Frontier Adjusters of America Inc – ‘DEFS14A’ for 8/29/01

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Definitive Proxy Solicitation Material — Special Meeting   —   Schedule 14A
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Document/Exhibit                   Description                      Pages   Size 

 1: DEFS14A     Amendment No. 4 to DEFS14A                            85    392K 

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SCHEDULE 14A INFORMATION
 (AMENDMENT NO.  )

Proxy Statement Pursuant to Section 14(a) of the
 Securities Exchange Act of 1934

Filed by the Registrant [X]                                                     
Filed by a Party other than the Registrant [ ]                                  

Check the appropriate box:                                                      
[ ]  Preliminary Proxy Statement           [ ]  Confidential, For Use of the    
[X]  Definitive Proxy Statement                 Commission Only (as permitted   
[ ]  Definitive Additional Materials            by Rule 14a-6(e)(2))            
[ ]  Soliciting Material Pursuant to                                            
Rule 14a-11(c) or Rule 14a-12                                         

Frontier Adjusters of America, Inc. 
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box):                              
[ ] No fee required.                                                            
[X] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.    

1) Title of each class of securities to which transaction applies:              
Common Stock, par value $.01 per share                                    
--------------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:                 
8,957,660 shares of Common Stock                                          
--------------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction  computed  pursuant  
 to Exchange  Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):                              
   Assumes payment of $1.58 per share in exchange for each share of Common Stock
--------------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:                             
$14,153,103                                                               
--------------------------------------------------------------------------------
5) Total fee paid:                                                              
$2,830.62                                                                 
--------------------------------------------------------------------------------
[X] Fee paid previously with preliminary materials:                             

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

1)   Amount previously paid:                                            
                          ------------------------------------------
2)   Form, Schedule or Registration Statement No.:                      
                                                --------------------
3)   Filing Party:                                                      
                ----------------------------------------------------
4)   Date Filed:                                                        
              ------------------------------------------------------

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 [Frontier Letterhead]

 August 29, 2001

Dear Shareholder:                                                               

     You are  cordially  invited to attend the special  meeting of  Shareholders
(the "Special Meeting") of Frontier Adjusters of America,  Inc.  ("Frontier") to
be held at 9:00 a.m.,  on Friday,  September  28, 2001 at  Frontier's  executive
offices, located at 45 East Monterey Way, Phoenix, Arizona 85012.               

     A Proxy  Statement and a proxy for the Special  Meeting are  enclosed.  The
Special  Meeting is for the purpose of considering and voting upon the following
matters:                                                                        

     1.   To  approve  and adopt a Plan and  Agreement  of Merger  (the  "Merger
          Agreement"),   and  the   transactions   contemplated  by  the  Merger
          Agreement,  pursuant to which  Frontier will be the  surviving  entity
          after it is merged with a  wholly-owned  subsidiary  of  Merrymeeting,
          Inc. ("MMI"). MMI is a newly-formed Delaware corporation that is owned
          by  John  M.  Davies,  Frontier's  Chairman  of  the  Board,  and  IVM
          Intersurer  BV, a  Netherlands  holding  company that  specializes  in
          investing  in  insurance-related  businesses.  Under  the terms of the
          Merger Agreement, MM Merger Corporation,  a wholly owned subsidiary of
          MMI ("Acquisition Company"),  would merge with and into Frontier, with
          Frontier  being  the  surviving  entity.  Each  outstanding  share  of
          Frontier's  common stock (the "Common  Stock"),  other than the shares
          held by MMI,  would be  exchanged  for the right to  receive  $1.58 in
          cash,  without interest,  for each share of Common Stock. As a result,
          Frontier  would  cease to be a public  company.  A copy of the  Merger
          Agreement dated as of April 27, 2001 is attached as Appendix A to, and
is described in, the accompanying Proxy Statement.          

     2.   Such other matters as may properly come before the Special Meeting, or
          any adjournment thereof. The Board of Directors is not presently aware
of any other business to come before the meeting.           

     After  careful  consideration,  your  Board of  Directors  has  unanimously
approved the Merger Agreement and has concluded that it is in the best interests
of Frontier and its shareholders. YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT FRONTIER'S SHAREHOLDERS APPROVE THE MERGER AGREEMENT.                      

     Approval  of the  Merger  Agreement  requires  the  affirmative  vote  of a
majority of the votes present in person or  represented  by proxy at the Special
Meeting  provided that there is a quorum present.  A quorum consists of over 50%
of the shares of Common Stock  issued and  outstanding  on August 29, 2001,  the
Record Date. MMI holds  approximately  59% of the aggregate number of votes that
may be cast by the  holders of Common  Stock,  which is a  sufficient  number of
votes to approve the Merger Agreement. MMI has informed Frontier that it intends
to vote its shares in favor of approving Merger Agreement.  Therefore, your vote
will not affect the outcome of the vote on the Merger Agreement.                

     In the  materials  accompanying  this  letter,  you will  find a Notice  of
Special Meeting of Shareholders,  a Proxy Statement relating to the action to be
taken by Frontier's  shareholders at the Special Meeting, and a proxy. The Proxy
Statement more fully  describes the terms of the proposed  Merger  Agreement and
includes information about Frontier going private. To ensure your representation
at the Special Meeting,  please complete,  sign, and date the enclosed proxy and
return it in the envelope provided.  If you attend the Special Meeting,  you may
vote in person if you  wish,  even  though  you have  previously  turned in your
proxy.                                                                          

Thank you for your continued support.                                 

          Sincerely,

                                  /s/ Jeffrey R. Harcourt, Secretary

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 FRONTIER ADJUSTERS OF AMERICA, INC.

--------------------------------------------------------------------------------
 NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
 AUGUST 29, 2001
--------------------------------------------------------------------------------

     The Special Meeting of Shareholders of Frontier Adjusters of America, Inc.,
an Arizona corporation ("Frontier"), will be held on Friday, September 28, 2001,
at 9:00 a.m. (Phoenix,  Arizona time) at Frontier's executive offices located at
45 East Monterey Way, Phoenix, Arizona 85012.                                   

     This  Notice  of the  Special  Meeting  and the  attached  Proxy  Statement
describe the formal  business to be  transacted at the Special  Meeting.  At the
Special  Meeting,  you will be asked to consider and vote to approve and adopt a
Plan and  Agreement of Merger (the  "Merger  Agreement"),  and the  transactions
contemplated  by the Merger  Agreement,  pursuant to which  Frontier will be the
surviving  entity  after  it  is  merged  with  a  wholly-owned   subsidiary  of
Merrymeeting,  Inc. ("MMI").  MMI is a newly formed Delaware corporation that is
owned by John M. Davies,  Frontier's  Chairman of the Board,  and IVM Intersurer
BV,  a   Netherlands   holding   company  that   specializes   in  investing  in
insurance-related  businesses. Under the terms of the Merger Agreement MM Merger
Corporation,  a wholly owned subsidiary of MMI  ("Acquisition  Company"),  would
merge with and into  Frontier,  with Frontier being the surviving  entity.  Each
share of  Frontier's  common stock (the "Common  Stock"),  other than the shares
held by MMI, would be exchanged for the right to receive $1.58 in cash,  without
interest,  for each share of Common Stock. As a result,  Frontier would cease to
be a public  company.  A copy of the Merger  Agreement is included as Appendix A
to, and is described in, the accompanying Proxy Statement. Following this merger
(the  "Merger"),  the  shareholders  of  Frontier  other  than MMI  (hereinafter
referred to as the "Unaffiliated  Shareholders")  would no longer have an equity
interest in Frontier and MMI would own all of the equity  interests in Frontier,
which would be the surviving entity in the Merger.                              

     A special  committee of directors of Frontier  (the  "Special  Committee"),
consisting of three directors who are not holders of any stock in Frontier,  MMI
or Acquisition Company, and who are not employed by affiliates of Frontier,  MMI
or  Acquisition  Company,  has reviewed and  considered  the terms of the Merger
Agreement and the Merger.  The Special  Committee  unanimously  recommended  the
approval  of the  Merger  Agreement  to the  Board of  Directors.  The  Board of
Directors has  unanimously  approved the Merger  Agreement and believes that the
terms of the Merger are in the best  interests of Frontier and its  shareholders
and fair to the  Unaffiliated  Shareholders.  The Board of Directors  recommends
that you vote FOR  approval of the Merger  Agreement.  For a  discussion  of the
interests  of  directors  and officers in this  transaction,  see "The  Proposed
Merger--Conflicts of Interest."                                                 

     Under  Arizona law, the approval of the Merger at the Special  Meeting will
require the affirmative vote of holders of a majority of the outstanding  shares
of Common Stock. MMI owns a majority of the shares of Common Stock, representing
59% of the  aggregate  number of votes that may be cast at the Special  Meeting,
which are sufficient to approve the Merger Agreement.                           

     The  Merger  Agreement  is more  fully  described  in the  Proxy  Statement
accompanying  this Notice.  Only shareholders of record at the close of business
on August 29, 2001 are entitled to notice of and to vote at the Special Meeting.

     All  shareholders  are cordially  invited to attend the Special  Meeting in
person. To assure your representation at the Special Meeting,  however,  you are
urged to mark, sign, date, and return the enclosed proxy as promptly as possible
in the  postage-prepaid  envelope  enclosed for that  purpose.  Any  shareholder
attending  the Special  Meeting may vote in person even if he or she  previously
has returned a proxy.                                                           

     SHAREHOLDERS  WHO DO NOT EXPECT TO BE PRESENT AT THE  SPECIAL  MEETING  ARE
REQUESTED  TO MARK,  SIGN,  DATE AND RETURN THE  ENCLOSED  PROXY IN THE ENVELOPE
PROVIDED.                                                                       

                                   By Order of the Board of Directors,

Phoenix, Arizona                                                                
August 29, 2001                         /s/ Jeffrey R. Harcourt, Secretary      

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 FRONTIER ADJUSTERS OF AMERICA, INC.
 PROXY STATEMENT

 TABLE OF CONTENTS

General........................................................................1
Record Date....................................................................1
Revocability of Proxies........................................................1
Voting Securities and Voting Rights............................................1
Voting of Proxies..............................................................2
Solicitation...................................................................2
Summary Term Sheet.............................................................2
The Proposed Merger............................................................6
   The Company.................................................................6
     General...................................................................6
     Claims Adjusting..........................................................7
     Licensing and Franchising.................................................7
     Operation of Independent Adjusters........................................8
   Background of the Merger....................................................9
Recommendation of the Special Committee and Board of Directors;           
     Reasons for the Merger...................................................11
   Opinion of ComStock........................................................14
     Definition of Value......................................................15
     Governing Standards......................................................15
     General Valuation Approach...............................................15
     Discussion of Independent Valuation Methods Utilized.....................16
   Range of Independently Calculated Values...................................18
     Discussion of Range of Fair Values.......................................18
     Discussion of Each Valuation Method......................................18
   Current Trading Price Plus Control Premium.................................18
   Capitalized Cash Flow Method...............................................18
   Discounted Cash Flow Method................................................19
   Guideline Company Method...................................................19
   Merger and Acquisition Method..............................................19
     Discussion of the Purchase of Shares Owned by Netrex.....................19
     Impact of Additional Compensation Expenses...............................20
     Discussion of Trading Activity for the Common Stock......................20
     Discussion of Prior Trading Activity for the Common Stock................20
   Certain Effects of the Merger..............................................20
   Conflicts of Interest......................................................21
   Federal Income Tax Consequences............................................21
   Source of Funds............................................................22
   Effective Time of the Merger and Payment for Shares........................23
   The Merger Agreement.......................................................24
   Pro Forma Financial Information............................................24
   Conduct of the Business of Frontier if the Merger is Not Consummated.......24
   Exchange of Securities.....................................................24
   Transfer of Shares.........................................................25
   Regulatory Approvals.......................................................25
   Expenses of the Merger.....................................................25
   Rights of Dissenting Shareholders..........................................25
   Conduct of Frontier's Business After the Merger............................25
   Interests of Certain Persons in the Merger.................................26
Market Price and Dividend Information.........................................27
Management of MMI.............................................................28
   Current Directors and Executive Officers...................................28

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Beneficial Ownership of Common Stock Prior to and After the Merger............29
Availability of Information...................................................30
Incorporation of Certain Information by Reference.............................30
Required Vote, Effect of Shareholder Approval, and Related Matters............31
Other Matters.................................................................31
Deadline for Shareholder Proposals............................................31

Appendix A - Plan and Agreement of Merger                                       
Appendix B - ComStock Opinion dated April 24, 2001                              

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 FRONTIER ADJUSTERS OF AMERICA, INC.
45 EAST MONTEREY WAY
PHOENIX, ARIZONA 85012

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

 PROXY STATEMENT

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

GENERAL                                                                         

The  enclosed  proxy is  solicited  on behalf of Frontier  Adjusters of America,
Inc., an Arizona corporation ("Frontier"), by Frontier's board of directors (the
"Board"  or "Board of  Directors")  for use at  Frontier's  Special  Meeting  of
Shareholders  to be held on Friday,  September  28, 2001 at 9:00 a.m.  (Phoenix,
Arizona time) (the "Special Meeting"),  or at any adjournment  thereof,  for the
purposes set forth in this Proxy  Statement  and in the  accompanying  Notice of
Special Meeting of Shareholders.  The Special Meeting will be held at Frontier's
executive offices located at 45 East Monterey Way, Phoenix, Arizona 85012.      

These proxy solicitation materials were first mailed on or about August 29, 2001
to all shareholders  entitled to vote at the Special Meeting. We have mailed our
2000  Annual  Report and our  Quarterly  Report on Form 10-Q for the nine months
ended March 31, 2001 to our stockholders with this Proxy Statement.             

The mailing address of Frontier's principal executive office is 45 East Monterey
Way, Phoenix, Arizona 85012. Frontier's telephone number is (602) 264-1061.     

RECORD DATE                                                                     

The Board of Directors has fixed the close of business on August 29, 2001 as the
record date (the "Record Date") for the  determination of shareholders  entitled
to notice of and to vote at the Special Meeting or any adjournment thereof.     

REVOCABILITY OF PROXIES                                                         

Any person  giving a proxy may  revoke  the proxy at any time  before its use by
delivering to Frontier  written  notice of  revocation or a duly executed  proxy
bearing a later date, or by attending the Special Meeting and voting in person. 

VOTING SECURITIES AND VOTING RIGHTS                                             

On the Record Date,  Frontier had outstanding  8,957,660 shares of Common Stock,
par value $.01 per share  (the  "Common  Stock").  Each  holder of Common  Stock
voting at the Special  Meeting,  either in person or by proxy, may cast one vote
per share of Common  Stock held on all  matters to be voted upon at the  Special
Meeting.                                                                        

The  presence at the Special  Meeting,  in person or by proxy,  of  shareholders
entitled  to cast a majority of all votes  entitled to be cast at such  meeting,
shall  constitute a quorum.  Assuming that a quorum is present,  the affirmative
vote of a majority of the shares of Frontier present in person or represented by
proxy at the Special Meeting is required to approve the Merger Agreement and the
transactions  contemplated  thereby and to transact  such other  business as may
properly come before the Special Meeting or any adjournment thereof.            

PRIOR TO APPROVAL OF THE MERGER  AGREEMENT,  MERRYMEETING,  INC.  ("MMI")  HOLDS
APPROXIMATELY 59% OF FRONTIER'S OUTSTANDING SHARES OF COMMON STOCK. THE FRONTIER
SHARES OWNED BY MMI ARE  SUFFICIENT TO ASSURE  PASSAGE OF THE MERGER  AGREEMENT.
MMI HAS INFORMED FRONTIER THAT IT WILL VOTE ITS SHARES IN FAVOR OF APPROVING THE
MERGER  AGREEMENT  WITHOUT  REGARD  TO HOW OTHER  SHAREHOLDERS  MAY VOTE ON THIS
ISSUE.  FOR THIS  REASON,  YOUR VOTE WILL NOT AFFECT  THE  PASSAGE OF THE MERGER
AGREEMENT.                                                                      

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Votes cast by proxy or in person at the Special Meeting will be tabulated by the
election inspectors appointed for the Special Meeting and will determine whether
a quorum is present.  The election  inspectors will treat  abstentions as shares
that are present and entitled to vote for purposes of  determining  the presence
of a quorum,  but as unvoted for  purposes of  determining  the  approval of any
matter  submitted to the  shareholders for a vote. Thus, an abstention will have
the same effect as a vote against the Merger Agreement. If a broker indicates on
the proxy that it does not have discretionary  authority as to certain shares to
vote on a particular matter,  those shares will not be considered as present and
entitled to vote with respect to that matter.                                   

VOTING OF PROXIES                                                               

A proxy has been  included  with this  Proxy  Statement.  To vote by proxy,  you
should  complete  the proxy,  sign it and return it to us in the  self-addressed
envelope we have provided.  When a proxy is properly executed and returned,  the
shares it represents  will be voted at the Special  Meeting as directed.  Unless
otherwise instructed, shares represented by proxy will be voted "for" the Merger
Agreement.  Frontier knows of no other matters that will come before the Special
Meeting.  However,  if any other matters should properly come before the Special
Meeting,  it is the intention of the persons named in the enclosed proxy to vote
each proxy in accordance with their best judgment on such matter.               

SOLICITATION                                                                    

The cost of this solicitation will be borne by Frontier.  In addition,  Frontier
may reimburse brokerage firms and other persons  representing  beneficial owners
of shares for expenses  incurred in  forwarding  solicitation  materials to such
beneficial  owners.  Proxies  also may be  solicited  by certain  of  Frontier's
directors  and  officers,  personally  or  by  telephone  or  telegram,  without
additional compensation.                                                        

SUMMARY TERM SHEET

This  summary  term  sheet  highlights  selected  information  from  this  Proxy
Statement and may not contain all of the  information  that is important to you.
To better understand the Merger and for a more complete description of the terms
and  conditions  of the Merger,  you should  carefully  read this  entire  Proxy
Statement  and its  appendices  and the other  documents to which we refer.  The
actual  terms of the Merger are  contained  in the  Merger  Agreement,  which is
included in this Proxy Statement as Appendix A. Certain  capitalized  terms used
in this Summary are defined elsewhere in this Proxy Statement.                  

1.   WHAT IS THE PROPOSED MERGER?                                               

     Frontier  currently has one class of capital stock that is  publicly-traded
     and  that is its  Common  Stock.  The  Merger  will  eliminate  the  public
     ownership of the Common Stock. The Merger Agreement  provides that Frontier
     will merge with  Acquisition  Company and  Frontier  will be the  surviving
     entity. As a result, Frontier will become a wholly owned subsidiary of MMI,
     which in turn is owned by John M. Davies, Frontier's Chairman of the Board,
     and IVM  Intersurer  BV, a  Netherlands  company.  After  the  Merger,  the
     Unaffiliated  Shareholders  will receive cash for their shares,  and all of
     the  common  stock of  Frontier  will be owned  by MMI.  See "The  Proposed
     Merger--Recommendation  of the Special  Committee  and Board of  Directors;
Reasons for the Merger."                                              

2.   WHAT ARE THE REASONS FOR THE MERGER?                                       

     After review,  the Board of Directors and the Special Committee  determined
     that the Merger was in the best  interests  of all of the  shareholders  of
     Frontier,  including the  Unaffiliated  Shareholders . Among other factors,
the Board of Directors and the Special Committee considered that:     

     *    There is an extremely  limited  trading  market for the Common  Stock.
          Based upon the past  experience of Frontier as a public  company,  the
          Board of Directors  believes that there is no  substantial  likelihood
          that the investment  community will take a sufficient  interest in the
          Common Stock such that liquidity of the Unaffiliated Shareholders will
improve.                                                    

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     *    Despite a variety of efforts by the Board of Directors to put together
          a  strategic  transaction  that would  result in the active  growth of
     Frontier's business, no feasible alternative has been identified.

     *    Frontier  estimates  that  the  cost of  being  a  public  company  is
          approximately $200,000 per year, which management believes is too high
for a small corporation such as Frontier to support.        

     See "The Proposed Merger--Recommendation of the Special Committee and Board
of Directors; Reasons for the Merger."                                

3.   WHAT WILL I RECEIVE IN THE MERGER?                                         

     You will receive $1.58 in cash (the "Cash Consideration") for each share of
     Common Stock that you own immediately  prior to the Merger.  The $1.58 cash
     price  reflects a 32% premium over the average  closing market price of the
     Common  Stock for the last  trading  day before we publicly  announced  the
     Merger and at other  recent  periods,  including  the 22 trading day period
     prior to the mailing of this Proxy  Statement.  On April 27, 2001, the last
     trading  day prior to the first  public  announcement  of the  Merger,  the
     closing price per share of the Common Stock on the American  Stock Exchange
was $1.20. See "Market Price and Dividend Information."               

4.   HOW DOES THE $1.58 PER SHARE OF COMMON  STOCK  THAT I WILL  RECEIVE  IN THE
MERGER COMPARE TO THE MARKET PRICE FOR THE COMMON STOCK?              

Following is price data regarding the Common Stock:                 

*    Closing price per share of Common Stock on April                 
27, 2001, the last trading day before the Merger            
          was publicly announced.                                          $1.20

*    Average closing price per share of Common Stock                  
for the 22 days prior to April 30, 2001, the day            
          the Merger was publicly announced.                               $1.23

*    Estimated range of fair value per share of                       
minority shares, excluding control premium (based           
on valuation range from the ComStock Opinion).              
                                                                   $1.13 - $1.29

*    Range of per share control premium (based on                     
control premium of 35% proposed in the ComStock             
          Opinion).                                                $0.39 - $0.45

*    Per share Cash Consideration to be paid to the                   
          Unaffiliated Shareholders                                        $1.58

*    Price per share of Common Stock paid by MMI to                   
acquire the majority interest in Frontier from              
          UFAC.                                                            $1.58

5.   HAS  THE  BOARD  OF  DIRECTORS  RECOMMENDED  THAT I  VOTE  FOR  THE  MERGER
AGREEMENT?                                                            

     The Board of Directors  believes that the Merger is both  procedurally  and
     substantively  fair  to,  and in the best  interests  of  Frontier  and the
     Unaffiliated  Shareholders.   The  Board  of  Directors  formed  a  Special
     Committee,  which consisted of three directors independent of Frontier, MMI
     and Acquisition  Company and their respective  affiliates,  to evaluate the
     merits of the Merger and evaluate the proposed  price of $1.58 per share to
     be paid to the Unaffiliated Shareholders. The Special Committee unanimously
     approved  the $1.58 per share price and  unanimously  recommended  that the
     Board of Directors approve the terms of the Merger.  The Board of Directors

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     then unanimously approved the Merger. For further information as to how the
     Special  Committee and the Board of Directors  arrived at their conclusions
     and the  independent  opinion that the Special  Committee  and the Board of
     Directors  received  from  their  financial  advisor,   see  "The  Proposed
     Merger--Recommendation  of the Special  Committee  and Board of  Directors;
Reasons for the Merger."                                              

6.   DID THE BOARD AND THE SPECIAL COMMITTEE RETAIN A FINANCIAL ADVISOR?        

     The  Special  Committee   retained  ComStock   Valuation   Advisors,   Inc.
     ("ComStock") as its financial  advisor in connection with its evaluation of
     the Merger.  ComStock  delivered to the Special  Committee and the Board of
     Directors  an opinion to the effect  that the terms of the Merger are fair,
     from a financial point of view, to the Unaffiliated Shareholders.  See "The
Proposed Merger--Opinion of ComStock."                                

7.   WHAT EFFECTS MAY RESULT FROM THE MERGER?                                   

As a result of the Merger:                                            

     *    Frontier will merge with Acquisition Company and Frontier will survive
as a wholly-owned subsidiary of MMI.                        

*    All of the Common Stock will be owned by MMI.                    

     *    The Common Stock held by the Unaffiliated  Shareholders  will cease to
be outstanding.                                             

*    Frontier will no longer be publicly traded.                      

     The Board expects that,  immediately following the Merger, the business and
     operations of Frontier and its  subsidiaries,  as they are currently  being
     conducted,  will be  continued by Frontier as the  surviving  entity in the
     Merger. MMI and its shareholders, Mr. Davies and IVM Intersurer BV, will be
     the sole  beneficiaries of any future earnings and growth of Frontier,  and
     will also bear the  entire  risk of any  future  losses.  The  Unaffiliated
     Shareholders  of Common Stock will not benefit from any increase,  but will
     also not bear the risk of any decrease, in the value of Frontier.  See "The
Proposed Merger--Certain Effects of the Merger."                      

8.   DO I HAVE DISSENTERS' RIGHTS OR OTHER PROCEDURAL SAFEGUARDS?               

     Under  Arizona law you do not have  dissenter's  rights.  See "The Proposed
     Merger--Rights  of  Dissenting  Shareholders."  However,  Arizona  law does
     provide that transactions  between an Arizona corporation and an interested
     director must be (i) fair to the company, (ii) approved by a majority,  but
     at least two, of the company's independent directors,  or (iii) approved by
     a majority  of the  disinterested  shareholders.  For the reasons set forth
     under "The Proposed  Merger--Recommendations  of the Special  Committee and
     the Board of  Directors,"  the  Board  believes  the  Merger is fair to the
     company and to the Unaffiliated  Shareholders.  In addition, the Merger was
     approved  unanimously by Frontier's  independent  directors and the Special
     Committee hired ComStock,  an independent financial advisor, to analyze the
     financial  terms of the Merger  from the  perspective  of the  Unaffiliated
     Shareholders.  ComStock  has rendered an opinion that the Merger is fair to
     the  Unaffiliated  Shareholders  from a financial  point of view.  See "The
Proposed Merger - Opinion of ComStock."                               

9.   DOES THE TRANSACTION INVOLVE ANY CONFLICTS OF INTEREST?                    

     In considering the recommendation of the Special Committee and the Board of
     Directors  with  respect to the  Merger,  you should be aware that  certain
     directors  and officers of Frontier  have  interests  that may be deemed to
     conflict with your interests as shareholders or that are in addition to, or
different from, the interests of shareholders:                        

     *    As a result of the  Merger,  Mr.  Davies  and IVM  Intersurer  BV will
indirectly own all of the Common Stock of Frontier.         

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     *    Mr.  Davies and Jeffrey R.  Harcourt,  officers and  directors of MMI,
          will be officers,  directors and employees of Frontier when it becomes
a private company.                                          

See "The Proposed Merger--Conflicts of Interest."                     

10.  WHAT ARE THE CONDITIONS TO COMPLETING THE MERGER?                

     The  completion of the Merger is subject to several  conditions,  including
the following:                                                        

*    Approval of the Merger by the holders of Common Stock.           

     *    The absence of any injunction,  statute, regulation or proceeding that
prevents or challenges completion of the Merger.            

     *    The availability to MMI of sufficient funds to pay all amounts payable
as a result of the Merger,                                  

See "The Proposed Merger--The Merger Agreement."                      

11.  HOW WILL ACQUISITION COMPANY FINANCE THE MERGER?                           

     The funds  required  to  complete  the Merger and to pay  related  fees and
     expenses  are  expected  to be provided  from MMI's  working  capital,  the
     proceeds of a loan and/or equity  contribution from MMI's  shareholders and
     from the  proceeds of loans funded by Fifth Third Bank and Fifth Third Bank
(Northeastern Ohio). See "The Proposed Merger--Source of Funds."      

12.  WHEN IS THE MERGER EXPECTED TO BE COMPLETED?                               

     Frontier  is working to  complete  all  aspects of the Merger as quickly as
     possible.  If the  shareholders  approve the Merger at the Special Meeting,
     Frontier  currently  expects the Merger to be completed on or shortly after
     the date of the Special Meeting. See "The Proposed  Merger--Effective  Time
of the Merger and Payment for Shares."                                

13.  WHO IS ENTITLED TO VOTE?                                                   

     Only  shareholders  of record at the close of business on August 29,  2001,
     which is the "Record  Date," are entitled to notice of, and to vote at, the
     Special Meeting.  However,  all  Unaffiliated  Shareholders at the time the
     Merger is completed will be entitled to receive a cash payment of $1.58 per
     share.  See ""Record Date," "Voting  Securities and Voting Rights" and "The
Merger--Exchange of Securities."                                      

14.  WHAT SHAREHOLDER VOTE IS REQUIRED TO APPROVE THE MERGER AGREEMENT?         

     The Merger  must be approved  by the  affirmative  vote of the holders of a
     majority of the outstanding shares of the Common Stock. MMI owns sufficient
     shares of Common Stock to approve the Merger  Agreement  and has  indicated
     that it will vote to approve  the Merger  Agreement.  See  "Required  Vote,
Effect of Shareholder Approval, and Related Matters."                 

15.  WHAT DO I NEED TO DO NOW?                                                  

     First, read this Proxy Statement carefully. Then, you should complete, sign
     and mail your proxy in the enclosed return envelope as soon as possible. If
     your  shares are held by a broker as  nominee,  you should  receive a proxy
from your broker. See "Voting of Proxies."                            

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16.  MAY I CHANGE MY VOTE AFTER I HAVE  MAILED IN MY SIGNED  PROXY OR  OTHERWISE
VOTED?                                                                

Yes. To change your vote you can:                                     

     *    send in a later-dated, signed proxy or a written revocation before the
Special Meeting, or                                         

     *    attend the Special  Meeting and give oral notice of your  intention to
vote in person.                                             

     You should be aware that simply  attending the Special  Meeting will not in
     and of itself  constitute a revocation of your proxy. See  "Revocability of
Proxies."                                                             

17.  SHOULD I SEND IN MY STOCK CERTIFICATES NOW?                                

     No. If the Merger is completed,  you will receive  written  instructions on
     how to exchange your shares of Common Stock for the Cash Consideration. See
     "The Proposed Merger--Effective Time of the Merger and Payment for Shares."

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

     Your broker will vote your shares only if you provide written  instructions
     on how to vote.  You should follow the  directions  provided by your broker
     regarding how to instruct  your broker to vote your shares.  See "Voting of
Proxies."                                                             

19.  WHAT ARE THE FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER?                

     The Merger  will be a taxable  transaction  to holders of Common  Stock who
     receive  cash  in the  transaction.  The  gain or loss  per  share  of each
     shareholder will equal the difference  between $1.58 and the  shareholder's
     basis in the share of Common Stock. You should consult your tax advisor for
     a full  understanding  of the tax consequences of the Merger as they relate
     to your individual tax situation.  See "The Proposed Merger--Federal Income
Tax Consequences."                                                    

 THE PROPOSED MERGER

THE COMPANY                                                                     

Frontier   licenses  and  franchises   independent   insurance   adjusters  (the
independent   insurance   adjusters  licensed  or  franchised  by  Frontier  are
hereinafter  referred to collectively as the "Adjusters")  throughout the United
States  and in Canada  and  provides  support  services  to the  Adjusters.  The
Adjusters are engaged by insurance carriers and self-insured companies to adjust
claims made against them by claimants and by policyholders. In addition, certain
of the Adjusters  offer risk management  services to their clients.  As of April
30,  2001,  Frontier  had  entered  into 519 license  and  franchise  agreements
("Agreements")  with 385  entities,  operating  481 offices with 686  advertised
locations in the United States and Canada.  As of March 31, 2001,  Frontier also
owned and operated  independent  insurance  adjusting  businesses in Arizona and
Nevada.  In April,  the Company  entered  into  agreements  to sell its Phoenix,
Arizona and Las  Vegas/Henderson,  Nevada adjusting  offices effective April 30,
2001 and June 1, 2001,  respectively.  Frontier  currently  employs 21 full-time
employees.                                                                      

GENERAL                                                                         

For its fiscal years ended June 30, 2000, 1999, and 1998,  Frontier's  licensing
and  franchising  activities  accounted  for  approximately  83%,  78% and  79%,
respectively,  of gross revenue,  and Frontier's  adjusting and risk  management
businesses accounted for approximately 17%, 22%, and 21%, respectively, of gross
revenue.  The revenue derived from Frontier's  operations,  as well as the gross

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billings  by  Adjusters  (upon  which  Frontier's  revenue  from  licensing  and
franchising activities are based), are set forth in the following table.        

