SECTION 6. CHIEF FINANCIAL OFFICER. Unless provided otherwise by
-----------------------
resolution adopted by the Board of Directors, the Chief Financial Officer (a)
shall keep accurate financial records for the Corporation; (b) shall deposit all
monies, drafts and checks in the name of and to the credit of the Corporation in
such banks and depositories as the Board of Directors shall designate from time
to time; (c) shall endorse for deposit all notes, checks and drafts received by
the Corporation as ordered by the Board of Directors, making proper vouchers
therefor; (d) shall disburse corporate funds and issue checks and drafts in the
name of the Corporation, as ordered by the Board of Directors; (e) shall render
to the Chief Executive Officer and the Board of Directors, whenever requested,
an account of all of such officer's transactions as Chief Financial Officer and
of the financial condition of the Corporation; and (f) shall perform such other
duties as may be prescribed by the Board of Directors or the Chief Executive
Officer from time to time.

SECTION 7. PRESIDENT. Unless otherwise determined by the Board of
---------
Directors, the President shall be the Chief Executive Officer of the
Corporation. If an officer other than the President is designated Chief
Executive Officer, the President shall perform such duties as may from time to
time be assigned by the Board of Directors. In the absence of the Chairman of
the Board of Directors, the President shall preside at meetings of the
stockholders and of the Board of Directors.

SECTION 8. VICE PRESIDENTS. Any one or more Vice Presidents, if any,
---------------
may be designated by the Board of Directors as Executive Vice Presidents or
Senior Vice Presidents. During the absence or disability of the President, it
shall be the duty of the highest ranking Executive Vice President, and, in the
absence of any such Vice President, it shall be the duty of the highest ranking
Senior Vice President or other Vice President, who shall be present at

Page 7 of 10
<PAGE>

the time and able to act, to perform the duties of the President. The
determination of who is the highest ranking of two or more persons holding the
same office shall, in the absence of specific designation of order of rank by
the Board of Directors, be made on the basis of the earliest date of appointment
or election, or, in the event of simultaneous appointment or election, on the
basis of the longest continuous employment by the Corporation.

SECTION 9. SECRETARY. The Secretary, unless otherwise determined by
---------
the Board of Directors, shall attend all meetings of the stockholders and all
meetings of the Board of Directors, shall record or cause to be recorded all
proceedings thereof in a book to be kept for that purpose, and may certify such
proceedings. Except as otherwise required or permitted by law or by these By-
Laws, the Secretary shall give or cause to be given notice of all meetings of
the stockholders and all meetings of the Board of Directors.

SECTION 10. TREASURER. Unless otherwise determined by the Board of
---------
Directors, the Treasurer shall be the Chief Financial Officer of the
Corporation. If an officer other than the Treasurer is designated Chief
Financial Officer, the Treasurer shall perform such duties as may from time to
time be assigned by the Board of Directors.

SECTION 11. OTHER OFFICERS. The other officers of the Corporation,
--------------
subject and reporting to the Chief Executive Officer and/or President, as
determined from time to time by the Board of Directors, shall each have such
powers and duties generally pertaining to their respective offices.

SECTION 12. SALARIES. The salaries of all officers of the Corporation
--------
shall be fixed by the Board of Directors, or by the Chief Executive Officer if
authorized by the Board of Directors.

SECTION 13. SHARES OF OTHER CORPORATIONS. Whenever the Corporation
----------------------------
is the holder of shares of any other Corporation, any or all rights and powers
of the Corporation as such stockholder (including the attendance, acting and
voting at stockholders' meetings, and execution of waivers, consents and
proxies) may be exercised on behalf of the Corporation by the President or by
such other person as the Board of Directors may authorize.

Page 8 of 10
<PAGE>

ARTICLE V
---------

CERTIFICATES FOR SHARES

SECTION 1. CERTIFICATES. The certificates for shares of the
------------
Corporation shall be in such form as shall be determined by the Board of
Directors.

SECTION 2. FRACTIONAL SHARES. The Corporation may, but shall not be
-----------------
required to, issue fractions of a share. If the Corporation does not in any
case issue a fraction of a share, it shall instead pay to the stockholder an
amount in cash in lieu of such fraction of a share equal to the fair market
value of such fraction of a share, as determined in good faith by the Board of
Directors. In addition, the Corporation may at any time elect to pay to each
holder of a fraction of a share an amount in cash in lieu of such fraction of a
share equal to the fair market value of such holder's fraction of a share, as
determined in good faith by the Board of Directors.

SECTION 3. LOST, MUTILATED, STOLEN OR DESTROYED CERTIFICATES. The
-------------------------------------------------
Corporation may issue a new certificate or new certificates in place of any
certificate theretofore issued by the Corporation alleged to have been lost,
mutilated, stolen or destroyed. The Board of Directors, in its discretion and
as a condition precedent to the issuance thereof, may prescribe such terms and
conditions as it deems expedient, and may require such indemnities as it deems
adequate, to protect the Corporation from any claim that may be made against it
with respect to any such certificate alleged to have been lost, mutilated,
stolen or destroyed.

SECTION 4. TRANSFER AGENT AND REGISTRAR; REGULATIONS. The Board of
-----------------------------------------
Directors may appoint transfer agents or registrars, or both, and may require
all share certificates to bear the signature of either or both. The Board of
Directors may make such additional rules and regulations as it may deem
expedient concerning the issue, transfer and registration of certificates for
shares of the Corporation.

SECTION 5. TRANSFER OF SHARES. Upon surrender to the Corporation or
------------------
the transfer agent of the Corporation of a certificate for shares duly endorsed
or accompanied by proper evidence of succession, assignment or authority to
transfer, the Corporation shall issue or cause the transfer agent to issue a new
certificate to the person entitled thereto, shall cancel the old certificate and
shall record such transfer upon the books of the corporation.

Page 9 of 10
<PAGE>

ARTICLE VI
----------

GENERAL

SECTION 1. FISCAL YEAR. The fiscal year of the Corporation shall be
-----------
fixed and may from time to time be changed by resolution of the Board of
Directors.

SECTION 2. SEAL. The seal of the Corporation, if any, shall be
----
circular in form and bear the name of the Corporation, and the year and the
state of its organization.

SECTION 3. AMENDMENTS. These By-Laws may be amended or repealed or
----------
new By-Laws may be adopted by the affirmative vote of a majority of the
stockholders (unless a greater percentage is required by the Certificate of
Incorporation or these By-Laws) at any annual or special meeting, if the notice
thereof mentions that amendment or repeal or the adoption of new By-Laws is one
of the purposes of such meeting. These By-Laws may also be amended or repealed
or new By-Laws may be adopted by the affirmative vote of a majority of the Board
of Directors given at any meeting (unless a greater percentage is required by
the Certificate of Incorporation or these By-Laws) if the notice thereof
mentions that amendment or repeal or the adoption of new By-Laws is one of the
purposes of such meeting; provided, however, that if any By-Laws regulating an
-------- -------
impending election of directors is adopted or amended or repealed by the Board
of Directors there shall be set forth in the notice of the next meeting of the
stockholders for the election of directors the By-Laws so adopted or amended or
repealed, together with a concise statement of the changes made.

Page 10 of 10

<PAGE>

EXHIBIT 10.8

[x]Original Contract 9046100
----------
[box] Amendment:
-----------------
Max. Contract $ 7,264,486.00
--------------
Contract Contact Person KM Brennan
------------
Contact Phone 860-424-5693
---------------
Revised 5/7/97 (MSW-97 posc2.doc)
(For Internal Use Only)

STATE OF CONNECTICUT
HUMAN SERVICE CONTRACT
PART I

The State of Connecticut Department of Social Services
-------------------------------------

Street: 25 Sigourney Street
---------------------------

City: Hartford State: CT Zip 06106-5033
--------------------------------- -- ----------

Tel: (860) 424-5693 hereinafter "the department",
----------------------------------
hereby enters into a contract with:

Contractor's Name: Logisticare, Inc.
-----------------

Street: 1895 Phoenix Blvd., Suite 306
-----------------------------

City: College Park State: GA Zip: 30349
-------------------------------- -- ------

Tel: (770) 907-7596 FEIN/SS#: 13-3765416
--------------------- ------------

hereinafter "the contractor", for the provision of services outlined herein.

1. This contract is in effect from 2/1/98 through 1/31/1999.
------ ---------

2. Contractor is a set aside contractor pursuant to (S) 32-9e of the Conn.
Gen. Stat.: [ ] YES [X] NO

3. The contractor shall perform the specific services as described in
accordance with:

PART II: Contract terms required by the department, consisting of 5 pages,
-
numbered consecutively beginning with page 10;
--
PART III: Specific terms for contract performance, statement of
compensation and terms of payment, consisting of 12 pages, numbered
--
consecutively beginning with page 15 and ending with the Acceptances and
--
Approvals page, numbered 27
--
WORKFORCE ANALYSIS: The contractor has provided the Workforce Analysis
affirmative action report attached hereto and made a part hereof, related
to employment practices and procedures.

4. STATUTORY AUTHORITY: The Department is authorized to enter into this
contract pursuant to (S) 17b-276 Connecticut General Statutes.
-------

Page 1 of 29
<PAGE>

5. EFFECTIVE DATE: This contract shall become effective only as of the date
of signature by the department's authorized official(s) and, where applicable,
the date of approval by the Attorney General. Upon such execution, this
contract shall be deemed effective for the entire term specified in Section 1,
above. This contract may be amended pursuant to Section 6.

6. CONTRACT REVISIONS AND AMENDMENTS: (a) A formal contract amendment, in
writing, shall not be effective until executed by both parties to the contract,
and, where applicable, the Attorney General. Such amendments shall be required
for extensions to the final date of the contract period and to terms and
conditions specifically stated in Part II or Part III of this contract,
including but not limited to revisions to the maximum contract payment, to the
unit cost of service, to the contract's objectives, services, or plan, to due
dates for reports, to completion of objectives or services, and to any other
contract revisions determined material by the department.

(b) The contractor shall submit to the department in writing any proposed
revision to the contract and the department shall notify the contractor of
receipt of the proposed revision. Any proposal deemed material shall be
executed pursuant to (a) of this section. The department may accept any
proposal as a technical amendment and notify the contractor in writing of
the same. A technical amendment shall be effective on the date approved by
the department, unless expressly stated otherwise.

7. LIAISON: Each party shall designate a liaison to facilitate a cooperative
working relationship between the contractor and the department in the
performance and administration of this contract.

8. CANCELLATION AND RECOUPMENT:
(a) This agreement shall remain in full force and effect for the entire term of
the contract period specified in Section 1, above, unless either party
provides written notice ninety (90) days or more from the date of
termination, except that no cancellation by the contractor may be effective
for failure to provide services for the agreed price or rate and
cancellation by the department shall not be effective against services
already rendered, so long as the services were rendered in compliance with
the contract during the term of the contract.

(b) In the event the health or welfare of the service recipients is endangered,
the department may cancel the contract and take any immediate action
without notice it deems appropriate to protect the health and welfare of
service recipients. The department shall notify the contractor of the
specific reasons for taking such action in writing within five (5) business
days of cancellation. Within five (5) business days of receipt of this
notice, the contractor may request in writing a meeting with the
commissioner of the department or his/her designee. Any such meeting shall
be held within five (5) business days of the written request. At the
meeting, the contractor shall be given an opportunity to present
information on why the department's actions should be reversed or modified.
Within five (5) business days of such meeting, the commissioner of the
department shall notify the contractor in writing of his/her decision
upholding, reversing or modifying the action of the department. This
action of the commissioner shall be considered final.

(c) The department reserves the right to cancel the contract without prior
notice when the funding for the contract is no longer available.

Page 2 of 29
<PAGE>

(d) The department reserves the right to recoup any deposits, prior payment,
advance payment or down payment made if the contract is terminated by
either party. Allowable costs incurred to date of termination for
operation or transition of program(s) under this contract shall not be
subject to recoupment. The contractor agrees to return to the department
any funds not expended in accordance with the terms and conditions of the
contract and, if the contractor fails to do so upon demand, the department
may recoup said funds from any future payments owing under this contract or
any other contract between the state and the contractor.

9. TRANSITION AFTER TERMINATION OR EXPIRATION OF CONTRACT: In the event that
this contract is terminated for any reason except where the health and
welfare of service recipients is endangered or if the department does not
offer the contractor a new contract for the same or similar service at the
contract's expiration, the contractor will assist in the orderly transfer
of clients served under this contract as required by the department and
will assist in the orderly cessation of operations under this contract.
Prior to incurring expenses related to the orderly transfer or continuation
of services to service recipients beyond the terms of the contract, the
department and the contractor agree to negotiate a termination amendment to
the existing agreement to address current program components and expenses,
anticipated expenses necessary for the orderly transfer of service
recipients and changes to the current program to address service
recipients' needs. The contractual agreement may be amended as necessary
to assure transition requirements are met during the term of this contract.
If the transition cannot be concluded during this term, the department and
the contractor may negotiate an amendment to extend the term of the current
contract until the transition may be concluded.

10. CONTRACT REDUCTION: The department reserves the right to reduce the
contracted amount of compensation at any time in the event that: (1) the
Governor or the Connecticut General Assembly rescinds, reallocates, or in
any way reduces the total amount budgeted for the operation of the
department during the fiscal year for which such funds are withheld; or (2)
federal funding reductions result in reallocation of funds within the
department.

The contractor and the department agree to negotiate on the implementation
of the reduction within thirty (30) days of receipt of formal notification
of intent to reduce the contracted amount of compensation from the
department. If agreement on the implementation of the reduction is not
reached within 30 calendar days of such formal notification and a contract
amendment has not been executed, the department may terminate the contract
sixty (60) days from receipt of such formal notification. The department
will formally notify the contractor of the termination date.

11. CHOICE OF LAW AND CHOICE OF FORUM: The contractor agrees to be bound by
the law of the State of Connecticut and the federal government where
applicable, and agrees that this contract shall be construed and
interpreted in accordance with Connecticut law and federal law where
applicable.

12. INSPECTION OF WORK PERFORMED: The department or its authorized
representative shall at all times have the right to enter into the
contractor's premises, or such other places where duties under the contract
are being performed, to inspect, to monitor or to evaluate the work being
performed. The contractor and all subcontractors must provide all
reasonable facilities and assistance for department representatives. All
inspections and evaluations shall be performed in such a manner as will not
unduly delay work. The contractor shall disclose information on clients,
applicants and their families as requested unless otherwise prohibited by
federal or

Page 3 of 29
<PAGE>

state law. Written evaluations pursuant to this section shall be made
available to the contractor.

13. SAFEGUARDING CLIENT INFORMATION: The department and the contractor agree
to safeguard the use, publication and disclosure of information on all
applicants for and all clients who receive service under this contract with
all applicable federal and state law concerning confidentiality.

14. REPORTING OF CLIENT ABUSE OR NEGLECT: The contractor shall comply with all
reporting requirements relative to client abuse and neglect, including but
not limited to requirements as specified in C.G.S.17a-101 through 103, 19a-
216, 46b-120 related to children; C.G.S. 46a-11b relative to persons with
mental retardation and C.G.S. 17b-407 relative to elderly persons.

15. CREDITS AND RIGHTS IN DATA: Unless expressly waived in writing by the
department, all documents, reports, and other publications for public
distribution during or resulting from the performances of this contract
shall include a statement acknowledging the financial support of the state
and the department and, where applicable, the federal government. All such
publications shall be released in conformance with applicable federal and
state law and all regulations regarding confidentiality. Any liability
arising from such a release by the contractor shall be the sole
responsibility of the contractor and the contractor shall indemnify the
department, unless the department or its agents co-authored said
publication and said release is done with the prior written approval of the
commissioner of the department. Any publication shall contain the
following statement: "This publication does not express the views of the
department or the State of Connecticut. The views and opinions expressed
are those of the authors." The contractor or any of its agents shall not
copyright data and information obtained under the terms and conditions of
this contract, unless expressly authorized in writing by the department.
The department shall have the right to publish, duplicate, use and disclose
all such data in any manner, and may authorize others to do so. The
department may copyright any data without prior notice to the contractor.
The contractor does not assume any responsibility for the use, publication
or disclosure solely by the department of such data.

"Data" shall mean all results, technical information and materials
developed and/or obtained in the performance of the services hereunder,
including but not limited to all reports, surveys, plans, charts,
recordings (video and/or sound), pictures, curricula, public awareness or
prevention campaign materials, drawings, analyses, graphic representations,
computer programs and printouts, notes and memoranda, and documents,
whether finished or unfinished, which result from or are prepared in
connection with the services performed hereunder.

16. FACILITY STANDARDS AND LICENSING COMPLIANCE: The contractor will comply
with all applicable local, state and federal licensing, zoning, building,
health, fire and safety regulations or ordinances, as well as standards and
criteria of pertinent state and federal authorities. Unless otherwise
provided by law, the contractor is not relieved of compliance while
formally contesting the authority to require such standards, regulations,
statutes, ordinance or criteria.

17. SUBCONTRACTS: For purposes of this clause subcontractors shall be defined
as providers of direct human services. Vendors of support services, not
otherwise known as human service providers or educators, shall not be
considered subcontractors, e.g. lawn care, unless such

Page 4 of 29
<PAGE>

activity is considered part of a training, vocational or educational
program. The subcontractor's identity, services to be rendered and costs
shall be detailed in PART II or III of this contract. Notwithstanding the
execution of this contract prior to a specific subcontractor being
identified or specific costs being set, no subcontractor may be used or
expense under this contract incurred prior to identification of the
subcontractor or inclusion of a detailed budget statement as to
subcontractor expense, unless expressly provided in PART II or III of this
contract. Identification of a subcontractor or budget costs for such
subcontractor shall be deemed to be a technical amendment if consistent
with the description of each contained in PART II or III of this contract.
No subcontractor shall acquire any direct right of payment from the
department by virtue of the provisions of this paragraph or any other
paragraph of this contract. The use of subcontractors, as defined in this
clause, shall not relieve the contractor of any responsibility or liability
under this contract. The contractor shall make available copies of all
subcontracts to the department upon request.

