<PAGE>
AS FILED WITH THE SECURITIES EXCHANGE COMMISSION ON NOVEMBER 23, 1999
FILE NO.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13E-3
RULE 13E-3 TRANSACTION STATEMENT
(Pursuant to Section 13(e) of the Securities Exchange Act of 1934)
------------------------
INTERDENT, INC.
(Name of Issuer)
------------------------------
INTERDENT, INC.
CB CAPITAL INVESTORS, L.P.
SPROUT CAPITAL VII, L.P.
DLJ CAPITAL CORPORATION
DLJ FIRST ESC L.L.C.
SPROUT GROWTH II, L.P.
THE SPROUT CEO FUND, L.P.
SRM 1993 CHILDREN'S TRUST
MICHAEL T. FIORE
(Name of Persons Filing Statement)
------------------------------
COMMON STOCK, PAR VALUE $0.001 PER SHARE
(Title of Class of Securities)
45865R109
(CUSIP Number of Class of Securities)
MICHAEL T. FIORE
CO-CHAIRMAN AND CHIEF EXECUTIVE OFFICER
INTERDENT, INC.
222 NORTH SEPULVEDA BLVD., SUITE 740
EL SEGUNDO, CALIFORNIA, 90235
(310) 765-2400
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications on Behalf of the Persons Filing Statement)
COPIES TO:
RICHARD J. BABCOCK, ESQ.
ROBERT I. NEWTON, ESQ.
DANIEL E. ROSTON, ESQ.
MCDERMOTT, WILL & EMERY
18101 VON KARMEN, SUITE 1100
IRVINE, CALIFORNIA, 92612
(949) 851-0633
------------------------
This statement is filed in connection with (check the appropriate box):
<TABLE>
<C> <C> <S>
a. /X/ The filing of solicitation materials or an information
statement subject to Regulation 14A, Regulation 14C or Rule
13e-3(c) under the Securities Exchange Act of 1934.
b. / / The filing of a registration statement under the Securities
Act of 1933.
c. / / A tender offer.
d. / / None of the above.
</TABLE>
Check the following box if the soliciting materials or information statement
referred to in checking box (a) are preliminary copies: /X/
<PAGE>
CALCULATION OF FILING FEE
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<S> <C>
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Transaction Valuation Amount of Filing Fee
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$170,069,351* $34,014**
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</TABLE>
* For purposes of calculation of fee only, this amount is based on $9.50 per
share for 17,881,030 shares of Common Stock and Series D Preferred Stock,
$1.00 per share for 100 shares of Series A Preferred Stock, $2.87 per share
of Common Stock underlying the options, representing the difference in cash
between $9.50 and the average exercise price per share of the options and
$2.70 per share of Common Stock underlying the warrants, representing the
difference in cash between $9.50 and the average exercise price per share of
the warrants.
** The amount of the filing fee calculated in accordance with Exchange Act Rule
0-11 equals 1/50th of 1% of the value of the securities proposed to be
acquired.
/X/ Check box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offering fee was previously
paid. Identify the previous filing by registration statement number, or the form
or schedule and the date of its filing.
<TABLE>
<S> <C>
Amount Previously Paid: $34,014 Filing Party: InterDent, Inc.
Form or Registration No.: Preliminary Schedule 14A Proxy Date Filed: November 23, 1999.
Statement
</TABLE>
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This Rule 13e-3 Transaction Statement on Schedule 13E-3 filed pursuant to
Section 13(e) of the Securities and Exchange Act of 1934, as amended, relates to
the Agreement and Plan of Merger, dated as of October 22, 1999, by and between
InterDent, Inc. and ID Recap, Inc. The terms and conditions of the merger
agreement are described in the proxy statement filed by InterDent with the
Securities and Exchange Commission immediately prior to the filing of this
statement.
The cross reference sheet below is being supplied pursuant to General
Instruction F to Schedule 13E-3 and shows the location in the proxy statement of
the information required to be included in response to the items of this
statement. The information in the proxy statement, including all exhibits
thereto, is hereby expressly incorporated herein by reference and the responses
to each item in this statement are qualified in their entirety by the
information contained in the proxy statement.
<PAGE>
CROSS-REFERENCE SHEET
<TABLE>
<CAPTION>
ITEM IN
SCHEDULE 13E-3 WHERE LOCATED IN THE PROXY STATEMENT
- ----------------------------- ------------------------------------------------------------
<S> <C>
Item 1(a) Cover Page
Item 1(b) INFORMATION CONCERNING THE SPECIAL MEETING -- Vote Required
to Approve the Merger; Certain Common and Preferred Stock
Voting in Favor of the Merger
Item 1(c)-(d) MARKET PRICE INFORMATION; DIVIDENDS AND RELATED STOCKHOLDER
MATTERS and SELECTED FINANCIAL DATA
Item 1(e) *
Item 1(f) MARKET PRICE INFORMATION; DIVIDENDS AND RELATED STOCKHOLDER
MATTERS -- Affiliate Group Common Stock Purchase Information
Item 2(a)-(d) and (g) SPECIAL FACTORS -- Members of the Affiliate Group and
Appendix G
Item 2(e)-(f) **
Item 3(a)(1) *
Item 3(a)(2) and (b) SPECIAL FACTORS -- Background of the Merger; -- Conflicts of
Interests and Other Interests of Affiliate Group -- EXCHANGE
AND SUBSCRIPTION AGREEMENTS -- PAYMENT AND CANCELLATION OF
CONVERTIBLE SUBORDINATED NOTES -- MANAGEMENT SERVICES
AGREEMENT -- STOCKHOLDERS AGREEMENT -- VOTING AGREEMENTS --
TREATMENT OF OPTIONS
Item 4(a) SPECIAL FACTORS, PROPOSALS AT THE SPECIAL MEETING and
Appendices A, C, and D
Item 4(b) SPECIAL FACTORS -- Conflicts of Interest and Other Interests
of Affiliate Group -- EXCHANGE AND SUBSCRIPTION AGREEMENTS
-- PAYMENT AND CANCELLATION OF CONVERTIBLE NOTES --
STOCKHOLDERS AGREEMENT -- VOTING AGREEMENTS -- TREATMENT OF
OPTIONS
Item 5(a)-(g) SPECIAL FACTORS -- Plans for InterDent After the Merger
Item 6(a)-(c) SPECIAL FACTORS -- Financing and Expenses of the Merger
Item 6(d) *
Item 7(a)-(c) SPECIAL FACTORS -- Background of the Merger; -- Purposes and
Reasons of the Merger; -- Certain Effects of the Merger
Item 7(d) SPECIAL FACTORS -- Purposes and Reasons of the Merger;
Certain Effects of the Merger; -- Conflicts of Interest and
Other Interests of Affiliate Group -- EXCHANGE AND
SUBSCRIPTION AGREEMENTS -- PAYMENT AND CANCELLATION OF
CONVERTIBLE SUBORDINATED NOTES -- EMPLOYMENT AGREEMENTS --
MANAGEMENT SERVICES AGREEMENT -- STOCKHOLDERS AGREEMENT --
VOTING AGREEMENTS; -- Rights of Dissenting Stockholders;
PROPOSALS AT THE SPECIAL MEETING -- Certain Tax
Considerations -- Accounting Treatment -- Certain
Litigation; MARKET PRICE INFORMATION; DIVIDENDS AND RELATED
STOCKHOLDERS MATTERS -- Effects of Merger on Principal
Stockholders of InterDent
Item 8(a)-(b) SPECIAL FACTORS -- Background of the Merger; --
Recommendations of Special Committee and the Board of
Directors -- Fairness of the Merger; -- Opinion of Deutsche
Banc Alex. Brown; -- Position of Affiliate Group as to
Fairness
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ITEM IN
SCHEDULE 13E-3 WHERE LOCATED IN THE PROXY STATEMENT
- ----------------------------- ------------------------------------------------------------
<S> <C>
Item 8(c) INFORMATION CONCERNING THE SPECIAL MEETING -- Vote Required;
SPECIAL FACTORS -- Purposes and Reasons of the Merger;
Certain Effects of the Merger
Item 8(d) SPECIAL FACTORS -- The Special Committee
Item 8(e) SPECIAL FACTORS -- The Special Committee; -- Recommendations
of the Special Committee and the Board of Directors
Item 8(f) *
Item 9(a)-(c) SPECIAL FACTORS -- Background of the Merger; -- The Special
Committee; Opinion of Deutsche Banc Alex. Brown and Appendix
B
Item 10(a) SPECIAL FACTORS -- Position of Affiliate Group as to
Fairness; -- Conflicts of Interest and Other Interests of
Affiliate Group -- EXCHANGE AND SUBSCRIPTION AGREEMENTS --
PAYMENT AND CANCELLATION OF CONVERTIBLE SUBORDINATED NOTES
-- EMPLOYMENT AGREEMENTS -- STOCKHOLDERS AGREEMENT -- VOTING
AGREEMENTS and Appendices A, C, and D
Item 10(b) *
Item 11 SPECIAL FACTORS -- Position of Affiliate Group as to
Fairness; -- Conflicts of Interest and Other Interests of
Affiliate Group -- EXCHANGE AND SUBSCRIPTION AGREEMENTS --
PAYMENT AND CANCELLATION OF CONVERTIBLE SUBORDINATED NOTES
-- EMPLOYMENT AGREEMENTS -- STOCKHOLDERS AGREEMENT -- VOTING
AGREEMENTS and Appendices A, C, and D
Item 12(a)-(b) SPECIAL FACTORS -- Position of Affiliate Group as to
Fairness; -- Conflicts of Interest and Other Interests of
Affiliate Group -- EXCHANGE AND SUBSCRIPTION AGREEMENTS --
VOTING AGREEMENTS and Appendices A, C, and D
Item 13(a) SPECIAL FACTORS -- Rights of Dissenting Stockholders and
Appendix E
Item 13(b-(c)) *
Item 14(a) SELECTED FINANCIAL DATA; and Pages F-1 through F-
Item 15(a)-(b) INFORMATION CONCERNING THE SPECIAL MEETING -- Solicitation
and Revocation of Proxies
Item 16 SUMMARY PROPOSALS AT THE SPECIAL MEETING -- Certain
Litigation, BUSINESS OF THE COMPANY -- Legal Proceeding
Proxy Statement and related Notice of Special Meeting and
Proxy
Item 17(a) *
Item 17(b) **
Item 17(c) **
Item 17(d) Proxy Statement and related Notice of Special Meeting and
Proxy
Item 17(e) Appendix E
Item 17(f) *
</TABLE>
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* The Item is inapplicable or the answer thereto is in the negative.
** The information requested by this item is included in this Schedule 13E-3 or
as an Exhibit hereto.
<PAGE>
ITEM 1. ISSUER AND CLASS OF SECURITIES SUBJECT TO THE TRANSACTION
(a) The information set forth on the cover page of the Proxy Statement is
incorporated herein by reference.
(b) The information set forth under "INFORMATION CONCERNING THE SPECIAL
MEETING -- Vote Required to Approve the Merger; Certain Common and Preferred
Stock Voting in Favor of the Merger" is incorporated herein by reference.
(c)-(d) The information set forth under "MARKET PRICE INFORMATION;
DIVIDENDS AND RELATED STOCKHOLDER MATTERS" and "SELECTED FINANCIAL DATA" is
incorporated herein by reference.
(e) Not applicable.
(f) The information set forth under "MARKET PRICE INFORMATION; DIVIDENDS;
AND RELATED STOCKHOLDER MATTERS -- Affiliate Group Common Stock Purchase
Information" is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND
(a)-(d) and (g) This Schedule 13E-3 is being filed by the issuer, C.B.
Capital Investors, L.P., Sprout Capital VII, L.P., DLJ Capital Corp., DLJ First
ESC L.L.C., Sprout Growth II, L.P., The Sprout CEO Fund, L.P., SRM 1993
Children's Trust, Michael T. Fiore and certain related person. The information
set forth under "SPECIAL FACTORS -- Members of the Affiliate Group" and
Appendix G is incorporated herein by reference.
(e) and (f) During the last five years, none of individuals described in
Items 2 (a)-(d) above has been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors); nor has been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction
resulting in a judgment, decree or final order enjoining future violations of,
or prohibiting or mandating activities subject to, federal or state securities
laws or finding any violation with respect to such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS
(a)(1) Not applicable.
(a)(2) and (b) The information set forth under "SPECIAL FACTORS --
Background of the Merger; -- Conflicts of Interests and Other Interests of
Affiliate Group -- EXCHANGE AND SUBSCRIPTION AGREEMENTS -- PAYMENT AND
CANCELLATION OF CONVERTIBLE SUBORDINATED NOTES -- MANAGEMENT SERVICES
AGREEMENT -- VOTING AGREEMENTS -- STOCKHOLDERS AGREEMENT -- TREATMENT OF
OPTIONS" is incorporated herein by reference.
ITEM 4. TERMS OF THE TRANSACTIONS
(a) The information set forth under "SPECIAL FACTORS," "PROPOSALS AT THE
SPECIAL MEETING" and Appendices A, C and D is incorporated herein by reference.
(b) The information set forth under "SPECIAL FACTORS -- Conflicts of
Interest and Other Interests of Affiliate Group -- EXCHANGE AND SUBSCRIPTION
AGREEMENTS -- PAYMENT AND CANCELLATION OF CONVERTIBLE SUBORDINATED NOTES --
VOTING AGREEMENTS -- STOCKHOLDERS AGREEMENT -- TREATMENT OF OPTIONS" is
incorporated herein by reference.
ITEM 5. PLANS OR PROPOSALS OF THE ISSUER OR AFFILIATE
(a)-(g) The information set forth under "SPECIAL FACTORS -- Plans for
InterDent After the Merger" is incorporated herein by reference.
1
<PAGE>
ITEM 6. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
(a)-(c) The information set forth under "SPECIAL FACTORS -- Financing and
Expenses of the Merger" is incorporated herein by reference.
(d) Not applicable.
ITEM 7. PURPOSES, ALTERNATIVES, REASONS AND EFFECTS
(a)-(c) The information set forth under "SPECIAL FACTORS -- Background of
the Merger; -- Purposes and Reasons of the Merger; Certain Effects of the
Merger" is incorporated herein by reference.
(d) The information set forth under "SPECIAL FACTORS -- Purposes and
Reasons of the Merger; Certain Effects of the Merger; -- Conflicts of Interest
and Other Interests of Affiliate Group -- EXCHANGE AND SUBSCRIPTION
AGREEMENTS -- PAYMENT AND CANCELLATION OF CONVERTIBLE SUBORDINATED NOTES --
EMPLOYMENT AGREEMENTS -- MANAGEMENT SERVICES AGREEMENT -- STOCKHOLDERS
AGREEMENT -- VOTING AGREEMENTS; --Rights of Dissenting Stockholders;" PROPOSALS
AT THE SPECIAL MEETING -- Certain Tax Considerations -- Accounting Treatment --
Certain Litigation; and MARKET PRICE INFORMATION; DIVIDENDS AND RELATED
STOCKHOLDER MATTERS -- Effects of Merger on Principal Stockholders of InterDent"
is incorporated herein by reference.
ITEM 8. FAIRNESS OF THE TRANSACTIONS
(a)-(b) The information set forth under "SPECIAL FACTORS -- Background of
the Merger; -- Recommendations of the Special Committee and the Board of
Directors -- Fairness of the Merger; -- Opinion of Deutsche Banc Alex.
Brown; -- Position of the Affiliate Group as to Fairness" is incorporated herein
by reference.
(c) The information set forth under "INFORMATION CONCERNING THE SPECIAL
MEETING -- Vote Required" and "SPECIAL FACTORS -- Purposes and Reasons of the
Merger; Certain Effects of the Merger" is incorporated herein by reference.
(d) The information set forth under "SPECIAL FACTORS -- The Special
Committee" is incorporated herein by reference.
(e) The information set forth under "SPECIAL FACTORS -- The Special
Committee; -- Recommendations of the Special Committee and the Board of
Directors" is incorporated herein by reference.
(f) Not applicable.
ITEM 9. REPORTS, OPINIONS, APPRAISALS AND CERTAIN NEGOTIATIONS
(a)-(c) The information set forth under "SPECIAL FACTORS -- Background of
the Merger; -- The Special Committee; -- Opinion of the Deutsche Banc Alex.
Brown" and Appendix B is incorporated herein by reference.
ITEM 10. INTEREST IN SECURITIES OF THE ISSUER
(a) The information set forth under "SPECIAL FACTORS -- Members of the
Affiliate Group" and MARKET PRICE INFORMATION; DIVIDENDS; AND RELATED
STOCKHOLDER MATTERS -- Effect of Merger on Principal Stockholders of InterDent"
is incorporated herein by reference.
(b) Not applicable.
2
<PAGE>
ITEM 11. CONTRACTS, ARRANGEMENTS OR UNDERSTANDINGS WITH RESPECT TO THE ISSUER'S
SECURITIES
The information set forth under "SPECIAL FACTORS -- Conflicts of Interest
and Other Interests of the Affiliate Group -- EXCHANGE AND SUBSCRIPTIONS
AGREEMENTS -- PAYMENT AND CANCELLATION OF CONVERTIBLE SUBORDINATED NOTES --
EMPLOYMENT AGREEMENTS -- STOCKHOLDERS AGREEMENT -- VOTING AGREEMENTS" and
Appendices A, C and D is incorporated herein by reference.
ITEM 12. PRESENT INTENTION AND RECOMMENDATION OF CERTAIN PERSONS WITH REGARD TO
THE TRANSACTION
(a)-(b) The information set forth under "SPECIAL FACTORS -- Position of
Affiliate Group as to Fairness; -- Conflicts of Interest and Other Interests of
the Affiliate Group -- EXCHANGE AND SUBSCRIPTION AGREEMENTS -- VOTING
AGREEMENTS" and Appendices A, C and D is incorporated herein by reference.
ITEM 13. OTHER PROVISIONS OF THE TRANSACTION
(a) The information set forth under "SPECIAL FACTORS -- Rights of
Dissenting Stockholders" and Appendix E is incorporated herein by reference.