                                                        [Enlarge/Download Table]

                                                                    FISCAL YEAR ENDED JUNE 30         
                                                           -------------------------------------------
                                                              2000            1999            1998    
                                                           -----------     -----------     -----------
                                                                                                      
Gross billings by Adjusters (approximate)                  $45,810,000     $44,730,000     $42,050,000
Revenue from licensing and franchising activities            5,170,592       4,936,349       4,596,657
Revenue from Frontier-owned adjusting and risk management                                             
  businesses                                                 1,086,304       1,405,235       1,228,691

CLAIMS ADJUSTING                                                                

A claims adjuster conducts the business of providing claims adjustment  services
to insurance companies and to self-insured clients. The major elements of claims
adjusting consist of the following:                                             

     *    Investigation--the  development of information  necessary to determine
the cause and origin of the loss.                           

     *    Evaluation--the  determination  of the  extent  and  value  of  damage
          incurred and the coverage,  liability and  compensability  relating to
the parties involved.                                       

     *    Disposition--the   resolution  of  the  claim,   whether  by  payment,
 negotiation and settlement, by denial or by other resolution.

     *    Management--the  coordination  of all  parties  involved in the claims
          process  and the  supervision  of the claims  process  including  risk
management related services.                                

Insurance  companies,  which represent the major source of revenue to adjusters,
customarily  manage their own claims  management  function  and require  defined
services from adjusters,  such as field  investigation and settlement  services.
Self-insured  clients  typically  require  a range of risk  management  services
including claims adjustment,  claims management,  statistical reporting and loss
control, among other services. Insurance companies usually make claims adjusting
assignments on a claim by claim basis.  Self-insured  clients  typically  retain
adjusting  firms like  Frontier and the Adjusters to handle all of their claims,
such as  workers'  compensation,  general  liability  claims  and other  claims.
Neither  Frontier nor any of the Adjusters  engages in public  adjusting,  which
consists  of  representing  individual  insureds  with  respect to their  claims
against insurance companies.                                                    

Risk management  related  services  consist  primarily of providing  services to
in-house risk managers of self-insureds  whose internal resources do not include
expertise  in claims  adjusting  or other  aspects  of claims  management.  Risk
management services,  which also are often referred to in the industry as "third
party administration"  include administering claims,  working with self-insurers
to decide whether certain claims need external  investigation,  coordinating the
efforts of the field  investigation  with  internal  claims  review  activities,
generating  necessary  statistical  reports  and paying  losses.  The  insurance
companies responsible for the excess coverage of self-insured clients often play
a  significant  role  in the  selection  and  retention  of  providers  of  risk
management or third party administration and related services.                  

LICENSING AND FRANCHISING                                                       

The major part of Frontier's  revenue is derived under its  Agreements  with the
Adjusters. Pursuant to the terms of the Agreements, an Adjuster is authorized to
use, within a designated  geographic area,  Frontier's service mark in providing
adjusting  and risk  management-related  services.  In addition,  an Adjuster is
provided  with a  computerized  central  collection  and  rebilling  service and
national  advertising and referrals by Frontier.  Frontier receives a 10% or 15%
royalty  fee on all of the  Adjusters'  collections.  In fiscal  2000,  Frontier
retained  10.7% of the  Adjusters'  collections as royalty fees under all of its
Agreements.                                                                     

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Frontier  generally  does not  advertise for or solicit  potential  licensees or
franchisees.  Frontier believes that through the financial flexibility it offers
and the established and dependable  services it provides to Adjusters,  Frontier
is generally capable of attracting qualified licensees and franchisees.         

Frontier's philosophy is to enter into agreements with licensees and franchisees
who are highly qualified and capable of adjusting all types of claims.  Frontier
estimates  that the average  length of time during which the Adjusters have been
providing   insurance   adjusting   services,   on  a  company-wide   basis,  is
approximately 20 years.                                                         

Before  entering into an agreement  with a prospective  licensee or  franchisee,
Frontier  reviews the  prospective  licensee's  or  franchisee's  background  to
determine   whether  he  or  she  is  qualified  and  experienced  in  rendering
professional insurance adjusting services. In evaluating a potential licensee or
franchisee,  Frontier  considers  the length of time the  potential  licensee or
franchisee  has been  involved in insurance  adjusting and such other factors as
his or her (i)  experience  and the types of claims that he or she is capable of
adjusting;  (ii) ability to act independently  without  supervision by Frontier;
(iii) prior and current  associations in the insurance adjusting  business;  and
(iv)  reputation  in the  insurance  adjusting  business and in the community in
which he or she will provide insurance adjusting services.                      

OPERATION OF INDEPENDENT ADJUSTERS                                              

Each Adjuster is required to maintain an office  within a designated  geographic
area  defined in his or her  Agreement.  The  Agreements  require,  among  other
things,  that  Adjusters  devote at least 80% of their  time  during  any 45-day
period to the conduct of the defined  business.  The  Agreements  are subject to
termination by Frontier upon an Adjuster's failure to meet minimum gross billing
volumes. The Adjusters retain the right to make independent  decisions regarding
the  management and operation of their  businesses,  subject to the terms of the
Agreements.                                                                     

Frontier  has a  national  advertising  program  in major  trade  journals.  The
advertising  is designed to promote  Frontier's  operations  and to generate new
accounts for its Adjusters.  Adjusters  receive claims from both local referrals
developed by the Adjusters and from referrals by Frontier.  The latter referrals
are generally obtained through advertising efforts and the general reputation of
Frontier. In addition,  Adjusters are permitted,  but not required, to advertise
within their designated geographic areas.                                       

Upon providing  services to a client, the Adjuster prepares a bill to the client
for the Adjuster's services. The form of invoice, which is supplied by Frontier,
indicates  that  remittance is to be made directly to Frontier's  address.  Upon
receipt of payment from the client,  Frontier withholds the royalty fee together
with any  reimbursements  due to Frontier for liability and errors and omissions
insurance  premiums  Frontier  may  have  paid on  behalf  of the  Adjuster  and
repayments  for any  credits,  loans or advances  Frontier  may have made to the
Adjuster. Frontier rebills uncollected invoices on a 45-60 day cycle. Frontier's
arrangements  with Adjusters located in Canada differ from the foregoing in that
clients of Canadian  Adjusters send their remittances to Frontier's  Canadian P.
O. Box or to Frontier's franchisee in Regina, Saskatchewan,  Canada. Remittances
received by Frontier's  franchisee are deposited by the franchisee directly into
Frontier's bank account.                                                        

If a particular geographic area produces claims volume greater than the Adjuster
in that area is capable of servicing,  the Adjuster may, at Frontier's  request,
or at the suggestion of the Adjuster,  relinquish to a new prospective  licensee
or franchisee a portion of the designated  area covered by his or her Agreement.
As a result  of these  arrangements,  Frontier  redirects  to the  relinquishing
Adjuster 5% of collections derived from services provided by the new Adjuster.  

To assist new Adjusters in meeting their business and personal  expenses  during
their initial  period as  Adjusters,  Frontier may advance funds to them against
future  billings.  Typically  such  advances are made  semi-monthly  and average
approximately  $2,500 per month.  The number of Adjusters  to whom  semi-monthly
advances are made typically varies between one and five.  Frontier believes that
these  arrangements  provide new Adjusters  assistance in making the  transition
from being employees of insurance companies or other adjusting firms to becoming
the owners of their own businesses  and,  therefore,  aid Frontier in attracting
qualified individuals as Adjusters.                                             

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In addition to advancing funds to new Adjusters, Frontier frequently lends money
to Adjusters.  These loans may either be loans that are repaid on a weekly basis
out of their  collections,  or advances  against accounts  receivable.  Frontier
generally requires that advances against receivables be repaid in full within 45
days.                                                                           

Frontier  does not charge  interest on any loans or advances  made to Adjusters.
During the past four fiscal  years,  Frontier  has loaned or advanced an average
aggregate of approximately  $331,836 per month and has received reimbursement of
an average of approximately  $322,425 per month. At June 30, 2000,  Frontier had
approximately $1,198,000 in outstanding loans or advances.  During the past four
fiscal years, Frontier has written off an average of approximately  $147,554 per
year due to bad debts related to these arrangements.                            

BACKGROUND OF THE MERGER                                                        

In 1999 United Financial  Adjusting Company ("UFAC"),  a wholly owned subsidiary
of The Progressive  Corporation  ("Progressive")  purchased  5,258,513 shares of
Frontier's  newly issued Series A Convertible  Voting Preferred Stock at a price
of $1.30 per share. UFAC's purchase represented  approximately 53% of Frontier's
voting securities.  Following the purchase by UFAC, Frontier made a tender offer
to purchase up to 1,000,000  shares of Common Stock at $2.90 per share from then
existing  shareholders.  The tender  offer  resulted in the  purchase of 971,464
shares of Common  Stock.  Following  the tender offer  Frontier  declared a cash
distribution of $1.60 per share for all remaining  Common Stock  shareholders of
record.  Neither the shares tendered in the tender offer, nor the shares held by
UFAC,  were eligible for the cash  distribution.  In June 1999 UFAC's  preferred
shares  were  converted  into  shares  of  Common  Stock,  representing  59%  of
Frontier's  voting  securities.  In October,  1999,  Progressive sold all of its
shares in UFAC to Netrex L.L.C. ("Netrex").  In April 2001, UFAC sold all of its
shares in Frontier to MMI.                                                      

Historically, the market for the Common Stock has been thin with average trading
volume for the year ended  December 31, 2000 of 2,838 shares of Common Stock and
average daily trading volume for the three months ended August 17, 2001 of 2,454
shares of Common Stock. As a result,  investors had limited  liquidity for their
investment in the Common Stock. In order to increase the liquidity of the Common
Stock,  the Board of  Directors  undertook  a  process  of  long-term  strategic
planning with the overall  objective of improving  Frontier's  rate of growth by
acquisition  of companies in compatible  lines of business and by increasing the
number of shares of Common Stock in the hands of the public.                    

In March  2000,  the Board of  Directors  agreed in  principle  to enter  into a
transaction   (the   "Transaction")   whereby   Frontier  would  have  exchanged
approximately  11.5 million shares of its Common Stock for all of the issued and
outstanding  shares  of  stock  of  UFAC.  Upon  consummation  of  the  proposed
Transaction,  Frontier  would have  merged  with UFAC and would have  become the
parent of UFAC's three subsidiaries, JW Software, Inc. ("JW"), DBG Technologies,
Inc. ("DBG") and Vedder Software Group, Inc.  ("Vedder") and would have employed
approximately 300 full-time employees.                                          

UFAC is an insurance claim management  services company, JW develops and markets
claim management software,  DBG develops and markets  internet-based systems and
websites,  and Vedder develops property  estimating  software and tools. Had the
Transaction been consummated, Netrex would have owned approximately 16.4 million
shares of the Common Stock,  representing  approximately  82% of the outstanding
Common Stock.                                                                   

The Transaction was subject to the approval of certain  regulatory  agencies and
the American Stock Exchange,  the stock exchange on which Frontier's  shares are
currently traded, as well as the approval by shareholders of Frontier and UFAC. 

In May 2000,  Frontier  filed a preliminary  proxy  statement with the SEC to be
used to present the  Transaction  to the  shareholders  for their  approval.  In
November  2000,  prior to  filing a  definitive  proxy  statement,  the Board of
Directors  determined to withdraw its  recommendation  of the Transaction to the
shareholders due to changes in the outlook for the UFAC companies.              

Subsequent  to  abandoning  the  Transaction,  Netrex began to  investigate  the
possibility of divesting  itself of its investment in Frontier.  Netrex was only
able to  identify  one  independent  party  that was  interested  in  purchasing
Frontier's  shares.  This  party  offered  to  purchase  the block of shares for
approximately  $1.55 per share.  This offer was later withdrawn.  MMI, a company

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owned by Mr.  Davies,  Frontier's  Chairman of the Board,  and IVM Intersurer BV
("IVM")  offered to purchase the shares for a purchase price of $1.58 per share.
MMI's offer was accepted by Netrex and MMI purchased the shares in April 2001.  

In a meeting held on April 11, 2001, MMI proposed to the Board of Directors that
the inherent risk in identifying and consummating  appropriate  acquisitions and
the cost associated  with such  acquisitions by a public company were not in the
best interests of the Unaffiliated Shareholders.  Therefore, MMI proposed to the
Board that Frontier implement a cash-out merger whereby Frontier's  shareholders
other than MMI (the "Unaffiliated  Shareholders")  would be paid $1.58 per share
of Common Stock and Frontier  would cease to be a public  company.  Mr.  Davies,
MMI,  Acquisition  Company and Frontier  determined that this was an appropriate
time to investigate taking Frontier private because the Frontier had been unable
to identify a viable merger  partner.  Without a merger  partner,  Frontier is a
relatively small company with only 21 full-time  employees.  Frontier  estimates
that the annual cost  associated  with being a public company was  approximately
$200,000  or 8% of  Frontier's  annual  corporate  expenses.  Mr.  Davies,  MMI,
Acquisition  Company  and  Frontier  believe  that the expense  associated  with
maintaining  Frontier as a public  company,  given the size of Frontier,  is too
high and not in the interest of the Frontier shareholders.                      

In April 2001,  the Board of  Directors  was composed of nine  members,  all but
three of whom were related to MMI or Netrex.  Therefore, the Board determined to
appoint a Special Committee composed solely of directors who were independent of
MMI and of Netrex.  The Special  Committee  was charged  with  representing  the
interests of the Unaffiliated  Shareholders with regard to the Merger. The Board
appointed  Eric J.  Carlstrom,  Kenneth A.  Sexton,  and Mark A.  Freeman to the
Special  Committee and authorized the committee to retain a financial advisor to
assist them in carrying out their responsibilities.                             

On April 12, 2001, the Special Committee met to consider the possible  retention
of ComStock as  independent  financial  advisor in connection  with the proposed
Merger. The members noted the impressive credentials of ComStock in working with
smallcap   companies  such  as  Frontier  and,  based  upon  those  credentials,
determined  that ComStock is well qualified to conduct the necessary  evaluation
of the fairness of the proposed  transaction.  The Special  Committee also noted
the fact that ComStock had worked with Frontier in the past and considered  both
that (i) ComStock was, therefore,  familiar with Frontier and its value and (ii)
ComStock had a potential  conflict stemming from its past engagement by Frontier
as opposed to its current duties towards the Unaffiliated Shareholders.         

ComStock  had  previously  been  retained  by  Frontier to advise the Board with
regard to valuation  issues  relating to the  Transaction  proposed in 2000 with
UFAC and had  received  approximately  $48,000  in fees  from  Frontier  for its
previous   services,   including   reimbursement  of  approximately   $2,000  in
out-of-pocket  expenses.  In  spite  of  ComStock's  previous  involvement  with
Frontier,   the  Special  Committee  determined  that  in  light  of  ComStock's
experience with smallcap  companies and its knowledge of Frontier,  ComStock was
an  appropriate  firm to  evaluate  the  merits of the  proposed  Merger.  After
discussions with a representative of ComStock,  the Special Committee determined
that  ComStock's  previous  representation  of Frontier would not compromise its
independence  as an advisor to the  Special  Committee.  ComStock  is being paid
$25,000 for its  valuation  analysis  and  preparation  of the related  fairness
opinion for the  Special  Committee  and will be  reimbursed  for  out-of-pocket
expenses. ComStock's fee is not contingent upon consummation of the Merger.     

In connection  with  performing  ComStock's due diligence on Frontier,  Frontier
provided  ComStock  with  information  regarding  the company and  requested  by
ComStock.                                                                       

On April 23, 2001,  ComStock delivered a draft opinion to the Special Committee.
On April 24, the  Special  Committee  met with a  representative  of ComStock to
consider the draft opinion.  The Special  Committee  discussed the draft opinion
and requested certain  clarification from ComStock regarding the allocation of a
control  premium to the  Unaffiliated  Shareholders  and the range of valuations
that was calculated in the ComStock Opinion.  ComStock expressed its belief that
because the Merger was a cash-out merger with no alternative to the Unaffiliated
Shareholders  but to accept a cash payment for their  shares of  Frontier,  they
should receive a pro rata share of the control premium paid by MMI. In addition,
ComStock  explained  that it developed a range of fair values and then  compared
the  Cash   Consideration  to  the  range  to  determine  the  fairness  of  the
consideration.  After ComStock provided the requested clarification, the Special
Committee  unanimously  concluded  that the  analysis of  ComStock  was fair and
reasonable to the Unaffiliated Shareholders.  In addition, the Special Committee
adopted  ComStock's  conclusion that the Cash Consideration to be offered to the

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Unaffiliated  Shareholders is fair to the shareholders from a financial point of
view and is reasonable based on the facts and analyses presented by ComStock. On
April  25,  2001,   ComStock   delivered  a  revised   opinion  to  reflect  the
clarification  that had been  provided  to the  Special  Committee.  The revised
opinion was distributed to the entire Board of Directors.                       

On April 25, 2001, the Board of Directors met to consider the conclusions of the
Special  Committee.  Mr.  Sexton  presented a report from the Special  Committee
noting that the Special Committee had met twice,  first to review the Merger and
second to  review  the  ComStock  Opinion.  Mr.  Sexton  stated  that it was the
consensus of the Special  Committee,  based upon the ComStock Opinion,  that the
cash-out price of $1.58 per share was fair to the Unaffiliated Shareholders. Mr.
Sexton  concluded his report with the  recommendation  of the Special  Committee
that the Board  approve the Merger on the terms  presented  and reflected in the
ComStock  Opinion.  After a discussion of the Special  Committee's  report,  the
Board  adjourned  at 12:00 p.m.  Eastern  Time to allow its members who were not
members of the Special  Committee,  to review the ComStock Opinion.  The meeting
was  reconvened  at 5:30 p.m.  Eastern  Time with a  discussion  of the ComStock
Opinion.  The Board  concluded  that the  Merger was fair and  equitable  to the
Unaffiliated  Shareholders.  All  members of the Board  present  at the  meeting
approved the proposed price of $1.58 to the  Unaffiliated  Shareholders as fair.
One member of the Board, who is also a member of the Special Committee,  was not
present at the meeting,  but had previously approved the proposed price of $1.58
to the  Unaffiliated  Shareholders  as fair at the April 24, 2001 meeting of the
Special Committee.                                                              

On April 27,  2001,  the full  Board of  Directors  met to  consider  the Merger
Agreement.  Based on the  recommendation  of the Special  Committee  and its own
analysis  of  the  terms  of  the  Merger  Agreement,  the  Board  of  Directors
unanimously  voted to approve the Merger Agreement and to authorize  Frontier to
enter into the Merger Agreement. In addition, based upon the reasoning set forth
below, the Board of Directors  confirmed its  determination  that the Merger was
fair,  from both a financial and procedural  point of view, to the  Unaffiliated
Shareholders  and voted to recommend to the  shareholders  that they approve the
Merger.                                                                         

Effective at the close of business April 27, 2001, Mr. Freeman resigned from the
Board.  On May 2, 2001, UFAC completed the sale of its shares of Common Stock to
MMI and Charles E. Becker,  Peter I. Cavallaro,  James J. Ferzoco and Anthony J.
Puglisi  resigned  from the  Board.  Mr.  Freeman  was an  independent  director
nominated by UFAC. Each of Messrs.  Becker,  Cavallaro,  Ferzoco and Puglisi are
affiliated with UFAC.                                                           

RECOMMENDATION OF THE SPECIAL COMMITTEE AND BOARD OF DIRECTORS;  REASONS FOR THE
MERGER                                                                          

Due to the  limited  trading  volume in  Frontier's  shares,  the Board does not
believe that the Unaffiliated Shareholders uniformly are able to liquidate their
shareholdings  both in a timely manner and at a fair price.  The Board  believes
that the Merger will provide the Unaffiliated  Shareholders with liquidity and a
fair price for their shares.  The Board of Directors has unanimously  determined
that  the  terms  of the  Merger  and  the  transaction  are  substantively  and
procedurally   fair  to,  and  in  the  best  interests  of,  the   Unaffiliated
Shareholders.  Furthermore,  the  Board  has  unanimously  approved  the  Merger
Agreement and recommends that the shareholders  vote for the proposal to approve
and adopt the Merger Agreement.                                                 

Frontier has been advised by each of its directors  and executive  officers that
each  intends to vote all of his or her  shares of Common  Stock in favor of the
proposal  to  approve  and adopt  the  Merger  Agreement.  Mr.  Davies,  MMI and
Acquisition  Company have informed Frontier that each believes that the terms of
the Merger and the transaction are  substantively  and procedurally  fair to the
Unaffiliated Shareholders. Mr. Davies, MMI and Acquisition Company have reviewed
the analysis of and have adopted the conclusions and underlying reasoning of the
Special  Committee  and have based their belief in the fairness of the Merger to
the Unaffiliated Shareholders upon the factors set forth below.                 

In  making  its  unanimous  determination  that  the  terms  of the  Merger  are
substantively  and  procedurally  fair to,  and in the best  interests  of,  the
Unaffiliated  Shareholders,  to approve the Merger  Agreement,  and to recommend
that shareholders  approve and adopt the Merger Agreement,  the Board considered
that:                                                                           

     *    a  Special  Committee  of  independent   directors  was  appointed  to
          represent the interests of the Unaffiliated Shareholders in connection
with the Merger;                                            

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     *    the Special  Committee  retained  ComStock,  an independent  financial
advisor, to assist it in carrying out its responsibilities; 

     *    the analysis performed by ComStock considered, among other things, the
          current market price of Frontier stock,  the historical  market price,
          net book value,  the purchase  price paid in the purchase of shares by
          MMI from  UFAC and  that  the Cash  Consideration  was the same as the
consideration paid by MMI to UFAC;                          

     *    the opinion of ComStock that the  consideration  to be received in the
          Merger by the  Unaffiliated  Shareholders  is fair,  from a  financial
          point of view, to such holders (see "The Proposed  Merger-- Opinion of
ComStock");                                                 

     *    the unanimous conclusion of the Special Committee that the analysis of
          ComStock was reasonable and that the Cash  Consideration to be offered
          was fair to the  Unaffiliated  Shareholders  from a financial point of
view;                                                       

     *    the unanimous  recommendation by the Special Committee that the Board*
          approve and adopt the Merger Agreement and that the Board recommend to
          Frontier's  shareholders  that  they  approve  and  adopt  the  Merger
Agreement;                                                  

     *    other than the proposed  merger with UFAC that was later  abandoned by
          Frontier's  management,  Frontier had been unable to identify a merger
          partner  or a  purchaser  of all or  substantially  all of  Frontier's
assets;                                                     

     *    Netrex and UFAC had been unable to  identify a party to  purchase  the
          control  block of  Frontier  shares  held by UFAC other than one party
          that made a preliminary offer for approximately $1.55 per share, which
was subsequently withdrawn by the offering party;           

     *    the purchase  price of $1.58 per share for the control block of shares
          by MMI  from  UFAC was  negotiated  at arm's  length  between  the two
companies;                                                  

     *    the terms of the Merger to the Unaffiliated  Shareholders are the same
as those negotiated at arm's length between UFAC and MMI;   

     *    the likelihood that UFAC would terminate its management  contract with
          Frontier  or  substantially  increase  the  management  fee charged to
Frontier; and                                               

     *    the factors  considered by the Special  Committee in its deliberations
described below.                                            

The  Board  did  not  consider  the   liquidation   value  of  Frontier  in  its
deliberations,  because  the  Board  believed  that  this  would  result  in  an
artificially low value for Frontier.                                            

In  connection  with  its  consideration  of the  determination  by the  Special
Committee,  and as part of its determination with respect to the fairness of the
consideration  to be received  by the  Unaffiliated  Shareholders  of the Common
Stock in the Merger, the Board adopted the conclusions and underlying  reasoning
of the Special Committee,  based upon the view of the Board that the conclusions
and factors considered by the Special Committee were reasonable.                

The Special  Committee  considered the following  factors,  which constitute the
material factors considered by the Special Committee in making its determination
that the terms of the  Merger  are fair to,  and in the best  interests  of, the
Unaffiliated  Shareholders  and its  decision  to  recommend  that the  Board of
Directors  approve and adopt the Merger  Agreement  and  recommend to Frontier's
shareholders that they approve and adopt the Merger Agreement:                  

     *    The Special  Committee  considered  the  opinion of ComStock  that the
          consideration  of $1.58  per  share in cash is fair  from a  financial
          point of view to the  Unaffiliated  Shareholders  of the Common Stock.
          The  Special  Committee  and  the  Board  of  Directors  reviewed  the

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          independent financial analyses performed by ComStock and found them to
          be reasonable and believed that  ComStock's  conclusion that the price
          to be paid in the  Merger was fair from a  financial  point of view to
          the Unaffiliated Shareholders was a reasonable conclusion based on the
          analyses  performed.   The  Special  Committee  adopted  the  analyses
          performed by ComStock and described in  ComStock's  report and did not
          perform  any  independent  analysis of the  factors  described  in the
          ComStock  report or any other factors not considered by ComStock.  The
          Special  Committee  did  take  into  account  earlier  evaluations  of
strategic options by the Board of Directors.                

     *    The Special  Committee  reviewed current and historical  market prices
          for  Frontier's  shares,  the  declining per share price of the Common
          Stock  prior to the time of the public  announcement  of the  proposed
          Merger,  the  possibility  that the price would  remain  depressed  or
          continue to decline and the premium that $1.58 per share  offered over
such price.                                                 

     *    The  Special  Committee  noted  that  in an  arm's-length  transaction
          negotiated  between MMI and Netrex, the major shareholder of UFAC, MMI
          paid $1.58 per share to UFAC for its control  block of shares and that
this price presumably reflected a control premium.          

     *    The  Special  Committee  also  concluded  that the Cash  Consideration
    represented a premium over the market price of the Common Stock.

     *    The Special  Committee  also  considered  the  premium  that the $1.58
          consideration  represented  relative  to the book  value  per share of
Common Stock.                                               

     *    The Board of Directors  and  management  of Frontier  have  considered
          alternative  ways to allow the  Unaffiliated  Shareholders  to realize
          value for their shares, and, based upon their unsuccessful attempts to
          identify strategic partners,  have concluded that there is no material
          interest by third parties to participate in any restructuring or other
          strategic  transaction  that  would  result in a  positive  return and
increased liquidity to the Unaffiliated Shareholders.       

     *    The Special  Committee  concluded  that the limited  liquidity  of the
          Common Stock in the public market is not likely to improve.  The Board
          has  concluded  that the  extremely  small  market  capitalization  of
          Frontier,   among  other  reasons,   has  left  Frontier  without  any
          significant  financial  analysts covering the company,  and that it is
          not likely that the  investment  community  will  become  sufficiently
          interested  in the Common  Stock so that the  liquidity  in the Common
Stock would improve.                                        

     *    The Special Committee's belief that Frontier can be more profitable as
          a private  company  that does not have to  comply  with the  reporting
          requirements  and does not have to incur  the  costs  associated  with
          being a public company.  Significant  cost savings will result from no
          longer  having  the  requirement  to file  periodic  reports  with the
          Securities  and Exchange  Commission,  all of which take  considerable
          management  time and have to be reviewed by  Frontier's  legal counsel
          and independent  accountants.  Frontier estimates that compliance with
          these reporting requirements,  together with the printing, mailing and
          administration   costs  associated  with  them,  total   approximately
          $200,000  per year.  These  costs  will be  eliminated  when  Frontier
becomes a private entity.                                   

The factors  discussed  above were all considered to be positive  factors in the
Special  Committee's  decision to recommend that the Board of Directors  approve
the Merger.                                                                     

The Special Committee also considered the following negative factors:           

     *    The  expectation  that the Merger  will be a taxable  transaction  for
Unaffiliated Shareholders.                                  

     *    The   Unaffiliated   Shareholders   will   have  no   ongoing   equity
participation in Frontier following the Merger.             

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     *    In the event of a sale of  Frontier  in the  future  the  Unaffiliated
          Shareholders will not be able to participate in any premium that might
result from such a sale.                                    

     *    Mr.  Davies,  Frontier's  Chairman  of the Board,  has a  conflict  of
          interest in connection with the Merger because, as an owner of MMI, he
          has, and after the Merger will continue to have, a substantial  equity
investment in Frontier.                                     

The Special Committee considered that although Frontier would lose access to the
public markets for future financing,  Frontier would  considerably  decrease its
expenses  by  becoming a private  company.  While the Board noted that MMI would
take on  substantial  debt as a  result  of its  purchase  of  Frontier  and the
subsequent Merger, the Board determined that it had no fiduciary duty to MMI and
therefore, would give no weight to the effect of the Merger on MMI.             

The Special  Committee  considered  the value of Frontier's  assets and the book
value per share of Common Stock. The Special  Committee  specifically  looked at
the book  value  per share of Common  Stock of $0.85 as of March 31,  2001,  the
premium that the Merger would offer over the book value,  and the lack of better
offers  received by Netrex for its  control  interest  of  Frontier's  shares of
Common Stock. Based upon these factors,  the Special Committee concluded that in
connection  with a sale of  Frontier,  it believed  that  Frontier  would not be
likely to  receive  proceeds  equal to or in  excess  of the Cash  Consideration
offered in the Merger.                                                          

The Special  Committee  recognized that  consummation of the Merger will deprive
the  Unaffiliated  Shareholders  of the  opportunity to participate  despite any
future growth of Frontier and,  accordingly,  gave  consideration  to Frontier's
results  of  operations  and  Frontier's   future   prospects  in  reaching  its
determination to recommend  approval and adoption of the Merger  Agreement.  The
Special Committee was also aware that Mr. Davies,  Chairman of Frontier's Board,
has a conflict of interest in connection with the Merger because, as an owner of
MMI, he has, and after the Merger will  continue to have, a  substantial  equity
investment in Frontier. See "The Proposed  Merger--Conflicts of Interest." These
factors were considered negative factors in the Special Committee's  decision to
recommend  that the Board of  Directors  approve  the  Merger.  However,  in the
Special  Committee's  view, these factors were  substantially  outweighed by the
positive factors discussed above.                                               

Based upon its  consideration of all of the factors described above, the Special
Committee  concluded  that the financial  terms of the Merger are  substantively
fair to, and in the best interests of, the  Unaffiliated  Shareholders  and that
the Board of  Directors  should  recommend  that the  shareholders  of  Frontier
approve and adopt the Merger Agreement.                                         

The Board  determined that the Merger is procedurally  fair to the  Unaffiliated
Shareholders  in the absence of a vote of the  Unaffiliated  Shareholders or the
retention  of an  unaffiliated  representative  to act  solely  on behalf of the
Unaffiliated  Shareholders,  because a Special Committee  composed of all of the
disinterested and independent directors was formed to represent the interests of
the  Unaffiliated  Shareholders,  the Special  Committee  engaged an independent
financial advisor to render a fairness opinion regarding the financial  fairness
of the  Merger  to the  shareholders  of  Frontier  and  the  Special  Committee
unanimously approved the Merger.                                                

In view of the  circumstances  and the wide  variety  of factors  considered  in
connection with its evaluation of the Merger, neither the Board of Directors nor
the Special  Committee  found it practicable to assign  relative  weights to the
factors considered in reaching its decision.                                    