18. CONFLICT OF INTEREST: At the department's election, it may require the
Contractor to submit a copy of its most recent IRS Form 990 submitted to
the Internal Revenue Service or such other information that the Department
deems appropriate with respect to the organization and affiliation of the
Contractor and related entities.

19. PROHIBITED INTEREST: The Contractor warrants that no state appropriated
funds have been paid or will be paid by or on behalf of the Contractor to
contract with or retain any company or person, other than bona fide
employees working solely for the Contractor, to influence or attempt to
influence an officer or employee of any state agency in connection with the
awarding, extension, continuation, renewal, amendment, or modification of
this agreement, or to pay or agree to pay any company or person, other than
bona fide employees working solely for the Contractor, any fee, commission,
percentage, brokerage fee, gift or any other consideration contingent upon
or resulting from the award or making of this Agreement.

20. DEFAULT BY THE CONTRACTOR: If the contractor defaults as to, or otherwise
fails to comply with, any of the conditions of this contract the department
may:

(a) withhold payments until the default is resolved to the satisfaction of
the department
(b) temporarily or permanently discontinue services under the contract
(c) require that unexpended funds be returned to the department
(d) assign appropriate state personnel to execute the contract until such
time as the contractual defaults have been corrected to the
satisfaction of the department
(e) require that contract funding be used to enter into a sub-contract
arrangement with a person or persons designated by the department in
order to bring the program into contractual compliance

(f) terminate this contract
(g) take such other actions of any nature whatsoever as may be deemed
appropriate for the best interests of the state or the program(s)
provided under this contract or both
(h) any combination of the above actions.

In addition to the rights and remedies granted to the department by this
contract, the department shall have all other rights and remedies granted
to it by law in the event of breach of or default by the contractor under
the terms of this contract.

Prior to invoking any of the remedies for default specified in this
paragraph except when the department deems the health or welfare of service
recipients is endangered as specified in

Page 5 of 29
<PAGE>

clause 7 of this agreement or has not met requirements as specified in
clause 21, the department shall notify the contractor in writing of the
specific facts and circumstances constituting default or failure to comply
with the conditions of this contract and proposed remedies. Within five
(5) business days of receipt of this notice, the contractor shall correct
any contractual defaults specified in the notice and submit written
documentation of correction to the satisfaction of the department or
request in writing a meeting with the commissioner of the department or
his/her designee. Any such meeting shall be held within five (5) business
days of the written request. At the meeting, the contractor shall be given
an opportunity to respond to the department's notice of default and to
present a plan of correction with applicable time frames. Within five (5)
business days of such meeting, the commissioner of the department shall
notify the contractor in writing of his/her response to the information
provided including acceptance of the plan of correction and, if the
commissioner finds continued contractual default for which a satisfactory
plan of corrective action has not been presented, the specific remedy for
default the department intends to invoke. This action of the commissioner
shall be considered final.

If at any step in this process the contractor fails to comply with the
procedure and, as applicable, the agreed upon plan of correction, the
department may proceed with default remedies.

21. NON-ENFORCEMENT NOT TO CONSTITUTE WAIVER: The failure of either party to
insist upon strict performance of any terms or conditions of this agreement
shall not be deemed a waiver of the term or condition or any remedy that
each party has with respect to that term or condition nor shall it preclude
a subsequent default by reason of the failure to perform.

22. SUSPENSION OR DEBARMENT: Signature on contract certifies the contractor or
any person (including subcontractors) involved in the administration of
Federal or State funds:

(a) has not within a three year period preceding the agreement been
convicted or had a civil judgment rendered against him/her for
commission of fraud or a criminal offense in performing a public
transaction or contract (local, state or federal) or commission of
embezzlement, theft, forgery, bribery, falsification or destruction of
records, making false statements or receiving stolen property
(b) is not presently indicted for or otherwise criminally or civil charged
by a governmental entity with commission of any of the above offenses
(c) has not within a three year period preceding this agreement had one or
more public transactions terminated for cause or fault.

Any change in the above status shall be immediately reported to the
department.

23. INSURANCE: The contractor will carry insurance (liability, fidelity
bonding or surety bonding and/or other), as specified in this agreement,
during the term of this contract according to the nature of the work to be
performed to "save harmless" the State of Connecticut from any claims,
suits or demands that may be asserted against it by reason of any act or
omission of the contractor, subcontractor or employees in providing
services hereunder, including but not limited to any claims or demands for
malpractice. Certificates of such insurance shall be filed with the
department prior to the performance of services.

24. RECORD KEEPING AND ACCESS: The contractor shall maintain books, records,
documents, program and individual service records and other evidence of its
accounting and billing

Page 6 of 29
<PAGE>

procedures and practices which sufficiently and properly reflect all direct
and indirect costs of any nature incurred in the performance of this
contract. These records shall be subject at all reasonable times to
monitoring, inspection, review or audit by authorized employees or agents
of the state or, where applicable, federal agencies. The contractor shall
retain all such records concerning this contract for a period of three (3)
years after the completion and submission to the state of the contractor's
annual financial audit.

25. AUDIT REQUIREMENTS: The contractor shall provide for an annual financial
audit acceptable to the department for any expenditure of state-awarded
funds made by the contractor. Such audit shall include management letters
and audit recommendations. The State Auditors of Public Accounts shall
have access to all records and accounts for the fiscal year(s) in which the
award was made. The contractor will comply with federal and state single
audit standards as applicable.

26. LITIGATION: The contractor shall provide written notice to the department
of any litigation that relates to the services directly or indirectly
financed under this contract or that has the potential to impair the
ability of the contractor to fulfill the terms and conditions of this
contract, including but not limited to financial, legal or any other
situation which may prevent the contractor from meeting its obligations
under the contract.

The contractor shall provide written notice to the department of any final
decision by any tribunal or state or federal agency or court which is
adverse to the contractor or which results in a settlement, compromise or
claim or agreement of any kind for any action or proceeding brought against
the contractor or its employee or agent under the Americans with
Disabilities Act of 1990, executive orders Nos. 3 & 17 of Governor Thomas
J. Meskill and any other provisions of federal or state law concerning
equal employment opportunities or nondiscriminatory practices.

27. DELINQUENT REPORTS: The contractor will submit required reports by the
designated due dates as identified in this agreement. After notice to the
contractor and an opportunity for a meeting with a department
representative, the department reserves the right to withhold payments for
services performed under this contract if the department has not received
acceptable progress reports, expenditure reports, refunds, and/or audits as
required by this agreement or previous agreements for similar or equivalent
services the contractor has entered into with the department.

28. LOBBYING: The contractor agrees to abide by state and federal lobbying
laws, and further specifically agrees not to include in any claim for
reimbursement any expenditures associated with activities to influence,
directly or indirectly, legislation pending before Congress, or the
Connecticut General Assembly, or any administrative or regulatory body
unless otherwise required by this contract.

29. PROGRAM CANCELLATION: Where applicable, the cancellation or termination of
any individual program or services under this contract will not, in and of
itself, in any way affect the status of any other program or service in
effect under this contract.

30. NON-DISCRIMINATION REGARDING SEXUAL ORIENTATION: Unless otherwise provided
by Conn. Gen. Stat. (S) 46a-81p, the contractor agrees to the following
provisions required pursuant to (S)4a-60a of the Conn. Gen. Stat.: (a) (1)
The contractor agrees and warrants that in the performance of the contract
such contractor will not discriminate or permit discrimination

Page 7 of 29
<PAGE>

against any person or group of persons on the grounds of sexual
orientation, in any manner prohibited by the laws of the United States or
of the State of Connecticut, and that employees are treated when employed
without regard to their sexual orientation; (2) the contractor agrees to
provide each labor union or representatives of workers with which such
contractor has a collective bargaining agreement or other contract or
understanding and each vendor with which such contractor has a contract or
understanding a notice to be provided by the commission on human rights and
opportunities advising the labor union or workers' representative of the
contractor's commitments under this section, and to post copies of the
notice in conspicuous places available to employees and applicants for
employment; (3) the contractor agrees to comply with each provision of this
section and with each regulation or relevant order issued by said
commission pursuant to (S) 46a-56 of the Conn. Gen. Stat.; (4) the
contractor agrees to provide the commission on human rights and
opportunities with such information requested by the commission, and permit
access to pertinent books, records and accounts concerning the employment
practices and procedures of the contractor which relate to provisions of
this section and (S) 46a-56 of the Conn. Gen. Stat.

(b) The contractor shall include the provisions of subsection (a) of this
section in every subcontract or purchase order entered into in order to
fulfill any obligation of a contract with the state and such provisions
shall be binding on a subcontractor, vendor or manufacturer unless exempted
by regulations or orders of the commission. The contractor shall take such
action with respect to any such subcontract or purchase order as the
commission may direct as a means of enforcing such provisions including
sanctions for noncompliance in accordance with (S) 46a-56 of the Conn. Gen.
Stat. provided, if such contractor becomes involved in, or is threatened
with, litigation with a subcontractor or vendor as a result of such
direction by the commission, the contractor may request the State of
Connecticut to enter into any such litigation or negotiation prior thereto
to protect the interests of the state and the state may so enter.

31. EXECUTIVE ORDERS NOS. 3 & 17: This contract is subject to the provisions
of Executive Order No. Three of Governor Thomas J. Meskill promulgated June
16, 1971, and, as such, this contract may be canceled, terminated or
suspended by the State Labor Commissioner for violation of or noncompliance
with said Executive Order No. Three, or any state or federal law concerning
nondiscrimination, notwithstanding that the Labor Commissioner is not a
party to this contract. The parties to this contract, as part of the
consideration hereof, agree that said Executive Order No. Three is
incorporated herein by reference and made a part hereof. The parties agree
to abide by said Executive Order and agree that the State Labor
Commissioner shall have continuing jurisdiction in respect to contract
performance in regard to nondiscrimination, until the contract is completed
or terminated prior to completion. The contractor agrees, as part
consideration hereof, that this contract is subject to the Guidelines and
Rules issued by the State Labor Commissioner to implement Executive Order
No. Three, and that the contractor will not discriminate in employment
practices or policies, will file all reports as required, and will fully
cooperate with the State of Connecticut and the State Labor Commissioner.
This contract is also subject to provisions of Executive Order No.
Seventeen of Governor Thomas J. Meskill promulgated February 15, 1973, and,
as such, this contract may be canceled, terminated or suspended by the
contracting agency or the State Labor Commissioner for violation of or
noncompliance with said Executive Order No. Seventeen, notwithstanding that
the Labor Commissioner may not be a party to this contract. The parties to
this contract, as part of the consideration hereof, agree that Executive
Order No. Seventeen is incorporated herein by reference and made a part
hereof. The parties agree to abide by said Executive Order and agree that
the contracting agency and the State labor

Page 8 of 29
<PAGE>

Commissioner shall have joint and several continuing jurisdiction in
respect to contract performance in regard to listing all employment
openings with the Connecticut State Employment Service.

32. NONDISCRIMINATION AND AFFIRMATIVE ACTION PROVISIONS IN CONTRACTS OF THE
STATE AND POLITICAL SUBDIVISIONS OTHER THAN MUNICIPALITIES: The contractor
agrees to comply with provisions of section 4a-60 of the Connecticut
General Statutes (a) Every contract to which the state or any political
subdivision of the state other than a municipality is a party shall contain
the following provisions: (1) The contractor agrees and warrants that in
the performance of the contract such contractor will not discriminate or
permit discrimination against any person or group of persons on the grounds
of race, color, religious creed, age, marital status, national origin,
ancestry, sex, mental retardation or physical disability, including, but
not limited to, blindness, unless it is shown by such contractor that such
disability prevents performance of the work involved, in any manner
prohibited by the laws of the United States or of the state of Connecticut.
The contractor further agrees to take affirmative action to insure that
applicants with job-related qualifications are employed and that employees
are treated when employed without regard to their race, color, religious
creed, age, marital status, national origin, ancestry, sex, mental
retardation, or physical disability, including, but not limited to,
blindness, unless it is shown by such contractor that such disability
prevents performance of the work involved; (2) the contractor agrees, in
all solicitations or advertisements for employees placed by or on behalf of
the contractor, to state that is an "affirmative action-equal opportunity
employer" in accordance with regulations adopted by the commission; (3) the
contractor agrees to provide each labor union or representative of workers
with which such contractor has a collective bargaining agreement or other
contract or understanding and each vendor with which such contractor has a
contract or understanding, a notice to be provided by the commission
advising the labor union or workers' representative of the contractor's
commitments under this section, and to post copies of the notice in
conspicuous places available to employees and applicants for employment;
(4) the contractor agrees to comply with each provision of this section and
sections 46a-68e and 46a-68f and with each regulation or relevant order
issued by said commission pursuant to sections 46a-56, 46a-68e and 46a-68f;
(5) the contractor agrees to provide the commission of human rights and
opportunities with such information requested by the commission, and permit
access to pertinent books, records and accounts, concerning the employment
practices and procedures of the contractor as relate to the provisions of
this section and section 46a-56. If the contract is a public works
contract, the contractor agrees and warrants that he will make good faith
efforts to employ minority business enterprises as subcontractors and
suppliers of materials on such public works project.

(b) For the purposes of this section, "minority business enterprise" means
any small contractor or supplier of materials fifty-one per cent or more of
capital stock, if any, or assets of which is owned by a person or persons:
(1) Who are active in the daily affairs of the enterprise, (2) who have the
power to direct the management and policies of the enterprise and (3) who
are members of a minority, as such term is defined in subsection (a) of
section 32-9n; and "good faith" means that degree of diligence which a
reasonable person would exercise in the performance of legal duties and
obligations. "Good faith efforts" shall include, but not be limited to,
those reasonable initial efforts necessary to comply with statutory or
regulatory requirements and additional or substituted efforts when it is
determined that such initial efforts will not be sufficient to comply with
such requirements.

Page 9 of 29
<PAGE>

(c) Determinations of the contractor's good faith efforts shall include but
shall not be limited to the following factors: The contractor's employment
and subcontracting policies, patterns and practices; affirmative action
advertising; recruitment and training; technical assistance activities and
such other reasonable activities or efforts as the commission may prescribe
that are designed to ensure the participation of minority business
enterprises in public works projects.

(d) The contractor shall develop and maintain adequate documentation, in a
manner prescribed by the commission, of its good faith efforts.

(e) The contractor shall include the provisions of subsection (a) of this
section in every subcontract or purchase order entered into in order to
fulfill any obligation of a contract with the state and such provision
shall be binding on a subcontractor, vendor or manufacturer unless exempted
by regulations or orders of the commission. The contractor shall take such
action with respect to any such subcontract or purchase order as the
commission may direct as a means of enforcing such provisions including
sanctions for noncompliance in accordance with section 46a-56; provided, if
such contractor becomes involved in, or is threatened with, litigation with
a subcontractor or vendor as a result of such direction by the commission,
the contractor may request the state of Connecticut to enter into any such
litigation or negotiation prior thereto to protect the interests of the
state and the state may so enter.

33. AMERICANS WITH DISABILITIES ACT OF 1990: This clause applies to those
contractors which are or will come to be responsible for compliance with
the terms of the Americans with Disabilities Act of 1990 (42 USCS (S)(S)
12101-12189 and (S)(S) 12201-12213) (Supp. 1993); 47 USCS (S)(S) 225, 611
(Supp. 1993). During the term of the contract, the contractor represents
that it is familiar with the terms of this Act and that it is in compliance
with the law. The contractor warrants that it will hold the state harmless
from any liability which may be imposed upon the state as a result of any
failure of the contractor to be in compliance with this Act.

Where applicable, the contractor agrees to abide by the provisions of
section 504 of the federal Rehabilitation Act of 1973, as amended, 29
U.S.C. (S) 794 (Supp. 1993), regarding access to programs and facilities by
people with disabilities.

34. UTILIZATION OF MINORITY BUSINESS ENTERPRISES: It is the policy of the
state that minority business enterprises should have the maximum
opportunity to participate in the performance of government contracts. The
contractor agrees to use best efforts consistent with 45 C.F.R. 74.150 et
seq. (1992) and paragraph 9 of Appendix G thereto for the administration of
programs or activities using HHS funds; and (S)(S) 13a-95; 4a-60, to 4a-62,
4b-95(b), and 32-9e of the Conn. Gen. Stat. to carry out this policy in the
award of any subcontracts.

35. PRIORITY HIRING: Subject to the contractor's exclusive right to determine
the qualifications of all employment positions, the contractor shall use
its best efforts to ensure that it gives priority to hiring welfare
recipients who are subject to time limited welfare and must find
employment. The contractor and the department will work cooperatively to
determine the number and types of positions to which this paragraph shall
apply. The Department of Social Services regional office staff or staff of
Department of Social Service contractors will undertake to counsel and
screen an adequate number of appropriate candidates for positions targeted
by the contractor as suitable for individuals in the time limited welfare
program. The success of the contractor's efforts will be considered when
awarding and evaluating contracts.

Page 10 of 29
<PAGE>

36. NON-SMOKING. If the contractor is an employer subject to the provisions of
(S) 31-40q of the Conn. Gen. Stat., the contractor agrees to provide upon
request the department with a copy of its written rules concerning smoking.
Evidence of compliance with the provisions of section 31-40q of the Conn.
Gen. Stat. must be received prior to contract approval by the department.

Page 11 of 29
<PAGE>

DEPARTMENT OF SOCIAL SERVICES

PART II: APPLICABLE TO ALL PURCHASE OF SERVICE CONTRACTS

1. NONSEGREGATED FACILITIES
------------------------

The contractor shall comply with Federal Executive Order 11246 of September
24, 1965, entitled "Equal Employment Opportunity" as amended by Federal
Executive Order 11375 and as supplemented in the United States Department of
Labor Regulations (41 CFR Part 60-1 et seq., Obligations of Contractors and
Subcontractors).