(b)-(c) Not applicable.
ITEM 14. FINANCIAL INFORMATION
(a)-(b) The information set forth under "SELECTED FINANCIAL DATA" and on
pages F-1 through F-56 of the Proxy Statement is incorporated herein by
reference.
ITEM 15. PERSONS AND ASSETS EMPLOYED, RETAINED OR UTILIZED
(a)-(b) The information set forth under "INFORMATION CONCERNING THE SPECIAL
MEETING -- Solicitation and Revocation of Proxies" is incorporated herein by
reference.
ITEM 16. ADDITIONAL INFORMATION
The information set forth under "SUMMARY PROPOSALS AT THE SPECIAL
MEETING -- Certain Litigation" -- "BUSINESS OF THE COMPANY -- Legal Proceedings"
is incorporated herein by reference. In addition, reference is hereby made to
the Proxy Statement and to each exhibit attached thereto, each of which is
incorporated herein by reference.
ITEM 17. MATERIAL TO BE FILED AS EXHIBITS
(a) Not applicable.
(b)(1) Opinion of Deutsche Banc Alex. Brown (incorporated by reference to
Appendix B to the Proxy Statement).
(b)(2) Presentation of Deutsche Banc Alex. Brown to the Special Committee.
(c)(1) Agreement and Plan of Merger, dated as of October 22, 1999, between
InterDent and ID Recap, Inc. (incorporated by reference to Appendix A to the
Proxy Statement).
(c)(2) Exchange and Subscription Agreement, dated as of November 18, 1999,
by and among ID Recap, Inc., C.B. Capital Investors, L.P. Sprout Capital VII,
L.P., DLJ Capital Corp., DLJ First ESC L.L.C., Sprout Growth II, L.P. and The
Sprout CEO Fund, L.P.
(c)(3) Exchange and Subscription Agreement, dated as of October 22, 1999,
by and between ID Recap, Inc. and SRM 1993 Children's Trust.
(c)(4) Exchange and Subscription Agreement, dated as of October 22, 1999,
by and between ID Recap, Inc. and Michael T. Fiore.
3
<PAGE>
(c)(5) Voting Agreement, dated as of November 18, 1999, by and among ID
Recap, Inc., CB Capital, Investors, L.P. Sprout Capital VII, L.P., DLJ Capital
Corp., DLJ First ESC L.L.C., Sprout Growth II, L.P. and The Sprout CEO Fund,
L.P.
(c)(6) Voting Agreement, dated as of October 22, 1999, by and between ID
Recap, Inc. and SRM 1993 Children's Trust.
(c)(7) Voting Agreement, dated as of October 22, 1999, by and between ID
Recap, Inc. and Michael T. Fiore.
(c)(8) Voting Agreement, dated as of October 22, 1999, by and between ID
Recap, Inc. and Steven R. Matzkin.
(d) Proxy Statement and related Notice of Special Meeting and Proxy
(incorporated by reference to the Proxy Statement filed by InterDent, Inc. on
the date hereof).
(e) Dissenters' Rights Provisions (incorporated by reference to Appendix E
to the Proxy Statement).
(f) Not applicable.
4
<PAGE>
SIGNATURE
After due inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
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<S> <C>
Dated: November 23, 1999 INTERDENT, INC.
By: /s/ MICHAEL T. FIORE
Name: Michael T. Fiore
Title: Co-Chairman and Chief Executive Officer
CB CAPITAL INVESTORS, L.P.
By: CB Capital Investors, Inc.
Its: General Partner
By: /s/ JOHN O'CONNOR
Name: John O'Connor
Title: Vice President
SPROUT CAPITAL VII, L.P.
By: DLJ Capital Corp.
Its: Managing General Partner
By: /s/ ARTHUR S. ZUCKERMAN
Name: Arthur S. Zuckerman
Title: Vice President
DLJ CAPITAL CORPORATION
By: /s/ ARTHUR S. ZUCKERMAN
Name: Arthur S. Zuckerman
Title: Vice President
DLJ FIRST ESC L.L.C
By: DLJ LBO Plans Management Corporation
Its: Manager
By: /s/ ARTHUR S. ZUCKERMAN
Name: Arthur S. Zuckerman
Title: Vice President
</TABLE>
5
<PAGE>
<TABLE>
<S> <C>
SPROUT GROWTH II, L.P.
By: DLJ Capital Corp.
Its: Managing General Partner
By: /s/ ARTHUR S. ZUCKERMAN
Name: Arthur S. Zuckerman
Title: Vice President
THE SPROUT CEO FUND, L.P.
By: DLJ Capital Corp.
Its: General Partner
By: /s/ ARTHUR S. ZUCKERMAN
Name: Arthur S. Zuckerman
Title: Vice President
SRM 1993 CHILDREN'S TRUST
By: /s/ THEODORE L. KOENIG
Name: Theodore L. Koenig
Its: Trustee
</TABLE>
6
<PAGE>
Strictly private and confidential
PROJECT SPRING
PRESENTATION TO THE
BOARD OF DIRECTORS OF FLOWER
OCTOBER 15, 1999
DEUTSCHE BANC ALEX. BROWN
DEUTSCHE BANK /
<PAGE>
PROJECT SPRING
THE INFORMATION CONTAINED IN THIS DOCUMENT WAS OBTAINED FROM
THE MANAGEMENT OF FLOWER AND OTHER SOURCES.
THIS PRESENTATION HAS BEEN PREPARED FOR THE USE OF THE BOARD
OF DIRECTORS OF FLOWER ONLY. IT IS CONFIDENTIAL AND MAY NOT
BE DISCLOSED OR PROVIDED TO ANY THIRD PARTIES WITHOUT THE
WRITTEN PERMISSION OF DEUTSCHE BANK SECURITIES, INC.
("DEUTSCHE BANC ALEX. BROWN").
UNLESS OTHERWISE NOTED, THIS DOCUMENT IS PREPARED AS OF
OCTOBER 15, 1999, AND REFLECTS INFORMATION MADE AVAILABLE TO
US PRIOR TO SUCH DATE. IT DOES NOT INCLUDE INFORMATION
REGARDING ALL OF THE ASSESSMENTS MADE BY DEUTSCHE BANC ALEX.
BROWN IN ARRIVING AT ITS CONCLUSIONS.
2
<PAGE>
TABLE OF CONTENTS
1. Overview of the proposed transaction
A. Financial overview of proposed transaction
B. Overview of acquiror
C. Overview of FLOWER
2. Valuation analysis
A. FLOWER valuation based on selected public companies
B. FLOWER valuation based on selected M&A transactions
C. FLOWER valuation based on discounted cash flow analysis
D. FLOWER valuation based on premiums paid analysis
3. Appendix
A. FLOWER leveraged recapitalization analysis
B. FLOWER projected financial statements
C. Selected public company statistics
D. Selected M&A transactions
E. FLOWER ownership profile
F. FLOWER summary valuation
3
<PAGE>
SECTION 1
OVERVIEW OF THE PROPOSED TRANSACTION
Sub-section A
Financial overview of proposed transaction
<PAGE>
SUMMARY OF PROPOSED TRANSACTION TERMS
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<S> <C>
Transaction: Cash merger for all outstanding shares of common stock of FLOWER.
Prior to merger, certain members of management and certain investors
will exchange a portion of their shares for shares of Newco
Price per share: $9.50
Accounting treatment: Recapitalization
Key conditions to close: Stockholder and convertible note holder approvals
No material adverse changes
No "push-down" accounting
Note more than 15% dissenting shares
Execution of management services agreement
Execution of employment agreements
Due diligence with dentist and dentist professionals
Execution of agreements with earn-out recipients
Other customary conditions
No-shop: 30 day period following announcement of execution of merger
agreement, may engage in discussions concerning unsolicited third
party acquisition proposal
After 30 day period, may not solicit or engage in discussions or
negotiations concerning third party acquisition proposal, subject to
fiduciary out to accept superior proposal
Termination fee: $7.5 million, plus $1.5 million for non-financing expenses and all financing
related expenses
</TABLE>
5
<PAGE>
FINANCIAL OVERVIEW OF PROPOSED TRANSACTION
<TABLE>
<CAPTION>
dollars in millions, except per share amounts
--------------------------------------------------------------------------------------------------------
<S> <C>
PURCHASE PRICE PER SHARE $9.50
Shares outstanding:
Shares outstanding 21.1
In-the money options outstanding(a) 2.4
In-the-money warrants outstanding(b) 0.8
Convertible preferred stock 1.6
Convertible notes 3.3
Less: performance shares (0.6)
------
Total shares outstanding 28.5
TOTAL IMPLIED EQUITY PURCHASE PRICE $270.9
Less: exercise of in the money options proceeds(a) ($15.6)
Less: exercise of in the money warrants proceeds(b) ($5.5)
------
NET EQUITY PURCHASE PRICE $249.8
Plus: total debt (as of 6/30/99) $59.5
Less: total cash (as of 6/30/99) ($2.5)
------
ENTERPRISE PURCHASE PRICE $306.8
</TABLE>
-----------------------------------------------------
SOURCE: FLOWER MANAGEMENT AND COMPANY DOCUMENTS.
(A) BASED ON A PURCHASE PRICE PER SHARE OF $9.50 AND IN-THE-
MONEY OPTIONS WITH A WEIGHTED AVERAGE EXERCISE PRICE OF
$6.65.
(B) BASED ON A PURCHASE PRICE PER SHARE OF $9.50 AND IN-THE-
MONEY WARRANTS WITH A WEIGHTED AVERAGE EXERCISE PRICE OF
$7.02.
6
<PAGE>
FINANCIAL OVERVIEW OF PROPOSED TRANSACTION
(continued)
<TABLE>
<CAPTION>
dollars in millions, except per share amounts
----------------------------------------------------------------------------------------------
FLOWER Transaction FLOWER Transaction
Run rate multiples LTM multiples
---------------------------- ---------------------------
<S> <C> <C> <C> <C>
ENTERPRISE VALUE MULTIPLES:
Revenues $220.3 1.4x $189.6 1.6x
EBITDA $30.8 10.0x $24.7 12.4x
EBIT $21.9 14.0x $16.9 18.1x
EQUITY VALUE MULTIPLES:
Net income $9.7 25.8x $7.5 33.3x
CY 1999 earnings per share(a) $0.45 21.1x $0.45 21.1x
CY 2000 earnings per share(b) $0.57 16.7x $0.57 16.7x
PREMIUM TO MARKET:
One day prior (10/13/99) $7.38 28.8% $7.38 28.8%
One month prior (9/13/99) $7.56 25.6% $7.56 25.6%
</TABLE>
---------------------------------------
NOTE: LTM AND RUN RATE AS OF QUARTER ENDING 6/30/99.
(A) SOURCE: I/B/E/S ESTIMATES.
7
<PAGE>
SECTION 1
OVERVIEW OF THE PROPOSED TRANSACTION
Sub-section B
Overview of acquiror
<PAGE>
OVERVIEW OF ACQUIROR
- FIELD is a leading source of private equity for management
buyouts.
- FIELD focuses on friendly buyouts of retail chains and
consumer products companies.
- Holdings include Communications & Power Industries, a
communications components maker and Leslie's Poolmart, a
leading swimming pool accessory retailer.
- FIELD's sponsorship has created public companies such as
vitamin and supplement maker Twinlab and Gart Sports, a
leading sporting goods chain in the US.
- FIELD closed on their third fund in the second half of last
year, raising $1.2 billion.
9
<PAGE>
SECTION 1
OVERVIEW OF THE PROPOSED TRANSACTION
Sub-section C
Overview of FLOWER
<PAGE>
OVERVIEW OF FLOWER
- FLOWER is the largest consolidator of dental practice
management companies in the US.
- The Company provides management services to approximately
570 dentists at 205 dental offices in select markets
throughout the US. FLOWER currently has affiliated dental
practices in California, Florida, Georgia, Hawaii, Idaho,
Indiana, Michigan, Nevada, Oregon, Pennsylvania and Washington.
- Formed by the merger of GRASS and GREEN on November 4, 1997
and by the subsequent merger of FLOWER and DAISY on March 12,
1999.
- The merger that created FLOWER brought together two
complimentary sets of skills- from the GRASS side, a
competency in automated information management systems and a
track record of successfully integrating acquisitions, and
from the DAISY side, superior capabilities in clinical level
productivity enhancement programs.
11
<PAGE>
GEOGRAPHIC CLUSTERS SERVICED BY FLOWER
[MAP]
12
<PAGE>
GRASS/FLOWER HISTORICAL STOCK PRICE HISTORY
FEBRUARY 13, 1997 TO OCTOBER 13, 1999
[GRAPH]
2/13/97 - GRASS sells 1.5 million shares in its IPO
9/23/97 - GRASS and GREEN announce their intention to merge
in a pooling of interests transaction
5/13/98 - GRASS announces the completion of a private
placement of $15 million in preferred stock and $30 million
in convertible subordinated debt
10/16/98 - GRASS announces plans to merge with DAISY in a
pooling of interests transaction
1/26/99 - GRASS announces the acquisitions of eleven dental
offices in four separate transactions
3/12/99 - GRASS and DAISY merger becomes effective, forming
FLOWER
5/19/99 - FLOWER announces Q1 results of an increase in net
revenue of 121% and net income of 272%
8/10/99 - FLOWER announces Q2 results of an increase in net
revenue of 90% and net income of 162%. FLOWER also announces
acquisition of interest in Dental X Change
Volume ---- Close
13
<PAGE>
FLOWER RELATIVE STOCK PRICE PERFORMANCE
FEBRUARY 13, 1997 TO OCTOBER 13, 1999
FLOWER: 47.5%
DPM/OPM INDEX: -28.4%
PPM INDEX: -51.2%
S&P 500: 58.4%
[GRAPH]
PHYSICIAN PRACTICE MANAGEMENT COMPANIES INCLUDE: AMERICAN
PHYSICIAN PARTNERS (RADIOLOGIX), PEDIATRIX MEDICAL GROUP,
PHYCOR, PROMEDCO MANAGEMENT, AND US ONCOLOGY.
DENTAL/ORTHODONTIC MANAGEMENT COMPANIES INCLUDE: AMERICAN
DENTAL PARTNERS, APPLE ORTHODONTIX, CASTLE DENTAL CENTERS,
COAST DENTAL SERVICES, MONARCH DENTAL, AND ORTHODONTIC CENTERS
OF AMERICA.
14
<PAGE>
FLOWER VOLUME AT PRICES
JANUARY 1, 1998 TO OCTOBER 13, 1999
Total volume: 13.9 million
Turnover (% of float (a)) 156.0%
[CHART]
(A) SOURCE: BLOOMBERG AS OF 10/13/99.
15
<PAGE>
FLOWER SUMMARY OF ANALYSTS' ESTIMATES AND COMMENTS
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
REPORT PRICE PRICE GY1999 GY2000
FINANCIAL INSTITUTION (ANALYST) DATE RECOMMENDATION AT REPORT TARGET ESTIMATE ESTIMATE
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Tucker Cleary Capital Markets (Holmes) 8/30/99 Strong buy $7.50 $12-$14 $0.45 $0.58
William Blair (Simpson) 8/25/99 Long term buy $7.06 - $0.44 $0.57
Deutsche Banc Alex Brown (Frazier) 8/11/99 Buy $7.75 $10.00 $0.45 $0.58
Raymond James (Baker) 8/11/99 Buy $7.75 $ 9.25 $0.45 $0.57
Red Chip Review (Shah) 7/7/99 - $7.88 $ 9.75 $0.44 $0.57
Wedbush Morgan Securities (Cheng) 5/14/99 Buy $6.88 $10.00 $0.44 $0.57
I/B/E/S Inc. 10/13/99 - $7.38 - $0.45 $0.57
-------------------------------------------------------------------------------------------------------------------
</TABLE>
"WE BELIEVE THAT, AS THE COMPANY ESTABLISHES A TRACK
RECORD OF PREDICTABLE, ON-CONSENSUS PERFORMANCE, THE P/E
RATIO SHOULD EXPAND FROM ITS CURRENT LEVEL. AS A RESULT
OF OUR INCREASING CONFIDENCE IN FLOWER'S ABILITY TO
ACHIEVE OUR 1999 AND 2000 EPS PROJECTIONS (ALONG WITH
INCREASING EARNINGS VISIBILITY), WE ARE RAISING OUR
12-MONTH PRICE TARGET TO $10."
-DEUTSCHE BANC ALEX. BROWN - 8/11/99
"WE BELIEVE THAT FLOWER SHOULD TRADE AT A PREMIUM
VALUATION RELATIVE TO THE PEER GROUP GIVEN ITS SEASONED
MANAGEMENT TEAM, PROSPECTS FOR GROWTH, DEMONSTRATED
ABILITY TO DELIVER RELATIVE TO EXPECTATIONS AND STRONG
FINANCIAL BACKING."
-RAYMOND JAMES - 5/12/99
"AS THE LEADING DENTAL PRACTICE MANAGEMENT COMPANY IN THE
US, WE BELIEVE FLOWER CAN DELIVER CONSISTENT LONG-TERM
CAPITAL APPRECIATION TO INVESTORS. WE MAINTAIN OUR BUY
RECOMMENDATION ON FLOWER AND 12-MONTH PRICE TARGET OF
$10."
-WEDBUSH MORGAN - 3/1/99
16
<PAGE>
FLOWER HISTORICAL AND PROJECTED QUARTERLY EBITDA AND EPS
[GRAPH]
-----------------------------------
SOURCE: COMPANY DOCUMENTS AND DBAB RESEARCH ANALYST ESTIMATES.