OPINION OF COMSTOCK                                                             

On April 23, 2001,  ComStock delivered a draft opinion to the Board of Directors
opining that the Cash  Consideration  was fair from a financial point of view to
the shareholders of Frontier,  including the Unaffiliated Shareholders.  A draft
of ComStock's  financial  analysis was distributed to the Special  Committee and
used as the basis of discussions  at a meeting of the Special  Committee held on
April 24,  2001.  The  Special  Committee  was given a detailed  written  report
setting forth the  financial  analysis  underlying  the ComStock  opinion.  This
analysis, as presented to the Special Committee, is summarized below. All of the
members of the Special Committee were present at the meeting and each member had
the  opportunity  to discuss the report.  The Special  Committee  discussed  the

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information in the report,  and the financial data and other factors  considered
by ComStock in conducting its analysis, all of which are summarized herein.     

In requesting the ComStock opinion,  neither the Special Committee nor the Board
gave any special  instructions  to ComStock or imposed any  limitation  upon the
scope of the  investigation  that  ComStock  deemed  necessary  to  enable it to
deliver ComStock's opinion.  ComStock's opinion is directed only to the fairness
of the Merger to the shareholders of Frontier from a financial point of view and
does  not  constitute  a  recommendation  to  any  shareholder  as to  how  such
shareholder should vote at the Special Meeting. The ComStock Opinion is attached
to this Proxy  Statement as Appendix B.  ComStock has consented to the inclusion
of its opinion in this Proxy Statement.                                         

DEFINITION OF VALUE                                                             

ComStock's financial analysis of the Merger included independently analyzing the
fair value of the  publicly-traded  common shares of Frontier.  For this purpose
fair  value  was  defined  by  ComStock  as the  underlying  price at which  the
publicly-traded  common  shares of  Frontier  would  change  hands  between  two
independent parties,  neither being under any compulsion to buy or sell and both
having  reasonable  knowledge of the relevant facts. Fair value, as used in this
context, does not reflect any discount for lack of control.                     

GOVERNING STANDARDS                                                             

The opinion was prepared in accordance  with relevant  standards and  guidelines
issued by The Appraisal  Foundation1,  The American Society of Appraisers2,  and
The Internal Revenue Service3. ComStock also considered other generally accepted
standards  deemed  appropriate for this  engagement.  In its analysis,  ComStock
specifically  considered  pertinent factors cited in Revenue Ruling 59-60, which
include, but are not limited to, a review of the following:                     

*    The nature of the business and the history of Frontier;          
*    The general economic outlook for Frontier;                       
*    The book value of Frontier, and its financial condition;         
*    The earnings capacity of Frontier;                               
*    The dividend-paying capacity of Frontier;                        
*    The possible existence of goodwill or other intangible values;   
     *    Past  sales of the stock of  Frontier,  and the size of the  blocks of
stock under consideration;                                  
     *    The market  price of  actively  traded  stocks of public  corporations
     engaged in the same or similar lines of business as Frontier; and
*    Issues of fairness typically considered in mergers.              

GENERAL VALUATION APPROACH                                                      

ComStock  interviewed  Frontier  management  regarding the historical  financial
performance,  current business status, and forecasted  financial  performance of
Frontier.  In addition,  ComStock  reviewed  documents  and other data needed to
comply  with  the  Uniform  Standards  of  Professional  Appraisal  Practice  as
promulgated by The Appraisal  Foundation;  the Principles of Appraisal  Practice
and Code of Ethics of the  American  Society of  Appraisers.  In arriving at its
opinion, ComStock:                                                              

     *    Reviewed the historical operating  performance and financial condition
          of Frontier as reflected in  publicly-available  financial  statements
          for the five fiscal  years  ended June 30, 2000 and for the  six-month
period ended December 31, 2000;                             
     *    Reviewed the financial forecasts for Frontier for fiscal year 2001, as
provided by management;                                     
*    Conducted discussions with management of Frontier;               

----------                                                                      
(1)  Competency Provision,  Standards 7, 9, 10, and related explanatory comments
of the Uniform Standards of Professional Appraisal Practice.          
(2)  Principles of Appraisal Practice and Code of Ethics.                       
(3)  Revenue Ruling 59-60.                                                      

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*    Reviewed publicly available information regarding Frontier;      
     *    Reviewed  the  outlook  for  the  economy  and the  prospects  for the
industry in which Frontier competes;                        
     *    Performed  an  analysis of market  multiples  for the  companies  that
ComStock considered comparable to Frontier; and             
     *    Performed various other financial  analyses regarding Frontier and the
Merger as deemed appropriate.                               

ComStock used publicly available sources to obtain information  pertinent to the
analysis.  Specifically,  ComStock  subscribes to  Compustat(R),  Disclosure(R),
Securities  Data  Corporation  and EDGAR for  financial  and other  information.
ComStock  deemed this  information  to be reliable;  however,  ComStock  made no
representation  as to the  accuracy  or  completeness  of such  information  and
accepted such information without further verification.                         

DISCUSSION OF INDEPENDENT VALUATION METHODS UTILIZED                            

ComStock applied  generally  accepted  valuation methods to analyze the range of
fair values for the Common Stock of Frontier. To establish this range of values,
the Capitalized Cash Flow Method, Discounted Cash Flow Method, Guideline Company
Method, and Merger & Acquisition Method were utilized. In addition,  the current
trading  price plus a relevant  premium for control was utilized as a measure of
the current  fair value per share for  Frontier's  stock.  ComStock has informed
Frontier  that it  typically  uses these  five  valuation  techniques,  standard
methods used in the  industry,  to develop a composite  of values that  ComStock
believes is more  appropriate  than the valuation that would be derived from any
single technique.  ComStock selected the valuation methods used according to the
following criteria                                                              

     *    the valuation  method is generally  considered to be a standard method
          in  the  business  appraisal  community  and  in   commonly-referenced
valuation texts and other literature;                       
     *    the  valuation  method  focuses  on a unique  aspect of the  Company's
          financial  performance  (i.e.,  historical  cash flows and future cash
          flows) or utilizes  market data that is derived  from a unique  source
          (i.e.,   public   company   stock  price  data  and  private   company
transactions data);                                         
     *    each valuation  method is distinct from the other  valuation  methods,
thereby eliminating duplication among the methods.          

ComStock chose each of the valuation methods used for the following reasons:    

CURRENT TRADING PRICE PLUS CONTROL PREMIUM                            

     Although  the  Frontier's  stock is thinly  traded,  the  existence  of any
     trading volume dictates that some weight be given to the historical trading
     patterns and most recent  trading  prices of the  Frontier's  common stock.
     However,  the Frontier's stock is traded by shareholders who own a minority
     of the total  outstanding  shares.  Because  ComStock  believes that a fair
     buyout  price for the entire  company  represents  a  controlling  interest
     value,  the current  trading  price was adjusted  upward for a "premium for
     control" to reflect the additional value above the minority  interest value
that accrues to the purchaser of the entire company.                  

CAPITALIZED CASH FLOW METHOD                                          

     The Capitalized Cash Flow Method utilizes Frontier's  historical  financial
     performance  as a critical  component of the  calculation  of equity value.
     This method also utilizes  information  regarding rates of return generally
     required by willing buyers for investments having a similar risk profile to
Frontier when deriving the appropriate cash flow multiple             

DISCOUNTED CASH FLOW METHOD                                           

     The value of a company's stock is many times viewed by a potential investor
     as a function of the perceived  expected future cash flows from the company
     relative to expected cash flows from alternative  investments of comparable
     risk. The Discounted Cash Flow method uses projected financial  performance
     and a risk-adjusted  discount rate to estimate equity value,  and therefore
     takes both elements of expected cash flows  (including all relevant  growth
opportunities at a company) and investment risk into account.         

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GUIDELINE COMPANY METHOD                                              

     The Guideline Company method uses pricing multiples developed from publicly
     traded stocks of relatively  similar  businesses to estimate the value of a
     company's  equity.  Since the market data is derived  from  publicly-traded
     stock in companies that are relatively similar to Frontier, and differences
     in risk between these comparable  companies and Frontier is also taken into
     account, ComStock believes that this valuation method provides an objective
benchmark for Frontier's equity value.                                

MERGER & Acquisition Method                                           

     The Merger & Acquisition method utilizes  valuation  multiples derived from
     published  news  reports  of actual  transactions  involving  the sale of a
     controlling equity interest in privately-held companies that are relatively
     similar to the  company  being  valued.  Once  again,  differences  in risk
     between the  privately-held  companies  that  comprise  the market data and
Frontier is taken into account.                                       

     This method is similar to the Guideline  Company method in that  objective,
     verifiable  market  data is  utilized.  Only the  source of market  data is
     different:   the  Guideline   Company  method  utilizes  data  from  public
     companies,  whereas the Merger & Acquisition  method  utilizes  market data
from privately-held companies.                                        

By using several  different,  yet relevant,  valuation  methods that result in a
narrow range of equity values,  ComStock  Valuation  Advisors  believes that the
overall valuation  conclusion is realistic and is based on objective market data
that can be substantiated by independent parties.                               

As set forth below,  two of the methods used resulted in valuations  higher than
$1.58 per share.  However,  the mid-point of the range of values  derived by the
five  valuation  methods was only 3% higher than the  proposed  merger  price of
$1.58  per  share.  Due to the  small  market  value of the  shares  held by the
Unaffiliated  Shareholders,  a 3%  difference  in valuation  translates  into an
aggregate dollar difference of $175,000 in Cash Consideration paid in connection
with the  Merger.  ComStock  reported  to the Board  that,  given  the  inherent
subjectivity in the valuation process,  and the small market value of the shares
held by the Unaffiliated  Shareholders,  the difference of 3% between the merger
price and the mid-point of the ComStock  valuations is reasonable.  In addition,
ComStock  concluded that it was  appropriate to assign a 35% control  premium to
the minority shares because of the majority shareholder's ability to control the
shareholder vote for approval of the Merger.  Management  believes that it would
have been reasonable not to assign a control premium to the minority shares.  If
the 35%  control  premium  had not been  assigned to the  minority  shares,  the
mid-point  value for the five  valuation  methods would have been  approximately
$1.34 per share or 18% less than the  proposed  merger price of $1.58 per share.
In addition,  as a result of the termination of the UFAC management contract and
changes in the management structure of Frontier, Frontier's annual expenses will
increase by a net amount of approximately $525,000 upon the direct employment by
Frontier of the full-time services of its CEO, CFO, Vice President of Marketing,
CIO and an administrative  assistant.  Prior to the purchase of the UFAC shares,
these services were provided by UFAC under the UFAC management  contract.  These
additional  costs will serve to decrease  the  valuation  of Frontier on a going
forward basis.  Frontier's equity value was calculated on a controlling interest
basis, including the application of a market-based control premium of 35%, which
reflects  the rights of a majority  shareholder  to control  the  operations  of
Frontier and the  disposition of its cash flows. A control basis of valuation is
relevant when considering the financial  fairness of a cash-out merger wherein a
company's  minority  shareholders  are being  forced to accept a given price per
share in order to gain liquidity for their shares.                              

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                                                        [Enlarge/Download Table]

VALUATION METHOD                            EXHIBIT  AGGREGATE VALUE  VALUE PER SHARE  DEVIATION
----------------                            -------  ---------------  ---------------  ---------
                                                                                                
Current Trading Price Plus Control Premium             $14,520,000           $1.62        (0.5%)
Capitalized Cash Flow Method                   B       $14,190,000           $1.58        (2.8%)
Discounted Cash Flow Method                    C       $15,590,000           $1.74         6.8% 
Guideline Company Method                       D       $14,620,000           $1.63         0.1% 
Mergers & Acquisitions Method                  E       $13,610,000           $1.52        (6.8)%

RANGE OF VALUES                                                                                 
Minimum Value                                          $13,610,000           $1.52        (6.8%)
Lowest Quartile Value                                  $14,190,000           $1.58        (2.8%)
Average Value                                          $14,510,000           $1.62        (0.6%)
Median Value                                           $14,520,000           $1.62        (0.5%)
Upper Quartile Value                                   $14,620,000           $1.63         0.1% 
Maximum Value                                          $15,590,000           $1.74         6.8% 
Mid-point of Range of Values                           $14,600,000           $1.63         0.0% 

TRANSACTION VALUE                                      $14,160,000           $1.58        (3.0%)
                                                       ===========           =====        ====  
TRANSACTION VALUE PERCENTILE RANKING                                         24.0%              
                                                                             =====              
BASIS OF APPRAISAL                                       CONTROL                                
                                                       ===========                              

RANGE OF INDEPENDENTLY CALCULATED VALUES                                        

DISCUSSION OF RANGE OF FAIR VALUES                                              

The various  valuation  methods result in a range of appraised values per share,
ranging from a low of $1.52 to a high of $1.74 per share.  The  appraised  value
from each valuation method deviates from the mid-point of the range of values by
no more  than  6.8%,  which  reflects  a  narrow  range of  values.  In order to
represent a fair  transaction to Frontier's  minority  shareholders,  the Merger
price of $1.58 per share  should be  significantly  above the minimum  value per
share  calculated  in  this  appraisal.  The  Merger  price  falls  in the  24th
percentile of the range of values,  which in ComStock's opinion is significantly
above the minimum  appraised value of $1.52 per share.  In addition,  two of the
valuation methods result in an appraised value that is below the Merger price of
$1.58 per  share,  and the  Merger  price is  within  3% of two other  valuation
methods.                                                                        

DISCUSSION OF EACH VALUATION METHOD                                             

A brief description of each valuation method is provided below.                 

CURRENT TRADING PRICE PLUS CONTROL PREMIUM                                      

As of April 23,  2001,  the Common  Stock  traded at a value of $1.20 per share.
Adding a premium for control of 35% results in a fair value per share of $1.62. 

CAPITALIZED CASH FLOW METHOD                                                    

The Capitalized Cash Flow Method utilizes five years of historical  earnings and
cash flows to estimate the current value of Frontier's equity. Estimated working
capital and capital expenditure  requirements (net of depreciation) are deducted
from average historical  earnings to derive the adjusted cash flow for Frontier.
A  market-based  cash  flow  multiple  is  applied  to the  normalized  adjusted
historical cash flow to calculate the value of Frontier's invested capital. Debt
is deducted  from the invested  capital  value to derive the value of Frontier's
equity on a minority interest basis.                                            

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Because a controlling  interest basis is being used as the standard of value for
this opinion,  and a majority  ownership  interest  provides its owners with the
right to control  Frontier's  operations,  ComStock applied a control premium to
calculate Frontier's equity value on a controlling interest basis.              

A 10%  discount  was then  deducted to reflect the pricing and  liquidity  risks
associated  with the  thinly-traded  market  that  exists for the Common  Stock,
arriving at an equity value of $1.58 per share using the  Capitalized  Cash Flow
Method.                                                                         

DISCOUNTED CASH FLOW METHOD                                                     

The  price of a  security  can also be  viewed as a  function  of an  investor's
perception of expected future cash flows from Frontier relative to expected cash
flows from alternative  investments of perceived  comparable  risk.  Because the
Discounted  Cash Flow Method ("DCF") uses projected  financial  performance  and
risk-adjusted discount rates to estimate value, ComStock believes that it can be
an effective valuation tool when properly applied.                              

ComStock  analyzed the fair value of Frontier by examining a cash flow  forecast
over a five-year period. This forecast was based on a one-year forecast for 2001
that was provided by Company  management.  The  expected  annual free cash flows
were  discounted to their present value using a  market-based  discount  rate. A
residual  value was also  computed and  discounted to its present value using an
assumption of constant cash flow growth at the end of the forecast  period.  The
present  value of the  forecasted  cash flow  stream for the next five years was
combined with the present  value of the residual  value to derive an estimate of
Frontier's equity value.                                                        

A  35%  control  premium  and  10%  discount  for  risks   associated  with  the
thinly-traded  market were applied in deriving  Frontier's equity value of $1.74
per share using the Discounted Cash Flow Method.                                

GUIDELINE COMPANY METHOD                                                        

The Guideline  Company  Method uses pricing  multiples  developed  from publicly
traded  stocks  of  relatively  similar  businesses  to  estimate  the  value of
Frontier's equity. These pricing multiples are applied to appropriate  financial
data for  Frontier,  creating  an array of  values on a  freely-traded  minority
interest   basis.   Current  market   pricing   multiples  were  developed  that
incorporated the following financial data for Frontier: 1) book value; 2) sales;
3) net earnings; and 4) after-tax cash flows.                                   

A  freely-traded  minority  interest  equity  value for Frontier is estimated by
selecting a representative value derived from the various pricing multiples.    

A  35%  control  premium  and  10%  discount  for  risks   associated  with  the
thinly-traded  market were applied in deriving  Frontier's equity value of $1.63
per share using the Guideline Company Method.                                   

MERGER AND ACQUISITION METHOD                                                   

The Merger and Acquisition  Method  utilizes  valuation  multiples  derived from
published  news  reports  of  actual  transactions   involving  the  sale  of  a
controlling  equity  interest in relatively  similar  privately-held  companies.
After  examining  the  industry  type,  transaction  components,   and  computed
valuation  multiple  for  reported  transactions,  representative  multiples  of
revenue, leveraged income and cash flow are selected and applied to the relevant
financial data of Frontier.  The result is a market-based  estimate of Frontier'
equity value. The valuation  multiples derived from the market data were reduced
by 20% to reflect  certain  risks  associated  with an  investment  in Frontier,
including  the  presence of a  thinly-traded  market in which to sell the Common
Stock.  The results from the three  ratios  utilized  were  averaged in deriving
Frontier's  equity  value of $1.52 per share  using the Merger  and  Acquisition
Method.                                                                         

DISCUSSION OF THE PURCHASE OF SHARES OWNED BY NETREX                            

An investor group has purchased Netrex' 58.7% ownership  interest in Frontier at
$1.58 per share,  which is equal to the Merger price.  The offer price to Netrex
is at a  significant  premium to the current  trading price of the Common Stock,

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and compensates  Netrex for its controlling  interest in Frontier.  The minority
shareholders  of Frontier  also  benefit  from the premium that the Merger price
reflects above the minority trading price of Frontier's stock.                  

IMPACT OF ADDITIONAL COMPENSATION EXPENSES                                      

Additional  compensation  expenses of approximately  $825,000 (including related
employee  benefits) will likely result from new equity  ownership and management
of Frontier.  These expenses will replace  management fees of $300,000 currently
being paid by  Frontier.  The impact of the net  expenses of $525,000 on the per
share value of the stock has not been reflected in the figures  provided  above.
Had such additional  expenses been  reflected,  values per share ranging between
$1.16 and $1.35 per share for the  Common  Stock  would have  resulted  from the
appraisal.                                                                      

DISCUSSION OF TRADING ACTIVITY FOR THE COMMON STOCK                             

The  Common  Stock is traded on the  American  Stock  Exchange  under the ticker
symbol FAJ.  Although the Common Stock trades on almost a daily basis, its daily
trading  volume is relatively  low.  During the last 20 trading days (March 21 -
April 23, 2001) the daily closing  price of  Frontier's  stock has ranged from a
low of $1.10 per share to a high of $1.45 per share, averaging $1.22 per share. 

Frontier's  average  weekly  trading  volume as a percentage of the total shares
outstanding   was  compared  with  companies   having  trading  volume  that  is
representative  of stocks traded on national stock  exchanges.  This  comparison
indicates that Frontier's  average weekly trading volume is  approximately 6% of
the trading volume experienced by companies having normal trading activity. This
analysis  suggests  that the Board of Directors  might not rely  exclusively  on
Frontier's  current  trading price when  considering the fairness of the Merger.
Therefore,  ComStock performed independent appraisal techniques in rendering its
opinion  to the  Special  Committee  of the  Board of  Directors  regarding  the
fairness of the Merger.                                                         

DISCUSSION OF PRIOR TRADING ACTIVITY FOR THE COMMON STOCK                       

The Common  Stock traded at a high of $4.00 per share at various  points  during
June through August 2000.  Prior to April 30, 1999  Frontier's  stock  generally
traded  at a price  of $1.20 or  lower,  and the same was true for the  month of
December  1999. An attempted  merger of Frontier  into a related  company is the
principal  reason that Frontier's stock price rose to the $4.00 per share level.
Once this merger attempt failed,  the trading price of Frontier's stock declined
to its normal price level.  The  historical  prices  referenced  above have been
adjusted to reflect the impact of dividends subsequently paid.                  

CERTAIN EFFECTS OF THE MERGER                                                   

As a result of the Merger,  all of the Common Stock of Frontier will be owned by
MMI. As a result,  MMI's  interest in Frontier's net book value and net earnings
will increase from  approximately  58.7% to 100%. After adjusting for the effect
of the Merger,  MMI's  ownership  interest in Frontier's  net book value,  as of
March 31, 2001,  will increase from $4,495,269 to $7,658,039 and MMI's ownership
interest in Frontier's net income for the nine months ended March 31, 2001, will
increase from $796,841 to $1,357,481. The Unaffiliated Shareholders will have no
further   interest  in  Frontier   except   their  right  to  receive  the  Cash
Consideration.                                                                  

In addition,  the Common  Stock will no longer be traded on the  American  Stock
Exchange or any other stock exchange, and price quotations with respect to sales
of shares in the public market will no longer be available.  The registration of
the Common  Stock under the  Securities  Exchange  Act of 1934,  as amended (the
"Exchange  Act"),  will be  terminated,  and  this  termination  will  eliminate
Frontier's  obligation to file periodic financial and other information with the
Securities and Exchange Commission.  This will make most other provisions of the
Exchange  Act, such as the  short-swing  profit  recovery  provisions of Section
16(b) and the  requirements  of furnishing a proxy or  information  statement in
connection with shareholders' meetings, no longer applicable.                   

The receipt of the Cash  Consideration  pursuant to the Merger will be a taxable
transaction. See "The Merger--Federal Income Tax Consequences."                 

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For a  detailed  discussion  of the  benefits  and  detriments  of the Merger to
Frontier,  its  affiliates  and the  Unaffiliated  Shareholders  see the factors
considered by the Special Committee and set forth under  "Recommendation  of the
Special  Committee and Board of Directors;  Reasons for the Merger." Most of the
factors were not capable of being  quantified due to the nature of the factor or
the absence of sufficient information about the Unaffiliated Shareholders.      

CONFLICTS OF INTEREST                                                           

In considering the  recommendation of the Board with respect to the Merger,  the
common  shareholders  should  be  aware  that two  directors  of  Frontier  have
interests  in  connection  with the  Merger  that  present  them with  actual or
potential  conflicts of interest.  Mr. Davies will  beneficially  own 50% of the
shares of Frontier and will be an officer and director of MMI, and Mr.  Harcourt
will be an officer of MMI.  The  Special  Committee  and the Board were aware of
their conflicts and considered them among the other matters described under "The
Merger--Recommendation of the Special Committee and Board of Directors;  Reasons
for the Merger."                                                                

FEDERAL INCOME TAX CONSEQUENCES                                                 

The  following   discussion   summarizes   the  principal   federal  income  tax
considerations  relevant to the Merger.  This  discussion  is based on currently
existing  provisions  of the  Internal  Revenue  Code of 1986,  as amended  (the
"Code"),  existing  and proposed  Treasury  Regulations  thereunder  and current
administrative rulings and court decisions, all of which are subject to change. 

Any such  change,  which  may or may not be  retroactive,  could  alter  the tax
consequences  to the holders of Common  Stock as described  herein.  Special tax
consequences  not described  below may be  applicable  to particular  classes of
taxpayers, including financial institutions, broker-dealers, persons who are not
citizens or  residents  of the United  States or who are  foreign  corporations,
foreign  partnerships  or foreign  estates or trusts as to the United States and
holders who  acquired  their stock  through  the  exercise of an employee  stock
option or otherwise as compensation.                                            

THIS TAX  DISCUSSION  IS BASED UPON  PRESENT  LAW.  EACH HOLDER OF COMMON  STOCK
SHOULD  CONSULT  WITH SUCH  HOLDER'S  OWN TAX  ADVISOR  AS TO THE  SPECIFIC  TAX
CONSEQUENCES OF THE MERGER TO SUCH HOLDER,  INCLUDING THE APPLICATION AND EFFECT
OF FEDERAL,  STATE,  LOCAL AND OTHER TAX LAWS, THE POSSIBLE EFFECT OF CHANGES IN
SUCH TAX LAWS,  AND THE BASIS OF THE HOLDER IN THE COMMON STOCK.  The receipt of
the Cash Consideration by the Unaffiliated  Shareholders,  including Mr. Davies,
will be a taxable  transaction  for  federal  income tax  purposes.  The federal
income tax  consequences  to such holders of Common Stock will depend on whether
the transaction is treated as a taxable stock acquisition by MMI or a redemption
of the Common Stock by Frontier  (subject to the provisions  and  limitations of
Section 302 of the Code).  It is MMI's  present  intention to cause  Frontier to
declare a dividend  immediately  after the Merger in an amount equal to the Cash
Consideration  provided  by MMI.  Therefore,  it is  likely  that the  temporary
provision of funds by MMI would be disregarded and the Merger will be treated as
a  redemption  of the  Common  Stock  by  Frontier  in  exchange  for  the  Cash
Consideration.                                                                  

If treated as a  redemption,  each holder's gain or loss per share will be equal
to the  difference  between $1.58 and the holder's basis per share in the Common
Stock.  Such gain or loss generally will be a capital gain or loss provided that
the holder held the Common Stock as a capital asset and provided that the Merger
results in either a complete termination of or a substantially  disproportionate
reduction  in (as  defined in Section  302(b) of the Code) the  interest  in the
Common Stock owned or deemed to be owned by the holder.                         

If treated as a taxable  stock  acquisition,  the  holder's  gain or loss on the
Common Stock will be a capital gain or loss without regard to the limitations in
Section 302(b) of the Code.                                                     

Capital  gain or loss will be treated as  long-term  capital gain or loss if the
holder  held the  Common  Stock for more than one year,  and will be  treated as
short-term capital gain or loss if the holder held the Common Stock for one year
or less.                                                                        

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A holder of Common Stock may be subject to backup withholding at the rate of 31%
with respect to the Cash  Consideration  received,  unless the holder:  (i) is a
corporation or comes within certain other exempt  categories and, when required,
demonstrates  this  fact,  or (ii)  provides a correct  taxpayer  identification
number  ("TIN"),  and otherwise  complies with  applicable  requirements  of the
backup  withholding  rules.  To prevent the possibility of backup federal income
tax withholding,  each holder must provide Frontier or its agent with his or her
correct TIN by completing a Form W-9 or Substitute  Form W-9. A holder of Common
Stock who does not provide  Frontier  with his or her correct TIN may be subject
to penalties  imposed by the Internal  Revenue  Service (the "IRS"),  as well as
backup withholding. Frontier (or its agent) will report to the holders of Common
Stock and the IRS the amount of any "reportable payments," as defined in Section
3406 of the Code, and the amount of tax, if any, withheld with respect thereto. 

The federal income tax consequences to Acquisition Company, Frontier and MMI are
as follows:                                                                     

The creation of  Acquisition  Company and its merger with and into Frontier will
be disregarded for federal income tax purposes provided that Acquisition Company
is organized by MMI to  participate  in the Merger merely as a conduit to enable
MMI to acquire the Common Stock of Frontier.                                    

The federal  income tax  consequences  to  Frontier  and MMI will also depend on
whether the  transaction  is treated as a taxable stock  acquisition by MMI or a
redemption  of the Common  Stock by  Frontier  (subject  to the  provisions  and
limitations of Section 302 of the Code). It is MMI's present  intention to cause
Frontier to declare a dividend  immediately  after the Merger in an amount equal
to the Cash  Consideration  provided  by MMI.  Therefore,  it is likely that the
temporary  provision of funds by MMI would be disregarded and the Merger will be
treated as a redemption of the Common Stock by Frontier in exchange for the Cash
Consideration.                                                                  

If treated as a  redemption,  no gain or loss would be recognized by Frontier on
the  redemption  of its Common  Stock.  Frontier's  earning and profits would be
reduced by an amount  equal to the total Cash  Consideration  paid to holders of
Common Stock, provided, however, that the reduction in earnings and profits will
not exceed an amount  equal to the  ratable  share of  earnings  and  profits of
Frontier  accumulated  after  February 28,  1913,  allocable to the Common Stock
redeemed.  In  addition,  MMI would have a total  basis in its  Common  Stock of
Frontier equal only to the amount of consideration paid for the shares of Common
Stock  previously  purchased by MMI from UPAC, with no increase in basis for the
Cash Consideration provided in the Merger.                                      

If treated as a taxable stock acquisition, Frontier's earnings and profits would
be  reduced  to the extent  MMI  causes  Frontier  to declare a dividend  to MMI
immediately after the Merger in an amount equal to the Cash  Consideration  paid
to the holders of Common  Stock.  Upon  payment of such a  dividend,  Frontier's
earnings  and profits  would be reduced by the amount of the dividend  paid.  In
addition,  MMI's basis in the Common  Stock  purchased  would be increased by an
amount  equal to the Cash  Consideration  paid to the  holders  of Common  Stock
surrendered  in the Merger and decreased by the amount of any dividend  declared
and paid by Frontier to MMI.                                                    

SOURCE OF FUNDS                                                                 

On May 2, 2001, MMI purchased  5,258,513 shares of common stock of Frontier (the
"Shares") from UFAC for an aggregate  consideration of $8,330,000.  MMI financed
the  purchase of the Shares  with  working  capital  and with the  proceeds of a
credit   facility   from  Fifth  Third  Bank   ("Bank")  and  Fifth  Third  Bank
(Northeastern Ohio) ("Bank - NE") (collectively,  "Banks").  Under the terms and
conditions of a Credit  Agreement  dated April 30, 2001 ("Credit  Agreement") by
and  among MMI and the  Banks,  the  Banks  have  made term  loans to MMI in the
aggregate  principal  amount of  $8,000,000  (each a "Loan",  collectively,  the
"Loans") to fund the acquisition of the Shares as follows:                      

     *    $4,000,000  term loan by Bank - NE to MMI secured by a pledge and lien
          on all of the stock  acquired  from UFAC and a blanket  lien on all of
the assets of MMI (Loan 1).                                 

     *    $1,000,000  term loan by Bank - NE to MMI secured by a blanket lien on
all of the assets of MMI (Loan 2).                          

*    $3,000,000 unsecured term loan by Bank to MMI (Loan 3).          

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The Loans are secured by a collateral  assignment of a life insurance  policy on
the life of Mr.  Davies.  The Loans are  guaranteed  by (i) Mr.  Davies  and his
spouse, Allyn; and (ii) Acquisition Company. The guaranty by Acquisition Company
is secured  by a lien on all of its  assets.  Following  the  completion  of the
merger,  it is anticipated that the Loans will be  redocumented,  with the Banks
taking a lien on all of Frontier's assets.                                      

Principal  payments  on Loan 1 and Loan 2 are due and  payable in equal  monthly
installments in immediately available funds at the principal office of Bank - NE
on the last day of each month in arrears,  beginning on February 28, 2002 with a
final payment of principal due on April 30, 2006.                               

Interest  will accrue on the  principal  amount of Loan 1 at the Bank Prime Rate
plus 125  basis  points  and on Loan 2 at the Bank  Prime  Rate  plus 175  basis
points;  provided that if the merger with Frontier is not completed by September
30, 2001,  the rate on Loan 2 increases to 21% and if the merger is completed by
then,  the rate on Loan 2 drops to the Bank  Prime  Rate plus 125 basis  points.
Interest  payments will be made in immediately  available funds at the principal
office of Bank - NE on the last day of each month in arrears, beginning with May
2001 and continuing  during the term of the Loan. The entire principal amount of
Loan 1 and Loan 2, plus all accrued and unpaid  interest and any other  charges,
advances, or fees required to be paid, will be due and payable on April 30, 2006

Interest will accrue on Loan 3 at the rate of 21% per annum.  Interest  payments
will be made in immediately  available funds at the principal office of the Bank
on the last day of each month in arrears,  beginning on the last day of May 2001
and continuing  during the term hereof.  The entire  principal  amount of Loan 3
plus all accrued and unpaid  interest  and any other  charges,  advances or fees
required to be paid, will be due and payable on October 30, 2003.               