Pursuant to the above-cited regulations, the contractor shall not maintain
any facilities it provides for its employees in a segregated manner, or permit
its employees to perform their services at any location, under its control,
where segregated facilities are maintained; and so certifies by its agreement to
this contract.

As used in this certification, the term "facilities" means waiting rooms,
work areas, restaurants and other eating areas, time clocks, restrooms,
washrooms, locker rooms, and other storage or dressing areas, parking lots,
drinking fountains, recreation or entertainment areas, transportation, and
housing facilities provided for employees which are segregated on the basis of
race, color, religion, or national origin. The contractor further agrees
(except where he has obtained identical certifications from proposed
subcontractors for specific time periods) that it will obtain identical
certifications from proposed subcontractors who are not exempt from the
provisions for Equal Employment Opportunity; that it will retain such
certifications in its files; and that it will forward a copy of this clause to
such certifications in its files; and that it will forward a copy of this clause
to such proposed subcontractors (except where the proposed subcontractors have
submitted identical certifications for specific time periods).

2. OFFER OF GRATUITIES
-------------------

By its agreement to this contract, the Contractor certifies that no elected
or appointed official or employee of the State of Connecticut has or will
benefit financially or materially from this procurement. This contract may be
terminated by the Department if it is determined that gratuities of any kind
were either offered to or received by any of the aforementioned officials or
employees from the Contractor, its agent or employee.

3. INDEPENDENT CAPACITY OF CONTRACTOR
----------------------------------

The Contractor, its officers, employees, subcontractors, or any other agent
of the Contractor in performance of this contract will act in an independent
capacity and not as officers or employees of the State of Connecticut or of the
Department.

4. MOST FAVORED CUSTOMER
---------------------

The Contractor agrees that if during the term hereof the Contractor shall
enter into any agreement with any other governmental customer, or any non-
affiliated commercial customer by which it agrees to provide the same equipment
or services at lower prices, or additional services at comparable prices, the
Contractor shall so notify the Department and the Agreement shall, at the
Department's option, be amended to accord equivalent advantage to the
Department.

Page 12 of 29
<PAGE>

5. EXAMINATION OF SUBCONTRACTOR'S RECORDS
--------------------------------------

Any subcontract shall contain terms that shall require the subcontractor to
maintain books, records, documents, program and individual service records and
other evidence of its accounting and billing procedures and practices which
sufficiently and properly reflect all direct and indirect costs; and that these
records shall be subject at all reasonable times to monitoring, inspection,
review or audit by authorized employees or agents of the state, or, where
applicable, federal agencies; and that the subcontractor shall retain all such
records concerning this contract for a period of three (3) years after the
completion and submission to the State of the Contractor's annual financial
audit.

6. SETTLEMENT OF DISPUTES
----------------------

Any dispute concerning a question of fact arising under the contract which
is not disposed of by agreement shall be decided by the Commissioner or her
designee, whose decision shall be final and conclusive, subject only to whatever
rights, if any, the Contractor may have in a court of law. In connection with
any appeal to the Commissioner or her designee under this paragraph, the
Contractor shall be afforded an opportunity to be heard and to offer evidence in
support of its appeal. Pending final resolution of a dispute, the Contractor
shall proceed diligently with the performance of the contract in accordance with
the Commissioner or her designee's decision.

7. LEGAL CONSIDERATIONS
--------------------

The Contractor agrees to be bound by the laws of the State of Connecticut
and agrees that this contract, or any amendment thereto, shall be construed and
interpreted in accordance with Connecticut law in the event a choice of law
situation arises. In particular, the Contractor agrees that the sole and
exclusive means for the presentation of any claim against the State arising out
of this contact, shall be in accordance with Chapter 53 of the Connecticut
General Statutes (Claims Against the State) and the Contractor further agrees
not to initiate legal proceedings in any State or Federal Court in addition to,
or in lieu of, said Chapter 53 proceedings.

8. AUDIT LIABILITIES
-----------------

In addition to and not in any way in limitation of the obligation of the
agreement, it is understood and agreed by the Contractor that the Contractor
shall be held liable for any State or Federal audit exceptions and shall return
to the Department all payments made under the agreement to which exception has
been taken or which have been disallowed because of such an exception.

9. FREEDOM OF INFORMATION
----------------------

Due regard will be given for the protection of proprietary information
contained in all proposals received; however, bidders should be aware that all
materials associated with this contract are subject to the terms of the Freedom
of Information Act, the Privacy Act and all rules, regulations and
interpretations resulting therefrom. It will not be sufficient for Bidders to
merely state generally that the proposal is proprietary in nature and not,
therefore, subject to release to third parties. Those particular pages or
sections which a Bidder believes to be proprietary must be specifically
identified as such. Convincing explanation and rationale sufficient to justify
each exemption from release consistent with Section 1-19 of the Connecticut
General Statutes must accompany the proposal. The rationale and explanation
must be stated in terms of the prospective harm to the competitive position of
the bidder that would result if the identified material were to be released and
the reasons why the materials are legally exempt from release pursuant to the
above-cited statute. Between the bidder and

Page 13 of 29
<PAGE>

the Department, the final administrative authority to release or exempt any or
all material so identified rests with the Department.

10. OWNERSHIP
---------

If this contract calls for the creation, production or writing by the
Contractor of any document, computer program, data, or analyses of whatever
description, all rights of ownership and ownership of the copyright of these
documents, computer program, data, or analyses of whatever description belongs
to the State of Connecticut.

11. SEVERABILITY
------------

If any provision of this contract is declared or found to be illegal,
unenforceable, or void, then both parties shall be relieved of all obligations
under that provision. The remainder of this contract shall be enforced to the
fullest extent permitted by law.

12. WAIVERS
-------

No covenant, condition, duty, obligation or undertaking contained in or
made a part of this contract shall be waived, except as specifically provided in
any section of this agreement except by the written agreement of the parties,
and forbearance or indulgence in any form or manner by the Department in any
regard whatsoever shall not constitute a waiver of the covenant, condition,
duty, obligation or undertaking to be kept, performed, or discharged by the
Contractor, and notwithstanding any such forbearance or indulgence, until
complete performance or satisfaction of all such covenant, conditions, duties,
obligations and undertaking, the Department shall have the right to invoke any
remedy available under the agreement, or under law or equity.

13. EQUIPMENT AND SUPPLIES
----------------------

A. Equipment shall mean all tangible personal property such as
tables, chairs, lamps, desks, copying machine, typewriters,
computer equipment, etc., with a normal useful life of more than
one year and an acquisition cost of more than $1,000.

B. Supplies shall mean all tangible personal property other than
equipment.

C. Purchase of equipment and supplies by the contractor shall be
limited to those items essential to carrying out the
program/operations/services authorized by this contract and
approved by the Department designee.

The Contractor shall maintain an inventory of all equipment and shall
provide copies of the inventory to the Department upon acquisition of the
equipment or as requested by the Department designee. The Department shall
determine the inventory data requirements.

Any item of equipment purchased under this agreement, may not be discarded,
sold or removed from the inventory without the prior written approval of the
Department designee.

Page 14 of 29
<PAGE>

Prior to the expiration or termination of the contact by either party, the
Department will determine the manner of the disposition of all equipment and
unused supplies purchased under this agreement.

Within 90 days of the termination of this contract, the contractor will be
informed in writing by the Department designee as to the disposition method of
equipment and unused supplies if the agency goes out of business.

14. CONTRACTOR PROCUREMENTS
-----------------------

The Contractor agrees to conduct procurements of equipment, services and/or
supplies necessary to discharge its duties under this contract through use of
competitive bids. The Contractor must retain evidence of its procurements in
its files for audit purposes. Contractors may obtain procurement guidance from
the Department, as required, through their named Liaison.

15. EMPLOYMENT/AFFIRMATIVE ACTION CLAUSE
------------------------------------

The Contractor agrees to comply fully with all federal and state anti-
discrimination laws, statutes, and regulations, and will supply
employment/affirmative action information as required for agency compliance with
Titles VI and VII of the Civil Rights Act of 1964 and Connecticut General
Statutes, Section 46a-68 and Section 46a-71.

16. PERSONNEL POLICIES
------------------

The Contractor agrees to develop and maintain policies relative to
personnel. Said personnel policies shall be maintained at the Contractor's
location in the Contractor's files and be made available to the Department as
requested by the Department, its representatives and its agents. The Contractor
further agrees to submit a copy of its personnel policies of the Department, if
requested, within (10) days of receipt of such request.

17. SURPLUS/EXCESS PAYMENTS
-----------------------

In the event the Department has advanced funds to the Contractor or
overpaid the Contractor, the Contractor shall at the end of the contract period,
or earlier if the contract is terminated, return to the department in full, any
unexpended funds within 30 days; or such unexpended funds may, at the discretion
of the Commissioner of the Department, be carried over and used as part of a new
contract period if a new similar contract is executed.

18. INTEREST INCOME
---------------

Any interest earned by the Contractor as a result of payments authorized by
the Department shall be reported to the Department by the Contractor on the next
Quarterly Financial Report submitted after the interest income is earned. the
Contractor agrees to follow the Department's direction as to the disposition of
such interest income.

A. CONTRACT TERM

This contract shall be in effect from 02/01/98 through 01/31/99 with two
one-year options to extend. The options to extend shall be exercised at
the discretion of the Department. The Department shall notify the
Contractor no less than thirty (30) days in advance of the stated

Page 15 of 29
<PAGE>

expiration date of the contract if the Department does not intend on
exercising the option to extend the term of the contract.

B. TASK I NON-EMERGENCY MEDICAL TRANSPORTATION SERVICES
SUBTASKS
--------
1. Contractor shall authorize, arrange and provide, through subcontractors,
Nonemergency Medical Transportation services for Eligible Clients Residing
in all of the towns in Contractor's Regions.

(a) Contractor shall be responsible for the payment to subcontractors
for the provision of Nonemergency Medical Transportation services to
Eligible Clients Residing in any of the towns in Contractor's region.
Payment to subcontractors shall be addressed in Contractor's transportation
agreement with the transportation provider. The Department assumes no
liability for the payment to the Contractor's transportation providers.

(b) Appendix A indicates all of the towns included in Contractor's
regions.

2. Contractor shall authorize and arrange through third party
transportation providers, Nonemergency Ambulance services for Eligible
Clients Residing in any of the towns in Contractor's regions.

(a) Contractor shall not be responsible for the payment to third party
transportation providers for the provision of Nonemergency Ambulance
services. Claims for Nonemergency Ambulance services shall be reimbursed
through the Department's fiscal agent for payment.

3. Definitions:

(a) "Contractor's Regions" are defined as: The Department's South
Central and South West regions, as indicated by the map attached hereto as
Appendix B.

(b) "Eligible Clients" is defined as Enrolled Clients and Pending
Clients.

(c) "Enrolled Clients" is defined as persons eligible under the
Connecticut Medicaid Program who are not enrolled in a Medicaid Managed
Care Plan.

(d) "Nonemergency Ambulance" is defined as those non-emergency,
ambulance transportation services for Eligible Clients to receive necessary
medical services covered by the State of Connecticut Medicaid program.
Contractor is responsible hereunder only for the authorization of
Nonemergency Ambulance services performed by third-party transportation
providers.

(e) "Nonemergency Medical Transportation" is defined as those non-
emergency, non-ambulance transportation services for Eligible Clients to
receive necessary medical services covered by the State of Connecticut
Medicaid program. Contractor may utilize any or all of the following forms
of transportation in the performance of its obligations hereunder; private
automobile, bus, taxi, livery, invalid coach, train, travel agent and air
transportation.

Page 16 of 29
<PAGE>

(f) "Pending Clients" is defined as persons whose applications for
Medicaid eligibility under the Connecticut Medicaid Program, who are not
enrolled in a Medicaid Managed Care Plan, are being processed by the
Department or its agents, but such persons have not yet received final
eligibility authorization.

(g) "Residing" and "Residence" are defined, (1) in the case of each
Eligible Client the Residence listed for such Eligible Client in the
monthly download of Eligible Client information provided by the Department;
and (2) in the case of each Pending Client, the Residence indicated by or
on behalf of such Pending client during the transportation reservation
process.

4. Contractor shall maintain a toll-free telephone number for Eligible
Clients to utilize to obtain information and/or request transportation
services.

5. Notwithstanding anything to the contrary herein, Contractor shall not be
responsible for the authorization and/or provision of any services related
to emergency ambulance services.

6. Contractor is required to be familiar with the organization and goals of
the Department as they relate to transportation services. In addition,
Contractor is required to comply with the Department's policies and
procedures regarding Nonemergency Medical Transportation services, which
policies and procedures may be amended from time to time. The Department
shall provide Contractor with such policies and procedures and any
amendments thereto.

C. TASK II ESTABLISH AND OPERATE AN OFFICE IN THE STATE OF CONNECTICUT

SUBTASKS
--------

1. Contractor shall establish and maintain an office in the State of
Connecticut. This office shall house, among other things, a call
center/dispatching center.

2. Contractor's office shall have the systems capabilities to access the
Department's Automated Eligibility Verification System (AEVS) for the
purpose of verifying eligibility in order to authorize, arrange and provide
Nonemergency Medical Transportation services.

(a) The Department shall provide Contractor with direct access to the
Automated Eligibility Verification System for the purposes of verifying
eligibility in order to authorize, arrange and/or provide transportation
services. Contractor shall be required to work with the Department to
learn the data fields within the AEVS that will provide Contractor with
information to make informed, correct decisions regarding eligibility for
transportation services.

3. All office administrative supplies shall be the responsibility of the
Contractor, including but not limited to, capital equipment such as the
telephone system, office equipment, furnishings and day-to-day office
supplies.

Page 17 of 29
<PAGE>

D. TASK III OPERATING HOURS

SUBTASKS
--------

1. Contractor will provide Nonemergency Medical Transportation as needed,
24 hours per day, seven days per week, 365 days per year.

2. Reservations for transportation will be accepted from 8:00am to 5:00pm,
Monday through Friday; urgent reservations, will be accepted as Eligible
Recipient medical need dictates. Authorizations which need to be performed
by a registered nurse may be performed during normal reservation hours. No
reservations for regular appointments will be taken on state or federal
holidays.

3. Managerial decision makers will be available 24 hours per day, seven
days per week by beeper or cellular telephone.

4. Contractor shall develop operational procedures, manuals and forms
necessary for the operation of Contractor's responsibilities. Such
procedures shall address any and all service parameters, that Eligible
Clients must follow, instituted by Contractor and shall be provided to the
Department for review and acceptance.

(a) All procedures instituted by Contractor shall be no more stringent
than those imposed by the Department.

(b) Contractor shall notify the Department of any changes to their
procedures and the Department shall review, accept and/or reject such
changes.

E. TASK IV MARKETING AND OUTREACH

SUBTASKS
--------

1. Contractor shall provide outreach and information to Eligible Clients
regarding the availability and coverage of Nonemergency Medical
Transportation services.

2. Contractor shall develop written materials to educate Eligible Clients
about accessing the new transportation delivery system.

3. At the Department's request, Contract shall design a multi-lingual
brochure for the Eligible Clients in Contractor's regions.

4. Any materials, written or visual, prepared in accordance with this task
must be culturally sensitive, written at fifth grade reading level and be
available in English and Spanish.

5. The Department shall have fifteen (15) business days in which to review
and accept or reject any and all materials submitted by Contractor for
production as stated in this Task. If the Department does not reject or
make changes to the materials within the fifteen business days, the
materials shall be deemed accepted by the Department.

Page 18 of 29
<PAGE>

F. TASK V PROVIDER NETWORK

To the extent that the terms contained herein conflict with the terms
contained in Part I Section 17 and Part II Section 14, the terms contained in
this Part III shall prevail and take precedence.

SUBTASKS
--------

1. Contractor shall maintain a network of transportation providers
sufficient to ensure that vehicle availability is adequate to fulfill the
standards of promptness and quality set forth in subtask 6 of Task V in
this contract.

2. Contractor may, but shall not be obligated to develop its provider
network through the use of competitive bids.

3. Contractor shall develop, implement and maintain a provider recruitment
strategy that will increase access to transportation with special attention
to geographical areas not served by public transportation.

4. Contractor shall in establishing their provider network utilize
transportation providers previously used by the Department, so long as such
transportation providers meet Contractor's standards, including but not
limited to Contractor's standards for qualifications and performance.
Contractor's standards for qualifications and performance must be no less
stringent than those used by the Department. Contractor is not obligated
to limit the extent of their provider network to those transportation
providers previously used by the Department.

5. Contractor shall, in an effort to assist the Department in reaching its
goal under the Connecticut Small Business Set-Aside program (CGS (S) 32-
9e), utilize small, minority or women's business enterprises as
transportation providers so long as such transportation providers meet
Contractor's standards, including but not limited to Contractor's standards
for qualifications and performance. Contractor's standards for
qualifications and performance must be no less stringent than those used by
the Department.

6. Contractor shall provide the Department with a sample subcontract and is
required to notify the Department's Contract Administrator of any changes
to the subcontract.

7. A list of the Contractor's provider network as of January, 1998 is
attached hereto and incorporated herein as Appendix __. Contractor shall,
on a monthly basis, report to the Department any additions or deletions to
their provider network.

(a) In the case of additions to the network, Contractor shall provide
the Department with a copy of the signature page from the executed
subcontract agreement.

(b) In the case of deletions to the provider network, Contractor shall
provide the Department with a reason for the removal of the provider from
the network.

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<PAGE>

8. CONTRACTORS ARE PROHIBITED FROM CONTRACTING WITH ANY TRANSPORTATION
PROVIDER WHICH HAS BEEN EXCLUDED FROM PARTICIPATING IN THE MEDICAID
PROGRAM.

9. The Department may, on occasion notify Contractor that a particular
transportation provider used by Contractor is indebted to the Department.
If Contractor is notified by the Department of such a situation and is
directed by the Department to direct any and all payments due to the
provider from Contractor to the Department, Contractor shall comply with
such direction.