17
<PAGE>
SELECTED PUBLIC COMPANIES FORWARD P/E ANALYSIS
<TABLE>
<CAPTION>
COMPANY 3/31/97 6/30/97 9/30/97 12/31/97 3/31/98 6/30/98
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
DENTAL/ORTHODONTIC PRACTICE MANAGEMENT COMPANIES
American Dental Partners, Inc. (a) - - - - - 19.9x
Apple Orthodontix, Inc. (b) - 20.7x 28.3x 18.5x 18.0x 9.9x
Castle Dental Centers, Inc. (c) - - - 13.8x 19.3x 14.8x
Coast Dental Services, Inc. 21.5x 23.4x 39.3x 29.1x 30.8x 14.8x
Monarch Dental Corporation (d) - - 40.3x 21.6x 26.0x 21.8x
Orthodontic Centers of America, Inc. 23.8x 29.5x 30.0x 23.1x 27.9x 24.9x
PHYSICIAN PRACTICE MANAGEMENT COMPANIES
American Physician Partners, Inc. (Radiologix)(e) - - - 12.5x 12.3x 8.5x
Pediatrix Medical Group, Inc. 24.2x 31.0x 27.4x 24.8x 25.3x 19.1x
PhyCor, Inc. 29.3x 34.1x 26.8x 22.4x 18.3x 14.5x
ProMedCo Management Company (f) NA 15.5x 17.3x 15.0x 20.2x 13.8x
US Oncology, Inc. 16.5x 29.8x 26.1x 24.4x 21.6x 16.3x
MEAN 23.1x 26.3x 29.4x 20.5x 22.0x 16.2x
DAISY (g) - - - 22.0x 24.7x 18.6x
GRASS 30.7x 27.1x 31.5x 16.6x 24.2x 20.3x
FLOWER - - - - - -
<CAPTION>
COMPANY 9/30/98 12/31/98 3/31/99 6/30/99 9/30/99
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
DENTAL/ORTHODONTIC PRACTICE MANAGEMENT COMPANIES
American Dental Partners, Inc. (a) 11.2x 13.8x 9.2x 12.4x 12.9x
Apple Orthodontix, Inc. (b) 7.8x 8.5x 8.7x 10.5x NM
Castle Dental Centers, Inc. (c) 7.3x 8.1x 9.3x 8.9x 4.5x
Coast Dental Services, Inc. 12.2x 10.2x 8.2x 8.7x 6.2x
Monarch Dental Corporation (d) 16.6x 8.4x 7.4x 6.6x 4.0x
Orthodontic Centers of America, Inc. 18.5x 20.1x 15.0x 12.6x 14.5x
PHYSICIAN PRACTICE MANAGEMENT COMPANIES
American Physician Partners, Inc. (Radiologix)(e) 8.2x 6.9x 6.1x 7.3x 8.0x
Pediatrix Medical Group, Inc. 20.5x 25.8x 11.8x 9.0x 5.9x
PhyCor, Inc. 6.3x 9.9x 7.2x 12.3x 9.6x
ProMedCo Management Company (f) 8.4x 8.4x 6.3x 5.0x 4.1x
US Oncology, Inc. 13.8x 19.0x 10.9x 13.6x 9.7x
MEAN 11.9x 12.7x 9.1x 9.7x 7.9x
DAISY (g) 15.1x 16.5x - - -
GRASS 15.4x 15.1x - - -
FLOWER - - 11.6x 14.2x 15.2x
</TABLE>
- ---------------------------
Source: Wall Street Estimates:
(a) AMERICAN DENTAL PARTNERS' IPO WAS ON 4/16/98.
(b) APPLE ORTHODONTIX'S IPO WAS ON 5/23/97.
(c) CASTLE DENTAL CENTERS' IPO WAS ON 9/12/97.
(d) MONARCH DENTAL SERVICES' IPO WAS ON 7/18/97.
(e) AMERICAN PHYSICIAN PARTNERS' (RADIOLOGIX) IPO WAS ON 11/21/97.
(f) PROMEDCO MANAGEMENT COMPANY'S IPO WAS ON 3/12/97.
(g) DAISY'S IPO WAS ON 11/4/97.
18
<PAGE>
FLOWER/GRASS/DAISY EARNINGS PERFORMANCE
VERSUS WALL STREET ESTIMATES
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
FLOWER GRASS
WALL STREET % ABOVE/(BELOW) WALL STREET %ABOVE/(BELOW)
ESTIMATES ACTUAL ESTIMATE ESTIMATES ACTUAL ESTIMATE
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Q2 $0.10 $0.11 10.0% - - -
1999 Q1 $0.08 $0.09 12.5% - - -
Q4 - - - $0.08 $0.09 12.5%
Q3 - - - $0.07 $0.07 7.7%
1998 Q2 - - - ($0.01) $0.01 NM
Q1 - - - $0.05 ($0.02) NM
Q4 - - - NM ($0.14)(a) NA
Q3 - - - $0.00 $0.03 NM
1997 Q2 - - - $0.01 $0.02 100.0%
Q1 - - - $0.00 $0.01 NM
<CAPTION>
--------------------------------------------------
DAISY
WALL STREET % ABOVE/(BELOW)
ESTIMATES ACTUAL ESTIMATE
--------------------------------------------------
<S> <C> <C> <C>
Q2 - -
1999 Q1 - -
Q4 $0.16 $0.17 4.6%
Q3 $0.12 $0.14 20.0%
1998 Q2 $0.10 $0.12 20.0%
Q1 $0.08 $0.10 33.3%
Q4 $0.03 $0.05 66.7%
Q3 $0.02 $0.01 (50.0%)
1997 Q2 - - -
Q1 - - -
</TABLE>
----------------------------
SOURCE: INVESTEXT
(a) GRASS AND GREEN MERGER
19
<PAGE>
SECTION 2
VALUATION ANALYSIS
Sub-Section A
FLOWER valuation based on selected public companies
<PAGE>
FLOWER VALUATION BASED ON SELECTED PUBLIC
COMPANIES - LTM
IMPLIED PRICE PER SHARE
[GRAPH]
- ----------------------
(a) LTM AS OF 06/30/99
SELECTED MEAN INCLUDES: AMERICAN DENTAL PARTNERS, AMERICAN PHYSICIAN PARTNERS
(RADIOLOGIX), ORTHODONTIC CENTERS OF AMERICA, PHYCOR, AND US ONCOLOGY.
OVERALL MEAN INCLUDES: AMERICAN DENTAL PARTNERS, AMERICAN PHYSICIAN PARTNERS,
APPLE ORTHODONTIX, CASTLE DENTAL CENTERS, COAST DENTAL SERVICES, MONARCH
DENTAL, ORTHODONTIC CENTERS OF AMERICA, PEDIATRIX MEDICAL GROUP, PHYCOR,
PROMEDCO MANAGEMENT, AND US ONCOLOGY.
21
<PAGE>
FLOWER VALUATION BASED ON SELECTED PUBLIC
COMPANIES - LTM (continued)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
FLOWER SELECTED DENTAL/ORTHODONTIC/PPM MULTIPLES
-------------------------- -----------------------------------------
TRANSACTION SELECTED OVERALL
STATISTICS MULTIPLES MEAN MEAN RANGE
-------------------------- -----------------------------------------
<S> <C> <C> <C> <C> <C> <C>
VALUATION BASED ON LTM STATISTICS AS OF 6/30/99
Revenues $189.6 1.6 x 1.8 x 1.3 x 0.5 x - 4.4 x
EBITDA $24.7 12.4 x 6.9 x 6.0 x 2.9 x - 11.4 x
EBIT $16.9 18.1 x 9.7 x 8.8 x 3.5 x - 13.3 x
Net Income $7.5 33.3 x 12.7 x 10.9 x 4.1 x - 20.6 x
VALUATION BASED ON PROJECTED STATISTICS
Cal. 1999 earnings per share (I/B/E/S) $0.45 21.4 x 11.3 x 9.8 x 5.2 x - 17.3 x
Cal. 2000 earnings per share (I/B/E/S) $0.57 16.7 x 9.1 x 8.0 x 4.6 x - 13.3 x
</TABLE>
SELECTED MEAN INCLUDES: AMERICAN DENTAL PARTNERS, AMERICAN PHYSICIAN PARTNERS
(RADIOLOGIX), ORTHODONTIC CENTERS OF AMERICA, PHYCOR, AND US ONCOLOGY.
OVERALL MEAN INCLUDES: AMERICAN DENTAL PARTNERS, AMERICAN PHYSICIAN PARTNERS,
APPLE ORTHODONTIX, CASTLE DENTAL CENTERS, COAST DENTAL SERVICES, MONARCH
DENTAL, ORTHODONTIC CENTERS OF AMERICA, PEDIATRIX MEDICAL GROUP, PHYCOR,
PROMEDCO MANAGEMENT, AND US ONCOLOGY.
22
<PAGE>
FLOWER VALUATION BASED ON SELECTED PUBLIC
COMPANIES - LTM (continued)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
IMPLIED PRICE PER SHARE BASED ON MULTIPLES OF
SELECTED DENTAL/ORTHODONTIC/PPM COMPANIES
----------------------------------------------------
FLOWER SELECTED OVERALL
STATISTICS MEAN MEAN RANGE
---------- ----------------------------------------------------
<S> <C> <C> <C> <C> <C>
VALUATION BASED ON LTM STATISTICS AS OF 6/30/99 (a)
Revenues $189.6 $10.53 $6.87 ($0.05) - $27.74
EBITDA $24.7 $3.73 $2.76 ($0.65) - $8.52
EBIT $16.9 $3.47 $2.81 ($1.24) - $6.21
Net Income $7.5 $4.33 $3.70 $1.40 - $6.97
VALUATION BASED ON PROJECTED STATISTICS
Cal. 1999 earnings per share (I/B/E/S) $0.45 $5.15 $4.38 $2.39 - $7.75
Cal. 2000 earnings per share (I/B/E/S) $0.57 $5.23 $4.61 $2.68 - $7.56
</TABLE>
- ---------------------------
(a) PER SHARE EQUITY VALUES BASED ON IMPLIED ENTERPRISE VALUES ADJUSTED BY
ADDING CASH OF $2.5M AND SUBTRACTING DEBT ($89.5M PRE-CONVERSION OF
CONVERTIBLE SUBORDINATED DEBENTURES OR $59.5M POST-CONVERSION).
SELECTED MEAN INCLUDES: AMERICAN DENTAL PARTNERS, AMERICAN PHYSICIAN PARTNERS
(RADIOLOGIX), ORTHODONTIC CENTERS OF AMERICA, PHYCOR, AND US ONCOLOGY.
OVERALL MEAN INCLUDES: AMERICAN DENTAL PARTNERS, AMERICAN PHYSICIAN PARTNERS,
APPLE ORTHODONTIX, CASTLE DENTAL CENTERS, COAST DENTAL SERVICES, MONARCH
DENTAL, ORTHODONTIC CENTERS OF AMERICA, PEDIATRIX MEDICAL GROUP, PHYCOR,
PROMEDCO MANAGEMENT, AND US ONCOLOGY.
23
<PAGE>
FLOWER VALUATION BASED ON SELECTED PUBLIC
COMPANIES - RUN RATE
IMPLIED PRICE PER SHARE
[GRAPH]
- -----------------------------------------
(a) RUN RATE BASED ON Q2 1999 ANNUALIZED.
SELECTED MEAN INCLUDES: AMERICAN DENTAL PARTNERS, AMERICAN PHYSICIAN PARTNERS
(RADIOLOGIX), ORTHODONTIC CENTERS OF AMERICA, PHYCOR, AND US ONCOLOGY.
OVERALL MEAN INCLUDES: AMERICAN DENTAL PARTNERS, AMERICAN PHYSICIAN PARTNERS,
APPLE ORTHODONTIX, CASTLE DENTAL CENTERS, COAST DENTAL SERVICES, MONARCH
DENTAL, ORTHODONTIC CENTERS OF AMERICA, PEDIATRIX MEDICAL GROUP, PHYCOR,
PROMEDCO MANAGEMENT, AND US ONCOLOGY.
24
<PAGE>
FLOWER VALUATION BASED ON SELECTED PUBLIC
COMPANIES - RUN RATE (continued)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
FLOWER SELECTED DENTAL/ORTHODONTIC/PPM MULTIPLES
-------------------------- -----------------------------------------
TRANSACTION SELECTED OVERALL
STATISTICS MULTIPLES MEAN MEAN RANGE
-------------------------- -----------------------------------------
<S> <C> <C> <C> <C> <C> <C>
VALUATION BASED ON RUN RATE AS OF 6/30/99
Revenues $220.3 1.4 x 1.6 x 1.1 x 0.5 x - 3.9 x
EBITDA $30.8 10.0 x 6.0 x 5.3 x 2.8 x - 9.4 x
EBIT $21.9 14.0 x 8.7 x 7.4 x 3.5 x - 11.3 x
Net Income $9.7 25.8 x 12.3 x 10.1 x 4.1 x - 17.8 x
VALUATION BASED ON PROJECTED STATISTICS
Cal. 1999 earnings per share (I/B/E/S) $0.45 21.1 x 11.3 x 9.6 x 5.2 x - 17.3 x
Cal. 2000 earnings per share (I/B/E/S) $0.57 16.7 x 9.1 x 8.0 x 4.6 x - 13.3 x
</TABLE>
SELECTED MEAN INCLUDES: AMERICAN DENTAL PARTNERS, AMERICAN PHYSICIAN PARTNERS
(RADIOLOGIX), ORTHODONTIC CENTERS OF AMERICA, PHYCOR, AND US ONCOLOGY.
OVERALL MEAN INCLUDES: AMERICAN DENTAL PARTNERS, AMERICAN PHYSICIAN PARTNERS,
APPLE ORTHODONTIX, CASTLE DENTAL CENTERS, COAST DENTAL SERVICES, MONARCH
DENTAL, ORTHODONTIC CENTERS OF AMERICA, PEDIATRIX MEDICAL GROUP, PHYCOR,
PROMEDCO MANAGEMENT, AND US ONCOLOGY.
25
<PAGE>
FLOWER VALUATION BASED ON SELECTED PUBLIC
COMPANIES - RUN RATE (continued)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
IMPLIED PRICE PER SHARE BASED ON MULTIPLES OF
SELECTED DENTAL/ORTHODONTIC/PPM COMPANIES
----------------------------------------------------
FLOWER SELECTED OVERALL
STATISTICS MEAN MEAN RANGE
---------- ----------------------------------------------------
<S> <C> <C> <C> <C> <C>
VALUATION BASED ON RUN RATE AS OF 6/30/99 (a)
Revenues $220.3 $11.06 $7.38 $0.74 - $28.62
EBITDA $30.8 $4.47 $3.45 $0.02 - $8.84
EBIT $21.9 $4.63 $3.37 ($0.50) - $7.20
Net Income $9.7 $5.38 $4.42 $1.79 - $7.63
VALUATION BASED ON PROJECTED STATISTICS
Cal. 1999 earnings per share (I/B/E/S) $0.45 $5.15 $4.38 $2.39 - $7.75
Cal. 2000 earnings per share (I/B/E/S) $0.57 $5.23 $4.61 2.66 - $7.56
</TABLE>
- ---------------------------
(a) PER SHARE EQUITY VALUES BASED ON IMPLIED ENTERPRISE VALUES ADJUSTED BY
ADDING CASH OF $2.5M AND SUBTRACTING DEBT ($89.5M PRE-CONVERSION OF
CONVERTIBLE SUBORDINATED DEBENTURES OR $59.5M POST-CONVERSION).
SELECTED MEAN INCLUDES: AMERICAN DENTAL PARTNERS, AMERICAN PHYSICIAN PARTNERS
(RADIOLOGIX), ORTHODONTIC CENTERS OF AMERICA, PHYCOR, AND US ONCOLOGY.
OVERALL MEAN INCLUDES: AMERICAN DENTAL PARTNERS, AMERICAN PHYSICIAN PARTNERS,
APPLE ORTHODONTIX, CASTLE DENTAL CENTERS, COAST DENTAL SERVICES, MONARCH
DENTAL, ORTHODONTIC CENTERS OF AMERICA, PEDIATRIX MEDICAL GROUP, PHYCOR,
PROMEDCO MANAGEMENT, AND US ONCOLOGY.
26
<PAGE>
SECTION 2
VALUATION ANALYSIS
Sub-section B
FLOWER valuation based on selected M&A transactions
27
<PAGE>
FLOWER VALUATION BASED ON SELECTED M&A
TRANSACTIONS - LTM
IMPLIED PRICE PER SHARE
[GRAPH]
- ---------------------
(a) LTM AS OF 6/30/99
28
<PAGE>
FLOWER VALUATION BASED ON SELECTED M&A
TRANSACTIONS - LTM (continued)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
FLOWER RECENT DENTAL/ORTHODONTIC/
-------------------------- PPM MERGERS AND ACQUISITIONS
TRANSACTION --------------------------------
STATISTICS MULTIPLES MEAN RANGE
-------------------------- --------------------------------
<S> <C> <C> <C> <C> <C>
VALUATION BASED ON LTM STATISTICS AS OF 6/30/99
Revenues $189.6 1.6 x 1.8 x 1.0 x - 3.5 x
EBITDA $24.7 12.4 x 9.8 x 6.1 x - 14.1 x
EBIT $16.9 18.1 x 13.5 x 7.9 x - 20.1 x
Net Income $7.5 33.3 x 23.9 x 10.2 x - 40.1 x
VALUATION BASED ON PROJECTED STATISTICS
Forward net income (I/B/E/S) $12.2 20.5 x 15.7 x 9.3 x - 30.4 x
VALUATION BASED ON PREMIUMS PAID
One day prior price $7.38 28.8 % 33.9 % 4.7 x - 129.2 %
One month prior price $7.56 25.6 % 49.9 % 6.1 x - 140.4 %
</TABLE>
29
<PAGE>
FLOWER VALUATION BASED ON SELECTED M&A
TRANSACTIONS - LTM (continued)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
IMPLIED PRICE PER SHARE BASED ON RECENT
DENTAL/ORTHODONTIC/PPM TRANSACTIONS
FLOWER ----------------------------------------
STATISTICS MEAN RANGE
---------- ------------ -------------------------
<S> <C> <C> <C> <C>
VALUATION BASED ON LTM STATISTICS AS OF 6/30/99 (a)
Revenues $189.6 $10.74 $4.96 - $21.68
EBITDA $24.7 $6.93 $2.90 - $10.94
EBIT $16.9 $6.37 $2.13 - $10.68
Net Income $7.5 $7.95 $3.45 - $11.30
VALUATION BASED ON PROJECTED STATISTICS
Forward net income (I/B/E/S) $12.2 $8.39 $5.11 - $13.73
VALUATION BASED ON PREMIUMS PAID
One day prior price $7.38 $9.88 $7.72 - $16.90
One month prior price $7.56 $11.33 $8.02 - $18.18
</TABLE>
- ---------------------------
(a) Per share equity values based on implied enterprise values adjusted by
adding cash of $2.5M and subtracting debt ($89.5M pre-conversion of
convertible subordinated debentures or $59.5M post-conversion).