Also,  IVM has loaned MMI the  principal  sum of $1 million,  with interest at a
rate per annum  equal to the Bank Prime Rate less 100 basis  points,  which rate
will be adjusted on October 31, 2001 and on April 30th and October  31st of each
calendar  year  thereafter  (with  such rate to be in effect  for the entire six
month period until the next adjustment  date).  The entire  principal amount and
all accrued and unpaid  interest  will be due and payable on the earlier of: (i)
upon  demand by IVM;  provided,  however,  that IVM will not make such demand if
such  action or the  payment of amounts  due under the note would  constitute  a
default under any agreement or note  evidencing the Loans  described  above;  or
(ii) April 30, 2008.  All amounts due under the note are expressly  subordinated
to all  obligations and  indebtedness  due and owing by MMI to the Banks and any
affiliates of such banks and any successor senior lender.                       

The funds  required to complete  the Merger and to pay related fees and expenses
are expected to be provided from MMI's working  capital,  the proceeds of a loan
and/or  equity  contribution  from MMI's  shareholders  and from the proceeds of
loans funded by the Banks. MMI has no alternative  financing plans in place. MMI
expects to repay its borrowings from the post merged  company's funds which will
include approximately $5,500,000 in cash and cash equivalents currently owned by
Frontier.                                                                       

EFFECTIVE TIME OF THE MERGER AND PAYMENT FOR SHARES                             

The effective time of the Merger (the "Effective Time") is currently expected to
occur as soon as practicable  after the Special Meeting,  subject to approval of
the Merger  Agreement at the Special  Meeting and  satisfaction or waiver of the
terms and conditions of the Merger Agreement.  Detailed instructions with regard
to the surrender of stock  certificates,  together with a letter of transmittal,
will be forwarded to the Unaffiliated Shareholders by Frontier's transfer agent,
U.S.  Stock  Transfer  Company (the  "Payment  Agent"),  promptly  following the
Effective Time.  Shareholders  should not submit their stock certificates to the
Payment Agent until they have received  such  materials.  The Payment Agent will
send  payment  of  the  Cash   Consideration  to  shareholders  as  promptly  as
practicable  following receipt by the Payment Agent of their stock  certificates
and other  required  documents.  No interest will be paid or accrued on the cash
payable  upon  the   surrender  of  stock   certificates.   See  "The   Proposed
Merger--Exchange of Securities."                                                

Shareholders  should not send any stock  certificates to Frontier or the Payment
Agent at this time.                                                             

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THE MERGER AGREEMENT                                                            

As noted above, Frontier expects that the Effective Time of the Merger will take
place  promptly  following  the  approval of the Merger at the Special  Meeting.
However,  Frontier  may not be  able  to  consummate  the  Merger  if any of the
following conditions exist:                                                     

     *    Acquisition Company becomes subject to any order, decree or injunction
          of a court  or  agency  of  competent  jurisdiction  that  enjoins  or
prohibits the consummation of the Merger.                   

     *    MMI fails to receive  funding for the costs of the  Merger,  including
       the aggregate Cash Consideration, from the Banks or another lender.

PRO FORMA FINANCIAL INFORMATION                                                 

Pro forma financial information has not been included in this proxy solicitation
because the holders of Common Stock are receiving  Cash  Consideration  only and
will not retain or receive a continuing  interest in Frontier's  business  after
the Merger.                                                                     

CONDUCT OF THE BUSINESS OF FRONTIER IF THE MERGER IS NOT CONSUMMATED            

If the Merger is not consummated,  the Board of Directors  expects that Frontier
will continue to conduct its business as it was  conducted  prior to the Special
Meeting with the exception of the  cancellation of the UFAC management  contract
and the  increased  costs  associated  with the direct  employment of management
personnel.  However, as noted above,  because the market for the Common Stock is
thin and Frontier does not anticipate  that the number of shares of Common Stock
in the  hands of the  public  will  increase  significantly  in the  foreseeable
future,  the Board of Directors believes that if the Merger is not completed and
a similar going-private transaction is proposed in the future, the consideration
available to the  Unaffiliated  Shareholders  in that future  transaction  would
likely be less than the Cash Consideration.                                     

EXCHANGE OF SECURITIES                                                          

At the  Effective  Time,  MMI will  deliver,  or cause to be  delivered,  to the
Payment Agent sufficient cash to pay the Cash  Consideration to the shareholders
of Frontier other than MMI. Subject to the terms,  conditions and procedures set
forth in the Merger Agreement, each share of Common Stock issued and outstanding
immediately  prior to the Effective Time,  other than the shares of Common Stock
held by MMI, will, by virtue of the Merger,  be automatically  exchanged for the
right to receive  the Cash  Consideration.  Each  holder of a stock  certificate
formerly  representing  such shares will after the Effective  Time cease to have
any rights with  respect to such shares other than the right to receive the Cash
Consideration  for such  shares upon  surrender  of the stock  certificate.  New
shares of Frontier will be issued in exchange for the outstanding  share capital
of Acquisition Company resulting in Frontier becoming a wholly-owned  subsidiary
of MMI.                                                                         

No interest will be paid or accrued on the amount  payable upon the surrender of
any stock certificate.  Payment to be made to a person other than the registered
holder  of the  stock  certificate  surrendered  is  conditioned  upon the stock
certificate so surrendered  being properly endorsed and otherwise in proper form
for transfer, as determined by the Payment Agent. Further, the person requesting
such  payment  will be required to pay any  transfer or other taxes  required by
reason of the payment to a person other than the registered  holder of the stock
certificate  surrendered or establish to the  satisfaction  of the Payment Agent
that such tax has been paid or is not  payable.  One  hundred  and  eighty  days
following the Effective Time, MMI may require the Payment Agent to deliver to it
any funds (including any interest  received with respect thereto) made available
to the  Payment  Agent  which  have  not  been  disbursed  to  holders  of stock
certificates  formerly  representing shares of Common Stock outstanding prior to
the  Effective  Time.  After such time holders of the Common Stock  certificates
will be entitled to look to MMI only as general  creditors  with respect to cash
payable upon due surrender of their stock certificates.                         

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Notwithstanding  the  foregoing,  neither the Payment Agent nor any party to the
Merger  Agreement  will be liable to any holder of stock  certificates  formerly
representing  shares of Common  Stock for any amount  paid to a public  official
pursuant to any applicable abandoned property, escheat or similar law.          

TRANSFER OF SHARES                                                              

Shares of Common Stock will not be transferred on the stock transfer books at or
after the Effective Time. If certificates representing such shares are presented
to  Frontier  after the  Effective  Time,  such  shares  will be  cancelled  and
exchanged for the Cash Consideration.                                           

REGULATORY APPROVALS                                                            

No federal or state regulatory approvals are required to be obtained by Frontier
or Acquisition Company,  nor must any regulatory  requirements be complied with,
in  connection  with the  consummation  of the Merger by any party to the Merger
Agreement,  except for (i) the requirements of the Delaware General Corporations
Law and the Arizona  Business  Corporation  Act in connection  with  stockholder
approvals  and  consummation  of the  Merger  and (ii) the  requirements  of the
federal securities laws.                                                        

EXPENSES OF THE MERGER                                                          

Assuming the Merger is  consummated,  the estimated costs and fees in connection
with the Merger and the related  transactions,  which will be paid by  Frontier,
are as follows:                                                                 

  Cost or Fee                                   Estimated Amount
  -----------                                   ----------------
Financial advisory fees                           $ 25,000  
Legal fees                                          95,000  
Accounting and tax fees                             18,000  
Printing and mailing fees                            5,000  
Regulatory filing fees                               2,800  
Independent Committee fees                          12,000  
Miscellaneous                                       10,700  
                                                --------
Total                                             $168,500  
                                                ========

RIGHTS OF DISSENTING SHAREHOLDERS                                               

Under Arizona Revised Statutes Section 10-1302(D), shareholders are not entitled
to  appraisal  rights with respect to the Merger.  Generally,  under the Arizona
Business Corporation Act, under certain circumstances, a shareholder is entitled
to dissent from certain transactions and obtain payment of the fair value of the
shareholder's shares ("Dissenter's Rights"). Dissenter's Rights are available to
shareholders of Arizona  corporations for certain corporate  actions,  including
the consummation of a plan of merger to which an Arizona corporation is a party,
if  shareholder  approval is  required.  With  respect to the  Merger,  however,
Frontier is exempted from this  provision and  shareholders  are not entitled to
Dissenter's  Rights  because  the  Common  Stock  is  registered  on a  national
securities exchange.                                                            

CONDUCT OF FRONTIER'S BUSINESS AFTER THE MERGER                                 

Following the Merger,  Frontier anticipates that it will continue to conduct its
business as it was conducted  immediately prior to the Merger. Prior to the date
of this Proxy  Statement,  Frontier  listed  the  property  where its  executive
offices are located  for sale at a sales price  approximately  equal to its book
value. If the property is sold,  Frontier will relocate to leased  facilities in
Phoenix,  Arizona.  Although no alternative facilities have as yet been located,
Frontier  anticipates  that  suitable  facilities  will be readily  found in the
Phoenix  metropolitan  area  should  the  property  be sold.  Although  Frontier
believes  that the  consummation  of the Merger may  improve its  prospects  for

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engaging in strategic transactions, no transaction is specifically contemplated,
and no  discussions  have  been  held  with any  third  party  regarding  such a
transaction.                                                                    

INTERESTS OF CERTAIN PERSONS IN THE MERGER                                      

Certain  members of  Frontier's  management  and the Board may be deemed to have
certain  interests  in the Merger  that are in addition  to their  interests  as
shareholders of Frontier generally.  The Board was aware of these interests when
it approved  the Merger  Agreement.  As provided  for in Arizona law, a majority
(but in any event not less than two) of Frontier's  disinterested  directors are
required  to approve the  Merger.  On April 27, 2001 the Merger was  unanimously
approved by the Board, including all three of the independent directors.        

Certain executive officers and directors of Frontier are also executive officers
and  directors of Netrex and officers  and  directors of MMI and/or  Acquisition
Company. See "Management of MMI" for a description of the officers and directors
of MMI and Acquisition  Company after the Merger.  The following chart lists the
executive  officers  and/or  directors  of Frontier  who will also be  directors
and/or officers of Frontier and/or MMI after the Merger.                        

Name                        Current Position                                    
----                        ----------------                                    
John M. Davies              Director and Officer of Frontier and Director and   
Officer of MMI      
Jeffrey R. Harcourt         Director and Officer of Frontier and Officer of MMI 

Other than as set forth above, no director or executive  officer of Frontier has
any direct or  indirect  material  interest  in the  Merger,  except  insofar as
ownership of the Common Stock might be deemed such an interest.                 

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 MARKET PRICE AND DIVIDEND INFORMATION

The Common  Stock is listed on the  American  Stock  Exchange  (AMEX)  under the
symbol "FAJ." The  following  table sets forth the range of high and low prices,
and the trading volume,  during each quarterly period within Frontier's two most
recent fiscal years.                                                            

                                         Price
                                          --------------------------------
                                          High          Low         Volume
                                          ----          ---         ------
Fiscal Year Ending June 30, 2001                                                
First Quarter                             $4.000       $2.625        120,800
Second Quarter                             3.000        1.000        139,500
Third Quarter                              1.750        1.000         84,600
Fourth Quarter                             1.550        1.000        189,300

Fiscal Year Ended June 30, 2000                                                 
First Quarter                              3.250        1.500        308,800
Second Quarter                             2.125        1.000        370,900
Third Quarter                              4.500        1.250        397,600
Fourth Quarter                             4.000        2.500        240,500

Fiscal Year Ended June 30, 1999                                                 
First Quarter                              3.375        2.375        260,900
Second Quarter                             2.563        2.000        254,200
Third Quarter                              2.750        2.375        240,800
Fourth Quarter                             4.375        2.375        354,400

As of April 27, 2001, the date the Merger Agreement was signed, and as of August
17, 2001, the closing price of the Common Stock on the AMEX, was $1.16 and $1.47
per share,  respectively.  Frontier has  approximately 220 holders of record and
800 beneficial holders of its Common Stock.                                     

The following  shows per share cash  dividends  declared for each quarter during
Frontier's two most recent fiscal years.                                        

                                               Cash Dividends Declared
                                               -----------------------
Fiscal Year Ending June 30, 2001                                                
First Quarter                                          $ .0000              
Second Quarter                                           .0000              
Third Quarter                                            .0000              
Fourth Quarter                                           .0000              

Fiscal Year Ended June 30, 2000                                                 
First Quarter                                            .0000              
Second Quarter                                           .0000              
Third Quarter                                            .0000              
Fourth Quarter                                           .0000              

Fiscal Year Ended June 30, 1999                                                 
First Quarter                                            .0375              
Second Quarter                                           .0000              
Third Quarter                                            .0000              
Fourth Quarter                                          1.6000              

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The  Board of  Directors  does  not  currently  anticipate  the  payment  of any
dividends to Frontier's shareholders in the foreseeable future.                 

Certain statements and information contained in this Proxy Statement,  including
statements  made  regarding  the  Merger,   concerning   future,   proposed  and
anticipated  activities of Frontier and/or Acquisition  Company,  certain trends
with respect to their operating results, capital resources and liquidity or with
respect to the insurance  adjusting  industry in general,  and other  statements
contained in this Proxy  Statement  regarding  matters  that are not  historical
facts are forward-looking  statements,  and by their very nature,  include risks
and uncertainties.  Accordingly,  actual results may differ, perhaps materially,
from those expressed in or implied by such forward-looking  statements.  Factors
that could cause actual results to differ  materially  include the foregoing and
those   discussed   elsewhere  in  this  Proxy   Statement  and  under  "Special
Considerations" in Frontier's Form 10-K for the year ended June 30, 2000.       

 MANAGEMENT OF MMI

CURRENT DIRECTORS AND EXECUTIVE OFFICERS                                        

The following table sets forth information  concerning each of the directors and
executive officers of MMI.                                                      

Name                        Age       Position                                  
----                        ---       --------                                  
John M. Davies              45        Chairman of the Board, President and CEO  
Patrick Enthoven            56        Director                                  
Jeffrey R. Harcourt         40        CFO, Secretary and Treasurer              

JOHN M. DAVIES was appointed  sole director of UFAC in November 1999. Mr. Davies
has been associated with Frontier as a director since April 1999 and Chairman of
the Board since January 2000. From June 1999 through April 2001, Mr. Davies also
served as President of Netrex. From September 1989 through June 1999, Mr. Davies
was employed by The Progressive Corporation, most recently as Division President
of  Progressive's  Diversified  Business  Group.  Mr. Davies has an MBA from the
University  of Pittsburgh  and has earned  numerous  professional  designations,
including being a Certified Public Accountant, a Chartered Property and Casualty
Underwriter and a Chartered Life Underwriter.                                   

PATRICK  ENTHOVEN has been  associated with IVM since 1987 and has served as its
Chief Advisor of Insurance  Operations  since July 1993. Mr.  Enthoven serves on
the boards of  directors  of The  Hollard  Insurance  Company,  Legalwise  North
America LLC, MMI, JW and AFS General  Insurance  Pty Ltd. Mr.  Enthoven has a BA
from the University of Cape Town and an O.P.M. from the Harvard Business School.
Mr. Enthoven is an Associate of the Chartered  Institute of Insurance in London,
England.                                                                        

JEFFREY R. HARCOURT was appointed Treasurer of UFAC in November 1999,  Treasurer
of JW in November  1998 and  Treasurer  and  director of DBG in March 1999.  Mr.
Harcourt has served as Chief Financial Officer of Frontier since August 1999, as
a director of Frontier  since April 1999 as Treasurer of Frontier  since January
2000 and as Secretary of Frontier  since April 2001.  From November 1999 through
April 2001,  Mr.  Harcourt  served as Chief  Financial  Officer of Netrex.  From
October 1990 through November 1999, Mr. Harcourt was employed by The Progressive
Corporation,  most recently as Controller of the Diversified Business Group. Mr.
Harcourt  holds a BS  degree  from  Miami  University  and has  earned  numerous
designations,  including  being  a  Certified  Public  Accountant,  a  Chartered
Property and Casualty Underwriter,  a Certified Internal Auditor and a Certified
Information Systems Auditor.                                                    

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 BENEFICIAL OWNERSHIP OF COMMON STOCK PRIOR TO
AND AFTER THE MERGER

As of the close of business on the Record Date,  there were 8,957,660  shares of
Common Stock outstanding.  The following table sets forth information  regarding
the beneficial  ownership of shares of the Common Stock outstanding as of August
17, 2001 and immediately following the Merger, by (i) each person or group known
to Frontier who owns or who will own more than 5% of the  outstanding  shares of
Common Stock, (ii) each of the directors and the executive  officers of Frontier
and (iii) by all directors and executive officers of Frontier as a group. Unless
otherwise indicated in the footnotes,  all of such interests are owned directly,
and the indicated  person has sole voting and  investment  power.  The number of
shares  represents  the  number  of shares of  Common  Stock the  person  holds,
including  shares  that may be issued  upon the  exercise  of  options  that are
exercisable  as of  August  17,  2001.  Information  presented  in the table and
related notes has been obtained  from the  beneficial  owner and/or from reports
filed by the  beneficial  owner  with the  Securities  and  Exchange  Commission
pursuant to Section 13 of the Exchange Act.                                     

                                                        [Enlarge/Download Table]

                                        Shares Beneficially            Shares Beneficially Owned  
                                      Owned on August 17, 2001          Adjusted for the Merger   
                                 -------------------------------  --------------------------------
                                    Amount                           Amount                       
                                 and Nature of          Percent   and Nature of          Percent  
                                  Beneficial              Of       Beneficial               Of    
Name of Beneficial Owner         Ownership (1)         Class (2)  Ownership (1)          Class (2)
------------------------         -------------         ---------  -------------          ---------
OFFICERS AND DIRECTORS                                                                            

                                                                                                  
John M. Davies (3)(4)              2,629,757             29.4%      2,629,257               50%   
Jeffrey R. Harcourt (3)                   --                *              --                *    
Kenneth A. Sexton (3)                     --                *              --                *    
Eric J. Carlstrom (3)                     --                *              --                *    
All officers and directors as a                                                                   
group (four persons) (4)           2,629,757             29.4%      2,629,257               50%   

FIVE PERCENT SHAREHOLDERS                                                                         

MMI (3)                            5,258,513             58.7%      5,258,513              100%   
Patrick Enthoven (3)(5)            2,629,256             29.3%      2,629,256               50%   

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

(1)  Includes,  when  applicable,  shares owned of record by such person's minor
     children and spouse and by other  related  individuals  and  entities  over
     whose  shares of Common Stock such person has  custody,  voting  control or
     power of  disposition.  Also  includes  shares  of  Common  Stock  that the
     identified  person had the right to acquire within 60 days after August 17,
2001 by the exercise of stock options.                                

(2)  The  percentages  shown  include the shares of Common Stock that the person
     had the  right  to  acquire  within  60 days  after  August  17,  2001.  In
     calculating  the  percentage of ownership,  all shares of Common Stock that
     the identified  person had the right to acquire within 60 days after August
     17,  2001 are deemed to be  outstanding  for the purpose of  computing  the
     percentage of the shares of Common Stock owned by such person,  but are not
     deemed to be  outstanding  for the purpose of computing  the  percentage of
shares of Common Stock owned by any other shareholders.               

(3)  Each of such persons may be reached  through  Frontier at 45 East  Monterey
Way, Phoenix, Arizona 85012.                                          

(4)  Includes 2,629,257 shares representing one-half of the shares owned by MMI.
     Mr. Davies disclaims any beneficial  interest for purposes of Section 13(d)
     or (g) of the Securities Exchange Act of 1934, as amended, in the remaining
one-half of the shares owned by MMI.                                  

(5)  Includes 2,629,256 shares representing one half of the shares owned by MMI.
     Mr.  Enthoven  disclaims  any  beneficial  interest for purposes of Section
     13(d) or (g) of the  Securities  Exchange Act of 1934,  as amended,  in the
remaining one-half of the shares owned by MMI.                        

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To the best  knowledge of Frontier,  no person or groups of persons,  other than
officers,  directors  and MMI  beneficially  own more than five  percent  of the
Common Stock (based upon present records of the transfer agent).                

 AVAILABILITY OF INFORMATION

Frontier files reports,  proxy  statements,  and other information with the SEC.
You can read and copy these reports,  proxy  statements,  and other  information
concerning  Frontier at the SEC's  public  reference  room at 450 Fifth  Street,
N.W., Washington,  D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further
information on the public  reference room. The SEC maintains an internet site at
www.sec.gov that contains  reports,  proxy and information  statements and other
information  about  issuers  that file  electronically  with the SEC,  including
Frontier.                                                                       

Pursuant to the  requirements  of Section  13(e) and Rule 13e-3 of the  Exchange
Act,  Frontier,  MMI,  Acquisition  Company and Mr. Davies have filed a Schedule
13e-3 with the SEC with respect to the Merger.  As permitted by SEC rules,  this
Proxy  Statement  does not  contain all of the  information  you can find in the
Schedule  13e-3 or in the  exhibits to the Schedule  13e-3.  You can obtain this
additional  information and a complete  Schedule 13e-3 from the SEC as indicated
above, or from Frontier.                                                        

No provisions have been made to grant Unaffiliated Shareholders access to MMI's,
Acquisition  Company's or  Frontier's  corporate  files or to obtain  counsel or
appraisal services at the expense of MMI, Acquisition  Company,  Frontier or Mr.
Davies.                                                                         

The ComStock  report and appraisal  will be made  available for  inspection  and
copying at the  principal  executive  offices of Frontier  during their  regular
business  hours  by  any  interested  equity  security  holder  of  Frontier  or
representative  who has been so  designated  in writing.  A copy of the ComStock
report or appraisal will be  transmitted  by Frontier to any  interested  equity
security  holder of Frontier or  representative  who has been so  designated  in
writing  upon  written  request  and at the expense of the  requesting  security
holder.                                                                         

 INCORPORATION OF CERTAIN INFORMATION BY REFERENCE

The SEC allows  Frontier to  "incorporate by reference" the information it files
with the SEC. This permits Frontier to disclose important  information to you by
referring to these filed documents. The information incorporated by reference is
deemed  to be a part  of  this  Proxy  Statement,  except  for  any  information
superseded by information in this Proxy Statement.  The information incorporated
by reference is an important part of this Proxy Statement. Frontier incorporates
by reference into this Proxy Statement the following documents:                 

     *    our Annual Report on Form 10-K for the year ended June 30, 2000, filed
with the SEC on September 2, 2000                           

     *    our Quarterly  Report on Form 10-Q for the nine months ended March 31,
2001, filed with the SEC on May 15, 2001                    

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You may  request a copy of these  filings  (other  than  exhibits  which are not
specifically  incorporated  by  reference  herein)  at no  cost  by  writing  or
telephoning us at the following address:                                        

 Frontier Adjusters of America, Inc.
45 East Monterey Way
Phoenix, Arizona 85012
(602) 264-1061

If you would like to request documents from Frontier,  please do so by September
21, 2001 to receive them before the Special Meeting.                            

You should rely only on the  information  contained or incorporated by reference
in this  Proxy  Statement  to vote on the  Merger  Agreement.  Frontier  has not
authorized anyone else to provide you with different information. You should not
assume that the  information in this Proxy  Statement is accurate as of any date
other than August 29, 2001.                                                     

REQUIRED VOTE, EFFECT OF SHAREHOLDER APPROVAL, AND RELATED MATTERS

The  affirmative  vote  of a  majority  of  the  shares  present  in  person  or
represented by proxy at the Special  Meeting,  provided that the total number of
shares  present  in  person  or  represented  by  proxy at the  Special  Meeting
represents  over 50% of the shares of Common  Stock issued and  outstanding,  is
required  to approve  the Merger  Agreement  and the  transactions  contemplated
thereby. MMI and the shareholder  directors,  which collectively represent 58.7%
of the  issued  and  outstanding  shares  of  Common  Stock  of  Frontier,  have
sufficient votes to approve the proposal.                                       

Approval of the Merger by the requisite vote of the  shareholders of Frontier is
a condition to  consummation of the Merger.  If the Merger is not approved,  the
Merger will not be consummated.                                                 

 OTHER MATTERS

Management  of  Frontier  knows of no other  matters  that will come  before the
Special Meeting.  However,  if any other matters should properly come before the
Special Meeting,  it is the intention of the persons named in the enclosed proxy
to vote each proxy in accordance with his best judgment on such matter.         

DEADLINE FOR SHAREHOLDER PROPOSALS

If the Merger is consummated,  there will be no Unaffiliated Shareholders and no
public  participation  in any  future  meetings  of  shareholders  of  Frontier.
However,  if the Merger is not consummated,  the Unaffiliated  Shareholders will
continue to be  entitled to attend and  participate  in  Frontier's  stockholder
meetings.  In such an event,  if a  shareholder  wishes to submit a proposal for
consideration  by the  stockholders  of Frontier  at the 2002 Annual  Meeting of
Stockholders (the "2002 Annual  Meeting"),  then in order for the proposal to be
includable  in the proxy  statement for the 2002 Annual  Meeting,  such proposal
must be received by the Secretary of Frontier no later than May 1, 2002.        

                                   By Order of the Board of Directors,

Phoenix, Arizona                                                                
August 29, 2001                         Jeffrey R. Harcourt, Secretary          

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                                                                      APPENDIX A

PLAN AND AGREEMENT OF MERGER

THIS PLAN AND  AGREEMENT OF MERGER  dated as of April 27,  2001,  is made by and
among  FRONTIER  ADJUSTERS OF AMERICA,  INC.,  an Arizona  corporation  ("FAJ"),
MERRYMEETING, INC., a Delaware corporation ("MMI"), and MM MERGER CORPORATION, a
Delaware corporation ("ACQUISITION").                                           

RECITALS

   A. MMI is the holder of approximately 58.7% of the issued and outstanding
capital stock of FAJ.                                                           

 B. MMI is also the holder of 100% of the issued and outstanding capital
stock of Acquisition.                                                           

   C. The parties hereto desire that Acquisition be merged with and into FAJ
upon the terms and conditions of this Agreement.                                

 AGREEMENT

NOW, THEREFORE,  the parties hereto hereby approve and adopt this Agreement as a
Plan of Merger and do mutually covenant and agree as follows:                   

ARTICLE 1 

 DEFINITIONS

As used in this  Agreement,  the following  terms have the following  respective
meanings:                                                                       

"ACQUISITION" means MM Merger Corporation, a Delaware corporation.              

"ACTION" means any actual or, to a Person's knowledge, threatened action, claim,
suit, litigation, arbitration, inquiry, proceeding or investigation by or before
any Government Authority.                                                       

"ADDITIONAL DOCUMENTS" has the meaning set forth in SECTION 11.1.               

"AFFILIATE" has the meaning ascribed thereto in Rule 12b-2 promulgated under the
Exchange Act, as in effect on the date hereof.                                  

"AGREEMENT" means this Plan and Agreement of Merger.                            

"AMEX" means the American Stock Exchange, Inc.                                  

"BENEFICIAL OWNERSHIP" has the meaning set forth in Rule 13d-3 promulgated under
the Exchange Act.                                                               

"BLUE SKY LAWS" has the meaning set forth in SECTION 4.5(E).                    

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"BUSINESS  DAY" means any day other than a Saturday,  a Sunday or a bank holiday
in Cleveland, Ohio or Phoenix, Arizona.                                         

"CERCLA" means the federal Comprehensive, Environmental Response, Compensation, 
and Liability Act, 42 U.S.C.ss. 9601 ET SEQ., as amended.                       

"CERTIFICATE OF MERGER" has the meaning as set forth in SECTION 2.1.            

"CLOSING" AND "CLOSING DATE" have the meanings set forth in SECTION 8.1.        

"CODE" means the Internal  Revenue Code of 1986,  as amended,  and any successor
thereto, including all of the rules and regulations promulgated thereunder.     

"COMMITMENT" means any commitment, contractual obligation, agreement, borrowing,
capital  expenditure or material  transaction  entered into by a party or any of
its Subsidiaries.                                                               

"CURRENT REPORTS" has the meaning set forth in SECTION 4.6(B).                  

"EFFECTIVE DATE" has the meaning set forth in SECTION 2.7.                      

"EMPLOYEES"  means all  current,  former and  retired  employees,  officers  and
directors of a Person or any of its Subsidiaries,  including current, former and
retired employees, officers and directors on disability, layoff or leave status.

"ENVIRONMENTAL  CLAIM" means any claim,  investigation  or written notice by any
Person  alleging  potential   liability   (including   potential  liability  for
investigatory  costs,  cleanup  costs,   governmental  response  costs,  natural
resources  damages,  property  damages,  personal  injuries  or  fatalities,  or
penalties)  arising  out of,  based  on or  resulting  from  (A)  the  presence,
generation,  transportation,  treatment,  use,  storage,  disposal or release of
Materials  of  Environment  Concern or the  threatened  release of  Materials of
Environmental  Concern at any location,  or (B) activities or conditions forming
the basis of any  violation,  or alleged  violation  of, or liability or alleged
liability under, any Environmental Law.                                         

"ENVIRONMENTAL LAWS" means any federal, state, or local statute, law, ordinance,
code, order, injunction, decree or ruling, and any regulation promulgated       
thereunder, which regulates or controls (i) pollution, contamination, or the    
condition of groundwater, surface water, soil, sediment or air, or (ii) a spill,
leak, emission, discharge, release or disposal into groundwater, surface water, 
soil, sediment or air, including without limitation CERCLA; the Federal Resource
Conservation and Recovery Act, 42 U.S.C.ss.6901 ET SEQ., as amended; the        
Hazardous Materials Transportation Act, 49 U.S.C.ss.1801 ET SEQ., as amended;   
the Toxic Substances Control Act, 15 U.S.C.ss.2601 ET SEQ., as amended; the     
Clean Air Act, 42 U.S.C.ss.7401 ET SEQ., as amended; the Clean Water Act, 33    
U.S.C.ss.1251 ET SEQ., as amended; the Safe Drinking Water Act, 42 U.S.C.ss.300f
ET SEQ., as amended; the Emergency Planning and Community Right to Know Act, 42 
U.S.C.ss.11001 ET SEQ., as amended; the Federal Insecticide, Fungicide and      
Rodenticide Act, 7 U.S.C.ss.136 ET SEQ., as amended; the National Environmental 
Policy Act, 42 U.S.C.ss.4321 ET SEQ., as amended; any similar state or local    
statutes or ordinances, and the regulations promulgated thereunder.             

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"ERISA"  means the Employee  Income  Security Act of 1974,  as amended,  and any
successor  thereto,  including  all of the  rules  and  regulations  promulgated
thereunder.                                                                     

"ERISA  AFFILIATE"  means,  with respect to any entity,  trade or business,  any
other entity, trade or business that is a member of a group described in Section
414(b), (c), (m) or (o) of the Code or Section 4001(b)(1) of ERISA that includes
the first entity, trade or business, or that is a member of the same "controlled
group" as the first  entity,  trade or  business  within the  meaning of Section
4001(a)(14) of ERISA.                                                           

"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.           

"FAJ" means Frontier Adjusters of America, Inc., an Arizona corporation.        

"FAJ COMMON STOCK" has the meaning set forth in SECTION 2.5(A).                 

"FAJ PERMITS" has the meaning set forth in SECTION 4.19(A).                     