10. Contractor are required to meet the performance standards for vehicle
availability listed below:

(a) Lateness of pickups - transportation vendors should not be more
than 30 minutes; and

(b) Missed pickups - no more than 1% of trips should be missed.

G. TASK VI MONITORING OF ALL SUBCONTRACTORS

To the extent that the terms contained herein conflict with the terms
contained in Part I Section 17 and Part II Section 14, the terms contained
in this Part III shall prevail and take precedence.

SUBTASKS
--------

1. Vehicles and drivers shall be appropriately licensed according to State
regulatory authorities and shall comply with all applicable state and
federal laws and regulations, including but not limited to, the Americans
with Disabilities Act of 1990.

2. Subcontracts with transportation providers must, at a minimum, contain
the following provisions:

(a) the responsibilities of the Contractor and the subcontractors;

(b) the range of services, activities and tasks to be performed by the
subcontractors;

(d) the procedures the Contractor shall employ in order to measure the
value of services performed by the subcontractor;

(e) the effective date and duration of the agreement and any
termination and renewable options;

(f) compliance with the reporting requirements as provided in the
Contractor's agreement with the Department;

Page 20 of 29
<PAGE>

(g) compliance with the Department's mandatory terms and conditions as
provide in Part II of this contract;

(h) the financial terms of the contract;

(i) the staffing requirements necessary to carry out the range of
services covered in the agreement;

(j) designation of a senior manager to act as the liaison between the
Contractor and the subcontractors;

(k) provision for a meeting, no less frequently than quarterly,
between the Contractor and subcontractors. The meetings must have a
written agenda and minutes; and

(l) Procedures for the exchange of information between the Contractor
and subcontractors regarding all complaints and their resolution.

3. Contractor's boards must have subcontractor relations on the agenda of
every scheduled meeting.

H. TASK VII SUFFICIENT AND APPROPRIATE STAFF TO HANDLE CALLS

SUBTASKS
--------

1. Contractor shall utilize trained medical staff to review, approve and
arrange transportation services for clients Residing in nursing facilities
and for clients requiring invalid coach and Nonemergency Ambulance
services. The level of the medical staff must be, at a minimum, a
registered nurse.

2. Contractor must maintain adequate telephone staffing to meet the
performance standards listed below:

(a) 90% of telephone calls must be answered within four rings;

(b) No more than 2 calls per operator should be in the queue at any
time;

(c) Telephone calls should be of sufficient length to assure adequate
information is received and imparted to the caller;

(d) The wait time in the queue should not be longer than 5 minutes;
and

(e) The lost (dropped) call rate does not exceed 5%.

Page 21 of 29
<PAGE>

3. With the prior approval of the Department, the Contractor may route
calls to other phone centers, staffed by appropriately trained customer
service representatives when volume is too high to be handled by the
Contractor's Connecticut staff.

4. Contractors are required to ensure that telephone operators treat all
callers with dignity and respect the callers need for privacy. Contractor
shall require each employee to maintain the confidentially requirements as
defined by the Department's policies and procedures which shall be provided
to Contractor.

I. TASK VIII REPORTS

SUBTASKS
--------

1. Contractor shall maintain logs and provide such logs to the Department
at a frequency to be determined by the Department which document:

(a) the number of calls received, broken down between (i) calls
resulting in reservations, and (ii) other calls;

(b) the number of complaints and their disposition;

(d) System issues and problems experienced by the Contractor and
subcontractors.

2. For all Nonemergency Medical Transportation, Contractor shall maintain
logs documenting complete encounter and utilization data and provide this
information in a form specified by the Department to the Department or its
agent. Contractor shall maintain the capability to provide summary
information, any subset of the data, and reports on all of the data
elements listed below, at the request of the Department:

(a) Eligible Client Medicaid ID Number

(b) Eligible Client Name

(d) Date of Trip

(e) Pick-Up Address

(f) Drop-Off Address

(g) Result of Reservation (performed, no-show, canceled)

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<PAGE>

(h) Type of Transportation (class of service (i.e. wheelchair,
ambulatory, etc.)

(i) Reservation Pick-up Time

(j) Reservation Drop-off Time

(k) Medical Provider ID Number (or address or zip code, and/or
modifiers)

(l) Transportation Provider Name

(m) Transportation Provider Vendor ID

(n) Trip Mileage (based upon the PUCA mileage docket issued by the
Department of Transportation)

3. For all Nonemergency Ambulance transportation, Contractor shall keep a
separate log which reflects the authorizations performed by the Contractor.
Contractor shall provide the Department or the Department's agent a
comprehensive list of Nonemergency Ambulance authorizations performed by
the Contractor, including authorization number and other information as
requested at a frequency to be determined by the Department.

4. Contractor shall maintain daily logs which demonstrate that the
performance standards set forth in Task III subtask 2 are being met.

5. Contractor shall create, update and maintain licensure files, which
document that each subcontractor is appropriately licensed or certified and
qualified to serve Eligible Clients. Contractor shall provide the
Department with a quarterly report on licensure files.

6. Contractor shall, on a quarterly basis, provide the Department with a
report of those subcontractors who qualify as a small, minority or women's
business enterprise pursuant to CGS (S)32-9e and the amount paid by
Contractor to the identified subcontractors. This information shall be
used by the Department for the sole purpose of preparing the quarterly set-
aside report to the Department of Economic and Community Development.

7. Contractor shall provide financial reports to the Department on a
quarterly and an annual basis. Quarterly reports may be unaudited, but
annual reports must be audited.

Page 23 of 29
<PAGE>

J. TASK IX INTERNAL QUALITY ASSURANCE SYSTEM TO MONITOR SERVICE QUALITY AND
TIMELINESS

SUBTASKS
--------

1. Contractor shall develop and maintain a Quality Assurance Program (QAP)
that has detailed goals and objectives that outline the program structure
and design and include a timetable for implementation and accomplishment.
The QAP should address quality of services, such as availability,
accessibility, and coordination. The QAP methodology should provide for a
review of all types of services and shall include a written description
which specifies quality of service studies and other activities to be
undertaken over a prescribed period of time and the methodologies and
organizational arrangements to be used to accomplish them. Individuals
responsible for the studies and other activities must be clearly
identified.

2. The QAP shall objectively and systematically monitor and evaluate the
quality and appropriateness of services provided to clients through quality
of service studies and related activities, and pursues opportunities for
improvement on an ongoing basis.

3. The QAP shall include procedures for taking appropriate remedial action
whenever inappropriate or substandard services are furnished, or services
that should have been furnished were not.

4. Contractor shall, six months after the contract is executed, survey
clients who have received transportation services provided under contract.
This survey must be conducted every six months via a format that is
approved by the Department prior to implementation. The purpose of the
survey is to verify the actual number of trips provided; the availability,
appropriateness and timeliness of the trips provided, accessibility to the
provider and the manner in which the provider's staff interacted with
clients.

(a) Contractor shall submit a draft of the survey and the sampling
strategies to be used, three months after the signing of the contract
so that a survey may be completed six months after the signing of the
contract.

K. TASK X RESOLUTION OF COMPLAINTS AND GRIEVANCES

1. Contractor shall be required to have a system(s) for resolving members'
complaints and formal grievances. This system shall include:

(a) Procedures for registering and responding to complaints and
grievances within 30 days;

Page 24 of 29
<PAGE>

(b) Documentation of the substance of the complaints or grievances,
and the actions taken;

(d) Aggregation and analysis of complaints and grievances data and
use of the data for quality improvement; and

(e) An appeal process for grievances.

2. Contractor must notify clients in writing of all denials of
Nonemergency Medical Transportation services; and must resolve
complaints and grievances within 30 days.

3. Contractor personnel, at a minimum employment level of a supervisor or
manager, must attend all DSS fair hearings. Notification of such fair
hearings will be provided to Contractor by the Department.
Contractor's "attendance" may be accomplished through the use of video
conferences.

L. TASK XI THIRD PARTY LIABILITY (TPL) INFORMATION

1. To The extent possible, Contractor will query about possible third
party resources during contracts with clients. The Contractors need
not report information that is identical to that on the monthly file
extract or AEVS system, but will need to report to the Department any
information which is in variance with the information on AEVS. The
Contractors will not be responsible for verification of the
information but should transmit copies of verification if provided by
the client.

(a) Contractor must include an inquiry about potential third party
resources at the time of authorizing invalid coach/ambulance
transportation.

(b) Contractor must check the third party information currently on
the monthly file extract or AEVS, question the client about
discrepancies in the information and transmit any information not
on record to the Department's TPL unit using the procedures
stated above.

(c) Contractor shall inform the Department if the TPL information
resulted from the identification of unknown resources or if TPL
resources were coded incorrectly to AEVS.

2. Contractor is responsible for the collection of a client's other
health insurances. If Contractor does not initiate the collection of
this health insurance after six (6) months from the date of service to
the client, the Department shall retain the right to pursue this third
party resource.

Page 25 of 29
<PAGE>

M. NOTICE PROVISIONS

Contractor shall maintain a telephone line dedicated for Department staff.
That number is (203) 949-4813.

Notices to the Contractor regarding operational issues, including telephone
access and client problems shall be directed to:

Henry Hardy
515 Main Street, 2nd Floor
Yalesville, CT 06492
(203) 303-9766 - phone
(203) 949-4811 - fax

Notices to the Contractor regarding contractual issues shall be directed
to:
Michael Weksel
1895 Phoenix Boulevard, Suite 306
College Park, GA 30349
(770) 907-7596 (ext. 454) phone
(770) 907-7598 - fax
[email protected] - e-mail

Notices to the Department regarding program issues:

Ms. Zantia McKinney
Department of Social Services
25 Sigourney Street
Hartford, CT 06106
(860) 424-5135

Notices to the Department regarding contractual issues shall be directed
to:

Ms. Kathleen M. Brennan
Department of Social Services
25 Sigourney Street
Hartford, CT 06106
(860) 424-5693

N. PAYMENT PROVISIONS

1. Upon contract execution and approval Contractor shall submit to the
Department a one-time invoice of $100,000.00 representing payment due to
the Contractor for the additional telephone lines requested by the
Department from the date of the issuance of the RFP to the execution of the
contract.

Page 26 of 29
<PAGE>

2. Contractor shall be paid a fixed monthly rate per person eligible for
Nonemergency Medical Transportation services in each of Contractor's
regions.

3. The fixed monthly rates per person eligible for this contract period are

(a) South Central Region: $21.63

(b) South West Region: $10.50

4. On a monthly basis Contractor shall provide the Department with an
invoice equal to payment due for services rendered in the prior month.

Contractor may submit a single invoice, however, the invoice must be
specific as to actual costs by region and estimated costs by region.

Payments shall be determined for each of Contractor's regions by
multiplying the number of eligibles in each region in the prior month by
the fixed monthly rate per person eligible.

5. In the event that Contractor fails to meet the performance standard set
forth in Section F, Task V Subtask 10b of this Part III and the Eligible
Client utilizes a taxi service outside of this program, then Contractor
shall be required to reimburse the Eligible Client for the fare paid to
the taxi vendor. If a fee was paid to an individual to transport the
Eligible Client, then the Eligible Client would be reimbursed the
established per mile fee.

6. Non emergency Ambulance

It is the understanding of the parties that the Department is concerned
that this initiative not result in a shift to the use of ambulance
services. In furtherance of that understanding, Contractor agrees to
carefully scrutinize all requests for ambulance transportation and will
deny authorization for the same when justified based on medical
necessity.

On a monthly basis, Contractor shall provide the Department with a
report documenting the aggregate number of authorizations and denials,
as well as the dollar expenditures involved for ambulance trips approved
during that month. These reports shall be issued in each month of
calendar year 1998 and will enable the Department to compare ambulance
utilization in 1998 with that which occurred in 1997. At the end of the
calendar year the Department shall review the monthly reports issued for
the regions. If after the review of such reports the Department
concludes that the ambulance utilization costs are higher than expected,
or exceed the prior year's costs, the Department and Contractor shall
enter into good faith negotiations to recoup such excess costs from
Contractor's rates.

Page 27 of 29
<PAGE>

If the number of Nonemergency Ambulance trips per capita, based on the
reports, in less than 90% of the number of trips per capita in the
prior year, the Department shall subtract the number of trips per
capita in the contract term from 90% of the trips per capita in the
previous year during an equal term and multiply that difference by the
average cost per trip and by the population served during the contract
term. Fifty percent of that amount for each of Contractor's regions
will be paid to Contractor as a bonus.

Page 28 of 29
<PAGE>

[x] Original Contract #:___9046100
[ ] Amendment # ______________
(For Internal Use Only)

ACCEPTANCES AND APPROVALS:

By the Contractor:

LOGISTICARE, INC.
- ------------------------------------------------------------------------------
Contractor (Corporate/Legal Name of Contractor)

/s/ Michael E. Weksel 5/4/98
- ------------------------------------------------------------------------------
Signature (Authorized Official) Date

Documentation necessary to demonstrate the authorization to sign must be
-------------------------------------
attached.

Michael E. Weksel Vice President & Chief Financial Officer
- ------------------------------------------------------------------------------
(Typed Name of Authorized Official) Title

By the Department:

Department of Social Services
- ------------------------------------------------------------------------------
Department Name

/s/ Michael P. Starkowski 5/14/98
- ------------------------------------------------------------------------------
Signature (Authorized Official) Date

Michael P. Starkowski Deputy Commissioner
- ------------------------------------------------------------------------------
(Typed Name of Authorized Official) Title

By the Office of the Attorney General:

/s/ [Signature of Attorney General] 5/29/98
- ------------------------------------------------------------------------------
Attorney General (approved as to form) Date

( ) This contract does not require the signature
of the Attorney General pursuant to an agreement
between the department and the Office of the
Attorney General, dated .
----------------------

Page 29 of 29

<PAGE>

EXHIBIT 10.9

VENDOR COPY
[Seal] AGENCY CONTRACT - OPEN
NOTICE OF AWARD
STATE OF GEORGIA
DEPARTMENT OF ADMINISTRATIVE SERVICES
PURCHASING & SURPLUS PROPERTY DIVISION
200 PIEDMONT AVENUE, SE, ROOM 1308
ATLANTA, GEORGIA 30335

---------------------------------
DATE: JULY 17, 1997 CONTRACT NO: 401-008-597204-3
---------------------------------

---------------------------------
VENDOR: DATE/NOTICE OF AWARD: 07/17/97
AUTOMATED DISPATCH SOLUTIONS INC. AGENCY CODE: 401
ATTN JOHN SHERMYEN VENDOR ID NO.: 133765416-001
8175 NW 12TH STREET, SUITE 430 G.C.C.: 990-0700
MIAMI FL 33216 GEO. CODE: VARIOUS
BUYER CODE: 9.1
305-471-0441 / FAX 305-471-0443 TYPE OF PURCHASE: 1.2
---------------------------------

AGENCY:
GEORGIA DEPARTMENT OF MEDICAL
ASSISTANCE
RE: CONTRACT #401-008-597204 DMA NET REGION CENTRAL, EAST AND SOUTHWEST
2 PEACHTREE STREET, N.W.
ATLANTA, GA 30303-3159

You are hereby awarded the above contract for the period indicated. The
contract includes the invitation to bid, the attached agency contract terms and
conditions and the attached item schedule.

EFFECTIVE DATE: JULY 17, 1997 See Special Notes, below
----------------------------------------------------------------

EXPIRATION DATE: See Special Notes, below
----------------------------------------------------------------

SPECIAL NOTES: Contract Award effective July 17 with contract performance start
date per contract.

Contract Term and Remuneration Schedule - See Contract.

This Notice of Award is issued to execute the attached Contract. However,
execution of this agreement is contingent upon Contractor compliance with the
following stipulation within fifteen working days of this Notice of Award:

Furnishing Certificates of Insurance and Bonds as required at attached Contract.
The Certificate Holder shall be the GEORGIA DEPARTMENT OF MEDICAL ASSISTANCE, 2
Peachtree Street, Atlanta, Georgia 30303-3159

APPROVED BY David M. Candler
-----------------------------------
State Purchasing Agent

SIGNATURE: /s/ David M. Candler
-----------------------------------
<PAGE>

APPENDIX A

EAST

CONTRACT BETWEEN

THE GEORGIA DEPARTMENT OF ADMINISTRATIVE SERVICES

ON BEHALF OF

THE GEORGIA DEPARTMENT OF MEDICAL ASSISTANCE

AND

AUTOMATED DISPATCH SOLUTIONS, INC.

BROKER

FOR THE PROVISION OF NON-EMERGENCY TRANSPORTATION SERVICES

TO MEDICAID RECIPIENTS

IN NET REGION EAST

CONTRACT NO. 419-03-00309
<PAGE>

WHEREAS, the Georgia Department of Administrative Services (DOAS) issued RFP No.
419-03-00309, A-1-which is incorporated herein, for the development and
administration of a broker system for the provision of a non-emergency
transportation system in the East NET Region on behalf of the Georgia Department
of Medical Assistance (DMA); and

WHEREAS, Automated Dispatch Solutions, Inc. (Contractor) submitted a response to
the Request for Proposal (RFP) which is incorporated herein and has been
selected by DOAS and DMA to perform said services.

NOW, therefore, in consideration of the mutual consents and agreements contained
herein, the parties agree as follows:

4.000 GENERAL

The Request for Proposal (RFP), any amendments thereto, and the Contractor's
proposal submitted in response to the RFP, including any best and final offer,
are incorporated in this contract by reference and form an integral part of this
contract. The Contractor shall perform all of the services of a broker, and
shall develop, produce and deliver to DMA all of the deliverables described in
the RFP, and DMA shall make payment therefore as hereinafter described.

In the event of a conflict in language between the various documents
incorporated into this contract, the provisions and requirements set forth in
this contract shall govern. In the event of a conflict between the language of
the RFP, as amended, and the Contractor's proposal, the language in the RFP
shall govern.

This contract shall be construed in accordance with the laws of the state.