30
<PAGE>
FLOWER VALUATION BASED ON SELECTED M&A TRANSACTIONS - RUN RATE
IMPLIED PRICE PER SHARE
[GRAPH]
(a) Based on run rate as of 06/30/99.
31
<PAGE>
FLOWER VALUATION BASED ON SELECTED M&A TRANSACTIONS - RUN RATE
(continued)
<TABLE>
<CAPTION>
----------------------------------------------------------------
FLOWER RECENT DENTAL/ORTHODONTIC/
--------- PPM MERGERS AND ACQUISITIONS
TRANSACTION ------------------------------
STATISTICS MULTIPLES MEAN RANGE
---------- ----------- ------------------------------
<S> <C> <C> <C> <C> <C>
VALUATION BASED ON RUN RATE AS OF 6/30/99
Revenue $220.3 1.4 x 1.7 x 1.0 x - 2.7 x
EBITDA $30.8 10.0 x 8.1 x 5.6 x - 9.9 x
EBIT $21.9 14.0 x 11.4 x 7.6 x - 20.4 x
Net income $9.7 25.8 x 21.2 x 14.8 x - 47.0 x
VALUATION BASED ON PROJECTED STATISTICS
Forward net income (I/B/E/S) $12.2 20.5 x 15.7 x 9.3 x - 30.4 x
VALUATION BASED ON PREMIUMS PAID
One day prior price $7.38 28.8 % 33.9 % 4.7 % - 129.2 %
One month prior price $7.56 25.6 % 49.9 % 6.1 % - 140.4 %
</TABLE>
32
<PAGE>
FLOWER VALUATION BASED ON SELECTED M&A
TRANSACTIONS - RUN RATE (continued)
<TABLE>
<CAPTION>
IMPLIED PRICE PER SHARE BASED ON RECENT
DENTALLORTHODONTIC/PPM TRANSACTIONS
FLOWER ---------------------------------------
STATISTICS MEAN RANGE
---------- -------------- --------------------
<S> <C> <C> <C>
VALUATION BASED ON RUN RATE AS OF 6/30/99 (A)
Revenues $220.3 $11.56 $5.55 - $19.63
EBITDA $ 30.8 $ 7.32 $3.86 - $ 9.40
EBIT $ 21.9 $ 7.26 $3.54 - $14.43
Net income $ 9.7 $ 8.93 $6.48 - $16.68
VALUATION BASED ON PROJECTED STATISTICS
Forward net income (I/B/E/S) $ 12.2 $ 8.39 $5.11 - $13.73
VALUATION BASED ON PREMIUMS PAID
One day prior price $ 7.38 $9.88 $7.72 - $16.90
One month prior price $ 7.56 $11.33 $8.02 - $18.18
</TABLE>
- ---------------------------------------
(A) PER SHARE EQUITY VALUES BASED ON IMPLIED ENTERPRISE VALUES ADJUSTED BY
ADDING CASH OF $2.5M AND SUBTRACTING DEBT ($89.5M PRE-CONVERSION OF
CONVERTIBLE SUBORDINATED DEBENTURES OR $59.5M POST-CONVERSION).
33
<PAGE>
SECTION 2
VALUATION ANALYSIS
Sub-Section C
FLOWER valuation based on discounted cash flow
34
<PAGE>
DISCOUNTED CASH FLOW ANALYSIS
IMPLIED PRICE PER SHARE
[CHART]
35
<PAGE>
FLOWER DISCOUNTED CASH FLOW ANALYSIS -
CASE 1
<TABLE>
<CAPTION>
Fiscal Year Ended December 31,
1990E 2000E 2001E 2002E 2003E 2004E
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Revenue $ 252,803 $ 308,255 $ 335,998 $ 366,238 $ 399,200 $ 435,127
GROWTH RATE 70.1% 21.9% 9.0% 9.0% 9.0% 9.0%
EBITDA 32,676 41,735 45,491 49,585 54,048 58,913
EBITDA MARGIN 12.5% 13.5% 13.5% 13.5% 13.5% 13.5%
EBIT 23,575 30,638 33,395 36,401 39,677 43,248
EBIT MARGIN 9.3% 9.9% 9.9% 9.9% 9.9% 9.9%
EBIT AFTER TAX (A) 14,145 18,383 20,037 21,841 23,806 25,949
plus: depreciation &
amortization 9,101 11,097 12,096 13,185 14,371 15,665
less: use of non-cash
working capital 8,359 4,492 2,247 2,449 2,670 2,910
less: maintenance capital
expenditures 12,640 15,413 16,800 18,312 19,980 21,756
less: acquisition capital
expenditures 52,473
---------- ---------- ---------- ---------- ---------- ----------
Unlevered free cash flow ($50,226) $ 9,576 $ 13,086 $ 14,264 $ 15,548 $ 16,947
========== ========== ========== ========== ========== ==========
- ------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PV of terminal value as of 9/30/99
PV cash multiple of 2004 EBITDA ($58.9 million) Less: Implied equity valuation
Discount flows as of -------------------------------------- net debt --------------------------------------
rate 9/30/99(b) 6.0x 8.0x 10.0x @ 9/30/99(c) 6.0x 8.0x 10.0x
- -------- ----------- --------- --------- ---------- ------------ --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
13.0% $33,738 $186,079 $248,105 $310,131 ($104,263) $115,554 $177,580 $239,606
14.0% $32,466 $177,688 $236,890 $296,113 ($104,263) $105,870 $165,093 $224,316
15.0% $31,247 $169,705 $226,274 $282,842 ($104,263) $96,690 $153,258 $209,826
</TABLE>
<TABLE>
<CAPTION>
Implied equity valuation per share(d)
- -------------------------------------
6.0x 8.0x 10.0x
- --------- --------- ---------
<S> <C> <C>
$5.16 $7.93 $10.70
$4.73 $7.37 $10.02
$4.32 $6.84 $9.37
</TABLE>
Note: Assumes 9% organic growth and acquisitions over the projected period.
(a) Assumes a 40% tax rate.
(b) Includes Q4 1999.
(c) FLOWER estimates based on management guidance.
(d) Based on 22.1M shares outstanding, 2.4M options outstanding at a weighted
average price of $6.65 and .8M warrants at a weighted average price of
$7.02.
36
<PAGE>
FLOWER DISCOUNTED CASH FLOW ANALYSIS -
CASE 2
<TABLE>
<CAPTION>
Fiscal Year Ended December 31,
1990E 2000E 2001E 2002E 2003E 2004E
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Revenue $ 252,803 $ 332,599 $ 417,981 $ 509,340 $ 607,094 $ 711,690
GROWTH RATE 70.1% 31.6% 25.7% 21.9% 19.2% 17.2%
EBITDA 32,676 45,899 58,935 74,364 90,457 108,177
EBITDA MARGIN 12.5% 13.8% 14.1% 14.6% 14.9% 15.2%
EBIT 23,575 33,016 41,350 51,631 62,230 74,035
EBIT MARGIN 9.3% 9.9% 9.9% 10.1% 10.3% 10.4%
EBIT AFTER TAX (a) 14,145 19,810 24,810 30,978 37,338 44,421
plus: depreciation &
amortization 9,101 12,882 17,585 22,733 28,227 34,142
less: use of non-cash
working capital 8,359 6,638 4,338 4,757 5,217 5,722
less: maintenance capital
expenditures 12,640 9,078 11,639 14,380 17,313 20,451
less: acquisition capital
expenditures 52,473 52,473 52,473 52,473 52,473 52,473
---------- ---------- ---------- ---------- ---------- ----------
Unlevered free cash flow ($50,226) ($35,497) ($26,055) ($17,899) ($9,438) ($83)
========== ========== ========== ========== ========== ==========
</TABLE>
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PV of terminal value as of 9/30/99
PV cash multiple of 2004 EBITDA ($108.3 million) Less: Implied equity valuation
Discount flows as of --------------------------------------- net debt --------------------------------------
rate 9/30/99(b) 6.0x 8.0x 10.0x @ 9/30/99(c) 6.0x 8.0x 10.0x
- -------- ----------- --------- --------- ----------- ------------ --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
13.0% ($80,127) $341,683 $455,578 $569,472 ($104,263) $157,294 $271,188 $385,083
14.0% ($78,830) $326,239 $434,985 $543,731 ($104,263) $143,146 $251,892 $360,638
15.0% ($77,572) $311,618 $415,490 $519,363 ($104,263) $129,782 $233,655 $337,527
</TABLE>
<TABLE>
<CAPTION>
Implied equity valuation per share(d)
- -------------------------------------
6.0x 8.0x 10.0x
- --------- --------- ---------
<S> <C> <C>
$7.02 $12.11 $17.20
$6.39 $11.25 $16.10
$5.80 $10.43 $15.07
</TABLE>
Note: Assumes 7% organic growth and acquisitions over the projected period.
(a) Assumes a 40% taxable.
(b) Includes Q4 1999.
(c) FLOWER estimates based on management guidance.
(d) Based on 22.1M shares outstanding, 2.4M options outstanding at a weighted
average price of $6.65 and .8M warrants at a weighted average price of
$7.02.
37
<PAGE>
PROJECT SPRING
FLOWER DISCOUNTED CASH FLOW ANALYSIS -
CASE 3
<TABLE>
<CAPTION>
Fiscal Year Ended December 31,
1990E 2000E 2001E 2002E 2003E 2004E
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Revenue $ 252,803 $ 331,363 $ 424,485 $ 526,649 $ 638,733 $ 761,704
GROWTH RATE 70.1% 31.1% 28.1% 24.1% 21.3% 19.3%
EBITDA 32,676 45,605 59,879 78,840 95,484 115,977
EBITDA MARGIN 12.5% 13.8% 14.1% 14.6% 14.9% 15.2%
EBIT 23,575 28,322 37,894 49,708 62,858 77,436
EBIT MARGIN 9.3% 8.5% 8.9% 9.4% 9.6% 10.2%
EBIT AFTER TAX (a) 14,145 16,993 22,736 29,825 37,715 46,462
plus: depreciation &
amortization 9,101 12,882 17,585 22,733 28,227 34,142
less: use of non-cash
working capital 8,359 6,638 4,338 4,757 5,217 5,722
less: maintenance capital
expenditures 12,640 8,370 13,695 17,485 21,647 26,214
less: acquisition capital
expenditures 52,473 52,473 52,473 52,473 52,473 52,473
---------- ---------- ---------- ---------- ---------- ----------
Unlevered free cash flow ($50,226) ($37,606) ($30,185) ($22,157) ($13,395) ($3,805)
========== ========== ========== ========== ========== ==========
</TABLE>
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PV of terminal value as of 9/30/99
PV cash multiple of 2004 EBITDA ($116.0 million) Less: Implied equity valuation
Discount flows as of --------------------------------------- net debt --------------------------------------
rate 9/30/99(b) 6.0x 8.0x 10.0x @ 9/30/99(c) 6.0x 8.0x 10.0x
- -------- ----------- --------- --------- ----------- ------------ --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
13.0% ($92,250) $366,321 $488,427 $610,534 ($104,263) $169,808 $291,915 $414,021
14.0% ($90,616) $349,762 $466,349 $582,937 ($104,263) $154,883 $271,471 $388,058
15.0% ($89,035) $334,087 $445,449 $556,812 ($104,263) $140,789 $252,152 $363,514
</TABLE>
<TABLE>
<CAPTION>
Implied equity valuation per share(d)
- -------------------------------------
6.0x 8.0x 10.0x
- --------- --------- ---------
<S> <C> <C>
$7.58 $13.04 $18.49
$6.92 $12.12 $17.33
$6.29 $11.26 $16.23
</TABLE>
Note: Assumes 9% organic growth and acquisitions over the projected period.
(a) Assumes a 40% taxable.
(b) Includes Q4 1999.
(c) FLOWER estimates based on management guidance.
(d) Based on 22.1M shares outstanding, 2.4M options outstanding at a weighted
average price of $6.96 and .8M warrants at a weighted average price of
$7.02.
38
<PAGE>
SECTION 2
VALUATION ANALYSIS
Sub-Section D
FLOWER valuation based on premiums paid analysis
<PAGE>
PREMIUMS PAID ANALYSIS (a)
IMPLIED PRICE PER SHARE
[CHART]
(a) Completed healthcare services transactions with an equity value between
$100 and $350 million, 1995 to present.
40
<PAGE>
PREMIUMS PAID ANALYSIS (CONTINUED)
---------------------------------------------------------------
Health care services merger and acquisition transactions (a)
<TABLE>
<CAPTION>
PREMIUM IMPLIED PRICE PER SHARE
FLOWER ------------------------- --------------------------
PRICE MEAN RANGE MEAN RANGE
--------- -------- -------------- -------- ---------------
<S> <C> <C> <C> <C> <C>
One day prior (10/13/99) $7.38 26.0 % 6.3 % - 54.0 % $ 9.29 $7.84 - $11.36
One week prior (10/06/99) $8.25 32.1 % 10.9 % - 60.4 % $10.90 $9.15 - $13.23
One month prior (09/13/99) $7.56 43.8 % 11.1 % - 92.5 % $10.87 $8.40 - $14.56
</TABLE>
--------------------------------
(a) completed health care services transactions with
an equity value between $100 and $350 million, 1995
to present.
41
<PAGE>
SECTION 3
APPENDIX
Sub-section A
FLOWER leveraged recapitalization analysis
42
<PAGE>
---------------------------------------------------------------
LEVERAGED RECAPITALIZATION ANALYSIS
KEY FINANCIAL ASSUMPTIONS
- -------------------------------------------------------------
<TABLE>
<CAPTION>
MULTIPLE OF MULTIPLE OF
AMOUNT INTEREST RATE LTM EBITDA RUN RATE EBITDA
-------- --------------- ------------- -----------------
<S> <C> <C> <C> <C>
DEBT STRUCTURE
Revolving credit $100M 8.00% 3.1x 2.5x
Subordinated debt $160M 11.50% 4.9x 4.0x
Total $260M 8.0x 6.5x
RETURN ANALYSIS
2004 EBITDA $115,977
------------------------------------------------------------
Terminal value
multiple of 2004
EBITDA 8.0x 9.0x 10.0x
------------------------------------------------------------
IRR 24.5% 28.3% 31.7%
</TABLE>
KEY FINANCIAL DATA
<TABLE>
<CAPTION>
1999E(1) 2000E 2001E 2002E 2003E 2004E
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Revenue $252,803 $331,363 $424,485 $526,649 $638,733 $761,704
EBITDA 32,676 45,605 59,879 76,840 95,484 115,977
Net interest 22,772 22,772 25,626 28,249 30,362 32,192
Total debt 179,756 224,785 265,518 292,092 313,712 326,039
Senior debt/EBITA 0.1x 0.9x 1.4x 1.4x 1.4x 1.2x
Total debt/EBITA 5.5x 4.9x 4.4x 3.8x 3.3x 2.8x
EBITDA/Interest 1.4x 2.0x 2.3x 2.7x 3.1x 3.6x
(EBITDA-capex)/Interest 1.1x 1.6x 1.8x 2.3x 2.4x 2.8x
</TABLE>
- ----------------------------------
NOTE: ASSUMPTIONS FROM GREEN
(1) PRO-FORMA FOR RECAPITALIZATION
43
<PAGE>
SECTION 3
APPENDIX
Sub-section B
FLOWER projected financial statements
44
<PAGE>
FLOWER PROJECTED BALANCE SHEET
<TABLE>
<CAPTION>
Year-end December 31 (in thousands) 2000E 2001E 2002E 2003E 2004E
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $0 $0 $0 $0 $0
Accounts receivable, net 17,091 18,629 20,306 22,133 24,125
Management license fee receivable 8,257 9,000 9,810 10,692 11,655
Advances to professional associations 15,680 19,180 12,515 5,847 0
Supplies and pre-paid expenses and other 10,986 14,625 18,618 23,007 27,823
TOTAL CURRENT ASSETS 52,014 61,434 61,249 61,679 63,603
Property and equipment, net 38,798 51,135 64,658 79,241 94,744
Capitalized fees 12,758 10,761 8,764 6,768 4,771
Intangible assets 188,290 229,251 265,169 295,195 321,454
Other long-term assets 4,423 4,423 4,423 4,423 4,423
TOTAL ASSETS 296,283 357,004 404,263 447,306 488,995
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable 6,523 7,110 7,750 8,447 9,208
Accrued payroll liabilities 9,267 10,101 11,010 12,001 13,081
Other current liabilities 18,361 29,855 36,307 36,629 36,980
TOTAL CURRENT LIABILITIES 34,151 47,066 55,067 57,077 59,269
Obligations under capital leases -
long-term 3,413 3,413 3,413 3,413 3,413
Long-term portion of credit facility 38,892 76,699 105,561 128,024 140,351
Subordinated debt 160,000 160,000 160,000 160,000 160,000
Seller notes 22,481 25,406 23,118 22,275 22,275
Other long-term liabilities 3,248 3,643 4,301 5,222 6,507
TOTAL LIABILITIES 262,185 316,227 351,460 376,011 391,815
Senior preferred stock 80,327 92,177 105,775 121,379 139,285
Junior preferred stock 76,884 88,227 101,242 116,177 133,216
Common stock (103,569) (103,569) (103,569) (103,569) (103,569)
Retained earnings (19,544) (36,058) (50,645) (62,692) (71,752)
TOTAL STOCKHOLDERS' EQUITY 34,098 40,777 52,803 71,295 97,180
TOTAL LIABILITIES, REDEEMABLE STOCK
AND STOCKHOLDER' EQUITY 296,283 357,004 404,263 447,306 488,995
SELECTED BALANCE SHEET DATA
Net working capital 17,863 14,368 6,182 4,602 4,334
Net working capital excl. other
accrued liabs/advs 20,544 25,043 29,974 35,384 41,314
</TABLE>
- ---------------------------------------------------
NOTE:FLOWER ESTIMATES BASED ON MANAGEMENT GUIDANCE.