"FAJ PLANS" means,  collectively,  each of FAJ's or any of the FAJ Subsidiaries'
benefit,  bonus,  pension,  profit  sharing,  deferred  compensation,  incentive
compensation,  stock  ownership,  stock purchase,  stock option,  phantom stock,
retirement,  vacation,  severance,  disability, death benefit,  hospitalization,
medical or other employee benefit arrangements, understandings or plans (whether
under Section  414(b),  (c), (m) or (o) of the Code or otherwise)  applicable to
any Employee or any Person affiliated with FAJ or any of the FAJ Subsidiaries.  

"FAJ PROPRIETARY RIGHTS" has the meaning set forth in SECTION 4.16.             

"FAJ AND SUBSIDIARIES' PROPERTIES" has the meaning set forth in SECTION 4.12.   

"FAJ REPORTS" has the meaning set forth in SECTION 4.6(A).                      

"FAJ SHARES" has the meaning set forth in SECTION 2.5.                          

"FAJ SUBSIDIARIES" means Frontier Adjusters of Arizona, Inc., an Arizona        
corporation, Frontier Adjusters, Inc., a Colorado corporation, and Frontier     
Adjusters Co., Ltd., an Alberta, Canada corporation.                            

"FINANCIAL STATEMENTS" has the meaning set forth in SECTION 5.5(A).             

"FORM 10-K" has the meaning set forth in SECTION 4.6(A).                        

"GAAP" means United States generally accepted accounting principles.            

"GOVERNMENT  AUTHORITY"  means  any  government  or  state  (or any  subdivision
thereof) of or in the United States or Canada, or any agency, authority, bureau,
commission,  department  or  similar  body or  instrumentality  thereof,  or any
governmental court or tribunal.                                                 

"INDEMNIFIED PARTY" has the meaning set forth in SECTION 11.3.                  

"INDEMNIFYING PARTY" has the meaning set forth in SECTION 11.3.                 

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"INDEMNITY THRESHOLD" has the meaning set forth in SECTION 11.4(A).             

"IRS" means the Internal Revenue Service or any successor thereto.              

"LIABILITIES" means, as to any Person, all debts,  adverse claims,  liabilities,
direct, indirect, absolute or contingent of such Person, whether accrued, vested
or otherwise.                                                                   

"LIENS"  means  all  liens,  mortgages,  deeds  of  a  Person,  title  retention
arrangements,  security interests, pledges, claims, charges, easements and other
encumbrances of any nature whatsoever.                                          

"LOSS AND EXPENSE" has the meaning set forth in SECTION 11.2(A).                

"MATERIAL  ADVERSE  EFFECT"  means a material  adverse  effect on the  financial
condition,  results  of  operations  or  business  of a  Person  or  any  of its
Subsidiaries.                                                                   

"MATERIALS  OF   ENVIRONMENTAL   CONCERN"  means  all   chemicals,   pollutants,
contaminants,  wastes,  toxic  substances,  petroleum or any  fraction  thereof,
petroleum  products  hazardous  substances  (as  defined in  Section  101(14) of
CERCLA, 42 U.S.C. ss. 6601(14)), or solid or hazardous wastes as now defined and
regulated under any Environmental Laws.                                         

"MATERIAL   TRANSACTION"  means  any  transaction   between  a  Person  and  its
Affiliates,  that would be required to be disclosed in such Person's  reports or
proxy materials filed under the Exchange Act by Item 404 of Regulation S-K.     

"MERGER" has the meaning set forth in SECTION 2.1.                              

"MERGER CONSIDERATION" has the meaning set forth in SECTION 2.5(A).             

"MMI" means Merrymeeting, Inc., a Delaware corporation.                         

"MMI PLANS" means,  collectively,  each of MMI's or any of the MMI Subsidiaries'
benefit,  bonus,  pension,  profit  sharing,  deferred  compensation,  incentive
compensation,  stock  ownership,  stock purchase,  stock option,  phantom stock,
retirement,  vacation,  severance,  disability, death benefit,  hospitalization,
medical or other employee benefit arrangements, understandings or plans (whether
under Section  414(b),  (c), (m) or (o) of the Code or otherwise)  applicable to
any Employee or any Person affiliated with MMI or any of the MMI Subsidiaries.  

"MMI SUBSIDIARIES" means Acquisition.                                           

"MMI PERMITS" has the meaning set forth in SECTION 5.19(A).                     

"MMI PROPRIETARY RIGHTS" has the meaning set forth in SECTION 5.15.             

"MMI AND SUBSIDIARIES' PROPERTIES" has the meaning set forth in SECTION 5.11.   

"OTHER FILINGS" has the meaning set forth in SECTION 3.2.                       

"PAYING AGENT" has the meaning set forth in SECTION 2.5(C)(I).                  

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"PAYMENT FUND" has the meaning set forth in SECTION 2.5(C)(I).                  

"PERSON"  means any  individual,  corporation,  partnership,  limited  liability
company,  joint  venture,  trust,  unincorporated  organization,  other  form of
business or legal entity or Government Authority.                               

"PERMITTED  LIENS" means:  (A)  statutory  liens for  obligations  which are not
overdue, or are being contested in good faith; (B) rights of way disclosed on an
ALTA survey of any property; and (C) items listed on SCHEDULES 4.12 and 5.11, as
applicable.                                                                     

"PROXY STATEMENT" has the meaning set forth in SECTION 3.2.                     

"SEC" means United States Securities and Exchange Commission.                   

"SECURITIES ACT" means the Securities Act of 1933, as amended.                  

"SECURITIES LAWS" has the meaning set forth in SECTION 4.6(A).                  

"SUBSIDIARY"  means each  entity of which a Person,  directly  or through one or
more intermediary entities (i) has the right to elect a majority of the board of
directors  or other  governing  body,  (ii) owns a  majority  of the  issued and
outstanding  common stock,  or (iii) has the right to receive 50% or more of the
economic  value of any  business  or  activity  in which such entity is engaged;
PROVIDED,  HOWEVER,  that FAJ shall not be  deemed a  Subsidiary  of MMI for any
purposes hereof.                                                                

"TAX" means any  federal,  state,  local,  or foreign  income,  gross  receipts,
license, payroll,  employment,  excise, severance,  stamp, occupation,  premium,
windfall  profits,  environmental  (including  taxes  under Code  Section  54A),
customs  duties,  capital  stock,  profits,  withholding,  social  security  (or
similar),  unemployment,  disability,  real property,  personal property, sales,
use,  transfer,  registration,  value  added,  alternative  or  add-on  minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition  thereto,  whether disputed or not. The term "Tax" also includes any
amount payable pursuant to any tax sharing agreement to which any relevant party
is liable and any amount payable pursuant to any similar contract.              

"TAX  RETURN"  means any  return,  declaration,  report,  claim for  refund,  or
information  return or statement  relating to Taxes,  including  any schedule or
attachment thereto, and including any amendment thereof.                        

ARTICLE 2 

MERGER

 2.1 MERGER. On the Effective Date, Acquisition shall be merged with and
into FAJ, which shall be the surviving corporation, pursuant to the terms hereof
and the Certificate and Articles of Merger (the "CERTIFICATE OF MERGER"),       
attached as EXHIBIT 1 hereto (the "MERGER").                                    

    2.2 EFFECT OF THE MERGER. On the Effective Date, the separate existence of
Acquisition shall cease, and FAJ shall succeed to and possess all the           
properties, rights, privileges, powers, franchises and immunities, of a public  
as well as of a private nature, and be subject to all the debts, liabilities,   

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obligations, restrictions, disabilities and duties of Acquisition, all without  
further act or deed, as provided in the Arizona Business Corporation Act and the
Delaware General Corporation Law.                                               

   2.3 OFFICERS AND DIRECTORS OF FAJ. On the Effective Date, the name of the
surviving corporation shall be unchanged and the directors and executive        
officers of FAJ shall be as listed on SCHEDULE A.                               

    2.4 ARTICLES OF INCORPORATION AND BYLAWS. The Articles of Incorporation of
FAJ and the Bylaws of FAJ immediately prior to the Effective Date shall remain  
the Articles of Incorporation and Bylaws of FAJ.                                

2.5 STATUS AND CONVERSION OF SECURITIES.                              

(a) CONVERSION OF FAJ COMMON STOCK. Upon the merger becoming
effective, each share of Common Stock, par value $.01 per share, of FAJ ("FAJ   
COMMON STOCK") issued and outstanding on the Effective Date, other than shares  
to be cancelled pursuant to SECTION 2.5(B) (such shares of FAJ Common Stock     
other than those to be cancelled are collectively called the "FAJ SHARES"), by  
reason of the Merger and without any action on the part of the holders thereof, 
shall be converted into the right to receive an amount equal to $1.58 in cash   
(the "MERGER Consideration"). Provided, however, that the Merger Consideration  
shall be subject to equitable adjustment in the event of any stock split, stock 
dividend, reverse stock split, or other change in the number of shares of FAJ   
Common Stock outstanding prior to the Effective Date. No shares of FAJ Common   
Stock shall be deemed to be outstanding or to have any rights other than those  
set forth in this Section after the Effective Date, except that any shares of   
FAJ Common Stock held in the treasury of FAJ shall be cancelled and all rights  
in respect thereof shall cease to exist and no cash or securities or other      
property shall be issued in respect thereof.                                    

       (b) CANCELLATION OF FAJ COMMON STOCK HELD BY MMI. All shares of FAJ
Common Stock previously held by MMI will be cancelled as of the Effective Date. 

          (c) CONVERSION OF CAPITAL STOCK OF ACQUISITION. On the Effective Date,
each share of common stock, $.01 par value per share, of Acquisition shall be   
converted into one share of FAJ Common Stock.                                   

(d) PROCEDURE FOR PAYMENT.                                  

           (i) On the Effective Date and as a condition precedent to the
effectiveness of the Merger, (A) MMI will furnish to U. S. Stock Transfer       
Company, or such other stock transfer company as may be mutually acceptable to  
the parties (the "PAYING AGENT") a corpus (the "PAYMENT FUND") consisting of    
cash sufficient in the aggregate for the Paying Agent to make full payment of   
the Merger Consideration to the holders of all of the outstanding FAJ Shares and
(B) MMI will cause the Paying Agent to mail a letter of transmittal (with       
instructions for its use) in the form attached hereto as EXHIBIT 2 to each      
record holder of outstanding FAJ Shares for the holder to use in surrendering   
the certificates which represented its shares of FAJ Shares against payment of  
the Merger Consideration. No interest will accrue or be paid to the holder of   
any outstanding FAJ Common Stock.                                               

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             (ii) MMI may cause the Paying Agent to invest the cash included
in the Payment Fund in one or more of the permitted investments set forth on    
EXHIBIT 3 attached hereto; provided, however, that the terms and conditions of  
the investments shall be such as to permit the Paying Agent to make prompt      
payment of the Merger Consideration as necessary. MMI may cause the Paying Agent
to pay over to MMI or FAJ any net earnings with respect to the investments, and 
MMI will replace promptly any portion of the Payment Fund that the Paying Agent 
losses through such investments.                                                

         (iii) MMI may cause the Paying Agent to pay over to MMI any
portion of the Payment Fund (including any earnings thereon) remaining 180 days 
after the Effective Date, and thereafter all former stockholders shall be       
entitled to look to MMI (subject to abandoned property, escheat, and other      
similar laws) as general creditors thereof with respect to the cash payable upon
surrender of their certificates.                                                

              (iv) MMI shall pay all charges and expenses of the Paying Agent.

       (e) CLOSING OF TRANSFER RECORDS. After the close of business on the
Effective Date, transfers of FAJ Common Stock outstanding prior to the Effective
Date shall not be made on the stock transfer books of FAJ.                      

          (f) NO OTHER CAPITAL STOCK OR OPTIONS TO PURCHASE FAJ COMMON STOCK. On
the Effective Date, there shall be no outstanding shares of capital stock of FAJ
other than shares of FAJ Common Stock. In addition, on the Effective Date, there
shall be no outstanding options, warrants, or rights to purchase shares of FAJ  
Capital Stock.                                                                  

    2.6 FURTHER DOCUMENTS. From time to time, on and after the Effective Date,
as and when requested by FAJ or MMI or their successors or assigns, the         
appropriate officers and directors of Acquisition as of the Effective Date      
shall, for and on behalf and in the name of Acquisition or otherwise, execute   
and deliver all such deeds, bills of sale, assignments and other instruments,   
and shall take or cause to be taken such further or other actions as FAJ or MMI 
or their successors or assigns may deem necessary or desirable in order to      
confirm of record or otherwise to FAJ title to and possession of all of the     
properties, rights, privileges, powers, franchises and immunities of Acquisition
and otherwise to carry out fully the provisions and purposes of this Agreement. 

 2.7 EFFECTIVE DATE. The Merger shall become effective on such date (the
"EFFECTIVE DATE") as of which all applicable legal requirements have been       
fulfilled to consummate the Merger, including the filing and effectiveness of   
the Certificate of Merger with the applicable authorities in the states of      
Arizona and Delaware. The parties shall use their best efforts to consummate the
Merger at the earliest practicable date following the Closing.                  

 2.8 APPROVAL OF MERGER. The parties shall take all necessary actions to
file the Certificate of Merger with, and obtain the approval for such filing by,
the Arizona Corporation Commission, and the Secretary of State of the State of  
Delaware.                                                                       

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ARTICLE 3 

SHAREHOLDER APPROVALS; PROXY FILINGS

3.1 SHAREHOLDER APPROVALS. Meetings of the shareholders of FAJ and    
Acquisition shall be held in accordance with the laws of their respective states
of incorporation, on or before the Closing Date, in each case, among other      
things, to consider and act upon the adoption of this Agreement and the Merger. 

     3.2 PROXY STATEMENT. As promptly as practicable after the execution of this
Agreement, FAJ shall prepare and file with the SEC a preliminary proxy statement
by which the shareholders of FAJ will be asked to approve, in accordance with   
the rules of the AMEX and any applicable laws, the Merger, and such other items 
as the FAJ Board of Directors deems appropriate. The preliminary proxy          
statement, as initially filed with the SEC, as it may be amended and refiled    
with the SEC, and the definitive proxy statement filed with the SEC and mailed  
to the FAJ shareholders (such definitive proxy statement, the "PROXY            
STATEMENT"), shall be in form and substance reasonably satisfactory to MMI. FAJ 
shall respond to any comments of the SEC, shall mail the Proxy Statement to the 
FAJ shareholders, and shall cause any meeting of the FAJ Board of Directors or  
the FAJ shareholders required to be held to consider the Merger and the         
transactions contemplated hereby at the earliest practicable time. As promptly  
as practicable after the date hereof, FAJ shall prepare and file any other      
filings required under the Exchange Act, the Securities Act or any other        
federal, state or local laws relating to this Agreement and the transactions    
contemplated hereby, including any state takeover laws (the "OTHER FILINGS").   
FAJ will notify MMI promptly of the receipt of any comments from the SEC or its 
staff or any other governmental official and of any request by the SEC or its   
staff or any other government official for amendments or supplements to the     
Proxy Statement or any Other Filing or for additional information and will      
supply MMI with copies of all correspondence between FAJ or any of its          
representatives, on the one hand, and the SEC or its staff or any other         
government official, on the other hand, with respect to the Proxy Statement or  
any Other Filing. FAJ shall cause the Proxy Statement and any Other Filing to   
comply in all material respects with all applicable requirements of law. MMI    
shall provide FAJ all information about MMI and the MMI Subsidiaries required to
be included or incorporated by reference in the Proxy Statement or any Other    
Filing and shall otherwise cooperate with FAJ in taking the actions described in
this Section. Whenever any event occurs that is required to be set forth in an  
amendment or supplement to the Proxy Statement or any Other Filing, each party, 
as applicable, shall promptly inform the other party of such occurrence and     
cooperate in the preparation and filing with the SEC or its staff or any other  
government officials, or mailing to the FAJ shareholders, as required, such     
amendment or supplement.                                                        

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ARTICLE 4 

 REPRESENTATIONS AND WARRANTIES OF FAJ

FAJ represents and warrants to MMI and Acquisition as follows:        

4.1 ORGANIZATION AND QUALIFICATION, SUBSIDIARIES.                     

  (a) Each of FAJ and the FAJ Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the state of 
its incorporation. Each of FAJ and the FAJ Subsidiaries has all requisite       
corporate power and authority to own, operate, lease and encumber its properties
and carry on its business as now conducted.                                     

  (b) Each of FAJ and the FAJ Subsidiaries is duly qualified to do
business and is in good standing in each jurisdiction in which the ownership or 
lease of its properties or the conduct of its business requires such            
qualification, except for any such failures to so qualify that would not have a 
Material Adverse Effect with respect to FAJ or any FAJ Subsidiary.              

        (c) All of the outstanding shares of capital stock of, or other equity
interests in, each of the FAJ Subsidiaries are owned, directly or indirectly, by
FAJ in compliance with all applicable securities laws, free and clear of all    
Liens.                                                                          

  (d) The issued and outstanding shares of each of FAJ and the FAJ
Subsidiaries have been duly authorized and are validly issued, fully paid and   
nonassessable and free of preemptive rights. On the Effective Date, FAJ will    
have good and marketable title to the FAJ Subsidiaries' shares, free and clear  
of all Liens.                                                                   

4.2 DUE AUTHORIZATION. The execution, delivery and performance of this
Agreement and of all of the documents and instruments delivered in connection   
herewith by FAJ has been duly and validly authorized by all necessary corporate 
action on the part of FAJ. This Agreement has been duly executed and delivered  
on behalf of FAJ. This Agreement is, and the other documents and instruments    
required hereby will be, when executed and delivered by FAJ, the valid and      
binding obligations of FAJ, enforceable against FAJ in accordance with their    
respective terms, subject only to bankruptcy, insolvency, reorganization,       
moratorium or similar laws at the time in effect affecting the enforceability or
right of creditors generally and to general equitable principles which may limit
the right to obtain equitable remedies.                                         

4.3 CAPITALIZATION.                                                   

       (a) As of the date hereof, FAJ has 100,000,000 shares of common stock
authorized, and 8,957,660 shares of common stock issued and outstanding, and    
100,000,000 shares of preferred stock authorized, and no shares of preferred    
stock issued or outstanding. Neither FAJ nor any of the FAJ Subsidiaries has any
outstanding securities or bonds, debentures, notes or other obligations, the    
holders of which have the right to vote (or that are convertible into or        
exercisable for securities the holders of which have the right to vote) with    
respect to the transactions contemplated hereby. All issued and outstanding     
shares of FAJ and the FAJ Subsidiaries were issued in compliance with all       
applicable state and federal securities laws. Except as set forth on SCHEDULE   
4.3(A), there are no existing options, warrants, calls, subscriptions,          

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convertible securities, or other rights, agreements or commitments that obligate
FAJ or any FAJ Subsidiary to issue, transfer or sell any shares of capital stock
or other equity interests in FAJ or any FAJ Subsidiary.                         

       (b) Neither FAJ nor any of the FAJ Subsidiaries has issued or granted
securities convertible into or exchangeable for interests in FAJ or any FAJ     
Subsidiary, and, except as set forth on SCHEDULE 4.3(A), neither FAJ nor any FAJ
Subsidiary is a party to any outstanding commitment of any kind relating to, or 
any presently effective agreement or understanding with respect to, interests in
FAJ or any FAJ Subsidiary, whether issued or unissued.                          

  (c) Neither FAJ nor any of the FAJ Subsidiaries owns directly or
indirectly any material interest or investment (whether equity or debt) in any  
corporation, partnership, joint business venture, trust or other legal entity   
(other than the list set forth on SCHEDULE 4.3(C), which is a list of all of the
investments of FAJ and the FAJ Subsidiaries).                                   

4.4 APPROVAL; STOCK.                                                  

     (a) The Board of Directors of FAJ and a committee of "disinterested
directors" (as defined in Section 10-2741(D) of the Arizona Business Corporation
Act) have approved the Merger, and this Agreement, and the transactions         
contemplated hereby and have determined to recommend that the shareholders of   
FAJ vote in favor of and approve this Agreement and the Merger.                 

     (b) The Merger and the payment of the Merger Consideration will not
give any shareholder of FAJ or any other Person the right to demand payment for 
that shareholder's shares under the laws of the State of Arizona; any appraisal 
or similar rights under the laws of the State of Arizona; any dissenters' or    
similar rights under the laws of the State of Arizona; any preemptive or similar
right to purchase additional shares of FAJ's capital stock; or any rights under 
any shareholders' rights, "poison pill" or similar plan adopted by the FAJ Board
of Directors or the FAJ shareholders or contained in FAJ's Articles of          
Incorporation or other organizational documents.                                

   4.5 NO CONFLICTS; NO DEFAULTS; REQUIRED FILINGS AND CONSENTS. Neither the
execution and delivery by FAJ of this Agreement, nor the consummation by FAJ of 
the transactions contemplated hereby in accordance with the terms hereof, will: 

  (a) conflict with or result in a breach of any provisions of the
organizational documents of FAJ;                                                

 (b) result in a breach or violation of, a default under, or the
triggering of any payment or other obligation pursuant to, or accelerate vesting
or have any other consequence under, any stock option plan, option plan or      
similar compensation plan of FAJ or any grant or award made under any of the    
foregoing;                                                                      

        (c) violate or conflict with any statute, regulation, judgment, order,
writ, decree or injunction applicable to FAJ;                                   

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         (d) violate or conflict with or result in a breach of any provision of,
or constitute a default (or any event that, with notice or lapse of time or     
both, would constitute a default) under, or result in the termination or in a   
right of termination or cancellation of, or accelerate the performance required 
by, or result in the creation of any Lien upon any of the properties of FAJ     
under, or result in being declared void, voidable or without further binding    
effect, any of the terms, conditions or provisions of any note, bond, mortgage, 
indenture, deed or any franchise, license, permit, lease, contract, agreement or
other instrument, commitment or obligation to which FAJ is a party, or by which 
FAJ or any of its properties is bound or affected; or                           

        (e) require any consent, approval or authorization of, or declaration,
filing or registration with, any Government Authority or private organization,  
other than any filings required under the Securities Act, the Exchange Act, any 
state franchise laws or state securities laws ("BLUE SKY LAWS").                

4.6 SEC MATTERS AND ABSENCE OF UNDISCLOSED LIABILITIES.               

        (a) FAJ has delivered or made available to MMI, FAJ's Annual Report on
Form 10-K for the fiscal year ended June 30, 2000 filed by FAJ with the SEC and 
all exhibits, amendments and supplements thereto, including all documents       
incorporated by reference therein (collectively, the "FORM 10-K"), and each     
registration statement, report, proxy statement or information statement and all
exhibits thereto prepared by or relating to FAJ for the three years prior to the
date of this Agreement, each in the form (including exhibits and any amendments 
thereto) filed with the SEC (collectively the "FAJ REPORTS"). The FAJ Reports   
were filed with the SEC in a timely manner and constitute all forms, reports and
documents required to be filed by FAJ under the Securities Act and the Exchange 
Act and the rules and regulations promulgated thereunder (the "SECURITIES       
LAWS"). As of their respective dates, the FAJ Reports: (i) complied as to form  
in all material respects with the applicable requirements of the Securities     
Laws; and (ii) did not contain any untrue statement of a material fact or omit  
to state a material fact required to be stated therein or necessary to make the 
statements made therein, in the light of the circumstances under which they were
made, not misleading. There has been no violation asserted by any Government    
Authority with respect to any of the FAJ Reports that has not been resolved and,
to FAJ's knowledge, there have been no threatened assertions of violations.     

 (b) Each of the balance sheets (including the related notes and
schedules) included in or incorporated by reference into the Form 10-K and each 
Exchange Act report filed between the date such annual report was filed with the
SEC and the Closing Date (the Form 10-K and such reports collectively, the      
"CURRENT REPORTS") fairly present the consolidated financial position of FAJ and
its Subsidiaries as of its date and each of the statements of operations,       
shareholders' equity (deficit) and cash flows included in or incorporated by    
reference into the Current Reports (including any related notes and schedules)  
fairly present the consolidated results of operations, retained earnings or cash
flows, as the case may be, of FAJ and its Subsidiaries for the period covered   
thereby, in each case in accordance with GAAP and in accordance with Regulation 
S-X promulgated by the SEC, except as may be noted therein and except, in the   
case of the unaudited statements, for normal recurring year-end adjustments     
which would not, individually or in the aggregate, reasonably be expected to    
result in a Material Adverse Effect. All such balance sheets and statements are 
free of errors, omissions and misstatements, except for such errors, omissions  

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and misstatements that would not, individually or in the aggregate, have, or    
reasonably be expected to have, a Material Adverse Effect. None of the          
receivables of FAJ and its Subsidiaries are materially overstated, and no       
payables and other liabilities of FAJ and its Subsidiaries are materially       
understated, on any such balance sheet or statement.                            

        (c) Except as and to the extent set forth in the Current Reports or in
any Schedule hereto, to FAJ's knowledge, none of FAJ or any of its Subsidiaries 
has any material Liabilities, nor do there exist any circumstances that would,  
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect.                                                                 

4.7 LITIGATION; COMPLIANCE WITH LAW.                                  

   (a) SCHEDULE 4.7 sets forth a list and a brief description of all
pending Actions against FAJ and any of the FAJ Subsidiaries of which FAJ has    
notice, in which the amount of damages prayed for in any complaint or pleading  
exceeds $150,000 or that is reasonably likely to result in damages of $150,000  
or more.                                                                        

       (b) Except as set forth on SCHEDULE 4.7, there are no Actions pending
or, to the knowledge of FAJ threatened, against FAJ or any of the FAJ           
Subsidiaries, or any property (including proprietary rights) of FAJ or any of   
the FAJ Subsidiaries in any court or other forum or before any arbitrator of any
kind or before or by any Governmental Authority of which or FAJ has notice, in  
which the amount of damages prayed for in any complaint or pleading exceeds     
$150,000 or that is reasonably likely to result in damages of $150,000 or more. 

(c) To the knowledge of FAJ, neither FAJ nor any of the FAJ   
Subsidiaries is in violation of any statute, rule, regulation, order, writ,     
decree or injunction of any Government Authority or any body having jurisdiction
over them or any of their respective properties. SCHEDULE 4.7 sets forth all    
such violations known to FAJ except for violations that would not, individually 
or in the aggregate, have, or reasonably be expected to have, a Material Adverse
Effect.                                                                         

   4.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in SCHEDULE
4.8 or in any other Schedule hereto, since December 31, 2000, FAJ and each of   
the FAJ Subsidiaries has conducted its business only in the ordinary course of  
business, and there has not been (a) any change, circumstance or event that had 
or that could reasonably be expected to have a Material Adverse Effect or (b)   
any change in any accounting principles, practices or methods, except as        
required by changes in GAAP.                                                    

4.9 TAX MATTERS.                                                      

    (a) FAJ and each of the FAJ Subsidiaries has timely filed with the
appropriate taxing authority all Tax Returns required to be filed by it or has  
timely requested extensions and any such request has been granted and has not   
expired. Each such Tax Return is complete and accurate in all material respects 
and all information shown thereon is correct in all material respects. All Taxes
required to have been paid by FAJ or any of the FAJ Subsidiaries have been paid 
when due, except for Taxes contested in good faith and for which adequate       
reserves as required by GAAP have been taken and which are listed on SCHEDULE   
4.9. FAJ and each of the FAJ Subsidiaries have properly accrued their liability 

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for all Taxes for periods subsequent to the periods covered by such Tax Returns 
as required by GAAP. Neither FAJ nor any of the FAJ Subsidiaries has executed or
filed with the IRS or any other taxing authority any agreement now in effect    
extending the period for assessment or collection of any Tax. Except as set     
forth on SCHEDULE 4.9, neither FAJ nor any of the FAJ Subsidiaries is a party to
any pending action or proceeding by any taxing authority for assessment or      
collection of any Tax, and no claim for assessment or collection of any Tax has 
been asserted against any of them. Except as set forth on SCHEDULE 4.9, no claim
has been made by any authority in a jurisdiction where FAJ or any of the FAJ    
Subsidiaries does not file Tax Returns that it is or may be subject to taxation 
or reporting in that jurisdiction. There is no dispute or claim concerning any  
information, reporting or tax liability of FAJ or any of the FAJ Subsidiaries,  
(i) claimed or raised by any taxing authority in writing or (ii) as to which FAJ
has knowledge. Except as set forth on SCHEDULE 4.9, neither FAJ nor any of the  
FAJ Subsidiaries has had its tax returns audited by any Government Authority    
within the last four years.                                                     

       (b) No amount or other entitlement that could be received (whether in
cash or property or the vesting of property) as a result of any of the          
transactions contemplated hereby by any Employee of FAJ or any of the FAJ       
Subsidiaries or of any of their Affiliates who is a "disqualified individual"   
(as such term is defined in proposed Treasury Regulation Section 1.280G-1) under
any employment, severance or termination agreement, other compensation          
arrangement or plan currently in effect would be characterized as an "excess    
parachute payment" (as such term is defined in Section 280G(b)(2) of the Code). 

4.10 COMPLIANCE WITH AGREEMENTS.                                      

        (a) Neither FAJ nor any of the FAJ Subsidiaries is in default under or
in violation of any provision of its articles of incorporation or organization, 
or bylaws or operating agreement or any similar organizational document.        

 (b) FAJ and each of the FAJ Subsidiaries has filed all material
reports, registrations, documents and statements, together with any amendments  
and supporting materials required with respect thereto, that it was required to 
file with any Government Authority and all other material reports, documents,   
materials and statements required to be filed by it, and has paid all fees or   
assessments due and payable in connection therewith. There is no unresolved     
violation asserted by any Government Authority against FAJ or any of the FAJ    
Subsidiaries of which FAJ or Acquisition has received notice.                   

        (c) Neither FAJ nor any of the FAJ Subsidiaries is in default, and, to
FAJ's knowledge, no event has occurred that, with the giving of notice or the   
lapse of time or both, would constitute a default, under any Commitment to which
FAJ or any of the FAJ Subsidiaries are bound, whether as a party or otherwise or
in respect of any payment obligations thereunder except for defaults that would 
not, individually or in the aggregate, have, or reasonably be expected to have, 
a Material Adverse Effect with respect to FAJ or any FAJ Subsidiary. Except as  
set forth in SCHEDULE 4.10(C), neither FAJ nor any of the FAJ Subsidiaries is a 
party to any joint venture or partnership agreements. To FAJ's knowledge, there 
is no condition with respect to FAJ or the FAJ Subsidiaries that, individually  
or in the aggregate, could reasonably be expected to result in a Material       
Adverse Effect with respect to FAJ or any FAJ Subsidiary.                       