Contractor will forthwith pay all taxes lawfully imposed upon it with respect to
this contract or any product delivered in accordance herewith. DMA will
forthwith pay all taxes lawfully imposed upon it with respect to this contract
or any product delivered in accordance herewith. DMA makes no representation
whatsoever as to the liability or exemption from liability of the Contractor to
any tax imposed by any governmental entity.

This contract shall be executed on behalf of the Georgia Department of Medical
Assistance by the Georgia Department of Administrative Services in accordance
with the Purchasing Act (Official Code of Georgia Annotated Title 50, Chapter 5,
Article 3).

4.010 TERM OF THE CONTRACT

This contract shall begin on the date of issuance and shall continue until the
close of the state fiscal year 1998 (June 30, 1998) unless renewed as
hereinafter provided.

DMA is hereby granted two (2) successive options to renew this contract for
additional terms of up to one fiscal year each all upon the same terms,
conditions and price in effect according to the Contractor's price proposal.
Each such option shall be exercisable solely and exclusively by DMA and shall be

APPENDIX A - Contract 3
<PAGE>

effected by the issuance of a Purchase Order Correction no later than June 1 for
all subsequent years. As to each term, the contract shall terminate absolutely
at the close of the then current state fiscal year without further obligation by
DMA.

4.020 COST OR PRICING

The Contractor shall submit or shall require any subcontractors hereunder to
submit cost or pricing data prior to the award of any subcontract.

The Contractor shall certify and shall require subcontractors to certify in a
form satisfactory to DMA that, to the best of their knowledge and belief, the
cost or pricing data submitted under this contract is accurate, complete and
current as of the date of agreement on the negotiated price of the subcontract
or of the contract or subcontract change.

The Contractor shall insert the substance of this subsection, including this
paragraph, in each subcontract hereunder.

If the Contract Administrator determines that any price, including profit or
fee, negotiated in connection with this agreement, or any cost reimbursable
under this agreement was increased by any significant sums because the
Contractor or any subcontractor furnished incomplete or inaccurate cost or
pricing data not current as certified in the Contractor's or subcontractor's
certification of current cost or pricing data, then such price or cost shall be
reduced accordingly and this contract and the subcontract, if applicable, shall
be modified in writing to reflect such reduction.

Since the contract is subject to reduction under this subsection by reason of
defective cost or pricing data submitted in connection with certain
subcontracts, the Contractor shall include a clause in each subcontract
requiring the subcontractor to indemnify the Contractor as appropriate. It is
expected that any subcontractor subject to such indemnification will generally
require substantially similar indemnification for defective cost or pricing data
required to be submitted by its lower tier subcontractors.

4.030 INSPECTION OF WORK PERFORMED

DMA, the U. S. Department of Health and Human Services (HHS), the General
Accounting Office (GAO), the Georgia Public Service Commission (PSC), the
Georgia Office of the Attorney General, and any other federal, state, county or
local agency with appropriate jurisdiction or their authorized representatives
or agent shall, at reasonable times, have the right to enter the Broker's
premises or other such places where duties under the contract are being
performed, to inspect, monitor or otherwise evaluate the work being performed
and all related financial records. The Broker, all subcontractors and
transportation providers must provide reasonable access to all facilities and
cooperate with state and federal representatives conducting inspection, visits,
audits, and investigations.

APPENDIX A - Contract 4
<PAGE>

4.040 SUBCONTRACTS

The Contractor will not subcontract or permit anyone other than Contractor
personnel to perform any of the work, services, or other performance required of
the Contractor under this contract, or assign any of its rights or obligations
hereunder, without the prior written consent of DMA. No subcontract which the
Contractor enters into with respect to the performance under the contract shall
in any way relieve the Contractor of any responsibility for any performance
required of it by this contract.

Service agreements with transportation providers are not considered subcontracts
for the purpose of this contract.

The Contractor shall give DMA immediate notice in writing by registered or
certified mail of any action or suit filed against it by any subcontractor, and
prompt notice of any claim made against the Contractor by any subcontractor or
vendor which in the opinion of the Contractor may result in litigation related
in any way to this contract with the state.

4.045 MINORITY AND SMALL BUSINESS SUBCONTRACTORS

The State encourages offerors to consider the use of certified minority and
small business firms as subcontractors. Offerors who do so are entitled to an
income tax credit under Georgia law (Code Title 48, Chapter 7 Amended, No. 1332
- - House Bill 635).

4.046 DMA Minority and Small Business Liaison Officer
Herbert Weldon, Deputy Commissioner
Georgia Department of Medical Assistance
40th Floor
2 Peachtree Street, N.W.
Atlanta, Georgia 30303-3151
Telephone: (404) 656-4496
FAX: (404) 651-6880

4.050 CONTRACTOR PERSONNEL

The Contractor warrants and represents that all persons including independent
Contractors and consultants (excluding all transportation providers) assigned by
it to the performance of this contract shall be employees of the Contractor and
shall be fully qualified to perform the work required herein. The Contractor
shall include a similar provision in any contract with a subcontractor selected
to perform work hereunder.

DMA shall have the absolute right to approve or disapprove any of the
Contractor's staff as defined in RFP subsection 3.310, et. seq., assigned to
this contract, to approve or disapprove any proposed changes in staff, or to
require the removal or reassignment of any Contractor employee or subcontractor
employee found unacceptable by DMA. The Contractor shall, upon request, provide
DMA with a

APPENDIX A - Contract 5
<PAGE>

resume of any member of its staff including independent Contractors and
consultants or subcontractor's staff assigned to or proposed to be assigned to
any aspect of the performance of this contract.

Personnel commitments made in the Contractor's proposal shall not be changed
except as hereinabove provided, or due to a resignation of any named individual.
Contractor staffing will include the named individuals at the levels of effort
proposed in the Contractor's technical proposal. Replacement of any personnel
will be with personnel of equal ability and qualifications as determined by DMA.
No diversion of staffing will be made by the Contractor, without prior written
consent of DMA.

The Contractor shall provide staff to perform all tasks specified as the
Contractor's responsibilities in this RFP. The staff level must be maintained
at the bid level or as authorized in writing by DMA for the duration of the
contract.

Failure of the Contractor to provide staffing at the bid level or level amended
by contract amendment or to receive DMA written approval for staffing changes
may result in liquidated damages.

All administrative personnel will be committed to this contract by the
Contractor unless DMA exercises its option to have a staff person removed. DMA
will be provided unrestricted access to appropriate Contractor personnel for
discussion of problems or concerns.

4.060 FEDERAL EMPLOYMENT PRACTICES REQUIREMENTS

The Contractor will not discriminate against any employee or applicant for
employment because of race, color, religion, sex, national origin, age, marital
status, political affiliation, or handicap. The Contractor will take equal
opportunity approach to employ and treat employees during employment without
discrimination because of their race, color, religion, sex, national origin,
age, marital status, political affiliation, or handicap. Such action will
include, but will not be limited to the following:

. Employment;
. Upgrade;
. Promotion;
. Demotion;
. Transfer;
. Recruitment;
. Advertisement for Recruitment;
. Layoff;
. Termination;
. Rates of pay or other compensation; and
. Selection for training (including apprenticeship).

The Contractor agrees to post in conspicuous places, available to employees and
applicants for employment, notices setting forth the provision of this
nondiscrimination clause.

APPENDIX A - Contract 6
<PAGE>

The Contractor will in all solicitations or advertisements for employees placed
by or on behalf of the Contractor, state that all qualified applicants will
receive consideration for employment without regard to race, color, religion,
sex, national origin, age, marital status, political affiliation, or handicap
except where it relates to a bona fide occupational qualification.

The Contractor shall comply with the nondiscrimination clause contained in
Federal Executive Order 11246, as amended by Federal Executive Order 11375,
relative to equal employment opportunity for all persons without regard to race,
color, religion, sex, or national origin, and the implementing rules and
regulations prescribed by the Secretary of Labor and with Title 41, Code of
Federal Regulations, Chapter 60. The Contractor and subcontractors shall comply
with related state laws and regulations regarding nondiscrimination.

The Contractor shall comply with regulations issued by the Secretary of Labor of
the United States in Title 48, Code of Federal Regulations, Subpart 22.14,
pursuant to the provisions of Executive Order 11758 and the Federal
Rehabilitation Act of 1973. The Contractor shall be responsible for ensuring
that all subcontractors comply with the above-mentioned regulations.

The Contractor and its subcontractors shall comply, with the Civil Rights Act of
1964, and any amendments thereto, and the rules and regulations thereunder;
Section 504 of Title V of the Federal Rehabilitation Act of 1973 as amended, and
the rules and regulations thereunder; and the Americans with Disabilities Act of
1990 (the ADA), and the rules and regulations thereunder.

The Contractor will furnish all information and reports required by Executive
Order Number 11246 of September 24, 1976, as amended and will permit access to
its books, records, and accounts by the Secretary of Labor or the Commissioner
of DMA or their authorized representatives, for purposes of investigation to
ensure compliance with rules, regulations, orders, and laws.

4.070 RELATIONSHIP OF THE PARTIES

Neither the Contractor nor any of its agents, consultants, servants, employees,
subcontractors or transportation providers with which the Contractor has active
service agreements shall become or be deemed to become agent, servant or
employee of the state or DMA. The Contractor and all such agents, consultants,
servants, employees, subcontractors or transportation providers shall for all
purposes be deemed to be independent contractors, and this contract shall not be
construed so as to create a partnership or joint venture between the Contractor
and DMA or the state.

4.080 DISPUTES

Any disputes concerning a question of fact arising under the contract which is
not disposed of by agreement shall be decided by the Contract Administrator who
shall reduce his decision to writing and mail or otherwise furnish a copy
thereof to the Contractor. The decision of the Contract Administrator shall be
final and conclusive unless within ten (10) calendar days from the date of
receipt of such copy the Contractor mails or otherwise furnishes a written
appeal to the Commissioner of DMA. The decision of the Commissioner or a duly
authorized representative for the determination of such appeals

APPENDIX A - Contract 7
<PAGE>

shall be final and conclusive unless determined by a court of competent
jurisdiction to have been fraudulent, or capricious or arbitrary, or so grossly
erroneous as necessarily to imply bad faith. In connection, with any appeal
proceeding under this clause, the Contractor shall be afforded an opportunity to
be heard and to offer evidence in support of his appeal. Pending a final
decision of a dispute hereunder, the Contractor shall proceed diligently with
the performance of the contract in accordance with the disputed decision.

4.090 AUDIT REQUIREMENTS

The state and federal standards for audits of DMA agents, contractors, and
programs conducted under contract are applicable to this section and are
incorporated by reference into this contract as though fully set out here.

4.091 Contractor Accounting Records Requirements

The Contractor agrees to maintain books, records, documents, and other evidence
pertaining to the costs and expenses of this contract (hereinafter collectively
called the "records") to the extent and in such detail as will properly reflect
all costs for which payment is made under the provisions of any contract of
which this contract is a part by reference or inclusion.

The Contractor's accounting procedures and practices shall conform to generally
accepted accounting principles and the costs properly applicable to the contract
shall be readily ascertainable therefrom.

4.092 Records Retention Requirements

The Contractor agrees to make available at its central business office at all
reasonable times during the period set forth below any of the records of the
contracted work for inspection or audit by any authorized representative of DMA,
the state auditor, the U.S. Department of Health and Human Services, the General
Accounting Office, the Georgia Public Service Commission (PSC), the Georgia
Office of the Attorney General, and for the Comptroller General of the United
States or their duly authorized representative.

The Contractor shall preserve and make available its records for a period of
three (3) years from the date of final payment under this contract, and for such
period, if any, as is required by applicable statute, by any other section of
this contract or associated contract.

If the contract is completely or partially terminated, the records relating to
the work terminated shall be preserved and made available for a period of three
(3) years from the date of any resulting final settlement.

Records which relate to appeals, litigations, or the settlements of claims
arising out of the performance of this contract, or costs and expenses of any
such agreement as to which exception has been taken by the state auditor or any
of his duly authorized representatives, shall be retained by the Contractor
until such appeals, litigations, claims, or exceptions have been disposed of.

APPENDIX A - Contract 8
<PAGE>

A file and report retention schedule shall be developed by the Contractor and
approved by DMA. The schedule shall be maintained by the Contractor and all
changes will be approved by DMA.

4.093 Substitution of Micro Media Records

Except for documentary evidence, the Contractor may in fulfillment of its
obligation to retain its records as required by this article, substitute clear
and legible photographs, microphotographs or other authentic reproductions of
such records, after the expiration of two (2) years following the last day of
the month of payment to the Contractor of the invoice to which such records
relate, unless a shorter period is authorized by DMA with the concurrence of the
state auditor or his duly authorized representatives.

4.094 Inclusion of Audit Requirements in Subcontracts

The provision of subsection 4.090 et. seq. shall be incorporated in any
subcontract.

4.100 CONFIDENTIALITY OF INFORMATION

The Contractor shall treat all information which is obtained by it through its
performance under the contract as confidential information, and shall not use
any information so obtained in any manner except as necessary for the proper
discharge of its obligations and securement of its rights herein, or as
otherwise provided for herein. DMA, the Attorney General, federal officials as
authorized by federal law or regulations, or the authorized representatives of
these parties shall have access to all confidential information in accordance
with the requirements of state and federal laws and regulations. Any other
party will be granted access to confidential information only after complying
with the requirements of state and federal laws and regulations pertaining to
such access. DMA shall have absolute authority to determine if and when any
other party has properly obtained the right to have access to this confidential
information. Nothing herein shall prohibit the disclosure of information in
summary, statistical, or other form which does not identify particular
individuals.

4.110 INDEMNITY AND INSURANCE

4.111 General

The Contractor shall be responsible from the time of the signing of this
agreement or from the effective date, whichever shall be later, for all injury
or damage of any kind resulting from its occupancy or any construction work
undertaken by Contractor or on Contractor's behalf.

4.112 Indemnification Agreement

Contractor hereby releases and agrees to indemnify and hold harmless the State
Agency, the State of Georgia and its departments, agencies and instrumentalities
(including the State Tort Claims Trust Fund, the State Authority Liability Trust
Fund, The State Employee Broad Form Liability Funds, the State Insurance and
Hazard Reserve Fund, and other self-insured funds, all such funds hereinafter
collectively referred to as the "Indemnities") from and against any and all
claims, demands, liabilities, losses, costs or

APPENDIX A - Contract 9
<PAGE>

expenses, and attorneys' fees, caused by, growing out of, or arising from this
Contract, due to any act or omission on the part of the Contractor, its agents,
employees, customers, invitees, licensees or others working at the direction of
Contractor or on it's behalf, or due to any breach of this Contract by the
Contractor, or due to the application or violation of any pertinent Federal,
State or local law, rule or regulation. This indemnification extends to the
successors and assigns of the Contractor, and this indemnification survives the
termination of the Contract and the dissolution or, to the extent allowed by the
law, the bankruptcy of the Contractor. If and to the extent such damage or loss
(including costs and expenses) as covered by this indemnification is covered by
the funds established and maintained by the State of Georgia Department of
Administrative Services (DOAS), the Contractor agrees to reimburse the Funds for
such monies paid out by the Funds.

This indemnification applies whether: (a) the claims, demands, liabilities,
losses, costs or expenses involve third parties or employees or agents or
customers or invitees or licensees of the Contractor or of the Indemnitees; or
(b) the Indemnitees are partially responsible for the situation giving rise to
the claim. This indemnification applies, without limitation, to claims, demands,
liabilities, losses, costs or expenses arising in any manner from the use, non-
use or occupancy of the premises, resulting from the discharge of polluting or
hazardous substances upon the premises, navigable and public waters, or
adjoining or nearby lands and private waters, or resulting from the failure of
Contractor to report to the appropriate governmental agency the discharge or
discovery of any pollutants or hazardous substances required by any governmental
entity or regulation.

This indemnification does not apply to the extent of the sole negligence of the
Indemnitees.

This indemnification does not extend beyond the term of this Contract, including
any extensions or options, and does not extend to claims exclusively between the
undersigned parties arising from the terms or regarding the interpretation of
this Contract.

4.113 Insurance Certificates

The Contractor shall, prior to the commencement of work, procure the insurance
policies identified below, at the Contractor's own expense and shall furnish the
State Agency an insurance certificate listing the agency as the certificate
holder with any endorsements thereof. The insurance certificate must document
that the liability insurance coverage purchased by the Contractor includes
contractual liability coverage and separate aggregate limits per project. In
addition, the insurance certificate must provide the following:
(a) Name and address of authorized agent
(b) Name and address of insured
(c) Name of insurance company(ies)
(d) Description of policies
(e) Policy Number(s)
(f) Policy Period(s)
(g) Limits of Liability
(h) Name and address of State Agency as certificate holder
(i) Signature of authorized agent

APPENDIX A - Contract 10
<PAGE>

(j) Telephone number of authorized agent
(k) Details of non-filed special policy exclusions in comments section of
the Certificate of Insurance
(1) Sixty days notice of cancellation/non-renewal
(m) Policy notification requirements for claims (to whom, address and time
limits) in comments section of the certificate of insurance.

4.114 Policy Provisions

Each of the insurance policies required below shall be issued by a company
licensed to transact the business of insurance in the State of Georgia by the
Insurance Commissioner for the applicable line of insurance and, unless waived
or modified in writing by the State Agency, shall be an insurer with a Best
Policyholders Rating of "A" or better and with a financial size rating of Class
IX or larger. Each such policy shall also contain the following provisions, or
the substance thereof, made a part of the insurance policy.

(a) The insurance company agrees that this policy shall not be canceled,
changed, allowed to lapse, or allowed to expire until sixty (60) days
after the State agency and the Department of Administrative Services,
Risk Management Division, has received written notice thereof as
evidenced by return receipt of registered letter or until such time as
other valid and effective insurance coverage acceptable in every
respect to the State Agency and providing protection equal to
protection called for in the policy shown below shall have been
received, accepted, and acknowledged by the State Agency. It is also
agreed that the said notice shall be valid only as to such project as
shall have been designated by name in said notice.