45
<PAGE>
FLOWER PROJECTED INCOME STATEMENT
<TABLE>
<CAPTION>
Year-end December 31 (in thousands) 2000E 2001E 2002E 2003E 2004E
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PRACTICE PATIENT REVENUE $331,363 $424,485 $526,649 $638,733 $761,704
NET REVENUE 307,254 398,206 498,005 607,511 727,672
Total salaries and supplies expense 195,640 255,093 319,343 389,845 467,211
Total practice expenses 51,646 67,099 83,776 102,074 122,153
EBITDA - PRACTICE LEVEL 59,968 76,014 94,886 115,592 138,308
Corporate SG&A 14,363 16,135 18,046 20,108 22,331
EBITDA - CORPORATE 45,605 59,879 76,840 95,484 115,977
Depreciation and amortization 15,040 19,742 24,889 30,384 36,298
Other expense/management fees 2,234 2,234 2,234 2,234 2,234
OPERATING INCOME 28,331 37,903 49,717 62,866 77,445
Interest expense 22,772 25,626 28,249 30,362 32,192
PRETAX INCOME 5,559 12,277 21,468 32,504 45,253
Provision for income taxes 2,741 5,598 9,441 14,015 19,268
NET INCOME 2,818 6,679 12,027 18,489 25,985
Senior preferred stock dividends 10,327 11,850 13,598 15,604 17,906
Junior preferred stock dividends 9,884 11,342 13,015 14,936 17,139
NET INCOME AFTER PREFERRED DIVIDENDS (17,393) (16,513) (14,586) (12,051) (9,060)
MARGINS (PERCENTAGE OF NET REVENUE)
EBITDA practice level 19.5% 19.1% 19.1% 19.0% 19.0%
Corporate SGA 4.7% 4.1% 3.6% 3.3% 3.1%
EBITDA corporate level 14.8% 15.0% 15.4% 15.7% 15.9%
Depreciation & amortization 4.9% 5.0% 5.0% 5.0% 5.0%
GROWTH
Net sales 32.7% 29.6% 25.1% 22.0% 19.8%
EBITDA practice level 35.7% 26.8% 24.8% 21.8% 19.7%
EBITDA corporate level 39.6% 31.3% 28.3% 24.3% 21.5%
</TABLE>
- ----------------------------------------------------
NOTE: FLOWER ESTIMATES BASED ON MANAGEMENT GUIDANCE.
46
<PAGE>
FLOWER PROJECTED CASH FLOW STATEMENT
<TABLE>
<CAPTION>
Year-end December 31 (in thousands) 2000E 2001E 2002E 2003E 2004E
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
EBITDA $45,605 $59,879 $76,840 $95,484 $115,977
Other income (expense) (2,234) (2,234) (2,234) (2,234) (2,234)
Cash generated (used) by working capital (18,976) (16,729) (9,539) (12,644) (12,456)
TOTAL CASH FLOW FROM OPERATIONS 24,395 40,916 65,067 80,606 101,287
INVESTING ACTIVITIES
Purchase of property and equipment (8,370) (13,695) (17,485) (21,647) (26,214)
Acquisitions (37,125) (37,125) (37,125) (37,125) (37,125)
NET CASH PROVIDED BY (USED IN) INVESTING
ACTIVITIES (45,495) (50,820) (54,610) (58,772) (63,339)
CASH FLOW BEFORE DEBT SERVICE AND INCOME
TAXES (21,100) (9,904) 10,457 21,834 37,948
Cash income tax payments (2,610) (5,203) (8,782) (13,093) (18,083)
FINANCING ACTIVITIES
Seller notes issued in acquisitions 11,138 11,138 11,138 11,138 11,138
Seller notes principal payments (5,000) (8,213) (13,426) (11,981) (11,138)
Net cash interest expense (excludes
revolver interest, includes revolver fee) (21,367) (21,261) (21,292) (21,410) (21,875)
Revolver facility interest (1,405) (4,365) (6,957) (8,951) (10,317)
Drawdowns (repayments) of revolver facility 38,892 37,808 28,862 22,463 12,327
Other
NET CASH PROVIDED BY (USED IN) FINANCING
ACTIVITIES 22,258 15,107 (1,675) (8,741) (19,865)
FREE CASH FLOW (1,452) 0 0 0 0
</TABLE>
- ----------------------------------------------------
NOTE: FLOWER ESTIMATES BASED ON MANAGEMENT GUIDANCE.
47
<PAGE>
SECTION 3
APPENDIX
Sub-section C
Selected public company statistics
<PAGE>
SELECTED PUBLIC COMPANY STATISTICS - LTM
<TABLE>
<CAPTION>
REVENUE MULTIPLE EBITDA MULTIPLE EBIT MULTIPLE
- --------------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
Orthodontic Centers of America 4.4x FLOWER (TRANSACTION) 12.4x FLOWER (TRANSACTION) 18.1x
American Phys. Part. (Radiologix) 1.7x Orthodontic Center of America 11.4x FLOWER (TRADING) 14.9x
FLOWER (TRANSACTION) 1.6x FLOWER (TRADING) 10.2x Apple Orthodontix 13.3x
FLOWER (TRADING) 1.3x American Dental 7.2x Orthodontic Centers of America 13.3x
US Oncology 1.2x US Oncology 6.6x American Dental 10.8x
American Dental 1.1x Apple Orthodontix 6.5x US Oncology 9.8x
Apple Orthodontix 0.9x Monarch Dental 6.2x American Phys. Part. (Radiologix) 8.6x
Pediatrix 0.9x American Phys. Part. (Radiologix) 5.8x Castle 7.3x
Castle 0.7x ProMedCo 5.0x ProMedCo 6.9x
ProMedCo 0.7x Castle 4.9x PhyCor 6.0x
Monarch Dental 0.6x PhyCor 3.4x Pediatrix 3.5x
PhyCor 0.5x Pediatrix 2.9x Coast Dental NM
Coast Dental NM Coast Dental NM Monarch Dental NM
<CAPTION>
CALENDAR 1999 P/E CALENDAR 2000 P/E CAL. 2000 P/E TO GROWTH
- --------------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
FLOWER (TRANSACTION) 21.1x FLOWER (TRANSACTION) 16.7x FLOWER (TRANSACTION) 62.7%
Orthodontic Centers of America 17.3x Orthodontic Centers of America 13.3x FLOWER (TRADING) 48.6%
FLOWER (TRADING) 16.4x FLOWER (TRADING) 12.9x Orthodontic Centers of America 42.1%
American Dental 14.7x American Dental 11.7x American Dental 36.7%
US Oncology 11.3x US Oncology 8.8x US Oncology 35.6%
American Phys. Part. (Radiologix) 7.8x American Phys. Part. (Radiologix) 6.1x American Phys. Part. (Radiologix)32.2%
PhyCor 5.5x Pediatrix 6.0x Pediatrix 28.6%
Castle 5.5x PhyCor 5.4x PhyCor 26.1%
Pediatrix 5.2x Castle 4.6x Castle 18.5%
Apple Orthodontix NM Apple Orthodontix NM Apple Orthodontix NM
Coast Dental NM Coast Dental NM Coast Dental NM
Monarch Dental NM Monarch Dental NM Monarch Dental NM
ProMedCo NM ProMedCo NM ProMedCo NM
</TABLE>
- --------------------------------------------------------
NOTE: LTM AS OF 06/30/99.
PROJECTED DATA FROM I/B/E/S.
49
<PAGE>
SELECTED PUBLIC COMPANY STATISTICS - LTM
(CONTINUED)
<TABLE>
<CAPTION>
EQUITY VALUE ENTERPRISE VALUE Q OVER Q EPS GROWTH
- --------------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
US Oncology $847.0 US Oncology $1,192.6 FLOWER 195.7%
Orthodontic Center of America $818.2 Orthodontic Center of America $857.2 American Dental 72.7%
FLOWER (TRANSACTION) $249.8 PhyCor $738.6 Orthodontic Centers of America 41.2%
PhyCor $187.8 FLOWER (TRANSACTION) $306.8 American Phys. Part. (Radiologix)29.4%
FLOWER (TRADING) $165.2 American Phys. Part.(Radiologix)$260.7 Castle 22.3%
Pediatrix $127.9 FLOWER (TRADING) $252.2 ProMedCo 20.0%
American Phys. Part.(Radiologix) $120.7 ProMedCo $187.7 Pediatrix 11.1%
American Dental $89.2 Pediatrix $185.7 US Oncology -10.0%
ProMedCo $60.6 American Dental $111.6 Monarch Dental -30.8%
Monarch Dental $27.5 Monarch Dental $108.1 PhyCor -44.0%
Coast Dental $20.2 Castle $68.0 Coast Dental -46.2%
Castle $19.3 Apple Orthodontix $43.3 Apple Orthodontix -87.0%
Apple Orthodontix $19.1 Coast Dental $5.9
<CAPTION>
EBITDA MARGIN EBIT MARGIN NET INCOME MARGIN
- --------------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
Orthodontic Centers of America 38.3% Orthodontic Centers of America 32.9% Orthodontic Centers of America 20.2%
Pediatrix 29.8% Pediatrix 24.8% Pediatrix 14.6%
American Phys. Part. (Radiologix) 29.1% American Phys. Part. (Radiologix)19.6% American Phys. Part. (Radiologix) 9.9%
US Oncology 18.7% US Oncology 12.7% Coast Dental 9.3%
Coast Dental 17.3% Coast Dental 10.6% US Oncology 6.5%
American Dental 15.6% American Dental 10.4% American Dental 5.4%
Castle 15.1% Castle 10.2% ProMedCo 5.4%
Apple Orthodontix 13.6% ProMedCo 9.8% Castle 4.5%
PhyCor 13.5% FLOWER 8.9% FLOWER 4.0%
ProMedCo 13.4% PhyCor 7.5% Apple Orthodontix 2.7%
FLOWER 13.0% Apple Orthodontix 6.6% PhyCor 2.3%
Monarch Dental 9.6% Monarch Dental 2.5% Monarch Dental NM
</TABLE>
- ---------------------------------
NOTE: LTM AS OF 06/30/99.
50
<PAGE>
SELECTED PUBLIC COMPANY STATISTICS - LTM
(Continued)
- -------------------------------------------------------------------------------
dollars in millions except per share data
<TABLE>
<CAPTION>
VALUATION BENCHMARKS
MARKET STATISTICS ----------------------------------------------------------------------
------------------------------- ENTERPRISE VALUE AS A MULTIPLE OF EQUITY VALUE AS A MULTIPLE OF
STOCK PRICE EQUITY ENTERPRISE --------------------------------- -----------------------------------
COMPANY 10/13/99 VALUE VALUE REVENUES EBITDA EBIT NET INCOME CAL '99 EPS CAL '00 EPS
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
DENTAL/ORTHODONTIC PRACTICE MANAGEMENT COMPANIES
American Dental
Partners Inc. $11.44 $89.2 $111.6 1.1x 7.2x 10.8x 16.5x 14.7x 11.7x
Apple Orthodontix, Inc. $1.38 $19.1 $43.4 0.9x 6.5x 13.3x 14.6x NM NM
Castle Dental Centers, Inc. $3.00 $19.3 $68.0 0.7x 4.9x 7.3x 4.7x 5.5x 4.6x
Coast Dental Services, Inc. $3.08 $20.2 $5.9 NM NM NM NM NM NM
Monarch Dental Corporation $2.25 $27.5 $108.1 0.6x 6.2x NM NM NM NM
Orthodontic Centers of
America, Inc. $16.63 $818.2 $857.2 4.4x 11.4x 13.3x 20.6x 17.3x 13.3x
PHYSICIAN PRACTICE MANAGEMENT COMPANIES
American Phys. Part.
(Radiologix) $8.25 $120.7 $260.7 1.7x 5.8x 8.6x 7.9x 7.8x 6.1x
Pediatrix Medical
Group, Inc. $8.25 $127.9 $185.7 0.9x 2.9x 3.5x 4.1x 5.2x 8.0x
PhyCor, Inc. $2.47 $187.8 $738.6 0.5x 3.4x 6.0x 5.1x 5.5x 5.4x
ProMedCo Management
Company $2.69 $60.6 $187.7 0.7x 5.0x 6.9x NM NM NM
US Oncology, Inc. $8.47 $847.0 $1,192.6 1.2x 6.6x 9.8x 13.5x 11.3x 8.8x
- ------------------------------------------------------------------------------------------------------------------------------------
OVERALL MEAN 1.3x 6.0x 8.8x 10.9x 9.6x 8.0x
SELECTED MEAN 1.8x 6.9x 9.7x 12.7x 11.3x 9.1x
- ------------------------------------------------------------------------------------------------------------------------------------
FLOWER (TRADING) $7.38 $165.2 $252.2 1.3x 10.2x 14.9x 21.9x 16.4x 12.9x
FLOWER (TRANSACTION) $9.50 $249.8 $306.8 1.6x 12.4x 18.1x 33.3x 21.1x 16.7x
</TABLE>
- ----------
Note: LTM AS OF 06/30/99
PROJECTED DATA FROM I/B/E/S
SELECTED MEAN INCLUDES: AMERICAN DENTAL PARTNERS, AMERICAN PHYSICIAN
PARTNERS (RADIOLOGIX), ORTHODONTIC CENTERS OF AMERICA, PHYCOR, AND US
ONCOLOGY.
51
<PAGE>
SELECTED PUBLIC COMPANY STATISTICS - LTM
(Continued)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH RATES
-------------------------------------------------------------------
HISTORICAL MARGINS
(MOST RECENT QTR) PROJECTED CALENDAR YEAR EPS -------------------------
------------------ -------------------------------- 2000 P/E TO NET
COMPANY REVENUE EPS 1998-1999 1999-2000 I/B/E/S GROWTH RATE EBITDA EBIT INCOME
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
DENTAL/ORTHODONTIC PRACTICE MANAGEMENT COMPANIES
American Dental
Partners Inc. 39.2% 72.7% 44.4% 25.6% 31.8% 36.7% 15.6% 10.4% 5.4%
Apple Orthodontix, Inc. 6.4% 87.0% NM 0.0% 25.0% NM 13.6% 6.6% 2.7%
Castle Dental Centers, Inc. 30.4% 22.3% 0.0% 18.2% 25.0% 18.5% 15.1% 10.2% 4.5%
Coast Dental Services, Inc. 38.3% 46.2% -42.0% 37.5% 28.3% NM 17.3% 10.6% 9.3%
Monarch Dental Corporation 99.1% 30.8% -14.0% 54.1% 28.0% NM 9.6% 2.5% NM
Orthodontic Centers of
America, Inc. 33.4% 41.2% 37.1% 30.2% 31.6% 42.1% 38.3% 32.9% 20.2%
PHYSICIAN PRACTICE MANAGEMENT COMPANIES
American Phys. Part. 27.4% 29.4% 14.3% 27.5% 19.0% 32.2% 29.1% 19.6% 9.9%
(Radiologix)
Pediatrix Medical
Group, Inc. 23.0% 11.1% 14.0% -12.3% 20.9% 28.6% 29.8% 24.8% 14.6%
PhyCor, Inc. 5.9% -44.0% -40.8% 2.2% 20.6% 26.1% 13.5% 7.5% 2.3%
ProMedCo Management Company 46.2% 20.0% 14.5% 15.5% 20.1% NM 13.4% 9.8% 5.4%
US Oncology, Inc. 30.1% -10.0% 23.0% 28.0% 24.8% 35.6% 18.7% 12.7% 6.5%
- -----------------------------------------------------------------------------------------------------------------------------------
OVERALL MEAN 34.5% -1.9% 2.3% 20.6% 25.0% 31.4% 19.5% 13.4% 8.1%
SELECTED MEAN 28.5% 16.7% 10.7% 22.7% 25.6% 34.5% 23.1% 16.6% 8.8%
- -----------------------------------------------------------------------------------------------------------------------------------
FLOWER (TRADING) 94.9% 195.7% 80.0% 26.7% 26.6% 48.6% 13.0% 8.9% 4.0%
FLOWER (TRANSACTION) 94.9% 195.7% 80.0% 26.7% 26.6% 62.7% 13.0% 8.9% 4.0%
</TABLE>
- ----------
Note: LTM AS OF 06/30/99
PROJECTED DATA FROM I/B/E/S
SELECTED MEAN INCLUDES: AMERICAN DENTAL PARTNERS, AMERICAN PHYSICIAN PARTNERS
(RADIOLOGIX), ORTHODONTIC CENTERS OF AMERICA, PHYCOR, AND US ONCOLOGY.
52
<PAGE>
SELECTED PUBLIC COMPANY STATISTICS - LTM
(Continued)
- -------------------------------------------------------------------------------
dollars in millions except per share data
<TABLE>
<CAPTION>
MARKET STATISTICS
----------------------------------------------------- BALANCE SHEET DATA
STOCK 52-WEEK PRICE --------------------------------------------
PRICE ----------------- CHANGE PRICE OF A CASH AND TOTAL
COMPANY 10/13/99 HIGH LOW 12 MONTHS % OF HIGH EQUIVALENTS ASSETS TOTAL DEBT BOOK VALUE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
DENTAL/ORTHODONTIC PRACTICE MANAGEMENT COMPANIES
American Dental
Partners Inc. $11.44 $13.88 $6.88 52.5% 82.4% $1.5 $90.4 $23.8 $51.8
Apple Orthodontix, Inc. $1.38 $6.00 $1.19 -53.2% 22.9% $0.0 $69.8 $24.3 $30.9
Castle Dental Centers, Inc. $3.00 $9.25 $2.50 -40.7% 32.4% $0.3 $107.9 $49.1 $37.5
Coast Dental Services, Inc. $3.06 $13.50 $2.78 -70.8% 22.7% $16.7 $69.7 $2.4 $62.1
Monarch Dental Corporation $2.25 $14.38 $2.13 -81.6% 15.7% $7.8 $183.9 $88.4 $63.0
Orthodontic Centers of
America, Inc. $16.63 $20.44 $10.81 25.5% 81.3% $4.0 $329.1 $43.0 $253.8
PHYSICIAN PRACTICE MANAGEMENT COMPANIES
American Phys. Part.