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     (d) SCHEDULE 4.10(D) sets forth a complete and accurate list of all
material agreements of FAJ and each of the FAJ Subsidiaries in effect on the    
date hereof. Each agreement or policy listed on SCHEDULE 4.10(D) is in full     
force and effect, and FAJ and each of the FAJ Subsidiaries and, to FAJ's        
knowledge, the other parties thereto, are in compliance with such agreements or 
policies. Solely for purposes of this Section, material agreements shall mean   
agreements that involve an expense to FAJ or any of the FAJ's Subsidiaries or   
annual revenue over $500,000.                                                   

4.11 FINANCIAL RECORDS; ARTICLES AND BYLAWS, CORPORATE RECORDS.       

         (a) The books of account and other financial records of FAJ and the FAJ
Subsidiaries are true and complete in all material respects, and have been      
maintained in accordance with GAAP.                                             

         (b) FAJ has delivered or made available to FAJ true and complete copies
of the Articles and the Bylaws of FAJ and each of the FAJ Subsidiaries, as      
amended to date, and the Articles of Organization, organizational documents and 
joint venture agreements of FAJ and each of the FAJ Subsidiaries, and all       
amendments thereto.                                                             

        (c) The corporate minute books and other records of proceedings of FAJ
and the FAJ Subsidiaries contain accurate records of all meetings and consents  
of the equity holders, directors and other governing bodies thereof and         
accurately reflect in all material respects all other corporate action of the   
directors and shareholders and any committees of the board of directors of FAJ  
and the FAJ Subsidiaries.                                                       

4.12 TITLE TO ASSETS; LIENS. FAJ and each FAJ Subsidiary has good and 
marketable title (insurable and indefeasible fee simple title in the case of    
owned real property), to all of the respective property, equipment and other    
assets owned by it (the "FAJ AND SUBSIDIARIES' PROPERTIES"), and, except as set 
forth on SCHEDULE 4.12, such assets are free and clear of any and all mortgages,
liens, security interests, charges, encumbrances or title defects of any nature 
whatsoever other than Permitted Liens and liens that would not, individually or 
in the aggregate, materially impair the use of such FAJ and Subsidiaries'       
Properties. SCHEDULE 4.12 contains a complete and accurate list of each parcel  
of real property owned, leased or used by FAJ and any FAJ Subsidiary in the     
conduct of its business. There are no pending or, to the best knowledge of FAJ, 
threatened zoning, condemnation or eminent domain proceedings, building, utility
or other moratoria, or injunctions or court orders which would materially       
adversely affect such real property. To the knowledge of FAJ, the current use of
the owned real property by FAJ and the FAJ Subsidiaries is permissible and in   
material compliance with all applicable zoning ordinances and other regulations 
of any Government Authority.                                                    

4.13 ENVIRONMENTAL MATTERS.                                           

        (a) FAJ and each of the FAJ Subsidiaries' ownership, operation and use
of its respective property have been and currently are in compliance in all     
material respects with all applicable Environmental Laws.                       

  (b) No Environmental Claim with respect to the operations or the
businesses of FAJ or the FAJ Subsidiaries, or with respect to any real property 
owned by FAJ or the FAJ Subsidiaries, has been asserted or, to FAJ's knowledge, 

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threatened, and, to FAJ's knowledge, no circumstances exist with respect to FAJ 
or any of the FAJ Subsidiaries or any such real property that would reasonably  
be expected to result in any Environmental Claim being asserted, in any such    
case, against (i) FAJ or any of the FAJ Subsidiaries, or (ii) any Person whose  
liability for any Environmental Claims FAJ or any of the FAJ Subsidiaries has or
may have retained or assumed either contractually or by operation of law.       

        (c) (i) Neither FAJ nor any of the FAJ Subsidiaries has been notified,
or has reason to anticipate being notified, of potential responsibility in      
connection with any site that has been placed on, or proposed to be placed on,  
the National Priorities List or its state or foreign equivalent pursuant CERCLA,
or analogous state or foreign laws, (ii) no Materials of Environmental Concern  
are present on, in or under any real property owned by FAJ or the FAJ           
Subsidiaries, (iii) neither FAJ nor any FAJ Subsidiary nor, to the knowledge of 
FAJ, any tenant of any such real property has released or arranged for the      
release of any Materials of Environmental Concern at or on any such real        
property, (iv) no underground storage tanks, surface disposal areas, pits,      
ponds, lagoons or open trenches are present at any such real property, (v) no   
transformers, capacitors or other equipment containing fluid with more than 50  
parts per million polychlorinated biphenyls are present at, on or under any such
real property, except for any such transformers, capacitors or other equipment  
owned by any utility company, and (vi) to FAJ's knowledge, no employee, agent,  
contractor, subcontractor or tenant of FAJ or any of the FAJ Subsidiaries is now
or has in the past been exposed to friable asbestos or asbestos-containing      
material at any such real property whether now or previously owned or occupied  
by FAJ or any of the FAJ Subsidiaries.                                          

4.14 EMPLOYEES AND BENEFIT PLANS.                                     

     (a) SCHEDULE 4.14(A) sets forth a complete and accurate list of all
employment agreements with Employees of FAJ and each of the FAJ Subsidiaries.   
Except for the Employees who are parties to such employment agreements, all of  
the Employees of FAJ and the FAJ Subsidiaries are employed in an at-will status 
(except for restrictions or limitations on the at-will status of such employees 
imposed by general principles of law or equity).                                

         (b) SCHEDULE 4.14(B) sets forth a complete and accurate list of each of
the FAJ Plans. Since December 31, 2000, there has been no adoption,             
modification, amendment or alteration of any FAJ Plan by FAJ or any of the FAJ  
Subsidiaries. All FAJ Plans, including any such plan that is an "employee       
benefit plan" as defined in Section 3(3) of ERISA, are in compliance, in all    
material respects, with all applicable requirements of law, including ERISA and 
the Code, and neither FAJ nor any of the FAJ Subsidiaries has any liabilities or
obligations with respect to any FAJ Plan, whether accrued, contingent or        
otherwise.                                                                      

4.15 LABOR MATTERS. Except as disclosed in SCHEDULE 4.15, there are no
pending or, to the knowledge of FAJ, threatened Actions or work stoppages       
relating to any Employee of FAJ or any FAJ Subsidiary. Neither FAJ nor any of   
the FAJ Subsidiaries is a party to any collective bargaining agreement with     
respect to Employees, and, to the knowledge of FAJ, there are no activities of  
any labor union seeking to represent or organize the employees of FAJ or any of 
the FAJ Subsidiaries. No unfair labor practice or labor arbitration, or race,   
sex, age, disability or other discrimination complaint is pending, nor is any   
such complaint, to the knowledge of FAJ, threatened against FAJ or any of the   

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FAJ Subsidiaries before the National Labor Relations Board, Equal Employment    
Opportunity Commission, Department of Labor or any other Governmental Authority,
and no grievance is pending, nor is any grievance, to the knowledge of FAJ,     
threatened against FAJ or any of the FAJ Subsidiaries. FAJ and each of the FAJ  
Subsidiaries is in compliance in all material respects with all applicable      
federal, state and local laws relating to employment, including without         
limitation, the provisions thereof relating to wages, non-discriminatory hiring 
and employment practices, collective bargaining, and payment of Social Security 
and Unemployment Compensation taxes or similar taxes, and neither FAJ nor any of
the FAJ Subsidiaries is liable for any arrears of wages or subject to any       
liabilities or penalties for failure to comply with any of the foregoing laws.  

 4.16 PROPRIETARY RIGHTS. Attached as SCHEDULE 4.16 is a list of (a) all
trademark, service mark or trade name registrations and all pending applications
for any such registration; (b) all patent and copyright registrations and all   
pending applications therefor; (c) all other trademarks, service marks, domain  
names, or trade names, whether or not registered; and (d) all licenses with     
respect thereto as well as rights or licenses to use any proprietary rights     
(including software licenses) of any other entities (the items in clauses (a),  
(b), (c) and (d) collectively, the "FAJ PROPRIETARY RIGHTS"), that are owned or 
used by FAJ or any of the FAJ Subsidiaries. To the knowledge of FAJ, the use of 
any of the Proprietary Rights by FAJ or any of the FAJ Subsidiaries has not     
infringed, is not infringing upon, and is not otherwise violating the rights of 
any Person or other entity in or to such FAJ Proprietary Rights or the asserted 
FAJ Proprietary Rights of others. No notices have been received by FAJ or any of
the FAJ Subsidiaries that the use of the FAJ Proprietary Rights by FAJ or any of
the FAJ Subsidiaries infringes upon or otherwise materially violates any rights 
of a person or other entity in or to such FAJ Proprietary Rights or the         
proprietary rights of others. To the knowledge of FAJ, no person or other entity
is infringing on the FAJ Proprietary Rights owned by FAJ or any of the FAJ      
Subsidiaries. The FAJ Proprietary Rights include all FAJ Proprietary Rights used
in, or necessary to, the conduct of the business of FAJ and each of the FAJ     
Subsidiaries.                                                                   

  4.17 INSURANCE. FAJ and each of the FAJ Subsidiaries maintains insurance
policies covering the assets, business, equipment, properties, operations and   
Employees of it, each of which insurance policies are of a type and in amounts  
customarily carried by Persons similar in size to FAJ or the FAJ Subsidiaries   
conducting businesses similar to those of FAJ or the FAJ Subsidiaries. SCHEDULE 
4.17 sets forth a list of all insurance coverage or policies currently          
maintained by FAJ and the FAJ Subsidiaries. All such coverage or policies shall 
be maintained in full force and effect until the Closing. There is no material  
claim by FAJ or any of the FAJ Subsidiaries pending under any of their insurance
policies as to which coverage has been questioned, denied or disputed by the    
underwriters of such policies.                                                  

    4.18 BROKERS OR FINDERS. No agent, broker, investment banker or other firm
or Person, including any of the foregoing that is an Affiliate of FAJ, is or    
will be entitled to any broker's or finder's fee or any other commission or     
similar fee agreed to or arranged by FAJ in connection with this Agreement or   
any of the transactions contemplated hereby.                                    

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4.19 GOVERNMENT APPROVALS; COMPLIANCE WITH LAWS AND ORDERS.           

     (a) FAJ and the FAJ Subsidiaries have obtained from the appropriate
Government Authorities that are charged with regulating or supervising any      
business conducted by FAJ and the FAJ Subsidiaries all permits, variances,      
exemptions, orders, approvals, certificates of authority and licenses necessary 
for the conduct of their business and operations as and to the extent currently 
conducted (the "FAJ PERMITS"), which FAJ Permits are valid and remain in full   
force and effect. FAJ and each of the FAJ Subsidiaries is in compliance in all  
material respects with the terms of all such FAJ Permits.                       

        (b) Neither FAJ nor any of the FAJ Subsidiaries has received notice of
or, to the knowledge of FAJ, is not subject to any Action, order or any         
complaint, proceeding or investigation of any Government Authority which is     
charged with regulating or supervising any business conducted by FAJ or any of  
the FAJ Subsidiaries, that is pending or threatened, that affects or which could
affect the effectiveness or validity of any such FAJ Permit or that could impair
the renewal thereof or that is likely to result in any such Action, agreement,  
consent decree or order or in any fine, penalty or other liability in excess of 
$20,000 or the forfeiture of the certificate of authority of FAJ or any of the  
FAJ Subsidiaries. As of the date hereof, neither FAJ nor any of the FAJ         
Subsidiaries is a party or subject to any Action, agreement, consent decree or  
order, or other understanding or arrangement with, or any directive of, any     
Government Authority that is charged with regulating or supervising any business
conducted by FAJ or any of the FAJ Subsidiaries that imposes any material       
restrictions on or otherwise affects in any material way the conduct of the     
business of FAJ.                                                                

     4.20 KNOWLEDGE DEFINED. As used herein, the phrase "to FAJ's knowledge" (or
words of similar import) means the actual knowledge, after reasonable inquiry,  
of any of the chief executive officers, chief financial officers or directors of
each of FAJ and the FAJ Subsidiaries.                                           

4.21 PROXY STATEMENT. The Proxy Statement, at the date mailed to the  
shareholders of FAJ and at the time of their meeting to consider the same, (i)  
will comply in all material respects with the applicable requirements of the    
Exchange Act and the rules and regulations thereunder and (ii) will not contain 
any untrue statement of a material fact or omit to state any material fact      
required to be stated therein or necessary in order to make the statements      
therein, in the light of the circumstances under which they were made, not      
misleading (except with respect to information that has been supplied to FAJ    
from MMI for inclusion in the Proxy Statement).                                 

ARTICLE 5 

 REPRESENTATIONS AND WARRANTIES OF MMI AND ACQUISITION

MMI and Acquisition each hereby represents and warrants to FAJ as follows:      

5.1 ORGANIZATION AND QUALIFICATION, SUBSIDIARIES.                     

(a) Each of MMI and the MMI Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the state of 
its incorporation. Each of MMI and the MMI Subsidiaries has all requisite       
corporate power and authority to own, operate, lease and encumber its properties
and carry on its business as now conducted.                                     

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  (b) Each of MMI and the MMI Subsidiaries is duly qualified to do
business and is in good standing in each jurisdiction in which the ownership or 
lease of its properties or the conduct of its business requires such            
qualification, except for any such failures to so qualify that would not have a 
Material Adverse Effect with respect to MMI or any MMI Subsidiary.              

        (c) All of the outstanding shares of capital stock of, or other equity
interests in, each of the MMI Subsidiaries are owned, directly or indirectly, by
MMI in compliance with all applicable securities laws, free and clear of all    
Liens.                                                                          

  (d) The issued and outstanding shares of each of MMI and the MMI
Subsidiaries have been duly authorized and are validly issued, fully paid and   
nonassessable and free of preemptive rights. On the Effective Date, MMI will    
have good and marketable title to the MMI Subsidiaries' shares, free and clear  
of all Liens.                                                                   

      (e) The Merger will not give any Person any dissenters, appraisal or
similar rights or any preemptive or similar right to purchase additional shares 
of capital stock of MMI or any of the MMI Subsidiaries, or any rights under any 
shareholders' rights, "poison pill" or similar plan.                            

5.2 DUE AUTHORIZATION. The execution, delivery and performance of this
Agreement and of all of the documents and instruments delivered in connection   
herewith by MMI and Acquisition has been duly and validly authorized by all     
necessary corporate action on the part of MMI and Acquisition. This Agreement   
has been duly executed and delivered on behalf of MMI and Acquisition. This     
Agreement is, and the other documents and instruments required hereby will be,  
when executed and delivered by MMI and Acquisition, the valid and binding       
obligation of MMI and Acquisition, enforceable against MMI and Acquisition in   
accordance with their respective terms, subject only to bankruptcy, insolvency, 
reorganization, moratorium or similar laws at the time in effect affecting the  
enforceability or right of creditors generally and to general equitable         
principles which may limit the right to obtain equitable remedies.              

   5.3 NO CONFLICTS; NO DEFAULTS; REQUIRED FILINGS AND CONSENTS. Neither the
execution and delivery by MMI or Acquisition of this Agreement, nor the         
consummation by MMI or Acquisition of the transactions contemplated hereby in   
accordance with the terms hereof, will:                                         

  (a) conflict with or result in a breach of any provisions of the
organizational documents of Acquisition or MMI;                                 

 (b) result in a breach or violation of, a default under, or the
triggering of any payment or other obligation pursuant to, or accelerate vesting
or have any other consequence under, any stock option plan, option plan or      
similar compensation plan of Acquisition or MMI or any grant or award made under
any of the foregoing;                                                           

        (c) violate or conflict with any statute, regulation, judgment, order,
writ, decree or injunction applicable to Acquisition or MMI;                    

         (d) violate or conflict with or result in a breach of any provision of,
or constitute a default (or any event that, with notice or lapse of time or     
both, would constitute a default) under, or result in the termination or in a   

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right of termination or cancellation of, or accelerate the performance required 
by, or result in the creation of any Lien upon any of the properties of         
Acquisition or MMI under, or result in being declared void, voidable or without 
further binding effect, any of the terms, conditions or provisions of any note, 
bond, mortgage, indenture, deed or any franchise, license, permit, lease,       
contract, agreement or other instrument, commitment or obligation to which      
Acquisition or MMI is a party, or by which Acquisition or MMI or any of their   
properties is bound or affected; or                                             

        (e) require any consent, approval or authorization of, or declaration,
filing or registration with, any Government Authority or private organization,  
other than any filings required under the Securities Act, the Exchange Act, or  
Blue Sky Laws.                                                                  

5.4 CAPITAL STOCK.                                                    

     (a) As of the date hereof, there are 3,000 and 10,000,000 shares of
common stock authorized and 2,000 and 3,699,147 shares of common stock issued   
and outstanding of each of MMI and Aquisition, respectively, and no and         
1,000,000 shares of preferred stock authorized, and no shares of preferred stock
issued and outstanding of MMI and Acquisition. Neither MMI nor any of the MMI   
Subsidiaries has any outstanding securities or bonds, debentures, notes or other
obligations, the holders of which have the right to vote (or that are           
convertible into or exercisable for securities the holders of which have the    
right to vote) with respect to the transactions contemplated hereby. All issued 
and outstanding shares of MMI and the MMI Subsidiaries were issued in compliance
with all applicable state and federal securities laws. There are no existing    
options, warrants, calls, subscriptions, convertible securities, or other       
rights, agreements or commitments that obligate MMI or any MMI Subsidiary to    
issue, transfer or sell any shares of capital stock or other equity interests in
MMI or any MMI Subsidiary.                                                      

       (b) Neither MMI nor any of the MMI Subsidiaries has issued or granted
securities convertible into or exchangeable for interests in MMI or any MMI     
Subsidiary, and, except as set forth on SCHEDULE 5.4(A), neither MMI nor any MMI
Subsidiary is a party to any outstanding commitment of any kind relating to, or 
any presently effective agreement or understanding with respect to, interests in
MMI or any MMI Subsidiary, whether issued or unissued.                          

  (c) Neither MMI nor any of the MMI Subsidiaries owns directly or
indirectly any material interest or investment (whether equity or debt) in any  
corporation, partnership, joint business venture, trust or other legal entity   
(other than the list set forth on SCHEDULE 5.4(C), which is a list of all of the
investments of MMI and the MMI Subsidiaries).                                   

5.5 FINANCIAL STATEMENTS AND ABSENCE OF UNDISCLOSED LIABILITIES.      

(a) MMI has delivered to FAJ financial statements for MMI and 
Acquisition (the "FINANCIAL STATEMENTS") for the two calendar years prior to the
date of this Agreement or for the period of its incorporation if such period is 
shorter, which are attached as SCHEDULE 5.5.                                    

        (b) The consolidated balance sheet of MMI (including the related notes
and schedules), included in the Financial Statements, have been prepared to     
reflect the financial position and results of operations of MMI and Acquisition 
on a carve-out basis and not to reflect MMI and all majority-owned subsidiaries 

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on a consolidated basis. Accordingly, FAJ has been excluded. Such statements    
fairly present the financial position of each of MMI and Acquisition as of its  
date, and the consolidated statement of operations, shareholders' equity        
(deficit) and cash flows included in the Financial Statements (including any    
related notes and schedules) fairly present the results of operations, retained 
earnings or cash flows, as the case may be, of MMI and Acquisition for the      
periods covered thereby, in each case in accordance with GAAP consistently      
applied during the periods involved, except as may be noted therein or that     
would not, individually or in the aggregate, reasonably be expected to result in
a Material Adverse Effect with respect to MMI or any MMI Subsidiary. All such   
balance sheets and statements are free of errors, omissions and misstatements   
except for such errors, omissions and misstatements that would not, individually
or in the aggregate, have, or reasonably be expected to have, a Material Adverse
Effect with respect to MMI or any MMI Subsidiary. None of the receivables of    
each of MMI and the MMI Subsidiaries are materially overstated, and no payables 
and other liabilities of MMI and each of the MMI Subsidiaries are materially    
understated, on any such balance sheet or statement.                            

       (c) Except as and to the extent set forth in the Financial Statements
or in any Schedule hereto, to MMI's knowledge, none of MMI or Acquisition has   
any material Liabilities, nor do there exist any circumstances that would,      
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect with respect to MMI or any MMI Subsidiary.                       

      (d) Except as and to the extent set forth in SCHEDULE 5.5(D) hereto,
there are no intercompany transactions that would be eliminated in consolidation
should a consolidated financial statement, consolidating MMI and Acquisition, be
prepared for each of the two calendar years prior to the date of this Agreement,
the date hereof, or the Closing Date.                                           

5.6 LITIGATION; COMPLIANCE WITH LAW.                                  

   (a) SCHEDULE 5.6 sets forth a list and a brief description of all
pending Actions against MMI and any of the MMI Subsidiaries or the MMI Shares of
which MMI or Acquisition have notice, in which the amount of damages prayed for 
in any complaint or pleading exceeds $150,000 or that is reasonably likely to   
result in damages of $150,000 or more.                                          

       (b) Except as set forth on SCHEDULE 5.6, there are no Actions pending
or, to the knowledge of MMI or Acquisition threatened, against MMI or any of the
MMI Subsidiaries, or any property (including proprietary rights) of MMI or any  
of the MMI Subsidiaries in any court or other forum or before any arbitrator of 
any kind or before or by any Governmental Authority of which Acquisition or MMI 
have notice, in which the amount of damages prayed for in any complaint or      
pleading exceeds $150,000 or that is reasonably likely to result in damages of  
$150,000 or more.                                                               

        (c) To the knowledge of MMI or Acquisition, neither MMI nor any of the
MMI Subsidiaries is in violation of any statute, rule, regulation, order, writ, 
decree or injunction of any Government Authority or any body having jurisdiction
over them or any of their respective properties. SCHEDULE 5.6 sets forth all    
such violations known to MMI or Acquisition except for violations that would    
not, individually or in the aggregate, have, or reasonably be expected to have, 
a Material Adverse Effect.                                                      

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   5.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in SCHEDULE
5.7 or in any other Schedule hereto, MMI and each of the MMI Subsidiaries has   
conducted its business only in the ordinary course of business, and there has   
not been (a) any change, circumstance or event that had or that could reasonably
be expected to have a Material Adverse Effect or (b) any change in any          
accounting principles, practices or methods, except as required by changes in   
GAAP.                                                                           

5.8 TAX MATTERS.                                                      

    (a) MMI and each of the MMI Subsidiaries has timely filed with the
appropriate taxing authority all Tax Returns required to be filed by it or has  
timely requested extensions and any such request has been granted and has not   
expired. Each such Tax Return is complete and accurate in all material respects 
and all information shown thereon is correct in all material respects. All Taxes
required to have been paid by MMI or any of the MMI Subsidiaries have been paid 
when due, except for Taxes contested in good faith and for which adequate       
reserves as required by GAAP have been taken and which are listed on SCHEDULE   
5.8. MMI and each of the MMI Subsidiaries have properly accrued their liability 
for all Taxes for periods subsequent to the periods covered by such Tax Returns 
as required by GAAP. Neither MMI nor any of the MMI Subsidiaries has executed or
filed with the IRS or any other taxing authority any agreement now in effect    
extending the period for assessment or collection of any Tax. Except as set     
forth on SCHEDULE 5.8, neither MMI nor any of the MMI Subsidiaries is a party to
any pending action or proceeding by any taxing authority for assessment or      
collection of any Tax, and no claim for assessment or collection of any Tax has 
been asserted against any of them. Except as set forth on SCHEDULE 5.8, no claim
has been made by any authority in a jurisdiction where MMI or any of the MMI    
Subsidiaries does not file Tax Returns that it is or may be subject to taxation 
or reporting in that jurisdiction. There is no dispute or claim concerning any  
information, reporting or tax liability of MMI or any of the MMI Subsidiaries,  
(i) claimed or raised by any taxing authority in writing or (ii) as to which MMI
or Acquisition has knowledge. Except as set forth on SCHEDULE 5.8, neither MMI  
nor any of the MMI Subsidiaries has had its tax returns audited by any          
Government Authority within the last four years.                                

       (b) No amount or other entitlement that could be received (whether in
cash or property or the vesting of property) as a result of any of the          
transactions contemplated hereby by any Employee of MMI or any of the MMI       
Subsidiaries or of any of their Affiliates who is a "disqualified individual"   
(as such term is defined in proposed Treasury Regulation Section 1.280G-1) under
any employment, severance or termination agreement, other compensation          
arrangement or plan currently in effect would be characterized as an "excess    
parachute payment" (as such term is defined in Section 280G(b)(2) of the Code). 

5.9 COMPLIANCE WITH AGREEMENTS.                                       

        (a) Neither MMI nor any of the MMI Subsidiaries is in default under or
in violation of any provision of its articles of incorporation or organization, 
or bylaws or operating agreement or any similar organizational document.        

 (b) MMI and each of the MMI Subsidiaries has filed all material
reports, registrations, documents and statements, together with any amendments  
and supporting materials required with respect thereto, that it was required to 

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file with any Government Authority and all other material reports, documents,   
materials and statements required to be filed by it, and has paid all fees or   
assessments due and payable in connection therewith. There is no unresolved     
violation asserted by any Government Authority against MMI or any of the MMI    
Subsidiaries of which MMI or Acquisitionhas received notice.                    

        (c) Neither MMI nor any of the MMI Subsidiaries is in default, and, to
MMI or Acquisition's knowledge, no event has occurred that, with the giving of  
notice or the lapse of time or both, would constitute a default, under any      
Commitment to which MMI or any of the MMI Subsidiaries are bound, whether as a  
party or otherwise or in respect of any payment obligations thereunder except   
for defaults that would not, individually or in the aggregate, have, or         
reasonably be expected to have, a Material Adverse Effect with respect to MMI or
any MMI Subsidiary. Except as set forth in SCHEDULE 5.9(C), neither MMI nor any 
of the MMI Subsidiaries is a party to any joint venture or partnership          
agreements. To MMI and Acquisition's knowledge, there is no condition with      
respect to MMI or the MMI Subsidiaries that, individually or in the aggregate,  
could reasonably be expected to result in a Material Adverse Effect with respect
to MMI or any MMI Subsidiary.                                                   

    (d) SCHEDULE 5.9(D) sets forth a complete and accurate list of all
material agreements of MMI and each of the MMI Subsidiaries in effect on the    
date hereof. Each agreement or policy listed on SCHEDULE 5.9(D) is in full force
and effect, and MMI and each of the MMI Subsidiaries and, to MMI or             
Acquisition's knowledge, the other parties thereto, are in compliance with such 
agreements or policies. Solely for purposes of this Section, material agreements
shall mean agreements that involve an expense to MMI or any of the MMI          
Subsidiaries or annual revenue over $500,000.                                   

5.10 FINANCIAL RECORDS; ARTICLES AND BYLAWS, CORPORATE RECORDS.       

         (a) The books of account and other financial records of MMI and the MMI
Subsidiaries are true and complete in all material respects, and have been      
maintained in accordance with GAAP.                                             

         (b) MMI has delivered or made available to FAJ true and complete copies
of the Articles and the Bylaws of MMI and each of the MMI Subsidiaries, as      
amended to date, and the Articles of Organization, organizational documents and 
joint venture agreements of MMI and each of the MMI Subsidiaries, and all       
amendments thereto.                                                             

        (c) The corporate minute books and other records of proceedings of MMI
and the MMI Subsidiaries contain accurate records of all meetings and consents  
of the equity holders, directors and other governing bodies thereof and         
accurately reflect in all material respects all other corporate action of the   
directors and shareholders and any committees of the board of directors of MMI  
and the MMI Subsidiaries.                                                       

5.11 TITLE TO ASSETS; LIENS. MMI and each MMI Subsidiary has good and 
marketable title (insurable and indefeasible fee simple title in the case of    
owned real property), to all of the respective property, equipment and other    
assets owned by it (the "MMI AND SUBSIDIARIES' PROPERTIES"), and, except as set 
forth on SCHEDULE 5.11, such assets are free and clear of any and all mortgages,

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liens, security interests, charges, encumbrances or title defects of any nature 
whatsoever other than Permitted Liens and liens that would not, individually or 
in the aggregate, materially impair the use of such MMI and Subsidiaries'       
Properties. SCHEDULE 5.11 contains a complete and accurate list of each parcel  
of real property owned, leased or used by MMI and any MMI Subsidiary in the     
conduct of its business. There are no pending or, to the best knowledge of MMI  
or Acquisition, threatened zoning, condemnation or eminent domain proceedings,  
building, utility or other moratoria, or injunctions or court orders that would 
materially adversely affect such real property. To the knowledge of MMI or      
Acquisition, the current use of the owned real property by MMI and the MMI      
Subsidiaries is permissible and in material compliance with all applicable      
zoning ordinances and other regulations of any Government Authority.            

5.12 ENVIRONMENTAL MATTERS.                                           

        (a) MMI and each of the MMI Subsidiaries' ownership, operation and use
of its respective property have been and currently are in compliance in all     
material respects with all applicable Environmental Laws.                       

  (b) No Environmental Claim with respect to the operations or the
businesses of the MMI or the MMI Subsidiaries, or with respect to any real      
property owned by MMI or the MMI Subsidiaries, has been asserted or, to         
Acquisition's knowledge, threatened, and, to MMI and Acquisition's knowledge, no
circumstances exist with respect to MMI or any of the MMI Subsidiaries or any   
such real property that would reasonably be expected to result in any           
Environmental Claim being asserted, in any such case, against (i) MMI or any of 
the MMI Subsidiaries, or (ii) any Person whose liability for any Environmental  
Claims MMI or any of the MMI Subsidiaries has or may have retained or assumed   
either contractually or by operation of law.                                    

        (c) (i) Neither MMI nor any of the MMI Subsidiaries has been notified,
or has reason to anticipate being notified, of potential responsibility in      
connection with any site that has been placed on, or proposed to be placed on,  
the National Priorities List or its state or foreign equivalent pursuant CERCLA,
or analogous state or foreign laws, (ii) no Materials of Environmental Concern  
are present on, in or under any real property owned by MMI or the MMI           
Subsidiaries, (iii) neither MMI nor any MMI Subsidiary nor, to the knowledge of 
MMI or Acquisition, any tenant of any such real property has released or        
arranged for the release of any Materials of Environmental Concern at or on any 
such real property, (iv) no underground storage tanks, surface disposal areas,  
pits, ponds, lagoons or open trenches are present at any such real property, (v)
no transformers, capacitors or other equipment containing fluid with more than  
50 parts per million polychlorinated biphenyls are present at, on or under any  
such real property, except for any such transformers, capacitors or other       
equipment owned by any utility company, and (vi) to MMI or Acquisition's        
knowledge, no employee, agent, contractor, subcontractor or tenant of MMI or any
of the MMI Subsidiaries is now or has in the past been exposed to friable       
asbestos or asbestos-containing material at any such real property whether now  
or previously owned or occupied by MMI or any of the MMI Subsidiaries.          

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5.13 EMPLOYEES AND BENEFIT PLANS.                                     

     (a) SCHEDULE 5.13(A) sets forth a complete and accurate list of all
employment agreements with Employees of MMI and each of the MMI Subsidiaries.   
Except for the Employees who are parties to such employment agreements, all of  
the Employees of MMI and the MMI Subsidiaries are employed in an at-will status 
(except for restrictions or limitations on the at-will status of such employees 
imposed by general principles of law or equity).                                

         (b) SCHEDULE 5.13(B) sets forth a complete and accurate list of each of
the MMI Plans. There has been no adoption, modification, amendment or alteration
of any MMI Plan by MMI or any of the MMI Subsidiaries. All MMI Plans, including 
any such plan that is an "employee benefit plan" as defined in Section 3(3) of  
ERISA, are in compliance, in all material respects, with all applicable         
requirements of law, including ERISA and the Code, and neither MMI nor any of   
the MMI Subsidiaries has any liabilities or obligations with respect to any MMI 
Plan, whether accrued, contingent or otherwise.                                 

5.14 LABOR MATTERS. Except as disclosed in SCHEDULE 5.14, there are no
pending or, to the knowledge of MMI or Acquisition, threatened Actions or work  
stoppages relating to any Employee of MMI or any MMI Subsidiary. Neither MMI nor
any of the MMI Subsidiaries is a party to any collective bargaining agreement   
with respect to Employees, and, to the knowledge of MMI or Acquisition, there   
are no activities of any labor union seeking to represent or organize the       
employees of MMI or any of the MMI Subsidiaries. No unfair labor practice or    
labor arbitration, or race, sex, age, disability or other discrimination        
complaint is pending, nor is any such complaint, to the knowledge of MMI or     
Acquisition, threatened against MMI or any of the MMI Subsidiaries before the   
National Labor Relations Board, Equal Employment Opportunity Commission,        
Department of Labor or any other Governmental Authority, and no grievance is    
pending, nor is any grievance, to the knowledge of MMI or Acquisition,          
threatened against MMI or any of the MMI Subsidiaries. MMI and each of the MMI  
Subsidiaries is in compliance in all material respects with all applicable      
federal, state and local laws relating to employment, including without         
limitation, the provisions thereof relating to wages, non-discriminatory hiring 
and employment practices, collective bargaining, and payment of Social Security 
and Unemployment Compensation taxes or similar taxes, and neither MMI nor any of
the MMI Subsidiaries is liable for any arrears of wages or subject to any       
liabilities or penalties for failure to comply with any of the foregoing laws.  