(b) Notice of any claim against the State or any indemnitee shall be
deemed to have occurred only when the Department of Administrative
Services, Risk Management Division, has received written notice
thereof and has acknowledged actual knowledge of the claim.

(c) The policy shall not be subject to invalidations as to any insured or
indemnitee by reason of any act or omission of another insured or any
of its officers, employees, agents or other representatives
("Severability of Insureds").

(d) The policy shall include "Cross-Liability" coverage.

(e) The policy shall acknowledge and agree that the Attorney General of
Georgia shall represent and defend the Indemnities and any settlement
on behalf of the Indemnities must be expressly approved by the
Attorney General.

4.115 Insurance Coverages

The Contractor agrees to purchase and have the authorized agent state on the
insurance certificate that the following types of insurance coverages,
consistent with the policies and requirements of O.C.G.A.

APPENDIX A - Contract 11
<PAGE>

(S) 50-321-37, have been purchased by the Contractor. The minimum liability
limits (general liability, automobile liability and employers' liability)
required from Contractors entering into an agreement with the State or an agency
or instrumentality of the State, is $5,000,000 per occurrence. Liability limits
for the Workers' Compensation Employers Liability, Commercial General Liability,
and Commercial Automobile Liability insurance coverages may be satisfied by
purchasing one or more insurance policies (e.g., a Commercial General Liability
Insurance Policy plus a Commercial Umbrella Insurance Policy). Any deviations
from these minimum limits must be approved by the Department of Administrative
Services, Risk Management Division.

(a) Workers' Compensation Insurance. The Contractor agrees to insure the
-------------------------------
statutory limits as established by the General Assembly of the State
of Georgia. (A self-insurer must submit a certificate from the Georgia
Board of Workers' Compensation stating the Contractor qualifies to pay
its own workers' compensation claims.)

(1) The Contractor shall also maintain employers Liability Insurance
Coverage with limits of at least:
(i) Bodily Injury by Accident - $1,000,000 each accident; and
(ii) Bodily Injury by Disease - $1,000,000 each employee.

(2) The Contractor shall require all Contractors or subcontractors
occupying the premises or performing work under this Contract to
obtain an insurance certificate showing proof of Workers'
Compensation and Employers Liability Insurance Coverage.

(b) Commercial General Liability Insurance. The Contractor shall procure
--------------------------------------
and maintain Commercial General Liability Insurance (1993 ISO
Occurrence Form or equivalent) which shall include, but need not be
limited to, coverage for bodily injury and property damage arising
from premises and operations liability, personal injury liability and
contractual liability. The Commercial General Liability Insurance
shall provide at lest the following limits (per occurrence) for each
type of coverage with a $2,000,000 aggregate:

Coverage Limit
-------- -----

1. Premises and Operations $1,000,000
2. Personal Injury $1,000,000
3. Contractual $1,000,000

The above coverage limits can be satisfied by purchasing one or more
insurance policies (e.g., a Commercial General Liability Insurance
Policy plus a Commercial Umbrella Insurance Policy).

APPENDIX A - Contract 12
<PAGE>

Additional Requirements for Commercial General Liability Insurance:
------------------------------------------------------------------

(1) The policy or policies shall name or cover as additional insureds
the officers, agents and employees of the State Agency and the
State of Georgia, but only with respect to claims for which the
Georgia Tort Claims Act, O.C.G.A. (S) 50-21-20 et seq. is not the
exclusive remedy.

(2) The policy or policies must provide primary limits over any other
liability policy provided by the State for any claims not covered
by the Georgia Tort Claims Act. However, the policy(ies) must
indemnify the Funds for any claims covered by the Georgia Tort
Claim Act.

(3) The policy or policies must be on an "occurrence" basis unless
waived by the State of Georgia, Department of Administrative
Services, Risk Management Office.

(4) To the full extent permitted by the Constitution and the laws of
the State of Georgia and the terms of the Funds, the Contractor
and its insurers waive any right of subrogation against the
Indemnitees, the Funds and insurers participating thereunder, to
the full extent of this indemnification.

(c) Commercial Automobile Liability Insurance. The Contractor shall
-----------------------------------------
procure and maintain Commercial Automobile Liability Insurance which
shall include courage for bodily injury and property damage arising
from the operation of any owned, non-owned or hired automobile. The
Commercial Automobile Liability Insurance Policy shall provide not
less than $1,000,000 Combined Single Limits for each occurrence.

Additional Requirements for Commercial Automobile Liability Insurance:
----------------------------------------------------------------------

(2) The policy or policies must provide primary limits over any other
liability policy provided by the State for any claims not covered
by the Georgia Tort Claim Act. However, the policy(ies) must
indemnify the Funds for any claims covered by the Georgia Tort
Claim Act.

(3) To the full extent permitted by the Constitution and the laws of
the State of Georgia and the terms of the Funds, the Contractor
and its insurers waive any right of subrogation against the
Indemnitees, the Funds and insurers participating thereunder, to
the full extent of this indemnification.

APPENDIX A - Contract 13
<PAGE>

(d) Commercial Umbrella Liability Insurance. The Contractor may purchase
---------------------------------------
a Commercial Umbrella Liability Insurance Policy to provide excess
coverage above the Commercial General Liability Insurance Policy, the
Commercial Automobile Liability Insurance Policy, and the Workers'
Compensation Employers' Liability Coverage to satisfy the minimum
liability limits set forth in this Article.

Additional Requirements for Commercial Umbrella Liability Insurance:
-------------------------------------------------------------------

(3) The policy or policies must be on an "occurrence" basis unless
waived by the State of Georgia, Department of Administrative
Services, Risk Management Office.

(4) To the full extent permitted by the Constitution and the laws of
the State of Georgia and the terms of the Funds, the Contractor
and its insurers waive any right of subrogation against the
lndemnitees, the Funds and insurers participating thereunder, to
the full extent of this indemnification.

4.120 LIQUIDATED DAMAGES - FAILURE TO MEET RFP/CONTRACT REQUIREMENTS

In the event that the Contractor fails to meet the RFP and contract requirements
listed below, damage shall be sustained by DMA which will be difficult or
impossible to ascertain exactly. The Contractor, therefore, agrees to pay DMA
the sums set forth below as liquidated damages, and not as a penalty.

A. DELIVERABLES AND REPORT PRODUCTION

REQUIREMENT:

All deliverables and reports described in Section 3 of the RFP must be delivered
to DMA in final form by the dates approved by DMA.

These include, but are not limited to:
1. operations manual interim or annual updates;
2. disaster recovery plan interim and annual updates;
3. vehicle reports;

APPENDIX A - Contract 14
<PAGE>

4. driver reports;
5. transportation services reporting;
6. detailed reports;
7. summary reports;
8. accident reports;
9. moving violation reports;
10. complaints reports;
11. telephone system reports;
12. annual certified financial audit; and
13. quality assurance plan interim and annual updates.

LIQUIDATED DAMAGES:

One hundred dollars ($100) per working day or any part thereof for each day each
report or other deliverable is late or unacceptable.

B. RECORD KEEPING

Requirement:

The Contractor shall maintain and shall make available within three (3) working
days of request all records. These include, but are not limited to:
1. Printouts of computerized recipient worksheets
2. Transportation provider records
3. Vehicle records
4. Vehicle manifests
5. Safety inspection records
6. Driver records
7. Records of complaints
8. Office/Business records relating to this contract as needed.

LIQUIDATED DAMAGES:

One hundred dollars ($100) per working day or any part thereof for failure to
produce any record as required.

C. VEHICLE RELATED REQUIREMENTS

REQUIREMENT:

The Contractor must assure that transportation providers maintain all vehicles
utilized in this contract up to all vehicle manufacturer and state and federal
safety standards, regulations of the PSC, the Americans with Disability Act
(ADA), and RFP requirements. Any vehicle found non-compliant with safety

APPENDIX A - Contract 15
<PAGE>

standards, PSC or ADA regulations, or RFP requirements must be removed from
service immediately upon discovery.

LIQUIDATED DAMAGES:

Five hundred dollars ($500) per calendar day or any partial day that non-
compliant vehicle is in service from the date of discovery.

D. DRIVER RELATED REQUIREMENTS

1. REQUIREMENT:

Any driver who is found not to be in compliance with Section 3.250 of the RFP
must be immediately removed from driving under this contract.

1. LIQUIDATED DAMAGES:

Five hundred dollars ($500) per calendar day or any part thereof in which a
driver who is non-compliant with Section 3.250 of the RFP is allowed to drive
under this contract.

2. REQUIREMENT:

Any driver who receives three (3) substantiated complaints in a 90-day period
must be removed from driving under this contract or enter a retraining program.
If a driver receives six (6) substantiated complaints within a twelve (12) month
time period, he/she must be removed from driving under this contract.

2. LIQUIDATED DAMAGES:

One hundred dollars ($100) a calendar day or any part thereof in which such a
driver is allowed to drive under this contract before retraining or before
dismissal.

E. REQUIREMENTS RELATED TO PROVISION OF TRANSPORTATION SERVICES

1. REQUIREMENT:

The Contractor shall be responsible for arranging for back-up vehicles and/or
personnel when notified by a recipient, a provider or DMA that a vehicle is
excessively late, is otherwise unavailable for services or when specifically
requested by DMA. The vehicle is "excessively late" if it is thirty (30)
minutes late in meeting its assigned schedule.

APPENDIX A - Contract 15
<PAGE>

1. LIQUIDATED DAMAGES:

Two hundred dollars ($200) per occurrence where back-up service is not available
within the required period of time.

2. REQUIREMENT:

The Contractor is required to assure that the proper type vehicle is utilized
for the status of the Medicaid recipient being transported.

2. LIQUIDATED DAMAGES:

Two hundred dollars ($200) per occurrence where a vehicle is utilized that is
not adequate to meet the health care status of the Medicaid recipient being
transported.

3. REQUIREMENT:

Contractors are required to assure that recipients are picked up within fifteen
(15) minutes of the scheduled pick-up time.

3. LIQUIDATED DAMAGES:

One thousand dollars ($1000) for any month in which ten per cent (10%) of
scheduled pick-ups are late. An additional one thousand dollars ($1000) will be
assessed for each percent that exceeds ten percent (10%).

4. REQUIREMENT:

Contractors are required to assure that recipients are delivered to scheduled
health care appointments on time.

4. LIQUIDATED DAMAGES:

One thousand dollars ($1000) for any month in which ten per cent (10%) of
arrivals for scheduled health care appointments are late. An additional one
thousand ($1000) will be assessed for each per cent that exceeds ten per cent
(10%).

F. BUSINESS REQUIREMENTS

1. REQUIREMENT:

The Contractor shall have sufficient toll free telephone lines, phones, staff,
and support equipment to meet these performance requirements. The phone system
installed must have an automated reporting system that identifies the number of
calls on hold and length of time, and number of calls per line.

APPENDIX A - Contract 17
<PAGE>

Telephone operating hours are 6:00 a.m. to 8:00 p.m. Eastern Time, Monday
through Friday and Saturday from 8:00 a.m. to 1:00 p.m. Eastern Time unless
otherwise approved by DMA.

Incoming telephone calls shall not be placed on "hold" for more than an average
of two minutes.

1. LIQUIDATED DAMAGES:

One hundred dollars ($100) per hour or any part thereof that telephone operating
hours/days do not meet the requirement.

Ten dollars ($10) for each minute or any part thereof that a call placed on
"hold" exceeds the requirement.

2. REQUIREMENT:

Incoming telephone calls shall not exceed a ten percent (10%) "busy" signal
rate. The Contractor must add sufficient telephone lines to bring the service
within contract standards within a time frame agreed upon by the DMA.

2. LIQUIDATED DAMAGES

Five hundred dollars ($500) per working day or any part thereof that corrective
action is late.

3. REQUIREMENT:

Contractor personnel used for scheduling must maintain a courteous and polite
attitude. Any service personnel who receives three (3) substantiated complaints
in a 90-day period must be removed from a position of direct public contact or
retained. If a service staff receives six (6) substantiated complaints within a
twelve (12) month period, he/she must be removed from a position of direct
public contact.

3. LIQUIDATED DAMAGES

One hundred dollars ($100) per business day or any part thereof that any service
staff personnel is allowed to remain in a direct public contact position after
the requirement is exceeded.

4. REQUIREMENT:

The Contractor must back up all computer files and store in a DMA approved off-
site storage area for safety.

4. LIQUIDATED DAMAGES:

Fifty dollars ($50) per working day for each file that is found not to have been
backed up correctly.

APPENDIX A - Contract 18
<PAGE>

5. REQUIREMENT:

The Contractor must provide on-line access to DMA during normal working hours.
On-line access includes the ability to view all system information and print
reports. DMA shall have free access (read-only) to the Contractor's systems to
include, but not limited to, recipient reservation worksheets, transportation
provider records, and historical records.

5. LIQUIDATED DAMAGES:

Two hundred fifty dollars ($250) per working day in which DMA access to the
Contractor's system is unavailable for sixty (60) or more minutes.

G. RECIPIENT NOTICES

1. REQUIREMENT:

Whenever NET service to a Medicaid recipient is denied or terminated, a notice
in writing must be issued to the recipient and DMA within three (3) working days
of the determination (see Section 3.281).

1. LIQUIDATED DAMAGES:

Five hundred dollars ($500) per calendar day that such a denial notice is late
in being sent or for failure to send notification.

2. REQUIREMENT:

Newly eligibles of a region are to receive a notice regarding availability of
services and instructions for accessing transportation from the region Broker
within ten (10) working days of the Broker's receipt of eligibility
notification.

2. LIQUIDATED DAMAGES:

Damages in the amount of one hundred ($100) shall be assessed for each calendar
day or any part thereof after the tenth working day that the newly eligible
notification of available services is late being sent.

3. REQUIREMENT:

Other notices are to be sent to recipients of a region by the region Broker as
agreed to by the Contractor and DMA staff.

APPENDIX A - Contract 19
<PAGE>

3. LIQUIDATED DAMAGES:

Damages for failure to send other notices as required by DMA will be agreed upon
in amount and duration at the time of the need for additional notices is agreed
upon by DMA.

H. OTHER CONTRACT PROVISIONS

REQUIREMENT:

DMA may identify any other condition resulting from Contractor non-compliance
with the RFP and contract through routine monitoring activities. DMA will
notify the Contractor in writing of the non-compliance and designate a
reasonable time for correction of the non-compliance.

LIQUIDATED DAMAGES:

Damages in the amount of two hundred dollars ($200) shall be assessed for each
working day or any part thereof after the designated time for correction until
the correction of the non-compliance.

4.130 LIMITATION OF LIABILITY

The total obligation of DMA for any term of this contract shall not exceed the
fund sources committed to this contract by DMA as of its effective date,
together with any additional fund sources subsequently determined to be
available and committed to it by DMA.

4.140 PERFORMANCE BOND

The Contractor in each NET region shall obtain and maintain for each contract
period a performance bond issued by a surety company that is listed in the
Federal Registry of Surety Companies in the amount of $250,000. In addition,
the Contractor in each NET region shall obtain and maintain for each contract
period a payment bond issued by a surety company that is listed in the Federal
Registry of Surety Companies in the amount of $750,000

Federal Registry of Surety Companies
Circular #570
Department of Treasury
Surety Section
401 14th Street, S.W.
Washington, D.C. 20227
Telephone: (202) 874-6850

(This Registry is updated every July 1st.)

APPENDIX A - Contract 20
<PAGE>

The performance bond shall be used to cover all costs of the State up to a
maximum of the full value of the bond in the event that the Contractor is unable
to properly, promptly and efficiently perform the contract and/or the contract
is terminated by default or bankruptcy. The payment bond shall be used to cover
delinquent payments to the transportation service providers and other vendors
under contract with the Broker up to a maximum of the full value of the bond in
the event that the Contractor is unable to properly, promptly and efficiently
perform the contract and/or the contract is terminated by default or bankruptcy.

4.150 ACCEPTANCE

The Contractor shall comply with all of the requirements of Section 3 of the
RFP, and DMA shall have no obligation to accept any deliverable tendered to it
until such time as all of said requirements have been met as to each such
deliverable.

4.160 WARRANTY AGAINST BROKERS' FEES

The Contractor warrants that it has not employed any company or person, other
than a bona fide employee working solely for the Contractor or company regularly
employed as its marketing agent, to solicit or secure this contract and that it
has not paid or agreed to pay any company or person, other than a bona fide
employee working solely for the Contractor or a company regularly employed by
the Contractor as its marketing agent, any fee, commission, percentage,
brokerage fee, gift, or other consideration contingent upon or resulting from
the award of this contract. In the event of a breach of this warranty by the
Contractor, DMA shall have the right to terminate this contract without any
liability whatsoever, or, in its discretion, to deduct from the contract price
or consideration or otherwise recover the full amount of such fee, commission,
percentage, brokerage fee, gift or contingent fee.

4.170 TERMINATION OF THE CONTRACT

This contract may terminate or may be terminated by DMA for any or all of the
following reasons:

.For any default by the Contractor;
.For the convenience of DMA;
.In the event of the insolvency of or declaration of bankruptcy by the
Contractor; and
.In the event sufficient appropriated, otherwise obligated funds no
longer exist for the payment of DMA's obligation hereunder.

Each of these is described in the following subsections.

4.171 Termination for Default

APPENDIX A - Contract 21
<PAGE>

of such notification to cure such default. In the event of default, and during
the above-specified grace period, performance under the contract shall continue
as though the default had never occurred. In the event the default is not cured
in fifteen (15) calendar days, DMA may, at its sole option, terminate the
contract for default. Such termination shall be accomplished by written notice
of termination forwarded to the Contractor by certified or registered mail,
return receipt requested, and shall be effective at the close of business on the
date specified in the notice. If it is determined, after notice of termination
for default, that the Contractor's failure was due to causes beyond the control
of and without error or negligence of the Contractor, the termination shall be
deemed a termination for convenience under subsection 4.182.