(Radiologix) $6.25 $9.00 $4.00 5.3% 69.4% $3.3 $184.5 $143.3 $15.5
Pediatrix Medical
Group, Inc. $8.25 $65.56 $8.19 -80.4% 12.6% $0.6 $329.9 $58.4 $218.0
PhyCor, Inc. $2.47 $8.38 $2.41 -45.5% 29.5% $74.5 $1,821.9 $625.4 $809.1
ProMedCo Management
Company $2.69 $7.88 $2.50 -55.2% 34.1% $10.1 $364.6 $137.2 $174.2
US Oncology, Inc. $8.47 $15.56 $6.44 -5.9% 54.4% $3.2 $1,160.8 $348.8 $669.0
- -----------------------------------------------------------------------------------------------------------------------------------
OVERALL MEAN -31.8% 41.6%
SELECTED MEAN 6.4% 63.4%
- -----------------------------------------------------------------------------------------------------------------------------------
FLOWER (TRADING) $7.38 $9.31 $4.00 26.9% 79.2% $2.5 $190.4 $89.5 $71.0
FLOWER (TRANSACTION) $9.50 $9.31 $4.00 63.4% 102.0% $2.5 $190.4 $59.5 $101.0
</TABLE>
- ----------
Note: LTM AS OF 06/30/99
PROJECTED DATA FROM I/B/E/S
SELECTED MEAN INCLUDES: AMERICAN DENTAL PARTNERS, AMERICAN PHYSICIAN PARTNERS
(RADIOLOGIX), ORTHODONTIC CENTERS OF AMERICA, PHYCOR, AND US ONCOLOGY.
53
<PAGE>
SELECTED PUBLIC COMPANY STATISTICS - LTM
(continued)
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
dollars in millions except per share data
EPS ESTIMATES CAPITALIZATION
OPERATING DATA ------------- ----------------------------------
------------------------------- CALENDAR TOTAL TOTAL TOTAL
NET ------------- DEBT/ DEBT/ DEBT/
COMPANY REVENUES EBITDA EBIT INCOME 1999 2000 BOOK VALUE CAPITALIZATION EBITDA
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
DENTAL/ORTHODONTIC PRACTICE MANAGEMENT
COMPANIES
American Dental Partners, Inc. $100.1 $15.6 $10.4 $5.4 $0.78 $0.98 46.0% 31.5% 152.8%
Apple Orthdontix, Inc. $49.2 $6.7 $3.3 $1.3 $0.05 $0.05 78.7% 44.0% 363.3%
Castle Dental Centers, Inc. $91.4 $13.8 $9.4 $4.1 $0.55 $0.65 130.9% 56.7% 356.6%
Coast Dental Services, Inc. $41.3 $7.1 $4.4 $3.8 $0.40 $0.55 3.9% 3.8% 34.0%
Monarch Dental Corporation $180.4 $17.3 $4.6 ($1.0) $0.37 $0.57 140.5% 58.4% 509.7%
Orthodontic Centers of America, Inc. $196.5 $75.3 $64.6 $39.7 $0.96 $1.25 17.0% 14.5% 57.1%
PHYSICIAN PRACTICE MANAGEMENT COMPANIES
American Phys. Part. (Radiologix.) $154.3 $44.9 $30.2 $15.2 $0.80 $1.02 923.4% 90.2% 319.5%
Pediatrix Medical Group, Inc. $212.1 $63.2 $52.7 $30.9 $1.57 $1.38 26.8% 21.1% 92.5%
PhyCor, Inc. $1,628.4 $220.4 $122.3 $36.8 $0.45 $0.46 77.3% 43.6% 283.7%
ProMedCo Management Company $279.0 $37.4 $27.3 $15.0 $0.71 $0.82 78.8% 44.1% 366.8%
US Oncology, Inc. $959.8 $179.7 $122.3 $62.6 $0.75 $0.96 52.1% 34.3% 194.0%
- --------------------------------------------------------------------------------------------------------------------------------
OVERALL MEAN $353.9 $62.0 $41.0 $19.4 $0.67 $0.79 143.2% 40.2% 2.5x
SELECTED MEAN $607.8 $107.2 $69.9 $31.9 $0.75 $0.93 232.2% 42.8% 2.0x
- --------------------------------------------------------------------------------------------------------------------------------
FLOWER (TRADING) $189.6 $24.7 $16.9 $7.5 $0.45 $0.57 126.0% 55.8% 3.6x
FLOWER (TRANSACTION) $189.6 $24.7 $16.9 $7.5 $0.45 $0.57 58.9% 37.1% 2.4x
</TABLE>
- -----------------------------
Note: LTM AS OF 06/30/99
PROJECTED DATA FROM I/B/E/S.
SELECTED MEAN INCLUDES: AMERICAN DENTAL PARTNERS, AMERICAN PHYSICIAN PARTNERS
(RADIOLOGIX), ORTHODONTIC CENTERS OF AMERICA, PHYCOR, AND US ONCOLOGY.
54
<PAGE>
SELECTED PUBLIC COMPANY STATISTICS - RUN RATE
<TABLE>
<CAPTION>
REVENUE MULTIPLE EBITDA MULTIPLE EBIT MULTIPLE
<S> <C> <C> <C> <C> <C>
Orthodontic Centers of America 3.9x FLOWER (TRANSACTION) 10.0x FLOWER (TRANSACTION) 14.0x
American Phys. Part. (Radiologix) 1.5x Orthodontic Centers of America 9.4x FLOWER (TRADING) 11.5x
FLOWER (TRANSACTION) 1.4x FLOWER (TRADING) 8.2x Orthodontic Centers of America 11.3x
FLOWER (TRADING) 1.1x Apple Orthodontix 7.3x American Dental 9.3x
US Oncology 1.1x American Dental 6.2x US Oncology 8.8x
American Dental 1.0x US Oncology 6.1x American Phys. Part. (Radiologix) 7.4x
Apple Orthodontix 0.9x American Phys. Part. (Radiologix) 5.0x Monarch Dental 6.9x
Pediatrix 0.8x ProMedCo 4.4x Castle 6.6x
Castle 0.7x Castle 4.2x PhyCor 6.5x
ProMedCo 0.6x Monarch Dental 4.1x ProMedCo 6.1x
Monarch Dental 0.5x PhyCor 3.5x Pediatrix 3.5x
PhyCor 0.5x Pediatrix 2.8x Apple Orthodontix NM
Coast Dental NM Coast Dental NM Coast Dental NM
CALENDAR 1999 P/E CALENDAR 2000 P/E CAL. 2000 P/E TO GROWTH
FLOWER (TRANSACTION) 21.1x FLOWER (TRANSACTION) 16.7x FLOWER (TRANSACTION) 62.7%
Orthodontic Centers of America 17.3x Orthodontic Centers of America 13.9x FLOWER (TRADING) 48.6%
FLOWER (TRADING) 16.4x FLOWER (TRADING) 12.9x Orthodontic Centers of America 42.1%
American Dental 14.7x American Dental 11.7x American Dental 36.7%
US Oncology 11.3x US Oncology 8.8x US Oncology 35.6%
American Phys. Part. (Radiologix) 7.8x American Phys. Part. (Radiologix) 6.1x American Phys. Part. (Radiologix) 32.2%
PhyCor 5.5x Pediatrix 6.0x Pediatrix 28.6%
Castle 5.5x PhyCor 5.4x PhyCor 26.1%
Pediatrix 5.2x Castle 4.6x Castle 18.5%
Apple Orthodontix NM Apple Orthodontix NM Apple Orthodontix NM
Coast Dental NM Coast Dental NM Coast Dental NM
Monarch Dental NM Monarch Dental NM ProMedCo NM
ProMedCo NM ProMedCo NM Monarch Dental NM
</TABLE>
- --------------------------------------------
Note: RUN RATE BASED ON Q2 1999 ANNUALIZED,
PROJECTED DATA FROM I/B/E/S.
55
<PAGE>
SELECTED PUBLIC COMPANY STATISTICS - RUN RATE
(Continued)
<TABLE>
<CAPTION>
EQUITY VALUE ENTERPRISE VALUE Q OVER Q EPS GROWTH
<S> <C> <C> <C> <C> <C>
US Oncology $847.0 US Oncology $1,192.6 FLOWER 195.7%
Orthodontic Centers of America $818.2 Orthodontic Centers of America $857.2 American Dental 72.7%
FLOWER (TRANSACTION) $249.8 PhyCor $738.6 Orthodontic Centers of America 41.2%
PhyCor $187.8 FLOWER (TRANSACTION) $306.8 American Phys. Part. (Radiologix) 29.4%
FLOWER (TRADING) $165.2 American Phys. Part (Radiologix) $260.7 Castle 22.3%
Pediatrix $127.9 FLOWER (TRADING) $252.2 ProMedCo 20.0%
American Phys. Part. (Radiologix) $120.7 ProMedCo $187.7 Pediatrix 11.1%
American Dental $89.2 Pediatrix $185.7 US Oncology -10.0%
ProMedCo $60.6 American Dental $111.6 Monarch Dental -30.8%
Monarch Dental $27.5 Monarch Dental $108.1 PhyCor -44.0%
Coast Dental $20.2 Castle $68.0 Coast Dental -46.2%
Castle $19.3 Apple Orthodontix $43.4 Apple Orthodontix -87.0%
Apple Orthodontix $19.1 Coast Dental $5.9
EBITDA MARGIN EBIT MARGIN NET INCOME MARGIN
<S> <C> <C> <C> <C> <C>
Orthodontic Centers of America 41.2% Orthodontic Centers of America 34.2% Orthodontic Centers of America 20.8%
American Phys. Part. (Radiologix) 30.6% Pediatrix 23.6% Pediatrix 13.8%
Pediatrix 28.8% American Phys. Part. (Radiologix) 20.7% American Phys. Part. (Radiologix) 10.0%
US Oncology 18.4% US Oncology 12.7% ProMedCo 5.2%
American Dental 16.0% American Dental 10.7% American Dental 5.2%
Castle 15.6% ProMedCo 10.1% US Oncology 5.1%
ProMedCo 14.2% Castle 10.0% Coast Dental 4.6%
FLOWER 14.0% FLOWER 9.9% FLOWER 4.4%
PhyCor 13.4% Monarch Dental 7.6% Castle 3.7%
Coast Dental 13.2% PhyCor 7.2% Monarch Dental 2.2%
Monarch Dental 12.7% Coast Dental 5.4% PhyCor 2.1%
Apple Orthodontix 11.9% Apple Orthodontix 5.1% Apple Orthodontix 1.1%
</TABLE>
- --------------------------------------------------
Note: RUN RATE BASED ON Q2 1999 ANNUALIZED.
56
<PAGE>
SELECTED PUBLIC COMPANY STATISTICS - RUN RATE
(continued)
- ------------------------------------------------------------------------------
dollars in millions except per share data
<TABLE>
<CAPTION>
VALUATION BENCHMARKS
---------------------------------------------------------------
ENTERPRISE VALUES
MARKET STATISTICS AS A MULTIPLE OF EQUITY VALUE AS A MULTIPLE OF
------------------------------- ------------------------- ------------------------------------
STOCK PRICE EQUITY ENTERPRISE REVENUES EBITDA EBIT NET INCOME CAL '99 EPS CAL '00 EPS
COMPANY 10/13/99 VALUE VALUE
DENTAL/ORTHODONTIC PRACTICE MANAGEMENT COMPANIES
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
American Dental Partners, Inc. $11.44 $89.2 $111.6 1.0x 6.2x 9.3x 15.2x 14.7x 11.7x
Apple Orthodontix, Inc. $1.38 $19.1 $43.4 0.9x 7.3x NM NM NM NM
Castle Dental Centers, Inc. $3.00 $19.3 $68.0 0.7x 4.2x 6.6x 5.1x 5.5x 4.6x
Coast Dental Services, Inc. $3.06 $20.2 $5.9 NM NM NM NM NM NM
Monarch Dental Corporation $2.25 $27.5 $108.1 0.5x 4.1x 6.9x NM NM NM
Orthodontic Centers of
America, Inc. $16.63 $818.2 $857.2 3.9x 9.4x 11.3x 17.8x 17.3x 13.3x
PHYSICIAN PRACTICE MANAGEMENT COMPANIES
American Phys. Part. $6.25 $120.7 $260.7 1.5x 5.0x 7.4x 7.0x 7.8x 6.1x
(Radiologix)
Pediatrix Medical Group, Inc. $8.25 $127.9 $185.7 0.8x 2.8x 3.6x 4.1x 5.2x 6.0x
PhyCor, Inc. $2.47 $187.8 $738.6 0.5x 3.5x 6.5x 5.8x 5.5x 5.4x
ProMedCo Management Company $2.69 $60.8 $187.7 0.6x 4.4x 6.1x NM NM NM
US Oncology, Inc. $8.47 $847.0 $1,192.6 1.1x 6.1x 8.8x 15.7x 11.3x 8.8x
- ---------------------------------------------------------------------------------------------------------------------------
OVERALL MEAN 1.1x 5.3x 7.4x 10.1x 9.6x 8.0x
SELECTED MEAN 1.6x 6.0x 8.7x 12.3x 11.3x 9.1x
- ---------------------------------------------------------------------------------------------------------------------------
FLOWER (TRADING) $7.38 $165.2 $252.2 1.1x 8.2x 11.5x 17.1x 16.4x 12.9x
FLOWER (TRANSACTION) $9.50 $249.8 $306.8 1.4x 10.0x 14.0x 25.8x 21.1x 16.7x
</TABLE>
- ----------------------------------------------
Note: RUN RATE BASED ON Q2 1999 ANNUALIZED.
PROJECTED DATA FROM I/B/E/S.
SELECTED MEAN INCLUDES: AMERICAN DENTAL PARTNERS, AMERICAN PHYSICIAN PARTNERS
(RADIOLOGIX), ORTHODONTIC CENTERS OF AMERICA, PHYCOR, AND US ONCOLOGY.
57
<PAGE>
SELECTED PUBLIC COMPANY STATISTICS - RUN RATE
(continued)
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH RATES
------------------------------------------------------------
HISTORICAL MARGINS
(MOST RECENT QTR.) PROJECTED CALENDAR YEAR EPS ----------------------
-------------------------------------------------2000 P/E TO NET
REVENUES EPS 1998-1999 1999-2000 I/B/E/S GROWTH RATE EBITDA EBIT INCOME
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COMPANY
DENTAL/ORTHODONTIC PRACTICE MANAGEMENT COMPANIES
American Dental Partners, Inc. 39.2% 72.7% 44.4% 25.6% 31.8% 36.7% 16.0% 10.7% 5.2%
Apple Orthodontix, Inc. 6.4% -87.0% NM 0.0% 25.0% NM 11.9% 5.1% 1.1%
Castle Dental Centers, Inc. 30.4% 22.3% 0.0% 18.2% 25.0% 18.5% 15.6% 10.0% 3.7%
Coast Dental Services, Inc. 38.3% -46.2% (42.0%) 37.5% 28.3% NM 13.2% 5.4% 4.6%
Monarch Dental Corporation 99.1% -30.8% (14.0%) 54.1% 28.0% NM 12.7% 7.6% 2.2%
Orthodontic Centers of America, Inc. 33.4% 41.2% 37.1% 30.2% 31.6% 42.1% 41.2% 34.2% 20.8%
PHYSICIAN PRACTICE MANAGEMENT COMPANIES
American Phys. Pert. (Radiologix) 27.4% 29.4% 14.3% 27.5% 19.0% 32.2% 30.6% 20.7% 10.0%
Pediatrix Medical Group, Inc. 23.0% 11.1% (14.0%) -12.3% 20.9% 28.6% 28.8% 23.6% 13.8%
PhyCor, Inc. 5.9% (44.0%) (40.8%) 2.2% 20.6% 26.1% 13.4% 7.2% 2.1%
PicMedCo Management Company 46.2% 20.0% 14.5% 15.5% 20.1% NM 14.2% 10.1% 5.2%
US Orcology, Inc 30.1% (10.0%) 23.0% 28.0% 24.8% 35.6% 18.4% 12.7% 5.1%
OVERALL MEAN 34.5% (1.9%) 2.3% 20.6% 25.0% 31.4% 19.6% 13.4% 6.7%
SELECTED MEAN 26.5% 16.7% 10.7% 22.7% 25.6% 34.5% 23.9% 17.1% 8.6%
FLOWER (TRADING) 94.9% 195.7% 80.0% 26.7% 26.6% 48.6% 14.0% 9.9% 4.4%
FLOWER (TRANSACTION) 94.9% 195.7% 80.0% 26.7% 26.6% 62.7% 14.0% 9.9% 4.4%
</TABLE>
- ------------------
NOTE: RUN RATE BASED ON Q2 1999 ANNUALIZED.
PROJECTED DATA FROM I/B/E/S.
SELECTED MEAN INCLUDES: AMERICAN DENTAL PARTNERS, AMERICAN PHYSICIAN PARTNERS
(RADIOLOGIX), OTHODONTIC CENTERS OF AMERICA, PHYCOR, AND US ONCOLOGY.