 5.15 PROPRIETARY RIGHTS. Attached as SCHEDULE 5.15 is a list of (a) all
trademark, service mark or trade name registrations and all pending applications
for any such registration; (b) all patent and copyright registrations and all   
pending applications therefor; (c) all other trademarks, service marks, domain  
names, or trade names, whether or not registered; and (d) all licenses with     
respect thereto as well as rights or licenses to use any proprietary rights     
(including software licenses) of any other entities (the items in clauses (a),  
(b), (c) and (d) collectively, the "MMI PROPRIETARY RIGHTS"), that are owned or 
used by MMI or any of the MMI Subsidiaries. To the knowledge of MMI or          
Acquisition, the use of any of the proprietary rights by MMI or any of the MMI  
Subsidiaries has not infringed, is not infringing upon, and is not otherwise    
violating the rights of any Person or other entity in or to such Proprietary    
Rights or the asserted Proprietary Rights of others. No notices have been       
received by MMI or any of the MMI Subsidiaries that the use of the MMI          
Proprietary Rights by MMI or any of the MMI Subsidiaries infringes upon or      
otherwise materially violates any rights of a person or other entity in or to   
such MMI Proprietary Rights or the proprietary rights of others. To the         
knowledge of MMI or Acquisition, no person or other entity is infringing on the 

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MMI Proprietary Rights owned by MMI or any of the MMI Subsidiaries. The MMI     
Proprietary Rights include all proprietary rights used in, or necessary to, the 
conduct of the business of MMI and each of the MMI Subsidiaries.                

  5.16 INSURANCE. MMI and each of the MMI Subsidiaries maintains insurance
policies covering the assets, business, equipment, properties, operations and   
Employees of it, each of which insurance policies are of a type and in amounts  
customarily carried by Persons similar in size to MMI or the MMI Subsidiaries   
conducting businesses similar to those of MMI or the MMI Subsidiaries. SCHEDULE 
5.16 sets forth a list of all insurance coverage or policies currently          
maintained by MMI and the MMI Subsidiaries. All such coverage or policies shall 
be maintained in full force and effect until the Closing. There is no material  
claim by MMI or any of the MMI Subsidiaries pending under any of their insurance
policies as to which coverage has been questioned, denied or disputed by the    
underwriters of such policies.                                                  

5.17 TAKEOVER STATUTES. No "fair price," "moratorium," "business      
combination," "control share acquisition" or other anti-takeover statute or     
similar statute or regulation enacted by the states of Delaware or Ohio applies 
to the transactions contemplated by this Agreement. All actions have been taken 
to ensure that no statute or regulation of the states of Delaware or Ohio,      
including any "business combination act," limits MMI's ability to engage in     
further transactions with FAJ.                                                  

5.18 BROKERS AND FINDERS. No agent, broker, investment banker or other
Person, including any of the foregoing that is an Affiliate of MMI or any of the
MMI Subsidiaries, is or will be entitled to any broker's or finder's fee or any 
other commission or similar fee agreed to or arranged by MMI or any of the MMI  
Subsidiaries in connection with this Agreement or any of the transactions       
contemplated hereby.                                                            

5.19 GOVERNMENT APPROVALS; COMPLIANCE WITH LAWS AND ORDERS.           

(a) MMI and each of the MMI Subsidiaries has obtained from the
appropriate Government Authority that is charged with regulating or supervising 
any business conducted by MMI or any of the MMI Subsidiaries all material       
permits, variances, exemptions, orders, approvals, certificates of authority and
licenses necessary for the conduct of its business and operations as and to the 
extent currently conducted (the "MMI PERMITS"), which MMI Permits are valid and 
remain in full force and effect. MMI and the MMI Subsidiaries are in compliance 
in all material respects with the terms of all such MMI Permits.                

        (b) Neither MMI nor any of the MMI Subsidiaries has received notice of
or, to the knowledge of MMI or Acquisition, is subject to any Action, order or  
any complaint, proceeding or investigation of any Government Authority that is  
charged with regulating or supervising any business conducted by MMI or any of  
the MMI Subsidiaries, that is pending or threatened, that affects or that could 
affect the effectiveness or validity of any MMI Permit or that could impair the 
renewal thereof or that is likely to result in any such Action, agreement,      
consent decree or order or in any fine, penalty or other liability in excess of 
$20,000 or the forfeiture of a certificate of authority of MMI or any of the MMI
Subsidiaries. As of the date hereof, neither MMI nor any of the MMI Subsidiaries
is a party or subject to any Action, agreement, consent decree or order, or     
other understanding or arrangement with, or any directive of, any Government    

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Authority that is charged with regulating or supervising any business conducted 
by MMI or any of the MMI Subsidiaries that imposes any material restrictions on 
or otherwise affects in any material way the conduct of the business of MMI or  
any of the MMI Subsidiaries, as currently conducted.                            

     5.20 KNOWLEDGE DEFINED. As used herein, the phrase "to MMI or Acquisition's
knowledge" (or words of similar import) means the actual knowledge, after       
reasonable inquiry, of any of the chief executive officers, chief financial     
officers or directors of each of MMI and the MMI Subsidiaries.                  

5.21 PLACEMENT.                                                       

   (a) MMI acknowledges that the FAJ Shares being acquired are being
acquired for Acquisition's own account without a view to public distribution or 
resale and that Acquisition has no contract, undertaking, agreement, or         
arrangement to sell or otherwise transfer or dispose of the FAJ Shares or any   
portion thereof to any other person or entity.                                  

       (b) MMI agrees that it will not sell or otherwise transfer or dispose
of the FAJ Shares, or any portion thereof, unless such FAJ Shares are registered
under the Securities Act and any applicable state securities laws or MMI obtains
an opinion of reputable securities counsel that such FAJ Shares may be sold in  
reliance on an exemption from such registration requirements.                   

        (c) MMI understands that no federal or state agency including the SEC,
the Arizona Corporation Commission or the securities commission or authorities  
of any other state has approved or disapproved the FAJ Shares, passed upon or   
endorsed the merits of the Merger or the adequacy of the disclosure given in    
connection with the offering, or made any finding or determination as to the    
fairness of the FAJ Shares for investment.                                      

   5.22 NO CONFLICTING INFORMATION. MMI acknowledges that it owns a majority
of the issued and outstanding capital stock of FAJ. In addition, certain        
officers of MMI are also officers of FAJ and manage certain day-to-day matters  
for FAJ. Accordingly, MMI has, and has access to, certain information regarding 
the business, operations and financial condition of FAJ.                        

     5.23 PROXY STATEMENT. None of the information in this Agreement relating to
MMI or Acquisition or otherwise supplied or to be supplied by MMI, including    
information for inclusion or incorporation by reference in the Proxy Statement, 
as of the date hereof and as of the date such information was provided to FAJ   
for inclusion in the Proxy Statement to be mailed to the FAJ's shareholders,    
contains or will contain any untrue statement of a material fact or omit to     
state any material fact required to be stated herein or therein or necessary to 
make the statements herein or therein, in light of the circumstances under which
they are made, not misleading. MMI will advise FAJ in writing of any material   
changes in any such information or if any such information contains any untrue  
statements of material facts or omits to state any material facts required to be
stated herein or therein or necessary to make the statements herein or therein, 
in light of the circumstances under which they are made, not misleading.        

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ARTICLE 6 

 COVENANTS RELATING TO THE CLOSING

6.1 TAKING OF NECESSARY ACTION. Each party hereto agrees to use its   
commercially reasonable best efforts promptly to take or cause to be taken all  
action and promptly to do or cause to be done all things reasonably necessary,  
proper or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement, subject to the terms 
and conditions of this Agreement.                                               

6.2 PUBLIC ANNOUNCEMENT; CONFIDENTIALITY.                             

         (a) For as long as this Agreement is in effect, no party shall issue or
cause the publication of any press release or any other announcement with       
respect to this Agreement, or the transactions contemplated hereby or thereby   
without the consent of the others (which consent shall not be unreasonably      
withheld or delayed), except when, in the reasonable judgment of FAJ, such      
release or announcement is required by applicable law or pursuant to any listing
agreement with, or the rules or regulations of, any securities exchange or any  
other regulatory requirement.                                                   

         (b) Each party agrees that all information provided to another party or
any of its representatives pursuant to this Agreement shall be kept             
confidential, and shall not disclose such information to any Persons other than 
the directors, officers, employees, financial advisors, legal advisors,         
accountants, consultants and affiliates of such party who reasonably need to    
have access to the confidential information and who are advised of the          
confidential nature of such information, but the foregoing obligation shall not 
(i) relate to any information that (A) is or becomes generally available other  
than as a result of unauthorized disclosure by the receiving party or by Persons
to whom the receiving party has made such information available, (B) is or      
becomes available to the receiving party on a nonconfidential basis from a third
party that is not, to the receiving party's knowledge, bound by any other       
confidentiality agreement with the disclosing party, or (C) is independently    
developed or already known to the receiving party prior to disclosure by the    
disclosing party, or (ii) prohibit disclosure of any information if required by 
law, rule, regulation, court order or other legal or governmental process.      

   6.3 CONDUCT OF BUSINESS. Except as agreed to by the other parties and set
forth on SCHEDULE 6.3, during the period from the date of this Agreement to the 
Effective Date: (i) each of FAJ and MMI will, and FAJ and MMI will cause each of
their respective Subsidiaries to, conduct its business only in the ordinary     
course consistent with past practice; (ii) neither of MMI nor FAJ will, and FAJ 
and MMI will cause each of their respective Subsidiaries not to, take any action
or enter into any material transaction other than in the ordinary course of     
business consistent with past practice; and (iii) to the extent consistent with 
the foregoing, each of FAJ and MMI will, and FAJ and MMI will cause each of     
their respective Subsidiaries to, use its commercially reasonable best efforts  
to preserve intact its current business organization and reputation, existing   
relationships with customers, franchisees, licensees, suppliers, government     
officials, regulatory authorities and others having business dealings with it or
regulatory authority over it and shall comply in all material respects with all 
laws and orders of each Governmental Authority and regulatory authority having  
jurisdiction over it. Without limiting the generality of the foregoing and      
except as otherwise expressly permitted in this Agreement, prior to the Closing,

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neither FAJ nor MMI will, and FAJ and MMI will not permit any of their          
respective Subsidiaries to, without the prior written consent of the other:     

         (a) issue, deliver or sell, or authorize or enter into any agreement or
commitment to issue, deliver or sell (y) any additional shares of its capital   
stock of any class, or any securities or rights which are convertible into,     
exchangeable for, or evidencing the right to subscribe for any shares of its    
capital stock, or any rights, warrants, options, calls, commitments or any other
agreements to purchase or acquire any shares of its capital stock or any        
securities or rights convertible into, exchangeable for, or evidencing the right
to subscribe for, any shares of its capital stock, or (z) any other of its      
securities or the securities of any of its Subsidiaries; (ii) split, combine,   
subdivide, reclassify, redeem, repurchase or otherwise acquire or take similar  
action with respect to any shares of its capital stock, or (iii) declare, set   
aside for payment or pay any dividend, or make any other distribution in respect
of any shares of its capital stock or other outstanding securities or make any  
payments to shareholders in their capacity as such, other than in a manner and  
amount consistent with prior business practices;                                

     (b) (i) create, increase the benefits payable or accruing under, or
modify in any manner any FAJ Plan or MMI Plan or the compensation, pension,     
welfare, medical or fringe benefits of any of its directors, officers or        
Employees, except for normal increases in the ordinary course of business       
consistent with past practice that, in the aggregate, do not result in a        
material increase in benefits or compensation expense to FAJ, MMI or their      
Subsidiaries, or (ii) enter into any new, or amend any existing, employment,    
severance, "golden parachute" or other similar agreement with any such director,
officer or Employee, except as may be approved in writing by the other party;   

       (c) make any acquisition, by means of merger, consolidation, purchase
of a substantial equity interest in or a substantial portion of the assets of,  
or otherwise, of any business or corporation, partnership, association or other 
business organization or division thereof (except as herein contemplated);      

      (d) adopt any amendments to its articles of incorporation, bylaws or
similar organizational documents, or alter through merger with any entity,      
liquidation, reorganization, restructuring or in any other fashion the corporate
structure or ownership of it or any of its Subsidiaries, or encumber, dispose   
of, sell or lease any material amount of the assets of FAJ or MMI or any of     
their Subsidiaries except as herein authorized;                                 

         (e) enter into any contract, arrangement or understanding requiring the
expenditure of greater than $150,000;                                           

     (f) in the event that a claim is made for damages during the period
prior to the Closing Date that is reasonably likely to have a Material Adverse  
Effect, fail to promptly notify the other party of the pendency of such claim;  
or                                                                              

         (g) authorize, recommend, propose or announce an intention to do any of
the foregoing, or enter into any agreement, contract or commitment to do any of 
the foregoing.                                                                  

   6.4 NOTIFICATION OF CERTAIN MATTERS. Each of the parties shall notify the
other parties in writing of its discovery of any matter that would render any of
such party's or the other party's representations and warranties contained      

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herein untrue or incorrect in any material respect, but the failure of any party
to so notify another party of the inaccuracy of that other party's              
representations and warranties does not constitute a breach of this Agreement.  

6.5 PROVISION OF CERTAIN DOCUMENTS. Each party shall, upon reasonable 
request by another party, deliver true and complete copies of any documents     
related to such party or any of its Subsidiaries that are reasonably requested  
within five Business Days after the date of such request.                       

ARTICLE 7 

 CERTAIN ADDITIONAL COVENANTS AND CONDITIONS

7.1 RESALE. MMI acknowledges and agrees that, as a result of the      
effectiveness of the Merger, and pursuant to a then effective Schedule 13e-3 and
a Form 15, FAJ will cease to be subject to the reporting requirements under the 
Securities Exchange Act of 1934, as amended. Accordingly, the FAJ Shares to be  
acquired pursuant to the transactions hereby contemplated will not upon         
completion of the Merger, as of the Closing Date or the Effective Date, be      
registered under the Securities Act or the Blue Sky Laws of any state and they  
may be sold or otherwise disposed of only in one or more transactions registered
under the Securities Act and, where applicable, such Blue Sky Laws or as to     
which an exemption from the registration requirements of the Securities Act and,
where applicable, such Blue Sky Laws is available.                              

7.2 ACCESS TO INFORMATION. From the date of this Agreement until the  
Effective Date, each party shall provide the other and its representatives with 
such financial and other information regarding such party's or any of the       
Subsidiaries' business, operations, properties and financial statements a party 
or its representatives shall reasonably request and shall provide the other     
party or its representatives access to all of the properties, assets, books,    
records, tax returns, contracts and personnel during the normal business hours  
of the party providing the information.                                         

   7.3 EFFECTIVENESS OF AGREEMENT; CONDITION PRECEDENT. The effectiveness of
this Agreement and the obligations of the parties hereunder are subject to the  
acquisition by MMI of approximately 58.7% of the issued and outstanding capital 
stock of FAJ within 10 days after the date of this Agreement.                   

ARTICLE 8 

 CLOSING; CLOSING DELIVERIES

   8.1 CLOSING; TERMINATION. The Closing (the "CLOSING") shall take place at
10:00 a.m., local time, at the offices of FAJ, 45 East Monterey Way, Phoenix,   
Arizona 85012, on the Business Day following the satisfaction or waiver of the  
last to be satisfied or waived of the conditions set forth in SECTIONS 9.1 AND  
9.2 (other than those conditions that are to be satisfied concurrently with the 
Closing), or on such other date or at such other time and place as the parties  
shall agree on in writing (the "CLOSING DATE"). If the Closing has not occurred 
on or before the first anniversary of this Agreement and this Agreement has not 
been previously terminated under ARTICLE 10, this Agreement shall terminate on  

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such anniversary without further action by the parties hereto, and this         
Agreement shall be null and void and have no further effect.                    

    8.2 FAJ CLOSING DELIVERIES. At the Closing, FAJ shall deliver, or cause to
be delivered, to Acquisition and MMI each of the following:                     

    (a) resolutions of the Board of Directors of FAJ, certified by the
Secretary of FAJ, authorizing the execution and delivery of this Agreement, and 
the transactions contemplated hereby, including the Merger;                     

    (b) the legal opinion of FAJ's counsel required by SECTION 9.1(F);

(c) evidence or copies of any consents, approvals, orders,    
qualifications or waivers required by SECTION 9.1;                              

(d) the Certificate of Merger executed by FAJ;                

       (e) the Articles of Incorporation or similar organizational documents
of each of FAJ and the FAJ Subsidiaries, each certified as of a recent date by a
duly authorized official of the jurisdiction of its incorporation or            
organization, and the bylaws or similar organizational documents of each of FAJ 
and the FAJ Subsidiaries, each certified as of a recent date by the Secretary or
similar officer of the entity;                                                  

       (f) certificates of a duly authorized official of the jurisdiction of
its organization, dated as of a recent date, as to the good standing of each of 
FAJ and the FAJ Subsidiaries in the jurisdiction of its organization or         
incorporation;                                                                  

         (g) if not previously delivered, all other certificates and instruments
and documents required pursuant this Agreement to be delivered by FAJ to MMI or 
Acquisition at or prior to the Closing; and                                     

       (h) such other instruments reasonably requested by MMI or Acquisition
as may be necessary or appropriate to confirm or carry out the provisions of    
this Agreement.                                                                 

8.3 MMI AND ACQUISITION CLOSING DELIVERIES. At the Closing, MMI or    
Acquisition shall deliver, or cause to be delivered, to FAJ the following:      

  (a) the certificate, dated the Closing Date and validly executed
required by SECTION 9.2(A);                                                     

(b) the legal opinion of counsel required by SECTION 9.2(G);  

(c) the Certificate of Incorporation or similar organizational
documents of each of MMI and the MMI Subsidiaries, each certified as of a recent
date by a duly authorized official of the jurisdiction of its incorporation or  
organization, and the bylaws or similar organizational documents of each of MMI 
and the MMI Subsidiaries, each certified as of a recent date by the Secretary or
similar officer of the entity;                                                  

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       (d) certificates of a duly authorized official of the jurisdiction of
its organization, dated as of a recent date, as to the good standing of each of 
MMI and the MMI Subsidiaries in the jurisdiction of its organization or         
incorporation;                                                                  

 (e) if not previously delivered to FAJ, all other certificates,
documents, instruments and writings required pursuant to this Agreement to be   
delivered by or on behalf of Acquisition or MMI at or before the Closing;       

    (f) the Certificate of Merger executed by MMI and Acquisition; and

  (g) such other instruments reasonably requested by FAJ as may be
necessary or appropriate to confirm or carry out the provisions of this         
Agreement.                                                                      

ARTICLE 9 

 CONDITIONS TO CLOSING

   9.1 CONDITIONS TO MMI AND ACQUISITION CLOSING. The obligations of MMI and
Acquisition hereunder are subject to the satisfaction or waiver by MMI or       
Acquisition of each of the following conditions precedent:                      

        (a) REPRESENTATIONS AND WARRANTIES; COVENANTS. The representations and
warranties of FAJ contained herein that are not qualified as to materiality     
shall have been true and correct in all material respects on and as of the date 
hereof, and shall be true and correct in all material respects on and as of the 
Closing Date with the same effect as though such representations and warranties 
had been made on and as of the Closing Date, and the representations and        
warranties already qualified with respect to materiality shall have been true   
and correct in all respects at each such date without regard to the materiality 
qualification contained in this Section. The covenants and agreements of FAJ to 
be performed on or before the Closing Date in accordance with this Agreement    
shall have been duly performed in all material respects. FAJ shall have         
delivered to MMI and Acquisition at the Closing a certificate of an appropriate 
officer in form and substance satisfactory to MMI and Acquisition, dated the    
Closing Date to such effect.                                                    

      (b) NO MATERIAL ADVERSE CHANGE. Since December 31, 2000, there shall
not have been any change, circumstance or event with respect to any of FAJ or   
the FAJ Subsidiaries that has had or could reasonably be expected to have a     
Material Adverse Effect.                                                        

   (c) NO LIMITATION. There is (i) no Action, suit, investigation or
proceeding instituted (x) by any Government Authority or any Person that seeks  
to prevent the consummation of the transactions contemplated hereby or (y) that 
is reasonably likely to result in material damages to FAJ or any of the FAJ     
Subsidiaries in connection with the transactions contemplated hereby, which, in 
either case, continues to be outstanding and (ii) no injunction or restraining  
order (temporary or permanent) in effect to stay, prevent or delay the          
consummation of the transactions provided for herein, which continues to be     
outstanding.                                                                    

       (d) SHAREHOLDER APPROVAL. The shareholders of FAJ shall have approved
this Agreement and the transactions contemplated hereby, including the Merger,  
by a vote of a majority of the shares of FAJ Common Stock present, in person or 

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by proxy, at a special meeting of FAJ shareholders, including the Merger. FAJ   
shall have delivered to MMI and Acquisition at the Closing a certificate of the 
Secretary of FAJ in form and substance satisfactory to MMI dated the Closing    
Date to such effect.                                                            

         (e) PROCEEDINGS. All corporate and other proceedings to be taken by FAJ
connection with the transactions contemplated by this Agreement and all         
documents incident thereto shall be reasonably satisfactory to MMI and          
Acquisition, and MMI and Acquisition shall have received all such counterpart   
originals or other copies of such documents as it has reasonably requested.     

         (f) OPINION OF COUNSEL. MMI and Acquisition shall have received a legal
opinion from Gallagher & Kennedy, P.A., counsel to FAJ, dated the Closing Date  
concerning, FAJ's existence, authority, capitalization, SEC filings (excluding  
financial and statistical data contained therein), compliance with law, and such
other legal matters within the scope of the Report of the State Bar of Arizona, 
Corporate, Banking and Business Law Section Subcommittee on Rendering Legal     
Opinions in Business Transactions, dated February 1, 1989, as MMI and           
Acquisition may request, in form and substance reasonably satisfactory to MMI   
and Acquisition.                                                                

     9.2 CONDITIONS TO FAJ CLOSING. The obligations of FAJ hereunder are subject
to the satisfaction or waiver by FAJ of each of the following conditions        
precedent:                                                                      

        (a) REPRESENTATIONS AND WARRANTIES, COVENANTS. The representations and
warranties of MMI and Acquisition contained herein that are not qualified as to 
materiality shall have been true and correct in all material respects on and as 
of the date hereof, and shall be true and correct in all material respects on   
and as of the Closing Date with the same effect as though such representations  
and warranties had been made on and as of the Closing Date, and the             
representations and warranties already qualified with respect to materiality    
shall have been true and correct in all respects at each such date without      
regard to the materiality qualification contained in this Section. The covenants
and agreements of MMI and Acquisition to be performed on or before the Closing  
Date in accordance with this Agreement shall have been duly performed in all    
material respects. MMI and Acquisition shall have delivered to FAJ at the       
Closing a certificate of an appropriate officer in form and substance reasonably
satisfactory to FAJ dated the Closing Date to such effect.                      

        (b) NO MATERIAL ADVERSE CHANGE. Since the date hereof, there shall not
have been any change, circumstance or event with respect to any of MMI or the   
MMI Subsidiaries that has had or could reasonably be expected to have a Material
Adverse Effect.                                                                 

   (c) NO LIMITATION. There is (i) no Action, suit, investigation or
proceeding instituted (x) by any Government Authority or any Person that seeks  
to prevent the consummation of the transactions contemplated hereby or (y) that 
is reasonably likely to result in material damages to MMI, or any of the MMI    
Subsidiaries in connection with the transactions contemplated hereby, which, in 
either case, continues to be outstanding and (ii) no injunction or restraining  
order (temporary or permanent) in effect to stay, prevent or delay the          
consummation of the transactions provided for herein, which continues to be     
outstanding.                                                                    

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       (d) SHAREHOLDER APPROVAL. The shareholders of FAJ shall have approved
this Agreement and the transactions contemplated hereby, including the Merger,  
by the requisite vote.                                                          

         (e) PROCEEDINGS. All corporate and other proceedings to be taken by MMI
in connection with the transactions contemplated by this Agreement and all      
documents incident thereto shall be reasonably satisfactory in form and         
substance to FAJ and FAJ shall have received all such counterpart originals or  
certified or other copies of such documents as they may reasonably request.     

         (f) FAIRNESS OPINION. The Board of Directors of FAJ shall have received
a fairness opinion from ComStock Valuation Advisors, Inc. satisfactory to the   
Board of Directors of FAJ and to a committee of the Board comprised entirely of 
independent third-party directors, in their reasonable discretion.              

      (g) OPINION OF COUNSEL. FAJ shall have received a legal opinion from
counsel to Acquisition and MMI, dated the Closing Date, concerning the existence
and authority of Acquisition and the existence, authority, capitalization, and  
compliance with law of each of MMI and the MMI Subsidiaries, and such other     
legal matters as FAJ may reasonably request, in form and substance reasonably   
satisfactory to FAJ.                                                            

ARTICLE 10

 WAIVER, MODIFICATION, ABANDONMENT

 10.1 WAIVERS. The failure of MMI to comply with any of its obligations,
agreements or conditions as set forth herein may be waived expressly in writing 
by FAJ, by action of its Board of Directors without the requirement for a vote  
of shareholders. The failure of FAJ to comply with any of its obligations,      
agreements or conditions as set forth herein may be waived expressly in writing 
by MMI, by action of its Board of Directors, without the vote of shareholders.  

10.2 MODIFICATION. This Agreement may be modified at any time in any  
respect by the mutual consent of all of the parties, notwithstanding prior      
approval by the shareholders. Any such modification may be approved for any     
party by its Board of Directors, without further shareholder approval, except   
that the Merger Consideration may not be decreased without the consent of the   
FAJ shareholders and may not be increased without the consent of the MMI        
shareholders given, in each case, by the same vote as is required under         
applicable state law for approval of this Agreement.                            

  10.3 ABANDONMENT. The Merger may be abandoned on or before the Effective
Date notwithstanding adoption of this Agreement by the shareholders of the      
parties hereto:                                                                 

        (a) By the mutual agreement of the Boards of Directors of FAJ, MMI and
Acqusition;                                                                     

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         (b) By the Board of Directors of FAJ, if any of the conditions provided
in SECTION 9.2 shall not have been satisfied, complied with or performed in any 
material respect, and FAJ shall not have waived such failure of satisfaction,   
noncompliance or nonperformance;                                                

         (c) By the Board of Directors of MMI, if any of the conditions provided
in SECTION 9.1 shall not have been satisfied, complied with or performed in any 
material respect, and MMI shall not have waived such failure of satisfaction,   
noncompliance or nonperformance; or                                             

       (d) At the option of FAJ and MMI, if there shall have been instituted
and be pending or threatened any legal proceeding before any court or           
governmental agency seeking to restrain or prohibit or to obtain damages in     
respect of this Agreement or the consummation of the Merger contemplated by this
Agreement, or if any order restraining or prohibiting the Merger shall have been
issued by any court or governmental agency and shall be in effect.              

In the event of any termination pursuant to this Section (other than pursuant to
subparagraph  (a) hereof) written notice setting forth the reasons thereof shall
forthwith be given by MMI, if it is the terminating party, to FAJ, or by FAJ, if
it is the terminating party, to MMI.                                            

ARTICLE 11

 SURVIVAL; INDEMNIFICATION

 11.1 SURVIVAL. Subject to the limitations set forth in this Article and
notwithstanding any investigation conducted at any time by or on behalf of any  
party, all representations and warranties, and, except as otherwise provided in 
this Agreement, covenants and agreements of the parties (as applicable) in this 
Agreement and in any Schedule hereto, or any certificate, document or other     
instrument delivered in connection herewith ("ADDITIONAL DOCUMENTS"), shall     
survive the execution, delivery and performance of this Agreement and shall be  
deemed to have been made again by the parties (as applicable) at and as of the  
Closing. Such representations and warranties, and the rights of any party to    
seek indemnification with respect thereto pursuant to SECTION 11.2, shall       
expire, except with respect to claims asserted prior to and pending at the time 
of such expiration, on the first anniversary of the Effective Date. All         
statements contained in any Exhibit, Schedule or Additional Document shall be   
deemed representations and warranties of the parties (as applicable) set forth  
in this Agreement within the meaning of this Article. Without duplication of    
Loss and Expense (as hereinafter defined), FAJ, MMI or Acquisition, as the case 
may be, shall be deemed to have suffered Loss and Expense arising out of or     
resulting from the matters referred to herein if the same shall be suffered by  
any parent, Subsidiary or Affiliate of FAJ, MMI or Acquisition; PROVIDED,       
HOWEVER, that MMI shall not be deemed to have suffered any Loss and Expense     
arising out of or resulting from any Loss and Expense suffered by FAJ.          

11.2 INDEMNIFICATION.                                                 

     (a) Subject to SECTION 11.4, from and after the Effective Date, FAJ
shall indemnify, defend and hold harmless MMI (and its officers, directors or   
members) and their successors and assigns, for, from and against any and all    
damages, claims, losses, expenses, costs, obligations and Liabilities, including
Liabilities for all reasonable attorneys' fees and expenses (collectively, "LOSS

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AND EXPENSE"), suffered, directly or indirectly, by MMI by reason of, or arising
out of, (i) any breach of any representation or warranty made by FAJ in this    
Agreement, or (ii) any failure by FAJ to perform or fulfill any of its covenants
or agreements set forth herein.                                                 

     (b) Subject to SECTION 11.4, from and after the Effective Date, MMI
shall indemnify, defend and hold harmless FAJ (and its officers and directors), 
its successors and assigns, for, from and against any and all Loss and Expense, 
suffered, directly or indirectly, by FAJ by reason of, or arising out of, (i)   
any breach of any representation or warranty made by Acquisition or MMI in this 
Agreement and, (ii) any failure by Acquisition or MMI to perform or fulfill any 
of its covenants or agreements set forth herein.                                

11.3 THIRD-PARTY CLAIMS. If a claim by a third party is made against a
party and if such party intends to seek indemnity with respect thereto under    
this Article, such party (the "INDEMNIFIED PARTY") shall promptly notify the    
party required to provide such indemnity (the "INDEMNIFYING PARTY") in writing  
of such claim setting forth such claim in reasonable detail and shall otherwise 
make available to the indemnifying party all relevant information which is      
material to the claim and which is in the possession of the Indemnified Party.  
The Indemnifying Party shall have 30 days after receipt of such notice (or such 
shorter time period as required so that the interests of the Indemnified Party  
would not be materially prejudiced as a result of the failure to have received  
such notice) to undertake, through counsel of its own choosing and at its own   
expense, the settlement or defense thereof, and the Indemnified Party shall     
cooperate with it in connection therewith. The Indemnified Party may participate
in such settlement or defense through counsel chosen by such Indemnified Party, 
so long as the fees and expenses of such counsel are borne by that Indemnified  
Party. The Indemnified Party shall not pay or settle any claim which the        
Indemnifying Party is diligently contesting, as herein required, without the    
prior written consent of the Indemnifying Party. Notwithstanding the foregoing, 
the Indemnified Party shall have the right to pay or settle any such claim      
without such consent, but in such event it shall waive any right to indemnity   
therefor by the Indemnifying Party. However, if the Indemnifying Party does not 
notify the Indemnified Party within 30 days after the receipt of the Indemnified
Party's notice of a claim for indemnity hereunder that it elects to undertake   
the defense thereof or if the Indemnifying Party fails to undertake or pursue   
the defense, the Indemnified Party shall have the right to contest or compromise
and may settle or pay the claim and no such contesting, compromise, settlement  
or payment will constitute a waiver of any right to indemnity therefor pursuant 
to this Agreement.                                                              

  11.4 LIMITATIONS ON INDEMNIFICATION, SURVIVAL. Rights to indemnification
under this Agreement are subject to the following limitations:                  

  (a) No party shall be entitled to indemnification hereunder with
respect to any Loss and Expense (or if more than one claim for indemnification  
is asserted, with respect to all such Loss and Expense), until the cumulative   
aggregate amount of all Loss and Expense incurred by such party with respect to 
such claim or claims exceeds $250,000 (the "INDEMNITY THRESHOLD"), in which case
the Indemnifying Party shall then be liable for the full amount of all such Loss
and Expense, without regard to the Indemnity Threshold.                         