4.172 Termination for Convenience

DMA may terminate performance of work under the contract in whole or in part
whenever, for any reason, DMA shall determine that such termination is in the
best interest of the state. In the event that DMA elects to terminate the
contract pursuant to this provision, it shall so notify the Contractor by
certified or registered mail, return receipt requested. The termination shall
be effective as of the date specified in the notice.

4.173 Termination for Bankruptcy or Insolvency

In the event that the Contractor shall cease conducting business in the normal
course, become insolvent, make a general assignment for the benefit of
creditors, suffer or permit the appointment of a receiver for its business or
its assets or shall avail itself of, or become subject to, any proceedings under
the Federal Bankruptcy Act or any other statute of any state relating to
insolvency or the protection of the rights of creditors, DMA may, at its option,
terminate this contract. In the event DMA elects to terminate the contract
under this provision, it shall do so by sending notice of termination to the
Contractor by certified or registered mail, return receipt requested. The date
of termination shall be deemed to be the date such notice is mailed to the
Contractor, unless otherwise specified.

4.174 Termination for Unavailability of Funds

Notwithstanding any other provision of this contract, the parties hereto agree
that the charges hereunder are payable by DMA from appropriations received by
DMA from the General Assembly of the state and matched by current percentages of
federal financial participation (FFP). In the event such appropriations are
determined at the sole discretion of the Commissioner of DMA no longer to exist
or to be insufficient with respect to the charges payable hereunder, this
contract shall terminate without further obligation of DMA as of that moment.
In such event, the Commissioner of DMA shall certify to the Contractor the
occurrence thereof, and such certification shall be conclusive.

4.175 Termination Procedures

The Contractor shall:
.Stop work under the contract on the date and to the extent specified in
the notice of termination;

APPENDIX A - Contract 22
<PAGE>

. Place no further orders or subcontract for materials, services, or
facilities, except as may be necessary for completion of such portion of
the work under the contract as is not terminated;

. Terminate all orders and subcontracts to the extent that they relate to
the performance of work terminated by the notice of termination;

. Assign to DMA in the manner and to the extent directed by the Contract
Administrator all of the right, title, and interest of the Contractor under
the orders or subcontracts so terminated, in which case DMA shall have the
right, in its discretion, to settle or pay any or all claims arising out of
the termination of such orders and subcontracts;

. With the approval of the Contract Administrator, settle all outstanding
liabilities and all claims arising out of such termination or orders and
subcontracts, the cost of which would be reimbursable in whole or in part,
in accordance with the provisions of the contract;

. Complete the performance of such part of the work as shall not have been
terminated by the notice of termination;

. Take such action as may be necessary, or as the Contract Administrator may
direct, for the protection and preservation of any and all property or
information related to the contract which is in the possession of the
Contractor and in which DMA has or may acquire an interest;

4.176 Termination Claims

After receipt of a notice of termination, the Contractor shall submit to the
Contract Administrator any termination claim in the form and with the
certification prescribed by the Contract Administrator. Such claim shall be
submitted promptly but in no event later than six (6) months from the effective
date of termination. Upon failure of the Contractor to submit its termination
claim within the time allowed, the Contract Administrator may, subject to any
review required by the state procedures in effect as of the date of execution of
the contract, determine, on the basis of information available, the amount, if
any, due to the Contractor by reason of the termination and shall thereupon
cause to be paid to the Contractor the amount so determined.

Upon receipt of notice of termination, the Contractor shall have no entitlement
to receive any amount for lost revenues or anticipated profits or for
expenditures associated with this or in any other contract. The Contractor
shall be paid only by the following upon termination:

. At the contract price(s) for completed deliverables and services delivered
to and accepted by DMA; and/or

. At a price mutually agreed by the Contractor and DMA for partially
completed deliverables.

APPENDIX A - Contract 23
<PAGE>

pursuant to this article, DMA shall determine on the basis of information
available the amount, if any, due to the Contractor by reason of termination and
shall pay to the Contractor the amount so determined.

The Contractor shall have the right of appeal, as stated under subsection 4.080,
from any such determination made by DMA.

4.180 CHANGE OF OWNERSHIP OR LEGAL STATUS

Any Contractor that undergoes a change (including, but not limited to,
dissolution, incorporation, re-incorporation, reorganization, change of
ownership of assets, merger or joint venture) so that as a result, the
Contractor either becomes a different legal entity or is replaced in the program
by another contractor, must give DMA at least thirty (30) days prior written
notice. The successor Contractor simultaneously must submit the information
requested in sections 6.100 through 6.530 in this NET RFP for DMA's evaluation.
Failure of the successor to submit this information or failure to obtain a
successful evaluation from DMA will prevent DMA from reimbursing any further
services as of the date of the change.

4.190 LIABILITY FOR OVERPAYMENT, ENTITLEMENT TO UNDERPAYMENT

Any person or entity that replaces a Contractor in the Georgia Medicaid program
shall be deemed to have accepted joint and several liability, along with its
predecessor, for any overpayment sought to be recovered by DMA after the
effective date of the successor Contractor take over, regardless of the
successor's contract status or lack of affiliation with its predecessor at the
time the overpayment was made. An entity shall be deemed to have replaced a
Contractor if it (1) effectively became a different legal entity through
incorporation, re-incorporation, merger, joint venture, dissolution, creation of
a partnership, or reorganization; (2) took over more than fifty percent (50%) of
the predecessor's assets or Medicaid activities; or (3) has substituted for the
predecessor in the program, as evidenced by all attendant circumstances.
Reimbursement for services rendered prior to the effective date of take over by
a successor Contractor (including any adjustments for underpayment made by DMA)
shall be made to the Contractor of record at the time the payment is made or to
that Contractor's payee as properly designated on the appropriate form(s)
required by DMA. Any disputes or conflicts, legal or otherwise, arising between
the current Contractor and the predecessor Contractor concerning either
apportionment of liability for any overpayment previously made by DMA or the
right to additional reimbursement for any underpayment previously made by DMA
shall be the sole responsibility of such parties and shall not include DMA.

4.200 CONFORMANCE WITH FEDERAL LAWS AND REGULATIONS

The Contractor shall agree to conform with such Federal Laws as affect the
delivery of services under this contract including but not limited to Titles VI,
VII, and XIX of the Social Security Act, the Federal Rehabilitation Act of 1973,
and the Americans with Disability Act of 1993 (28 CFR 35.100 et seq.). The
Contractor shall agree to conform to such requirements or regulations as the
United States Department of Health and Human Services may issue from time to
time. Authority to implement federal requirements or regulations will be given
to the Contractor by DMA by a contract amendment.

APPENDIX A - Contract 24
<PAGE>

4.210 FORCE MAJEURE

Neither party to this contract shall be responsible for delays or failures in
performance resulting from acts beyond the control of such party. Such acts
shall include but not be limited to acts of God, strikes, riots, lock-outs, acts
of war, epidemics, fire, earthquakes, or other disasters.

4.220 CONFLICT OF INTEREST

The Contractor covenants that it presently has no interest and shall not acquire
any interest, direct or indirect, which would conflict in any manner or degree
with its performance hereunder. The Contractor further covenants that in the
performance of the contract no person having any such interest is presently
employed or shall be employed in the future by the Contractor.

The Contractor and all subcontractors are prohibited from owning or having any
financial interest in organizations that deliver NET transportation services to
Georgia Medicaid recipients. The Contractor and all subcontractors must
maintain an arm's length relationship with any transportation delivery entities.

All of the parties hereto hereby certify that the provisions of Chapter 45-10-20
through 45-10-28 of the Official Code of Georgia Annotated have not been
violated and will not be violated in any respect.

4.230 PROVISION OF GRATUITIES

Neither the Contractor nor any person, firm or corporation employed by the
Contractor in the performance of this contract shall offer or give, directly or
indirectly, to any employee or agent of the state, any gift, money or anything
of value, or any promise, obligation or contract for future reward or
compensation at any time during the term of this contract.

4.240 NON-COMPETITION FOR EMPLOYEES

During the term of this contract and for a period of one (1) year from the date
of termination or expiration of this contract, unless otherwise agreed to in
writing, neither DMA nor the Contractor shall solicit for employment as a
consultant or independent contractor any sales, marketing or management employee
hereinafter and during the term of this contract employed by the other, or the
Contractor's parent corporation, or any corporation controlled by, controlling,
or under common control with the Contractor who is working on this project
during the prior twelve (12) months; provided, however, the term "solicit for
employment" shall not be deemed to include advertising in newspapers or trade
publications addressed to the general public and either party may employ any
person now or hereafter employed by the other (including the Contractor's
parent, or any corporate affiliate) who, without other solicitation, responds to
such an advertisement or applies for employment without solicitation.

APPENDIX A - Contract 25
<PAGE>

4.250 STATE OWNERSHIP AND USE

The Broker shall provide to DMA all data files and documentation specifically
developed by the Broker for use with the Georgia NET Program, to include but
limited to:

. All data files in the most current version;
. Operational Procedures Manuals and other documentation;
. System and program documentation in a form usable and acceptable to DMA,
describing the most current version of the system;
. A complete description of the hardware, software, and communication
environment used by the Broker in support of the NET Program;
. Training programs for DMA staff, its agents or designated representatives
in the operation and maintenance of the Broker's system; and
. Any and all performance enhancing operational plans.

This obligation is not subject to any limitation in any respect, whether by
claim for the cost of any part of the system as proprietary or by failure to
claim for cost of any part of the system.

4.260 STATE PROPERTY

The Contractor shall be responsible for the proper custody and care of any
state-owned property furnished for use in connection with the performance of the
contract; and the Contractor will reimburse DMA for any loss or damage thereto;
normal wear and tear expected.

4.270 NOTICES

All notices under this contract shall be deemed duly given upon delivery, if
delivered by hand (against receipt); or three (3) calendar days after posting,
if sent by registered or certified mail, return receipt requested, to a party
hereto at the addresses set forth below or to such other address as a party may
designate by notice pursuant hereto.

DMA Contract Administrator
Carleton Guptill
Contract Administration
Department of Medical Assistance
40th Floor
2 Peachtree Street, N.W.
Atlanta, Georgia 30303

APPENDIX A - Contract 26
<PAGE>

DOAS Contract Issuing Officer
David Candler, Technical Procurement Manager
State Purchasing Office
Department of Administrative Services
1308 West Floyd Veterans Memorial Building
200 Piedmont Avenue, S.E.
Suite 1320, West Tower
Atlanta, Georgia 30334-9010

Vendor Representative and Address:
Automated Dispatch Solutions, Inc.
ATTN: John Shermyen
8715 NW 12th Street, Ste. 430
Miami, FL 33216

4.280SURVIVAL

The terms, provisions, representatives and warranties contained in this contract
shall survive the development and submission of all required deliverables and
the payment of the purchase price thereof.

4.290 ATTORNEY'S FEES

In the event that the state should prevail in any legal action arising out of
the performance or non-performance of this contract, the Contractor shall pay,
in addition to any damages, all expenses of such action including reasonable
attorneys' fees and costs regardless that DMA is represented by the Attorney
General. The term legal action shall be deemed to include administrative
proceedings of all kinds, as well as all actions at law or equity.

4.300 WAIVER

The waiver by DMA of any breech of any provision contained in this contract
shall not be deemed to be a waiver of such provision on any subsequent breech of
the same or any other provision contained in this contract and shall not
establish a course of performance between the parties contradictory to the terms
hereof.

4.310 AUTHORITY

Each party has full power and authority to enter into and perform this contract,
and the person signing this contract on behalf of each party certifies that such
person has been properly authorized and empowered to enter into this contract.
Each party further acknowledges that it has read this contract, understands it,
and agrees to be bound by it.

APPENDIX A - Contract
<PAGE>

4.320 SEVERABILITY

If any provision of the contract (including items incorporated by reference) is
declared or found to be illegal, unenforceable, or void, then both DMA and the
Contractor shall be relieved of all obligations arising under such provision; if
the remainder of the contract is capable of performance, it shall not, at the
sole option of DMA, be affected by such declaration or finding and shall be
fully performed.

4.330 ASSIGNABILITY

The Contractor shall not assign this contract to any third party without prior
written approval by DMA.

4.340 AMENDMENTS IN WRITING

No amendment to this contract shall be effective unless it is in writing and
signed by duly authorized representatives of the Contractor, DMA and DOAS.

4.350 ENTIRE AGREEMENT

This contract constitutes the entire agreement between the parties with respect
to the subject matter. No written or oral agreements, representatives,
statements, negotiations, understandings, or discussions which are not set out,
referenced, or specifically incorporated in this contract shall in no way be
binding or of affect between the parties.

APPENDIX A - Contract
<PAGE>

SIGNATURE PAGE

IN WITNESS WHEREOF, the parties have executed this contract this 17th day of
July, 1997.

DEPARTMENT OF MEDICAL ASSISTANCE

BY:
Marjorie P. Smith
Commissioner

DEPARTMENT OF ADMINISTRATIVE SERVICES

BY: David M. Candler
----------------
Signature/Date

Purchasing Agent
----------------
Title

CONTRACTOR

Automated Dispatch Solutions, Inc.
----------------------------------
Contractor Name

BY:
Signature Date

C.E.O.
------
Title

4/25/97 Signed before me this 25 day of April,
1977 as to Automated Dispatch Solutions, Inc.
John Shermyen known to me

Notary Public

APPENDIX A - Contract
<PAGE>

APPENDIX A

CONTRACT

APPENDIX A - Contract 30
<PAGE>

AMENDMENT NO. 1

TO THE

CONTRACT BETWEEN

THE DEPARTMENT OF ADMINISTRATIVE SERVICES

ON BEHALF OF

THE DEPARTMENT OF MEDICAL ASSISTANCE

AND

LOGISTICARE

RFP NO. 419-03-00309
<PAGE>

AMENDMENT #1 TO THE CONTRACT BETWEEN THE DEPARTMENT OF
ADMINISTRATIVE SERVICES (DOAS) ON BEHALF OF THE DEPARTMENT
OF MEDICAL ASSISTANCE AND NON-EMERGENCY BROKER

WHEREAS, The Department of Medical Assistance (hereinafter called the
"Department") and LogistiCare, formerly known as Automated Dispatch Solutions,
Inc. (ADS), (hereinafter called the "Contractor") executed a Contract for the
development and administration of a broker system for the provision of a non-
emergency transportation system in the Central, Southwest and East NET Regions
on behalf of the Georgia Department of Medical Assistance, including in its
terms RFP No. 419-03-00309, (hereinafter called the "Contract");

WHEREAS, DMA and the Contractor desire to amend the above-referenced
Contract pursuant to 4.020 by modifying the reimbursement methodology and
certain other provisions of the Contract as set forth below.

NOW THEREFORE, for and in consideration of the mutual promises of the
parties, the terms provisions and conditions of this agreement (hereinafter
called the "Amendment") and other good and valuable consideration, the
sufficiency of which is hereby acknowledged, the Department and the Contractor,
with the express consent of DOAS, hereby agree:

I. Effective April 1, 1998, the Department agrees to implement a policy
which eliminates the Contractor's obligation to transport nursing home
recipients to mental health services with specified exemptions.

II. The Department agrees to review the appropriateness of treatment in the
delivery of outpatient mental health services affecting NET utilization
and to report the results of such review to Contractor no later than
June 30, 1998.

III. The Department agrees not to print the Contractor's name or phone number
on any Medicaid cards issued on or after May 1, 1998.

IV.To modify the RFP/Contract as specified:

A. Add Number 5 to subsection 3.011, Modes of Transportation to read
---
as follows:

5. COMMERCIAL TAXI SERVICES: The Contractor is allowed to use
commercial taxi services to supplement its ambulatory services.

B. Add new paragraph to subsection 3.020, Reimbursement, to read as
---
follows:

Any advance payments made to the Contractor shall be deducted by
the Department from future payments owed to the Contractor during
the same fiscal year.

C. Add new bullet to subsection 3.120, Page 9, regarding
---
Transportation to read as follows:
<PAGE>

. utilizing commercial taxi services to supplement ambulatory services.

D. Modify subsection 3.130, Page 9, regarding RECIPIENT EDUCATION AND
------
APPLICATION FOR SERVICES, Paragraph 2, to read as follows:

The Broker is responsible for developing an educational plan for recipients
that includes at least the following: initial mailing and any other
mutually agreed upon notices to recipients within their region, as defined
below. All notices shall be reviewed and approved by DMA prior to mailing.

E. Delete the paragraph entitled MONTHLY NOTICE, in subsection 3.130.
------

F. Add new paragraph to subsection 3.132, Validity of Information to read as
---
follows:

The Department agrees that if and when Contractor identifies specific
recipients or facilities acting on behalf of recipients which, based upon
criteria established by the Contractor and approved by the Department (such
approval shall not be unreasonably withheld and shall be granted or denied
within ten work days of submission of the criteria to the Department),
appear to be receiving or requesting NET services which are not within the
scope of the services required under the Contract, it will be the
obligation of the recipient or facilities to prove that the requested
services are allowable. Until such proof is provided and verified, under
penalty of Medicaid fraud, the Department agrees that Contractor may deny
service.

G. Modify subsection 3.210, Page 14, Paragraphs 2 and 3 regarding Hours of
------
Operation.

. The Broker shall provide scheduling services with sufficient capacity
Monday through Friday, 8:00 a.m. to 6:00 p.m., Eastern Time with no
routine scheduling hours on Saturdays. Time of the actual transport
is predicated on the need of the recipient. Scheduling and business
functions may be closed for New Year's Day, Memorial Day, July 4th,
Labor Day, Thanksgiving Day, and Christmas Day.

. The Broker must have a telephone system and appropriate personnel
available to allow for "paging" after-hours, including Saturdays,
Sundays and stated holidays. The Broker will be responsible for
arranging transportation services for appointments, urgent care and
replacing disabled vehicles after hours.