58
<PAGE>
SELECTED PUBLIC COMPANY STATISTICS - RUN RATE
(CONTINUED)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
DOLLARS IN MILLIONS EXCEPT PER SHARE DATA
OPERATING DATA EPS ESTIMATES CAPITALIZATION
------------------------------- ------------- ---------------------
CALENDAR
NET ------------- TOTAL DEBT/ TOTAL DEBT/ TOTAL DEBT/
COMPANY REVENUES EBITDA EBIT INCOME 1999 2000 BOOK VALUE CAPITALIZATION EBITDA
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
DENTAL/ORTHODONTIC PRACTICE MANAGEMENT COMPANIES
American Dental Partners, Inc. $112.6 $18.0 $12.0 $5.9 $0.78 $0.98 46.0% 31.5% 132.6%
Apple Orthodontix, Inc. $50.3 $6.0 $2.6 $0.6 $0.05 $0.05 78.7% 44.0% 406.5%
Castle Dental Centers, Inc. $102.6 $16.0 $10.3 $3.8 $0.55 $0.65 130.9% 56.7% 306.4%
Coast Dental Services, Inc. $44.7 $5.9 $2.4 $2.0 $0.40 $0.55 3.9% 3.8% 41.2%
Monarch Dental Corporation $205.9 $26.2 $15.6 $4.5 $0.37 $0.57 140.5% 58.4% 337.6%
Orthodontic Centers of America, Inc $221.6 $91.3 $75.7 $46.1 $0.96 $1.25 17.0% 14.5% 47.1%
PHYSICIAN PRACTICE MANAGEMENT COMPANIES
American Phys. Pert. (Radiologix) $171.0 $52.3 $35.4 $17.2 $0.80 $1.02 923.4% 90.2% 273.9%
Pediatrix Medical Group, Inc. $227.1 $65.5 $53.6 $31.2 $1.57 $1.38 26.8% 21.1% 89.2%
PhyCor, Inc. $1,574.0 $210.2 $113.7 $32.4 $0.45 $0.46 77.3% 43.6% 297.5%
PicMedCo Management Company $304.1 $43.1 $30.6 $15.8 $0.71 $0.82 78.8% 44.1% 318.6%
US Orcology, Inc $1,065.6 $196.1 $135.3 $53.9 $0.75 $0.96 52.1% 34.3% 177.9%
OVERALL MEANS $370.9 $66.4 $44.3 $19.4 $0.67 $0.79 143.2% 40.2% 2.2x
SELECTED MEAN $629.0 $113.6 $74.4 $31.1 $0.75 $0.93 223.2% 42.8% 1.9x
FLOWER (TRADING) $220.3 $30.8 $21.9 $9.7 $0.45 $0.57 126.0% 55.8% 2.9x
FLOWER (TRANSACTION) $220.3 $30.8 $21.9 $9.7 $0.45 $0.57 58.9% 37.1% 1.9x
</TABLE>
- -------------------------------
NOTE: RUN RATE BASED ON Q2 1999 ANNUALIZED.
PROJECTED DATA FROM I/B/E/S.
SELECTED MEAN INCLUDES: AMERICAN DENTAL PARTNERS, AMERICAN PHYSICIAN PARTNERS
(RADIOLOGIX), OTHODONTIC CENTERS OF AMERICA, PHYCOR, AND US ONCOLOGY.
59
<PAGE>
SECTION 3
APPENDIX
Sub-section D
Selected M&A transactions
<PAGE>
SELECTED M&A TRANSACTIONS - LTM
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
dollars in millions
Enterprise purchase price
as a mulitple of LTM:
Equity Enterprise ---------------------------
Date Target purchase purchase
announced Acquiror price price Revenue EBITDA EBIT
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
9/14/99 Alliance Imaging Inc. $337.9 $868.5 3.5x 8.3x 14.7x
KKR
6/14/99 Physicians' Specialty Corp. $100.0 $110.9 1.6x 9.4x 11.7x
TA Associates
5/25/99 Unilab Corporation $292.1 $420.1 1.9x 12.0x 15.3x
Kelso & Company
5/19/99 First Commonwealth Inc. $93.4 $75.5 1.2x 10.3x 12.0x
Guardian Life Insurance Co. of America
4/2/99 NovaCare Orthotics & Prosthetics $407.7 $443.0 1.6x 7.5x 9.4x
Hanger Orthopedic Group, Inc.
3/25/99 Sheridan Healthcare, Inc. $60.9 $117.3 1.0x 6.1x 7.9x
Vestar Capital Partners/Investor Group
3/3/99 Concentra Managed Care, Inc. $792.5 $1,014.3 1.7x 9.1x 11.5x
Welsh, Carson, Anderson & Stowe VIII, LP
1/19/99 CompDent Corporation $151.7 $195.9 1.1x 7.3x 9.3x
TA Associates & GTCR
12/14/98 Physician Reliance Network, Inc. $636.9 $688.5 1.8x 9.6x 14.5x
American Oncology Resources, Inc.
11/10/98 Intensiva HealthCare Corporation $102.1 $111.7 1.1x 13.1x 18.5x
Select Medical Corporation
10/16/98 Dental Care Alliance, Inc. $69.0 $64.5 2.8x 14.1x 17.0x
Gentle Dental Service Corporation
3/13/98 MedCath, Inc. $227.8 $328.7 2.6x 10.3x 20.1x
KKR and Welsh, Carson
Mean: $272.7 $369.9 1.8x 9.8x 13.5x
Low: $60.9 $64.5 1.0x 6.1x 7.9x
High: $792.5 $1,014.3 3.5x 14.1x 20.1x
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
dollars in millions
Equity purchase price
as a mulitple of: Premium to market
------------------------------- -----------------
Date Target Training Forward Book Day Month
announced Acquiror net income net income value prior prior Accounting
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
9/14/99 Alliance Imaging Inc. 40.1x NA NA 129.2% 140.4% Recapitalization
KKR
6/14/99 Physicians' Specialty Corp. 17.4x 11.2x 2.0x 20.0% 21.7% Recapitalization
TA Associates
5/25/99 Unilab Corporation 35.9x 15.5x NA 18.5% 53.4% Recapitalization
Kelso & Company
5/19/99 First Commonwealth Inc. 21.8x NA 3.2x 34.2% 72.4% Purchase
Guardian Life Insurance Co. of America
4/2/99 NovaCare Orthotics & Prosthetics 13.4x NA 1.3x NA NA Purchase
Hanger Orthopedic Group, Inc.
3/25/99 Sheridan Healthcare, Inc. 10.2x 9.3x 0.9x 8.8% 17.5% Recapitalization
Vestar Capital Partners/Investor Group
3/3/99 Concentra Managed Care, Inc. 18.7x 17.9x 3.3x 41.9% 41.2% Recapitalization
Welsh, Carson, Anderson & Stowe VIII, LP
1/19/99 CompDent Corporation 15.0x 14.9x 2.2x 40.4% 44.6% Purchase
TA Associates & GTCR
12/14/98 Physician Reliance Network, Inc. 24.5x 14.9x 2.0x 6.3% 24.1% Pooling
American Oncology Resources, Inc.
11/10/98 Intensiva HealthCare Corporation 29.2x 12.4x 3.8x 54.0% 92.5% Purchase
Select Medical Corporation
10/16/98 Dental Care Alliance, Inc. 25.5x 14.7x 2.6x 4.7% 6.1% Pooling
Gentle Dental Service Corporation
3/13/98 MedCath, Inc. 35.5x 30.4x 1.7x 15.2% 34.5% Recapitalization
KKR and Welsh, Carson
Mean: 23.9x 15.7x 2.3x 33.9% 49.9%
Low: 10.2x 9.3x 0.9x 4.7% 6.1%
High: 40.1x 30.4x 3.8x 129.2% 140.4%
</TABLE>
- ----------------------------------------
Note: ALL TRAILING FIGURES ARE LTM FOR THE QUARTER PRIOR TO TRANSACTION
ANNOUNCEMENT.
61
<PAGE>
SELECTED M&A TRANSACTIONS - RUN RATE
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
dollars in millions
Enterprise purchase price
as a mulitple of LTM:
Equity Enterprise ---------------------------
Date Target purchase purchase
announced Acquiror price price Revenue EBITDA EBIT
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
9/14/99 Alliance Imaging Inc. $337.9 $868.5 2.7x 5.6x 10.5x
KKR
6/14/99 Physicians' Specialty Corp. $100.0 $110.9 1.3x 8.0x 10.0x
TA Associates
5/25/99 Unilab Corporation $292.1 $420.5 1.7x 9.1x 10.9x
Kelso & Company
5/19/99 First Commonwealth Inc. $93.4 $75.5 1.1x 9.3x 10.7x
Guardian Life Insurance Co. of America
4/2/99 NovaCare Orthotics & Prosthetics $407.7 $443.0 1.6x 7.8x 9.6x
Hanger Orthopedic Group, Inc.
3/25/99 Sheridan Healthcare, Inc. $60.9 $117.3 2.0x 5.7x 7.6x
Vestar Capital Partners/Investor Group
3/3/99 Concentra Managed Care, Inc. $792.5 $1,000.4 1.7x 7.6x 9.5x
Welsh, Carson, Anderson & Stowe VIII, LP
1/19/99 CompDent Corporation $151.7 $195.9 1.1x 7.5x 9.4x
TA Associates & GTCR
12/14/98 Physician Reliance Network, Inc. $653.9 $705.5 1.7x 9.0x 13.6x
American Oncology Resources, Inc.
11/10/98 Intensiva HealthCare Corporation $102.1 $111.7 1.0x 9.9x 13.4x
Select Medical Corporation
10/16/98 Dental Care Alliance, Inc. $69.0 $64.5 2.0x 9.2x 11.1x
Gentle Dental Service Corporation
3/13/98 MedCath, Inc. $227.8 $328.7 2.0x 9.0x 20.4x
KKR and Welsh, Carson
Mean: $274.1 $370.2 1.7x 8.1x 11.4x
Low: $60.9 $64.5 1.0x 5.6x 7.6x
High: $792.5 $1,000.4 2.7x 9.9x 20.4x
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
dollars in millions
Equity purchase price
as a mulitple of: Premium to market
------------------------------- -----------------
Date Target Training Forward Book Day Month
announced Acquiror net income net income value prior prior Accounting
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
9/14/99 Alliance Imaging Inc. 18.5x NA NA 129.2% 140.4% Recapitalization
KKR
6/14/99 Physicians' Specialty Corp. 14.8x 11.2x 2.0x 20.0% 21.7% Recapitalization
TA Associates
5/25/99 Unilab Corporation 19.9x 15.5x NM 18.5% 53.4% Recapitalization
Kelso & Company
5/19/99 First Commonwealth Inc. 19.3x NA 3.2x 34.2% 72.4% Purchase
Guardian Life Insurance Co. of America
4/2/99 NovaCare Orthotics & Prosthetics 15.8x NA 1.3x NA NA Purchase
Hanger Orthopedic Group, Inc.
3/25/99 Sheridan Healthcare, Inc. 15.7x 9.3x 0.9x 8.8% 17.5% Recapitalization
Vestar Capital Partners/Investor Group
3/3/99 Concentra Managed Care, Inc. 27.0x 17.9x 3.3x 41.9% 41.2% Recapitalization
Welsh, Carson, Anderson & Stowe VIII, LP
1/19/99 CompDent Corporation 15.2x 14.9x 2.2x 40.4% 44.6% Purchase
TA Associates & GTCR
12/14/98 Physician Reliance Network, Inc. 21.5x 14.9x 2.0x 6.3% 24.1% Pooling
American Oncology Resources, Inc.
11/10/98 Intensiva HealthCare Corporation 20.9x 12.4x 3.8x 54.0% 92.5% Purchase
Select Medical Corporation
10/16/98 Dental Care Alliance, Inc. 18.3x 14.7x 2.6x 4.7% 6.1% Pooling
Gentle Dental Service Corporation
3/13/98 MedCath, Inc. 47.0x 30.4x 1.7x 15.2% 34.5% Recapitalization
KKR and Welsh, Carson
Mean: 21.2x 15.7x 2.3x 33.9% 49.9%
Low: 14.8x 9.3x 0.9x 4.7% 6.1%
High: 47.0x 30.4x 3.8x 129.2% 140.4%
</TABLE>
- ----------------------------------------
Note: ALL TRAILING FIGURES ARE LTM FOR THE QUARTER PRIOR TO TRANSACTION
ANNOUNCEMENT.
62
<PAGE>
SECTION 3
APPENDIX
Sub-section E
FLOWER ownership profile
<PAGE>
FLOWER OWNERSHIP PROFILE
<TABLE>
<CAPTION>
PERCENT OF
INSTITUTIONAL HOLDINGS (a) SHARES HELD OUTSTANDING
- ---------------------------------------------- --------------- -------------
<S> <C> <C>
ICM Asset Management, Inc. 683,158 3.24%
Capital Guardian Trust Company 674,540 3.20%
Van Wagoner Capital Management 458,176 2.17%
Riggs Bank of North America 322,581 1.53%
Gardner Lewis Asset Management, Inc. 301,999 1.43%
St. Paul Companies, Inc. 262,353 1.24%
Matador Capital Management Corporation 250,500 1.19%
Northern Trust Company of Connecticut 188,450 0.89%
Bricoleur Capital Management, LLC. 77,321 0.37%
Ehrmen William 68,325 0.32%
Vanguard Group 45,974 0.22%
Mellon Private Asset Management 40,459 0.19%
Columbia Partners LLC Investment Management 33,342 0.16%
Fiduciary Trust Company International 25,900 0.12%
Bank One Corporation 25,080 0.12%
Davidson DA & Co. 18,207 0.09%
Barclays Bank pc 7,617 0.04%
Legg Mason Wood Walker, Inc. 5,675 0.03%
Old Kent Bank Michigan 1,050 0.00%
Others 804 0.00%
- ---------------------------------------------- --------------- -------------
Total 3,491,481 16.55%
<CAPTION>
ADDITIONAL % OF SHARES
PERCENT OF SHARES BENEFICIALLY
INSIDER HOLDINGS (b) SHARES HELD OUTSTANDING EXERCISABLE (c) OWNED
- -------------------------------------------------------------- ------------ ------------- ----------------- -------------
<S> <C> <C> <C> <C>
Dr. Steven Matzkin (co-Chairman and Chief Officer) 2,494,671 11.83% 13,360 8.80%
SRM Trust 2,478,527 11.75% - 8.69%
Sprout Capital VII L.P. (Robert Finzi, General Partner) 1,649,562 7.82% 1,520,096 11.12%
Curtis Lee Smith Jr (Director) 754,795 3.58% 8,350 2.68%
Grant M. Sadler (co-Founder and Senior VP, Development) 395,541 1.88% - 1.39%
Michael F. Fiore (co-Chairman and Chief Executive Officer) 356,772 1.69% - 1.25%
Mitchell B. Olan (VP of Operations, East) 255,368 1.21% 13,360 0.94%
Robert F. Raucci (Director) 34,155 0.16% 8,350 0.15%
H. Wayne Posey (Director) 26,235 0.12% 5,564 0.11%
Chase Manhattan Bank - 2,714,431 9.52%
L. Theodore Van Ereden (Chief Development Officer, EVP and Secretary) - 43,275 0.15%
David P. Nichols (VP of Finance, East) - 96,152 0.34%
Norman R. Huffaker (Chief Financial Officer and Treasurer) - 11,127 0.04%
Paul H. Keckley (Director) - 1,800 0.01%
- ------------------------------------------------------------- ------------ ------------- ----------------- -------------
Total 8,445,626 40.04% 4,435,865 45.17%
Shares outstanding
- ---------------------------------------------
<S> <C> <C> <C> <C>
Institutional holdings 3,491,481 16.59% 3,491,481 12.24%
Insider holdings 8,445,626 40.04% 12,881,491 45.17%
Retail and other holdings 9,153,354 43.40% 12,143,079 42.58%
- --------------------------------------------- ------------ ------------- ------------- -----------
Total shares outstanding 21,090,461 (d) 100.00% 28,516,051 (e) 100.00%
</TABLE>
- -----------------------------------------
(a) SOURCE: CDA SPECTRUM AS OF JUNE 30, 1999.
(b) SOURCE: COMPANY PROSPECTUS DATED FEBRUARY 10, 1999.
(c) SOURCE: COMPANY PROSPECTUS DATED FEBRUARY 10, 1999. REPRESENTS SHARES
ISSUABLE UPON CONVERSION OR EXERCISE OF OPTIONS, WARRANTS, PREFERRED STOCK
AND/OR CONVERTIBLE NOTES ON BEFORE 3/1/99
(d) SOURCE: COMPANY MANAGEMENT.
(e) SOURCE: COMPANY MANAGEMENT. REPRESENTS ALL POTENTIALLY DILUTIVE SECURITIES.
64
<PAGE>
SECTION 3
APPENDIX
Sub-section F
FLOWER summary valuation
<PAGE>
FLOWER SUMMARY VALUATION
[GRAPH]
66
<PAGE>
THE SHARES OF COMMON STOCK AND PREFERRED STOCK SUBSCRIBED FOR BY THIS AGREEMENT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR ANY
OTHER APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE OFFERED OR SOLD UNLESS
REGISTERED THEREUNDER OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE. TRANSFER OF SUCH SHARES IS ALSO RESTRICTED BY THE TERMS OF THIS
AGREEMENT AND BY THE TERMS OF THE VOTING AGREEMENT OF ID RECAP, INC.
EXCHANGE AND SUBSCRIPTION AGREEMENT
This EXCHANGE AND SUBSCRIPTION AGREEMENT (the "AGREEMENT"), dated as of
November 18, 1999, by and among CB Capital Investors, L.P., DLJ Capital Corp.,
DLJ First ESC L.L.C., Sprout Capital VII, L.P., Sprout Growth II, L.P., and The
Sprout CEO Fund, L.P. (individually, an "INVESTOR" and collectively, the
"INVESTORS") and ID Recap, Inc., a Delaware corporation (the "COMPANY").
WHEREAS, Investor is currently a stockholder in InterDent, Inc., a
Delaware corporation ("InterDent"), and is the owner of the aggregate dollar
amount of securities consisting of Common Stock, Preferred Stock and 7%
Convertible Notes of InterDent set forth opposite Investor's name in SCHEDULE 1
attached hereto.