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     (b) The obligation of indemnity provided for in this Agreement with
respect to the representations and warranties set forth herein has no expiration
or termination date.                                                            

      (c) Except with respect to third-party claims being defended in good
faith or claims for indemnification with respect to which there exists a good   
faith dispute, the Indemnifying Party shall satisfy its obligations hereunder   
within 30 days of receipt of a notice of claim under this ARTICLE 11.           

         (d) The amount of any Loss and Expense otherwise recoverable under this
Article by an Indemnified Party shall be reduced by any amounts recovered by the
Indemnified Party under insurance policies (net of any costs incurred in        
connection with the collection thereof), it being understood that none of the   
parties shall have any obligation to, but each agrees to use commercially       
reasonable efforts to, timely pursue all reasonable remedies against applicable 
insurers, and provided it does not invalidate any coverage, each party hereby   
waives all rights of subrogation against the other parties under all applicable 
insurance policies.                                                             

      (e) The indemnification provisions of this Article shall be the sole
monetary remedy available to each of the parties. Equitable remedies shall      
remain available to each of the parties, provided that no unjust enrichment     
results from the enforcement of such remedies.                                  

ARTICLE 12

 MISCELLANEOUS

12.1 COUNTERPARTS. This Agreement may be executed in one or more      
counterparts, all of which shall be considered one and the same agreement, and  
shall become effective when one or more counterparts have been signed by each   
party hereto and delivered to the other party. Copies of executed counterparts  
transmitted by telecopy, telefax or other electronic transmission service shall 
be considered original executed counterparts for purposes of this Section,      
provided receipt of copies of such counterparts is confirmed.                   

  12.2 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE THE LAWS OF THE STATE OF ARIZONA WITHOUT REFERENCE TO THE CHOICE OF  
LAW PRINCIPLES THEREOF.                                                         

   12.3 JURISDICTION. Each party to this Agreement hereby irrevocably agrees
that any legal action or proceeding arising out of or relating to this Agreement
or any agreements or transactions contemplated hereby may be brought only in a  
United States District Court sitting in Phoenix, Arizona, or in the United      
States District that encompasses Phoenix, Arizona, and hereby expressly submits 
to the personal jurisdiction and venue of any such court of proper jurisdiction 
for the purposes thereof and expressly waives any claim of improper venue and   
any claim that such court is an inconvenient forum. TO THE EXTENT NOT PROHIBITED
BY APPLICABLE LAW WHICH CANNOT BE WAIVED, EACH PARTY HEREBY WAIVES, AND         
COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR           
OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE,    
CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS     
AGREEMENT OR THE SUBJECT MATTER HEREOF, IN EACH CASE WHETHER NOW EXISTING OR    
HEREAFTER ARISING OR WHETHER IN CONTRACT OR TORT OR OTHERWISE.                  

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12.4 ENTIRE AGREEMENT. This Agreement (including the agreements       
incorporated or referred to herein) and the Schedules and Exhibits hereto       
contain the entire agreement between the parties with respect to the subject    
matter hereof and supersede prior agreements, understandings, representations or
warranties between the parties. This Agreement is not intended to confer upon   
any Person not a party hereto (and their successors and assigns) any rights or  
remedies hereunder.                                                             

12.5 NOTICES. All notices and other communications hereunder shall be 
sufficiently given for all purposes hereunder if in writing and delivered       
personally, sent by documented overnight delivery service or, to the extent     
receipt is confirmed, telefax or other electronic transmission service to the   
appropriate address or number as set forth below, unless and until either of    
such parties notifies the other in accordance with this Section of a change of  
address or change of telecopy number:                                           

If to MMI:         Merrymeeting, Inc.                       
7763 Sunstone Drive   
 Brecksville, Ohio 44141
Attn:  President      
 Fax No.:_______________

With a copy to:    Ulmer & Berne LLP                        
         1300 East 9th Street, Suite 900
    Cleveland, Ohio 44114-1583
       Attn: Stephen A. Markus, Esq.
 Fax No.: (216) 621-7488

If to Acquisition: MM Merger Corporation                    
7763 Sunstone Drive   
 Brecksville, Ohio 44141
Attn:  President      
 Fax No.:_______________

With a copy to:    Ulmer & Berne LLP                        
         1300 East 9th Street, Suite 900
    Cleveland, Ohio 44114-1583
       Attn: Stephen A. Markus, Esq.
 Fax No.: (216) 621-7488

If to FAJ:         Frontier Adjusters of America, Inc.      
45 East Monterey Way  
Phoenix, Arizona 85012
Attention: President  
    Fax Number: (602) 279-5813

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With a copy to:    Gallagher & Kennedy, P.A.                
  2575 East Camelback Road
     Phoenix, Arizona 85016-9225
            Attention: Karen L. Liepmann, Esq.
    Fax Number: (602) 530-8500

     12.6 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and        
permitted assigns, but neither this Agreement nor any of the rights, interests  
or obligations hereunder may be assigned by either of the parties hereto without
the prior written consent of the other party.                                   

    12.7 AMENDMENTS AND WAIVERS. This Agreement may not be modified or amended
except by an instrument in writing signed by the party against whom enforcement 
of any such modification or amendment is sought. Either party hereto may, only  
by an instrument in writing, waive compliance by the other party hereto with any
term or provision hereof on the part of such other party hereto to be performed 
or complied with. The waiver by any party hereto of a breach of any term or     
provision hereof shall not be construed as a waiver of any subsequent breach    
thereof.                                                                        

12.8 INTERPRETATION; ABSENCE OF PRESUMPTION.                          

         (a) For the purposes hereof, (i) words in the singular shall be held to
include the plural and vice versa and words of one gender shall be held to      
include the other gender as the context requires, (ii) the terms "hereof,"      
"herein," and "herewith" and words of similar import shall, unless otherwise    
stated, be construed to refer to this Agreement as a whole (including all of the
Schedules and Exhibits hereto) and not to any particular provision of this      
Agreement, and Article, Section, paragraph, Exhibit and Schedule references are 
to the Articles, Sections, paragraphs, Exhibits and Schedules to this Agreement 
unless otherwise specified, (iii) the word "including" and words of similar     
import when used in this Agreement shall mean "including, without limitation,"  
unless otherwise specified, and (iv) the word "or" shall not be exclusive, but  
shall be interpreted as "and/or."                                               

        (b) This Agreement will be construed without regard to any presumption
or rule requiring construction or interpretation against the party drafting or  
causing any instrument to be drafted.                                           

12.9 SEVERABILITY. If any provision of this Agreement is held to be   
unenforceable for any reason, it shall be adjusted by a court of competent      
jurisdiction rather than voided, if possible, in order to achieve the intent of 
the parties to this Agreement to the fullest extent possible. In any event, all 
other provisions of this Agreement shall be deemed valid and enforceable to the 
fullest extent permitted.                                                       

12.10 FURTHER ASSURANCES. The parties agree that, from time to time,  
whether before, at or after the Closing Date, each of them will execute and     
deliver such further instruments and take such other actions as may be necessary
to carry out the purposes and intents hereof.                                   

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   12.11 SPECIFIC PERFORMANCE. The parties each acknowledge that, in view of
the uniqueness of the Merger, the parties hereto would not have an adequate     
remedy at law for money damages if this Agreement were not performed in         
accordance with its terms, and therefore agree that the parties hereto shall be 
entitled to specific enforcement of the terms hereof in addition to any other   
remedy to which the parties hereto be entitled at law or in equity.             

    IN WITNESS WHEREOF, this Agreement has been signed by or on behalf of each
of the parties hereto as of the date first above written.                       

                FRONTIER ADJUSTERS OF AMERICA, INC.,
  an Arizona corporation

       By: /s/ JEFFREY R. HARCOURT
                                --------------------------------------------
              Name:  Jeffrey R. Harcourt
          Title: CFO / Treasurer

                      MERRYMEETING, INC., a Delaware corporation

  By: /s/ JOHN M. DAVIES
                                --------------------------------------------
         Name:  John M. Davies
    Title: President

                         MM MERGER CORPORATION, a Delaware corporation

  By: /s/ JOHN M. DAVIES
                                --------------------------------------------
         Name:  John M. Davies
    Title: President

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Exhibit 1 - Certificate of Merger                                     
Exhibit 2 - Letter of Transmittal                                     
Exhibit 3 - Permitted Investments                                     

 SCHEDULES

Schedule A                     Directors and Executive Officers of FAJ
Schedule 4.3(a)                FAJ Outstanding Options                
Schedule 4.3(c)                FAJ Investments                        
Schedule 4.7                   FAJ Actions and Violations             
Schedule 4.8                   FAJ Changes since December 31, 2000    
Schedule 4.9                   FAJ Tax Issues                         
    Schedule 4.10(c)               FAJ Joint Venture or Partnership Agreements
Schedule 4.10(d)               FAJ Material Agreements                
Schedule 4.12                  FAJ Properties and Permitted Liens     
Schedule 4.14(a)               FAJ Employment Agreements              
Schedule 4.14(b)               FAJ Plans                              
Schedule 4.15                  FAJ Labor Matters                      
Schedule 4.16                  FAJ Proprietary Rights                 
Schedule 4.17                  FAJ Insurance                          
Schedule 5.4(a)                MMI Outstanding Options                
Schedule 5.4(c)                MMI Investments                        
Schedule 5.5                   MMI Financial Statements               
Schedule 5.5(d)                MMI Intercompany Transactions          
Schedule 5.6                   MMI Actions and Violations             
Schedule 5.7                   MMI Changes                            
Schedule 5.8                   MMI Tax Issues                         
    Schedule 5.9(c)                MMI Joint Venture or Partnership Agreements
Schedule 5.9(d)                MMI Material Agreements                
Schedule 5.11                  MMI Properties and Permitted Liens     
Schedule 5.13(a)               MMI Employment Agreements              
Schedule 5.13(b)               MMI Plans                              
Schedule 5.14                  MMI Labor Matters                      
Schedule 5.15                  MMI Proprietary Rights                 
Schedule 5.16                  MMI Insurance                          

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                                                                      APPENDIX B

COMSTOCK FAIRNESS OPINION LETTER

April 24, 2001

Board of Directors of                                                           
Frontier Adjusters of America, Inc.                                         
45 E. Monterey Way                                                              
Phoenix, AZ  85012                                                              

At your request, ComStock Valuation Advisors, Inc. ("ComStock") has analyzed the
financial  fairness of a cash-out  merger,  as  described  below (the  "Merger")
involving the common stock of Frontier Adjusters of America, Inc. ("Frontier" or
the "Company").                                                                 

SUMMARY OF THE MERGER                                                           

Merrymeeting,   Inc.  ("MMI")  will  form  a  wholly  owned  subsidiary  company
("Acquisition  Sub").  Frontier will merge with  Acquisition  Sub, with Frontier
being the  surviving  party of the  Merger.  The Merger will be in the form of a
cash-out merger with all shareholders of Frontier receiving $1.58 per share from
MMI.  MMI's  pre-existing   approximately  58%  interest  in  Frontier  will  be
cancelled.                                                                      

DEFINITION OF VALUE                                                             

ComStock's financial analysis of the Merger included independently analyzing the
fair value of the publicly-traded  common shares of the Company. For the purpose
of this independent  analysis,  fair value is defined as the underlying price at
which the publicly-traded common stock of the Company would change hands between
two independent  parties,  neither being under any compulsion to buy or sell and
both having  reasonable  knowledge of the relevant facts. Fair value, as used in
this context, does not reflect any discount for lack of control.                

OWNERSHIP MIX                                                                   

Insiders own the  majority of the  Company's  common  stock.  Approximately  2.0
million of the 3.9 million  publicly-traded  shares are held in street name, and
the remaining 1.9 million shares are held in individual  names.  Netrex Holdings
LLC ("Netrex") and three individual  shareholders own a significant  majority of
the outstanding shares of Frontier.                                             

GOVERNING STANDARDS                                                             

This opinion was prepared in accordance  with relevant  standards and guidelines
issued by The Appraisal  Foundation(1),  The American Society of  Appraisers(2),
and The Internal Revenue Service(3). We also considered other generally accepted

----------                                                                      
(1)  Competency Provision,  Standards 7, 9, 10, and related explanatory comments
of the Uniform Standards of Professional Appraisal Practice.          
(2)  Principles of Appraisal Practice and Code of Ethics.                       
(3)  Revenue Ruling 59-60.                                                      

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Board of Directors of                                                           
Frontier Adjusters of America, Inc.                                         
Fairness Opinion Regarding the                                                  
  Proposed Cash-out Merger                                        April 24, 2001

standards  deemed  appropriate  for  this  engagement.   In  our  analysis,   we
specifically  considered  pertinent factors cited in Revenue Ruling 59-60, which
included, but was not limited to, a review of the following:                    

*    The nature of the business and the history of the Company;       
*    The general economic outlook for the Company;                    
*    The book value of the Company, and their financial condition;    
*    The earnings capacity of the Company;                            
*    The dividend-paying capacity of the Company;                     
*    The possible existence of goodwill or other intangible values;   
     *    Past sales of the stock of the Company,  and the size of the blocks of
stock under consideration;                                  
     *    The market  price of  actively  traded  stocks of public  corporations
        engaged in the same or similar lines of business as the Company; and
*    Issues of fairness typically considered in Mergers.              

GENERAL VALUATION APPROACH                                                      

We  interviewed  management  regarding  the  historical  financial  performance,
current business status, and forecasted financial performance of the Company. We
reviewed documents and other data needed to comply with the Uniform Standards of
Professional Appraisal Practice as promulgated by The Appraisal Foundation;  the
Principles of Appraisal  Practice and Code of Ethics of the American  Society of
Appraisers.  In arriving at our opinion, we:                                    

     *    Reviewed the historical operating  performance and financial condition
          of the Company as reflected in publicly-available financial statements
          for the five fiscal  years  ended June 30, 2000 and for the  six-month
period ended December 31, 2000;                             
     *    Reviewed the financial forecasts for the Company for fiscal year 2001,
as provided by management;                                  
*    Conducted discussions with management of the Company;            
*    Reviewed publicly available information regarding Frontier;      
     *    Reviewed  the Proxy  Statement  contained  in the Schedule 14A and the
Schedule 13E-3 (the "Schedules");                           
     *    Reviewed  the  outlook  for  the  economy  and the  prospects  for the
industry in which the Company competes;                     
     *    Performed an analysis of market  multiples for the  companies  that we
considered comparable to the Company; and                   
     *    Performed various other financial  analyses  regarding the Company and
the Merger as deemed appropriate.                           

ComStock used publicly available sources to obtain information  pertinent to the
analysis. Specifically, we subscribe to Compustat(R),  Disclosure(R), Securities
Data  Corporation  and EDGAR for financial and other  information.  We deem this
information  to be  reliable;  however,  we  make  no  representation  as to the
accuracy or completeness of such  information and have accepted such information
without further verification.                                                   

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Board of Directors of                                                           
Frontier Adjusters of America, Inc.                                         
Fairness Opinion Regarding the                                                  
  Proposed Cash-out Merger                                        April 24, 2001

DISCUSSION OF INDEPENDENT VALUATION METHODS UTILIZED                            

We applied  generally  accepted  valuation  methods to analyze the range of fair
values for the common stock of the Company.  To establish  this range of values,
the Capitalized Cash Flow Method, Discounted Cash Flow Method, Guideline Company
Method, and Merger & Acquisition Method were utilized. In addition,  the current
trading  price plus a relevant  premium for control was utilized as a measure of
the current fair value per share for the Company's stock.                       

The  Company's  equity value was  calculated on a  controlling  interest  basis,
including  the  application  of a  market-based  control  premium of 35%,  which
reflects the rights of a majority  shareholder  to control the operations of the
Company and the  disposition  of its cash flows. A control basis of valuation is
relevant when considering the financial  fairness of a cash-out merger wherein a
company's  minority  shareholders  are being  forced to accept a given price per
share in order to gain liquidity for their shares.                              

RANGE OF INDEPENDENTLY CALCULATED VALUES                                        

                                                        [Enlarge/Download Table]

                                                      Aggregate     Value             
Valuation Method                            Exhibit     Value     Per Share  Deviation
----------------                            -------  -----------  ---------  ---------
                                                                                      
Current Trading Price Plus Control Premium           $14,520,000    $1.62      (0.5%) 
Capitalized Cash Flow Method                   B     $14,190,000    $1.58      (2.8%) 
Discounted Cash Flow Method                    C     $15,590,000    $1.74       6.8%  
Guideline Company Method                       D     $14,620,000    $1.63       0.1%  
Mergers & Acquisitions Method                  E     $13,610,000    $1.52      (6.8%) 
                                                     -----------    -----      ----   

RANGE OF VALUES                                                                       
Minimum Value                                        $13,610,000    $1.52      (6.8%) 
Lowest Quartile Value                                $14,190,000    $1.58      (2.8%) 
Average Value                                        $14,510,000    $1.62      (0.6%) 
Median Value                                         $14,520,000    $1.62      (0.5%) 
Upper Quartile Value                                 $14,620,000    $1.63       0.1%  
Maximum Value                                        $15,590,000    $1.74       6.8%  
Mid-point of Range of Values                         $14,600,000    $1.63       0.0%  

TRANSACTION VALUE                                    $14,160,000    $1.58      (3.0%) 
                                                     ===========    =====      ====   
TRANSACTION VALUE PERCENTILE RANKING                                 24%              
                                                                    =====             
BASIS OF APPRAISAL                                       CONTROL                      
                                                     ===========                      

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Board of Directors of                                                           
Frontier Adjusters of America, Inc.                                         
Fairness Opinion Regarding the                                                  
  Proposed Cash-out Merger                                        April 24, 2001

DISCUSSION OF RANGE OF FAIR VALUES                                              

The various  valuation  methods result in a range of appraised values per share,
ranging from a low of $1.52 to a high of $1.74 per share.  The  appraised  value
from each valuation method deviates from the mid-point of the range of values by
no more  than  6.8%,  which  reflects  a  narrow  range of  values.  In order to
represent a fair transaction to the Company's minority shareholders,  the Merger
price of $1.58 per share  should be  significantly  above the minimum  value per
share  calculated  in  this  appraisal.  The  Merger  price  falls  in the  24th
percentile of the range of values,  which in our opinion is significantly  above
the  minimum  appraised  value of  $1.52  per  share.  In  addition,  two of the
valuation methods result in an appraised value that is below the Merger price of
$1.58 per  share,  and the  Merger  price is  within  3% of two other  valuation
methods.                                                                        

DISCUSSION OF EACH VALUATION METHOD                                             

A brief  description  of each  valuation  method  is  provided  below and on the
following pages.                                                                

CURRENT TRADING PRICE PLUS CONTROL PREMIUM                                      

As of April 23, 2001 the  Company's  common stock traded at a value of $1.20 per
share.  Adding a premium for control of 35% results in a fair value per share of
$1.62.                                                                          

CAPITALIZED CASH FLOW METHOD                                                    

The Capitalized Cash Flow Method utilizes five years of historical  earnings and
cash flows to estimate  the current  value of the  Company's  equity.  Estimated
working capital and capital  expenditure  requirements (net of depreciation) are
deducted from average  historical  earnings to derive the adjusted cash flow for
the company.  A  market-based  cash flow  multiple is applied to the  normalized
adjusted  historical cash flow to calculate the value of the Company's  invested
capital. Debt is deducted from the invested capital value to derive the value of
the Company's equity on a minority interest basis.                              

Because a controlling  interest basis is being used as the standard of value for
this opinion,  and a majority  ownership  interest  provides its owners with the
right to control  the  Company's  operations,  we  applied a control  premium to
calculate the Company's equity value on a controlling interest basis.           

A 10%  discount is then  deducted to reflect  the  pricing and  liquidity  risks
associated  with the  thinly-traded  market  that exists for  Company's  shares,
arriving at an equity value of $1.58 per share using the  Capitalized  Cash Flow
Method.                                                                         

DISCOUNTED CASH FLOW METHOD                                                     

The  price of a  security  can also be  viewed as a  function  of an  investor's
perception of expected  future cash flows from the Company  relative to expected
cash flows from alternative  investments of perceived  comparable risk.  Because
the Discounted Cash Flow Method ("DCF") uses projected financial performance and
risk-adjusted discount rates to estimate value, it can be an effective valuation
tool when properly applied.                                                     

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Board of Directors of                                                           
Frontier Adjusters of America, Inc.                                         
Fairness Opinion Regarding the                                                  
  Proposed Cash-out Merger                                        April 24, 2001

We analyzed the fair value of the Company by examining a cash flow forecast over
a five-year period. This forecast was based on a one-year forecast for 2001 that
was provided by Company  management.  The  expected  annual free cash flows were
discounted to their present value using a market-based discount rate. A residual
value was also computed and  discounted to its present value using an assumption
of constant  cash flow  growth at the end of the  forecast  period.  The present
value of the  forecasted  cash flow stream for the next five years was  combined
with the  present  value of the  residual  value to  derive an  estimate  of the
Company's equity value.                                                         

A  35%  control  premium  and  10%  discount  for  risks   associated  with  the
thinly-traded  market were  applied in deriving  the  Company's  equity value of
$1.74 per share using the Discounted Cash Flow Method.                          

GUIDELINE COMPANY METHOD                                                        

The Guideline  Company  Method uses pricing  multiples  developed  from publicly
traded  stocks of  relatively  similar  businesses  to estimate the value of the
Company's equity.  These pricing multiples are applied to appropriate  financial
data for the Company,  creating an array of values on a  freely-traded  minority
interest   basis.   Current  market   pricing   multiples  were  developed  that
incorporated  the following  financial data for the Company:  1) book value;  2)
sales; 3) net earnings; and 4) after-tax cash flows.                            

A freely-traded  minority  interest equity value for the Company is estimated by
selecting a representative value derived from the various pricing multiples.    

A  35%  control  premium  and  10%  discount  for  risks   associated  with  the
thinly-traded  market were  applied in deriving  the  Company's  equity value of
$1.63 per share using the Guideline Company Method.                             

MERGER & ACQUISITION METHOD                                                     

The Merger &  Acquisition  Method  utilizes  valuation  multiples  derived  from
published  news  reports  of  actual  transactions   involving  the  sale  of  a
controlling  equity  interest in relatively  similar  privately-held  companies.
After  examining  the  industry  type,  transaction  components,   and  computed
valuation  multiple  for  reported  transactions,  representative  multiples  of
revenue, leveraged income and cash flow are selected and applied to the relevant
financial  data of the  Company.  The result is a  market-based  estimate of the
Company' equity value. The valuation multiples derived from the market data were
reduced by 20% to reflect  certain  risks  associated  with an investment in the
Company,  including the presence of a thinly-traded  market in which to sell the
Company's common stock. The results from the three ratios utilized were averaged
in deriving  the  Company's  equity  value of $1.52 per share using the Merger &
Acquisition Method.                                                             

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Board of Directors of                                                           
Frontier Adjusters of America, Inc.                                         
Fairness Opinion Regarding the                                                  
  Proposed Cash-out Merger                                        April 24, 2001

DISCUSSION OF THE OFFER TO PURCHASE SHARES OWNED BY NETREX                      

An investor group has made an offer to purchase Netrex' 58.7% ownership interest
in Frontier at $1.58 per share,  which is equal to the Merger  price.  The offer
price to Netrex is at a  significant  premium to the  current  trading  price of
Frontier's common stock, and compensates Netrex for its controlling  interest in
the Company. The minority shareholders of Frontier also benefit from the premium
that the Merger price  reflects  above the minority  trading price of Frontier's
stock.                                                                          

IMPACT OF ADDITIONAL COMPENSATION EXPENSES                                      

Additional  compensation  expenses of approximately  $825,000 (including related
employee  benefits) will likely result from new equity  ownership and management
of the  Company.  These  expenses  will  replace  management  fees  of  $300,000
currently being paid by the Company.  The impact of the net expenses of $525,000
on the per  share  value of the  stock  has not been  reflected  in the  figures
provided above.  Had such additional  expenses been reflected,  values per share
ranging between $1.16 and $1.35 per share for Frontier's common stock would have
resulted from the appraisal.                                                    

DISCUSSION OF TRADING ACTIVITY FOR FRONTIER'S COMMON STOCK                      

The common stock of Frontier is traded on the American  Stock Exchange under the
ticker  symbol FAJ.  Although  Frontier's  common stock trades on almost a daily
basis,  its daily trading volume is relatively  low.  During the last 20 trading
days (March 21st - April 23rd, 2001) the daily closing price of Frontier's stock
has ranged from a low of $1.10 per share to a high of $1.45 per share, averaging
$1.22 per share.                                                                

The Company's  average weekly trading volume as a percentage of the total shares
outstanding   was  compared  with  companies   having  trading  volume  that  is
representative  of stocks traded on national stock  exchanges.  This  comparison
indicates that the Company's  average weekly trading volume is  approximately 6%
of the trading volume  experienced by companies having normal trading  activity.
This analysis suggests that the Board of Directors might not rely exclusively on
Frontier's  current  trading price when  considering the fairness of the Merger.
Therefore,  ComStock performed independent appraisal techniques in rendering our
opinion to the Board of Directors regarding the fairness of the Merger.         

DISCUSSION OF PRIOR TRADING ACTIVITY FOR FRONTIER'S COMMON STOCK                

The Company's common stock traded at a high of $4.00 per share at various points
during  June  through  August  2000.  Prior to April 30, 1999  Frontier's  stock
generally  traded  at a price of $1.20 or  lower,  and the same was true for the
month of  December  1999.  An  attempted  merger of the  Company  into a related
company is the principal  reason that  Frontier's  stock price rose to the $4.00
per  share  level.  Once  this  merger  attempt  failed,  the  trading  price of
Frontier's  stock  declined to its normal price  level.  The  historical  prices
referenced  above  have  been  adjusted  to  reflect  the  impact  of  dividends
subsequently paid.                                                              

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Board of Directors of                                                           
Frontier Adjusters of America, Inc.                                         
Fairness Opinion Regarding the                                                  
  Proposed Cash-out Merger                                        April 24, 2001

MERGER COMPARED WITH 1999 TRANSACTIONS                                          

On April 29,  1999 the Company  made a Merger to  purchase  shares at a price of
$2.90 per  share,  or  receive a cash  dividend  of $1.60 as an  alternative  to
tendering shares. This transaction  resulted in an underlying value of $1.30 per
common share at that time. On April 30, 1999 Progressive Corp. purchased a 58.7%
equity interest in the Company for $1.30 per share.  The $1.58 current Merger is
slightly  higher  than  the  $1.30  underlying   common  share  value  plus  all
undistributed  earnings of the Company that have been  generated  subsequent  to
April 30, 1999.                                                                 

CONCLUSION ON FAIRNESS                                                          

Based on our  analysis of the Merger and  various  factors we  considered  to be
relevant to our  analysis,  it is our opinion that from the  perspective  of the
Board of Directors and solely from a financial point of view, the Merger is fair
to the Company's shareholders.                                                  

VALUATION TERMS AND CONDITIONS                                                  

INTEGRITY OF DATA SUPPLIED TO COMSTOCK                                          

In our investigation,  we have assumed, without independent  verification,  that
the materials  supplied by Frontier its  management or its  representatives  are
accurate and complete and that financial data correctly  reflects the results of
the  operations  and financial  condition of Frontier for the periods  indicated
therein in accordance with generally accepted accounting principles applied on a
consistent  basis.  To the extent that we have also used public  information and
industry and statistical data from various sources,  we deem this information to
be  reliable;  however,  we  make  no  representation  as  to  the  accuracy  or
completeness  of such  information  and have accepted such  information  without
further verification.                                                           

In addition,  we relied upon the  assurances  of the  employees,  officers,  and
agents of  Frontier,  that they were  unaware of any  information  or facts that
would make the information provided to us incomplete or misleading.             

ISSUANCE DATE FOR OPINION                                                       

Our opinion is also based on economic,  market,  financial and other conditions,
as they  exist as of the date of this  opinion.  We are under no  obligation  to
update,  revise,  or reaffirm our opinion based upon changes in such  conditions
after the issuance of our opinion.                                              

INDEPENDENCE OF APPRAISER                                                       

Our fees for this service are not contingent upon the opinion  expressed.  Also,
neither ComStock Valuation Advisors, Inc. nor any of its employees has a present
or intended financial  interest in Frontier and the Company,  and is independent
of Frontier and the Company.                                                    

Our  analyses  and  conclusions  are  designed to  constitute a valuation of the
common  stock  of  the  Company  by  ComStock  Valuation  Advisors,  Inc.  as an
independent  appraiser to meet the requirements of Section  401(a)(28)(C) of the
U.S. Internal Revenue Code.                                                     

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Board of Directors of                                                           
Frontier Adjusters of America, Inc.                                         
Fairness Opinion Regarding the                                                  
  Proposed Cash-out Merger                                        April 24, 2001

CONSENT BY COMSTOCK                                                             

We hereby  expressly  consent  to any  reference  to our firm in the  Schedules,
inclusion of this opinion as an exhibit to the  Schedules,  and to the filing of
this opinion with any other appropriate governmental agency.                    

          Sincerely,

                     By: /s/ Brad Van Horn
                                            ------------------------------------
                                        Brad Van Horn, Managing Director
                                         COMSTOCK VALUATION ADVISORS, INC.

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 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

 FRONTIER ADJUSTERS OF AMERICA, INC.

 SPECIAL MEETING OF SHAREHOLDERS

The  undersigned  hereby  appoints  John M.  Davies and  Jeffrey R.  Harcourt as
Proxies,  each with the power to appoint his substitute,  and hereby  authorizes
them,  or either of them,  or such  substitute,  to  represent  and to vote,  as
designated  below,  all of the shares of Common  Stock of Frontier  Adjusters of
America,  Inc. ("Frontier") held of record by the undersigned as of the close of
business on August 29, 2001, at the special  meeting of  shareholders to be held
on  September  28,  2001,  at 9:00  A.M.  (Phoenix,  Arizona  time),  and at any
adjournments thereof.                                                           

1.   THE  MERGER.   To  approve  the  Merger   Agreement  and  the  transactions
     contemplated  thereby, as described in the Proxy Statement dated August 29,
2001.                                                                 

 [ ] FOR                    [ ] AGAINST                      [ ] ABSTAIN

In their discretion, the Proxies are authorized to vote upon such other business
as may properly come before the Special Meeting.                                

This proxy, when properly executed,  will be voted in the manner directed herein
by the  undersigned  shareholder.  IF NO DIRECTION  IS MADE,  THIS PROXY WILL BE
VOTED FOR THE MERGER.                                                           

Receipt of Notice of Special Meeting of Shareholders and related Proxy Statement
dated August 29, 2001, is hereby acknowledged.                                  

Please sign  exactly as the name  appears  below.  When shares are held by joint
tenants, both should sign. When signing as attorney, or as executor, administer,
trustee or guardian,  please give full title as such. If a  corporation,  please
sign in full  corporate  name by President  or other  authorized  officer.  If a
partnership, please sign in partnership name by authorized person.              

                              Dated: ___________________________________________

                         PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY
                 PROMPTLY, USING THE ENCLOSED ENVELOPE

                              Signature:________________________________________

                              Signature if held jointly:________________________

Dates Referenced Herein   and   Documents Incorporated by Reference

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