H. Modify subsection 3.320, Page 29, Paragraph 3 to read as follows:
------

. The Project manager of the contract and scheduling staff must be
located at the central business office in each NET region. Scheduling
staff must be at the office between the hours of 8:00 a.m. and 6:00
p.m., Eastern time, Monday through Friday.
<PAGE>

I. Modify subsection 3.260 to allow the Contractor to establish and implement
------
its own Driver, Attendant, and Service Personnel Training standards, in
lieu of the standards specified in the RFP, subject to receipt of written
advance approval from the Department.

J. Delete subsection 6.420, COST DETAILS FOR PRICING PROPOSAL.
------

K. Add new paragraph to subsection 6.433, Monthly Operational Payment, to read
---
as follows:

Any advance payments made to the Contractor shall be deducted by the
Department from future payments owed to the Contractor during the same
fiscal year.

L. Delete Appendix D-5, Price Proposal and substitute Attachment A,
------
incorporated by reference into this Amendment, to reflect payment
modifications.

M. Modify subsection 4.000, Paragraph 2, to read as follows:
------

In the event of a conflict in language between the various documents
incorporated into this Contract, the provisions and requirements set forth
in this Contract shall govern unless otherwise specified in the Contract.
In the event of a conflict between the language of the RFP, as amended, and
the Contractor's proposal, the language in the RFP shall govern.

N. Add new section, 4.116, Complaints, to read as follows:
---

The Department agrees that effective immediately any and all parties (other
than elected or appointed officials or state government employees or
representatives) verbally informing the Department of Non-Emergency
Transportation service issues in the Contractor's region (hereinafter
"Complainants") shall be informed by the Department that such service
issues will not be handled by the Department directly and must be addressed
by such Complainants directly to Contractor and the Department and
Contractor agree that such complaints shall be handled in the manner
described in the RFP. The Department shall not become directly involved
with the processing of service issues identified verbally by Complainants
except in accordance with the procedures regarding appeals described in the
RFP. Additionally, the Department agrees to inform any and all
transportation providers who complain to the Department in written or
verbal form that such issues will not be handled by the Department and must
be addressed by such transportation providers directly to Contractor. The
Department agrees that the manner in which Contractor manages its
relationship with any and all transportation providers is within the
Contractor's discretion. Nothing herein shall prevent the Department from
exercising its rights under the RFP and to the extent that the provisions
of this paragraph specifically conflict with the RFP, the RFP shall be
controlling.
<PAGE>

O. Modify subsection 4.120 (F.) BUSINESS REQUIREMENTS, Number 1, Paragraph 2,
------
Page 15 to read as follows:

. Telephone operating hours are 8:00 a.m. to 6:00 p.m. Eastern Time,
Monday through Friday with no routine scheduling hours on Saturdays
unless otherwise approved by DMA.

P. Delete subsection 4.120 (G.) RECIPIENT NOTICES, Item 2, Page 17.
------

Q. Add new bullet in the Contract, subsection 4.250, State Ownership and Use
---
to read as follows:

. Any Driver, Attendant, and Service Personnel training standards
established and implemented in lieu of standards specified in 3.260.

R. Replace Appendix J, Glossary, Page 1, Business Day and Page 6, Scheduling
------- ------------ ----------
Day/Hours, to read as follows:
---------

Business Day -- The business office must be open between the hours of
------------
8:00 a.m. and 5:00 p.m., Eastern time, Monday through Friday.
Scheduling staff must be at the office between the hours of 8:00 a.m.
and 6:00 p.m.., Eastern time, Monday through Friday with no routine
scheduling hours on Saturdays.

Scheduling Day/Hours -- Any day or time when the Broker is expected,
--------------------
under the terms of this contract, to have personnel available for
scheduling NET services. Designated hours during which scheduling of
appointments can be done is a mandated function of the Broker. The
hours of 8:00 a.m. to 6:00 p.m., Eastern time, Monday through Friday
with no routine scheduling hours on Saturdays.

S. Delete Appendix J, Glossary, Page 8, last paragraph.
------

DMA and the Contractor agree that they have assumed an obligation to perform the
covenants, agreements, duties and obligations of the Contract, as modified and
amended herein, and agree to abide by all the provisions, terms and conditions
contained in the Contract as modified and amended.

This Amendment shall be binding and inure to the benefit of the parties hereto,
their heirs, representatives, successors and assigns. Whenever the provisions
of the Amendment and the Contract are in conflict, the provisions of the
Amendment shall take precedence and control.

It is understood by the parties hereto that, if any part, term or provision of
this Amendment or this entire Amendment is held to be illegal or in conflict
with any law of this State, then DMA at its sole option may enforce the
remaining unaffected portions or provisions of this Amendment or of the Contract
and the rights and obligations of the parties shall be construed and enforced as
if the Contract or Amendment did not contain the particular part, term or
provision held to be valid.
<PAGE>

The Contract and this Amendment constitute the entire agreement between the
parties with respect to the subject matter hereof and supersede all prior
negotiations, representations or contracts, either written or oral, between the
parties hereto relating to the subject matter hereof and shall be independent of
and have no effect upon any other contracts.

This Amendment shall remain effective for so long as the Contract is in effect.

This Amendment shall be construed in accordance with the laws of the State of
Georgia.
<PAGE>

IN WITNESS WHEREOF, DMA, the Contractor, and DOAS through their authorized
officers and agents have caused this Amendment to be executed on their behalf,
all on the date, month and year written below.

DEPARTMENT OF MEDICAL ASSISTANCE

BY: /s/ William R. Taylor 3-2-98
--------------------- ------
William R. Taylor, M.D., M.P.H. Date
Commissioner

DEPARTMENT OF ADMINISTRATIVE SERVICES

BY: /s/ 3/5/98
--- ------
Signature Date

Tech Procurement Mgr.
---------------------
Title

CONTRACTOR

LogistiCare
-----------
Contractor Name

BY: /s/ 3-3-98
--- ------
Signature Date

President/CEO
-------------
Title
<PAGE>

IN WITNESS WHEREOF, DMA, the Contractor, and DOAS through their
authorized officers and agents have caused this Amendment to be executed on
their behalf, all on the date, month and year written below.

DEPARTMENT OF MEDICAL ASSISTANCE

BY: /s/ William R. Taylor 3-2-98
--------------------- ------
William R. Taylor, M.D., M.P.H. Date
Commissioner

DEPARTMENT OF ADMINISTRATIVE SERVICES

BY: /s/ 3/5/98
--- ------
Signature Date

Tech Procurement Mgr.
---------------------
Title

CONTRACTOR

LogistiCare
-----------
Contractor Name

BY: /s/ 3-3-98
--- ------
Signature Date

President/CEO
-------------
Title
<PAGE>

PRICE PROPOSAL
CENTRAL NET REGION

- -----------------------------------------------------------------------------------------------------
A. IMPLEMENTATION PERIOD (FEE NOT TO EXCEED $200,000)
- -----------------------------------------------------------------------------------------------------
Maximum Monthly Proposed Monthly Number of Months
Period Amount per Eligible Amount per Eligible in Period
(Column 1) (Column 2) (Column 3)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
B. 1/ST/ CONTRACT SERVICE PERIOD $3.00 $3.90 4
(10/1/97 - 1/31/98)

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

C. 2/ND/ CONTRACT SERVICE PERIOD $3.00 $9.35 5
(2/1/98 - 6/30/98)

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

D. 3/RD/ CONTRACT SERVICE PERIOD $2.75 $6.93 12
(7/1/98 - 6/30/99)

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

E. 4/TH/ CONTRACT SERVICE PERIOD $2.50 $6.93 12
(7/1/99 - 6/30/00)

- -----------------------------------------------------------------------------------------------------
</TABLE>

SIGNED:
OFFEROR'S COMMITTING AUTHORITY DATE
<PAGE>

PRICE PROPOSAL
SOUTHWEST NET REGION

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
A. IMPLEMENTATION PERIOD (FEE NOT TO EXCEED $200,000)
- -----------------------------------------------------------------------------------------------------
Maximum Monthly Proposed Monthly Number of Months
Period Amount per Eligible Amount per Eligible in Period
(Column 1) (Column 2) (Column 3)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
B. 1/ST/ CONTRACT SERVICE PERIOD $3.00 $3.00 4
(10/1/97 - 1/31/98)

- -----------------------------------------------------------------------------------------------------
$3.00 $7.02 5
C. 2/ND/ CONTRACT SERVICE PERIOD
(2/1/98 - 6/30/98)

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

D. 3/RD/ CONTRACT SERVICE PERIOD $2.75 $5.23 12
(7/1/98 - 6/30/99)

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

E. 4/TH/ CONTRACT SERVICE PERIOD $2.50 $5.23 12
(7/1/99 - 6/30/00

- -----------------------------------------------------------------------------------------------------
</TABLE>

SIGNED:
OFFEROR'S COMMITTING AUTHORITY DATE
<PAGE>

PRICE PROPOSAL
EAST NET REGION

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

C. 2/ND/ CONTRACT SERVICE PERIOD $3.00 $6.38 5
(2/1/98 - 6/30/98)

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

D. 3/RD/ CONTRACT SERVICE PERIOD $2.75 $4.88 12
(7/1/98 - 6/30/99)

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

E. 4/TH/ CONTRACT SERVICE PERIOD $2.50 $4.88 12
(7/1/99 - 6/30/00)

- -----------------------------------------------------------------------------------------------------
</TABLE>

SIGNED:
OFFEROR'S COMMITTING AUTHORITY DATE
<PAGE>

PRICE PROPOSAL
CENTRAL NET REGION

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

C. 2/ND/ CONTRACT SERVICE PERIOD $3.00 $9.35 5
(2/1/98 - 6/30/98)

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

D. 3/RD/ CONTRACT SERVICE PERIOD $2.75 $6.93 12
(7/1/98 - 6/30/99)

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

E. 4/TH/ CONTRACT SERVICE PERIOD $2.50 $6.93 12
(7/1/99 - 6/30/00)

- -----------------------------------------------------------------------------------------------------
</TABLE>

SIGNED:
OFFEROR'S COMMITTING AUTHORITY DATE
<PAGE>

PRICE PROPOSAL
SOUTHWEST NET REGION

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

C. 2/ND/ CONTRACT SERVICE PERIOD $3.00 $7.02 5
(2/1/98 - 6/30/98)

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

D. 3/RD/ CONTRACT SERVICE PERIOD $2.75 $5.23 12
(7/1/98 - 6/30/99)

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

E. 4/TH/ CONTRACT SERVICE PERIOD $2.50 $5.23 12
(7/1/99 - 6/30/00

- -----------------------------------------------------------------------------------------------------
</TABLE>

SIGNED:
OFFEROR'S COMMITTING AUTHORITY DATE
<PAGE>

AMENDMENT NO. 1

TO THE

CONTRACT BETWEEN

THE DEPARTMENT OF ADMINISTRATIVE SERVICES

ON BEHALF OF

THE DEPARTMENT OF MEDICAL ASSISTANCE

AND

LOGISTICARE

RFP NO. 419-03-00309
<PAGE>

AMENDMENT #1 TO THE CONTRACT BETWEEN THE DEPARTMENT OF
ADMINISTRATIVE SERVICES (DOAS) ON BEHALF OF THE DEPARTMENT
OF MEDICAL ASSISTANCE AND NON-EMERGENCY BROKER

I. Effective April 1, 1998, the Department agrees to implement a policy which
eliminates the Contractor's obligation to transport nursing home recipients
to mental health services with specified exemptions.

II. The Department agrees to review the appropriateness of treatment in the
delivery of outpatient mental health services affecting NET utilization and
to report the results of such review to Contractor no later than June 30,
1998.

III. The Department agrees not to print the Contractor's name or phone number on
any Medicaid cards issued on or after May 1, 1998.

IV. To modify the RFP/Contract as specified:

A. Add Number 5 to subsection 3.011, Modes of Transportation to read as
---
follows:

5. COMMERCIAL TAXI SERVICES: The Contractor is allowed to use
commercial taxi services to supplement its ambulatory services.

B. Add new paragraph to subsection 3.020, Reimbursement, to read as
---
follows:

Any advance payments made to the Contractor shall be deducted by the
Department from future payments owed to the Contractor during the same
fiscal year.

2
<PAGE>

C. Add new bullet to subsection 3.120, Page 9, regarding Transportation
---
to read as follows:

. utilizing commercial taxi services to supplement ambulatory
services.

D. Modify subsection 3.130, Page 9, regarding RECIPIENT EDUCATION AND
------
APPLICATION FOR SERVICES, Paragraph 2, to read as follows:

The Broker is responsible for developing an educational plan for
recipients that includes at least the following: initial mailing and
any other mutually agreed upon notices to recipients within their
region, as defined below. All notices shall be reviewed and approved
by DMA prior to mailing.

E. Delete the paragraph entitled MONTHLY NOTICE, in subsection 3.130.
------

F. Add new paragraph to subsection 3.132, Validity of Information to read
---
as follows:

The Department agrees that if and when Contractor identifies specific
recipients or facilities acting on behalf of recipients which, based
upon criteria established by the Contractor and approved by the
Department (such approval shall not be unreasonably withheld and shall
be granted or denied within ten work days of submission of the
criteria to the Department), appear to be receiving or requesting NET
services which are not within the scope of the services required under
the Contract, it will be the obligation of the recipient or facilities
to prove that the requested services are allowable. Until such proof
is provided and verified, under penalty of Medicaid fraud, the
Department agrees that Contractor may deny service.

G. Modify subsection 3.210, Page 14, Paragraphs 2 and 3 regarding Hours
------
of Operation.

. The Broker shall provide scheduling services with sufficient
capacity Monday through Friday, 8:00 a.m. to 6:00 p.m., Eastern
Time with no routine scheduling hours on Saturdays. Time of the
actual transport is predicated on the need of the recipient.
Scheduling and business functions may be closed for New Year's
Day, Memorial Day, July 4th, Labor Day, Thanksgiving Day, and
Christmas Day.

3
<PAGE>

H. Modify subsection 3.320, Page 29, Paragraph 3 to read as follows:
------

. The Project manager of the contract and scheduling staff must be
located at the central business office in each NET region.
Scheduling staff must be at the office between the hours of 8:00
a.m. and 6:00 p.m., Eastern time, Monday through Friday.

I. Modify subsection 3.260 to allow the Contractor to establish and
------
implement its own Driver, Attendant, and Service Personnel Training
standards, in lieu of the standards specified in the RFP, subject to
receipt of written advance approval from the Department.

J. Delete subsection 6.420, COST DETAILS FOR PRICING PROPOSAL.
------

K. Add new paragraph to subsection 6.433, Monthly Operational Payment, to
---
read as follows:

Any advance payments made to the Contractor shall be deducted by the
Department from future payments owed to the Contractor during the same
fiscal year.

L. Delete Appendix D-5, Price Proposal and substitute Attachment A,
------
incorporated by reference into this Amendment, to reflect payment
modifications.

M. Modify subsection 4.000, Paragraph 2, to read as follows:
------

In the event of a conflict in language between the various documents
incorporated into this Contract, the provisions and requirements set
forth in this Contract shall govern unless otherwise specified in the
Contract. In the event of a conflict between the language of the RFP,
as amended, and the Contractor's proposal, the language in the RFP
shall govern.

N. Add new section, 4.116, Complaints, to read as follows:
---

4
<PAGE>

form that such issues will not be handled by the Department and must
be addressed by such transportation providers directly to Contractor.
The Department agrees that the manner in which Contractor manages its
relationship with any and all transportation providers is within the
Contractor's discretion. Nothing herein shall prevent the Department
from exercising its rights under the RFP and to the extent that the
provisions of this paragraph specifically conflict with the RFP, the
RFP shall be controlling.

O. Modify subsection 4.120 (F.) BUSINESS REQUIREMENTS, Number 1,
------
Paragraph 2, Page 15 to read as follows:

. Telephone operating hours are 8:00 a.m. to 6:00 p.m. Eastern
Time, Monday through Friday with no routine scheduling hours on
Saturdays unless otherwise approved by DMA.

P. Delete subsection 4.120 (G.) RECIPIENT NOTICES, Item 2, Page 17.
------

Q. Add new bullet in the Contract, subsection 4.250, State Ownership and
---
Use to read as follows:

. Any Driver, Attendant, and Service Personnel training standards
established and implemented in lieu of standards specified in
3.260.

R. Replace Appendix J, Glossary, Page 1, Business Day and Page 6,
------- ------------
Scheduling Day/Hours, to read as follows:
---------- ---------

Business Day -- The business office must be open between the
------------
hours of 8:00 a.m. and 5:00 p.m., Eastern time, Monday through
Friday. Scheduling staff must be at the office between the hours
of 8:00 a.m. and 6:00 p.m.., Eastern time, Monday through Friday
with no routine scheduling hours on Saturdays.

Scheduling Day/Hours -- Any day or time when the Broker is
--------------------
expected, under the terms of this contract, to have personnel
available for scheduling NET services. Designated hours during
which scheduling of appointments can be done is a mandated
function of the Broker. The hours of 8:00 a.m. to 6:00 p.m.,
Eastern time, Monday through Friday with no routine scheduling
hours on Saturdays.

S. Delete Appendix J, Glossary, Page 8, last paragraph.
------

5
<PAGE>

This Amendment shall remain effective for so long as the Contract is in effect.

This Amendment shall be construed in accordance with the laws of the State of
Georgia.

6
<PAGE>

DEPARTMENT OF MEDICAL ASSISTANCE

BY: /s/ William R. Taylor 3-2-98
--------------------- ------
William R. Taylor, M.D., M.P.H. Date
Commissioner

DEPARTMENT OF ADMINISTRATIVE SERVICES

BY: /s/ 3/5/98
--- ------
Signature Date

Tech Procurement Mgr.
---------------------
Title

CONTRACTOR

Logisticare
-----------
Contractor Name

BY: /s/ 3-3-98
--- ------
Signature Date

President/CEO
-------------
Title