WHEREAS, in connection with that certain Agreement and Plan of Merger,
dated as of October 20, 1999 (the "MERGER AGREEMENT"), the Company will merge
with and into InterDent with InterDent as the surviving corporation (the
"MERGER").
WHEREAS, subject to the terms and conditions in this Agreement,
Investor desires to contribute the aggregate dollar amount of the securities
(the "ROLLOVER SHARES") set forth in SCHEDULE 1 attached hereto in a transaction
intended to qualify under Section 351 of the Internal Revenue Code, as amended
in exchange (the "EXCHANGE") for newly issued shares of capital stock of the
Company (the "SHARES"), in the amounts set forth under the captions "Common
Exchange Shares" and "Preferred Exchange Shares" in SCHEDULE 1.
NOW, THEREFORE, in order to implement the foregoing and in
consideration of the mutual representations, warranties, covenants and
agreements contained herein and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto agree
as follows.
1. CONTRIBUTION OF THE ROLLOVER SHARES.
1.1. CONTRIBUTION OF THE ROLLOVER SHARES IN SUBSCRIPTION FOR THE
SHARES. On the terms and conditions set forth herein, Investor
agrees to subscribe for and the Company agrees to issue to
Investor the Shares of the Company set forth under the
captions "Common Exchange Shares" and "Preferred Exchange
Shares" in SCHEDULE 1 in exchange for the Rollover Shares set
forth in SCHEDULE 1.
<PAGE>
1.2. CLOSING . The closing (the "CLOSING") of the Exchange shall be
at the time and date established by the Company; provided, the
Company shall provide at least three (3) business days notice
of such time and date to Investor. The Closing shall take
place at the offices of Irell & Manella LLP, 333 South Hope
Street, Los Angeles, California 90071.
1.3. CONDITIONS TO CLOSING. The Closing shall be subject to the
following conditions unless waived in writing by both the
Company and Investor:
(a) NO LAW OR ORDERS. No law or order shall have been
enacted, entered, issued or promulgated by any
governmental entity (and be in effect) which
prohibits or materially restricts the consummation of
the transactions contemplated hereby.
(b) LEGAL PROCEEDINGS. No governmental entity shall have
notified either party to this Agreement that it
intends to commence proceedings to restrain or
prohibit the transactions contemplated hereby or
force rescission, unless such governmental entity
shall have withdrawn such notice and abandoned any
such proceedings prior to the time which otherwise
would have been the Closing date.
(c) STOCKHOLDER APPROVAL. The Merger and the other
transactions contemplated by the Merger Agreement
shall have been approved by the requisite vote of the
holders of the outstanding capital stock of InterDent
entitled to vote thereon.
(d) REPRESENTATIONS AND WARRANTIES. All representations
and warranties in this Agreement of each of the
Company and the Investor shall be true and correct in
all respects on the date when made and on and as of
the Closing date with the same effect as if made on
and as of the Closing date.
(e) COVENANTS AND AGREEMENTS. The Investor shall have
performed or complied in all material respects with
all covenants and conditions contained in this
Agreement or in any agreement, certificate or
instrument to be executed pursuant hereto required to
be performed or complied with at or prior to the
Closing.
(f) PERMITS AND APPROVALS. Each of the Company and the
Investor shall have obtained, on terms reasonably
satisfactory to it, all permits and approvals
required from any governmental entity or any third
party in order to consummate the transactions
contemplated hereby.
(g) COMPANY ADVERSE CHANGES. There shall not have
occurred any events which individually or in the
aggregate have had or are reasonably expected to have
a material adverse effect on the Company or its
ability to consummate the Merger.
<PAGE>
(h) ANCILLARY AGREEMENTS EXECUTED. The management fee
agreement to be entered into among the Investors and
InterDent and the Stockholders Agreement of InterDent
shall have been executed and delivered by each of the
parties thereto.
(i) TAX FREE EXCHANGE. The Exchange of the Rollover
Shares shall be on a tax free basis.
(j) MERGER AGREEMENT AND MERGER. The Merger Agreement
shall not have been amended in any manner that is
materially adverse to the Investor without the
Investor's prior written consent and the closing
conditions set forth in Article VIII of the Merger
Agreement shall have been satisfied or properly
waived in accordance with the terms therein.
1.4. COMPANY DELIVERIES. At the Closing, the Company shall deliver
to Investor stock certificates representing the Shares to be
received by Investor.
1.5. INVESTOR DELIVERIES. At the Closing, Investor shall deliver to
the Company the following:
(a) an executed Investment Qualification Questionnaire in
the form attached hereto;
(b) notes or certificate(s) evidencing the Rollover
Shares together with duly executed stock powers
thereof (if applicable); and
(c) a certificate of Investor confirming the fulfillment
of the conditions set forth in Sections 1.3(d) and
(e).
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to the Investor as follows.
2.1. ORGANIZATION. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the
State of Delaware, having full power and authority to own its
properties and to carry on its business as conducted.
2.2. AUTHORITY. The Company has the requisite corporate power and
authority to deliver this Agreement, perform its obligations
herein, and consummate the transactions contemplated hereby.
The Company has duly executed and delivered this Agreement.
This Agreement is a valid, legal and binding obligation of the
Company enforceable against the Company in accordance with its
terms, except to the extent that enforceability may be limited
by applicable bankruptcy, insolvency or similar laws affecting
the enforcement of creditors' rights generally and subject to
general principles of equity (regardless of whether such
enforcement is considered in a proceeding at law or at
equity).
<PAGE>
2.3. SHARES DULY AUTHORIZED. All of the Shares to be issued to the
Investor pursuant to this Agreement, when issued and delivered
in accordance with the terms of this Agreement, will be duly
authorized, validly issued, fully paid and non-assessable.
2.4. NO CONSENTS OR APPROVALS. No consents or approvals of, or
filings or registrations with, any governmental entity or with
any third party are required to be made or obtained by the
Company in connection with the execution, delivery or
performance by the Company of this Agreement except for: (i)
filings of applications, registrations, statements, reports or
notices with the Securities and Exchange Commission and state
securities authorities and (ii) certain consents, approvals,
filings or registrations set forth in the Merger Agreement and
the schedules attached thereto.
2.5. NO CONFLICTS. Except as set forth in Section 2.4 above, the
execution, delivery and performance of this Agreement by the
Company and the consummations of the transactions contemplated
hereby do not and will not: (i) violate or conflict with the
certificate of incorporation or bylaws of the Company; (ii)
conflict with or result in a breach of any material agreement
of the Company; or (iii) to the knowledge of the Company,
violate any law or order applicable to the Company that would
reasonably be expected to have a material adverse effect on
the Company or prevent the consummation of the Exchange.
3. REPRESENTATIONS AND WARRANTIES OF EACH INVESTOR. Investor hereby
represents and warrants to the Company as follows.
3.1. ORGANIZATION. Investor, if an entity, is duly organized,
validly existing and in good standing under the laws of state
of its incorporation or organization, having full power and
authority to own its properties and to carry on its business
as conducted. Investor, if a natural person, is of legal age,
competent to enter into a contractual obligation, and a
citizen of the United States of America. The principal place
of business or principal residence of Investor is as shown on
the signature page of this Agreement.
3.2. OWNERSHIP OF THE ROLLOVER SHARES. Investor is the sole record
and beneficial owner of the Rollover Shares set forth under
Investor's name in SCHEDULE 1 hereto, free and clear of any
claim, lien, security interest, mortgage, deed of trust,
pledge, charge, conditional sale or other title retention
agreement, lease, preemptive right, right of first refusal,
option, restriction, tenancy, easement, license or other
encumbrance of any kind. Except as set forth in SCHEDULE 3.2,
neither Investor nor any of its affiliates is a party to, or
bound by, any arrangement, agreement, instrument or order (i)
relating to the sale, repurchase, assignment, or other
transfer of any capital stock or equity securities of
InterDent, (ii) relating to the receipt of dividends, proxy
rights, or voting rights of any capital stock or other equity
securities of InterDent, or (iii) relating to rights to
registration under the Securities Act of 1933 or the
<PAGE>
Securities Exchange Act of 1934 of any capital stock or equity
securities of InterDent.
3.3. AUTHORITY. Investor has the requisite power and authority to
deliver this Agreement, perform Investor's obligations herein,
and consummate the transactions contemplated hereby. Investor
has duly executed and delivered this Agreement and has
obtained the necessary authorization to execute and deliver
this Agreement and to perform Investor's obligations herein
and to consummate the transactions contemplated hereby. This
Agreement is a valid, legal and binding obligation of Investor
enforceable against Investor in accordance with its terms,
except to the extent that enforceability may be limited by
applicable bankruptcy, insolvency or similar laws affecting
the enforcement of creditors' rights generally and subject to
general principles of equity (regardless of whether such
enforcement is considered in a proceeding at law or at
equity).
3.4. INVESTOR INTENT. Unless Investor is acting in a fiduciary
capacity as provided in Section 3.5 below, Investor is
acquiring the Shares for Investor's own account as principal,
for investment purposes only, not for any other person or
entity and not for the purpose of resale or distribution.
3.5. FIDUCIARY CAPACITY. If Investor is subscribing for the Shares
from the Company in a fiduciary capacity, Investor makes these
representations and warranties on behalf of the person(s) or
entity(ies) for whom Investor will contribute and exchange the
Rollover Shares for the Company's Shares.
3.6. FINANCIAL STATUS. Investor, alone or together with its
Purchase Representative (as defined in Rule 501(h) of
Regulation D), if applicable, has such knowledge and
experience in financial and business matters as will enable
Investor to evaluate the merits and risks of an investment in
the Company. Investor, if a natural person, has adequate means
of providing for his or her current financial needs and
personal contingencies, and has no need for liquidity in the
investment in the Shares, understands that he or she may not
be able to liquidate his or her investment in the Company in
an emergency, if at all, and can afford a complete loss of the
investment.
3.7. ACCREDITED INVESTOR OR PURCHASER REPRESENTATIVE. Investor (or
acting together a Purchaser Representative) is an Accredited
Investor, as defined by Rule 501 of Regulation D of the
Securities Act. If Investor is a natural person, (i)
Investor's individual net worth or joint net worth with
Investor's spouse at the time of the execution of this
Agreement is in excess of $1,000,000; or (ii) Investor had an
individual income in excess of $200,000 in each of the two (2)
most recent years or joint income with that person's spouse in
excess of $300,000 in each of those years and has a reasonable
expectation of reaching the same income level in the current
year.
3.8. NO GENERAL SOLICITATION. Investor has received no general
solicitation or general
<PAGE>
advertisement in connection with the Exchange or an investment
in the Company. Investor has received no other representations
or warranties from the Company or any other person acting on
behalf of the Company, other than those contained in this
Agreement.
3.9. ACCURACY OF INFORMATION. As of the date hereof and as of the
Closing, the representations and warranties of Investor
contained herein and all information provided by Investor to
the Company concerning Investor, its financial position and
its knowledge of financial and business matters including, but
not limited to, the information set forth in the Investment
Qualification Questionnaire, is correct and complete, and if
there should be any changes in that information prior to an
Investor receiving the Shares, Investor will immediately
provide the Company with the correct information.
3.10. NO CONSENTS OR APPROVALS. No consents or approvals of, or
filings or registrations with, any governmental entity or with
any third party are required to be made or obtained by each
Investor in connection with the execution, delivery or
performance by each Investor of this Agreement except for
filings of applications, registrations, statements, reports or
notices with the Securities and Exchange Commission and state
securities authorities.
3.11. NO CONFLICTS. Except as set forth in Section 3.10 above, the
execution, delivery and performance of this Agreement by each
Investor and the consummations of the transactions
contemplated hereby do not and will not: (i) violate or
conflict with the certificate of incorporation, organizational
documents, partnership agreement, operating agreement or
bylaws of each Investor, as applicable; (ii) conflict with or
result in a breach of any material agreement of the Investor;
or (iii) to the knowledge of the Investor, violate any law or
order applicable to the Investor that would reasonably be
expected to have a material adverse effect on the Investor or
prevent the consummation of the Exchange.
4. AGREEMENTS AND ACKNOWLEDGEMENTS OF EACH INVESTOR. Investor hereby
agrees and acknowledges to the Company as follows.
4.1. NO REGISTRATION. Investor understands that the Shares being
acquired by Investor have not been registered under the
Securities Act, in reliance on an exemption therefrom for
transactions not involving any public offering, that such
Shares have not been approved or disapproved by the Securities
and Exchange Commission or by any other federal or state
agency, and that no such agency has passed on the accuracy or
adequacy of disclosures made to Investor by the Company. No
federal or state governmental agency has passed on or made any
recommendation or endorsement of the Shares or an investment
in the Company.
4.2. LIMITATIONS ON DISPOSITION AND RESALE. Investor understands
that the Shares cannot be sold, transferred or otherwise
disposed of unless the Shares have been
<PAGE>
registered by the Company pursuant to the Securities Act of
1933 and any applicable state securities laws, unless an
exemption therefrom is available. Investor understands that
it may not be possible for Investor to liquidate the
investment in the Company; and Investor agrees not to sell,
transfer or otherwise dispose of the Shares unless the Shares
have been so registered or an exemption from the requirement
of registration is available under the Securities Act of 1933.
Investor recognizes that there will not be any public trading
market for the Shares and, as a result, Investor may be unable
to sell or dispose of its interest in the Company.
4.3. NEWLY FORMED ENTITY. Investor recognizes that the Company was
only recently formed and, accordingly, has no financial or
operating history and that the investment in the Company is
extremely speculative and involves a high degree of risk.
4.4. COMPLIANCE WITH AGREEMENT. Investor agrees to execute any and
all further documents necessary to become a stockholder of the
Company. Investor agrees to execute and deliver any and all
further documents and writings, and to perform such other
actions, as may be or become reasonably necessary or expedient
to effect and carry out the terms of this Agreement.
4.5. IRREVOCABLE SUBSCRIPTION AND CANCELLATION. Investor
understands that this subscription is irrevocable, except as
otherwise provided in any applicable federal or state law
governing this Agreement and the transactions contemplated
herein.
4.6. PURCHASER REPRESENTATIVE. If Investor used or will use the
services of a Purchaser Representative in connection with the
Exchange, such Purchaser Representative has disclosed or will
disclose, by submitting to the Company a Purchaser
Representative Questionnaire in the form given Investor by the
Company, any material relationship which now exists between
each Purchaser Representative or his affiliates and the
Company and its affiliates, or which is mutually understood to
be contemplated, or which has existed at any time during the
previous two (2) years, and further setting forth any
compensation received or to be received as a result of such
relationship.
5. ATTORNEY'S FEES. In the event of any litigation or other legal
proceeding involving the interpretation of this Agreement or
enforcement of the rights or obligations of the parties hereto, the
prevailing party or parties shall be entitled to recover reasonable
attorney's fees and costs as determined by a court or other
adjudicator. The reasonable fees and expenses incurred by the Investor
in connection with this Agreement shall be paid by the Company upon
consummation of the transactions contemplated herein.
6. GOVERNING LAW. This Agreement is governed by and shall be construed in
accordance with the law of the State of Delaware, excluding any
conflict-of-laws rule or principle that might refer the governance or
construction of this Agreement to the law of another jurisdiction. If
any provision of this Agreement or the application thereof to any
<PAGE>
person or circumstance is held invalid or unenforceable to any extent,
the remainder of this Agreement and the application of that provision
to other persons or circumstances is not affected thereby, and that
provision shall be enforced to the greater extent permitted by law.
7. ASSIGNMENT. Investor shall have neither the right nor the power to
assign or delegate any provision of this Agreement except with the
prior written consent of the Company; PROVIDED, however, Investor shall
be permitted to assign this Agreement to an affiliate of Investor.
Except as provided in the preceding sentence, this Agreement shall be
binding upon and shall inure to the benefit of the parties' respective
successors, assigns, executors and administrators.
8. COUNTERPARTS. This Agreement may be executed in separate counterparts,
each of which shall be deemed an original and both of which shall
constitute one and the same document.
9. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof
and may be amended only in a writing executed by the party to be bound
thereby.
10. TERMINATION OF AGREEMENT. This Agreement may be terminated: (i) by the
mutual written consent of the parties hereto; (ii) by the Company or
Investor if a condition set forth in Section 1.3 hereof is not
satisfied or otherwise waived; or (iii) by either party if the Merger
Agreement is terminated for any reason whatsoever.
11. FURTHER ASSURANCES. Subject to the terms and conditions provided
herein, each party hereto agrees to use all commercially reasonable
efforts to take, or cause to be taken, all action, and to do, or cause
to be done, all things necessary, proper or advisable, whether under
applicable laws and regulations or otherwise, in order to consummate
and make effective the transactions contemplated by this Agreement.
[The remainder of this page is blank]
<PAGE>
IN WITNESS WHEREOF, the parties have hereby executed this Exchange and
Subscription Agreement as of the day set forth above.
ENTITY INVESTOR
CB CAPITAL INVESTORS, L.P.
-----------------------------------
Name of Subscriber (Print or Type)
By: CB Capital Investors, Inc.
Its: General Partner
By:
-------------------------------------
Signature
Its:
-------------------------------------
Title
Principal Place of Business of Subscriber
-----------------------------------------
38 Madison Ave., 12th Floor
New York, New York 10017
(212) 622-3100 - telephone
-----------------------------------------
(City and State) (Zip Code)
-----------------------------------------
Telephone Number
-----------------------------------------
Tax Identification Number of Subscriber
<PAGE>
ENTITY INVESTOR
DLJ CAPITAL CORP.
-----------------------------------------
Name of Subscriber (Print or Type)
By:
-------------------------------------
Signature
Its:
-------------------------------------
Title
3000 Sand Hill Road, Building 3, Suite 170
------------------------------------------
Principal Place of Business of Subscriber
Menlo Park, California 94025
------------------------------------------
(City and State) (Zip Code)
(650) 234-2700
------------------------------------------
Telephone Number
------------------------------------------
Tax Identification Number of Subscriber
<PAGE>
ENTITY INVESTOR
DLJ FIRST ESC L.L.C.
------------------------------------------
Name of Subscriber (Print or Type)
By: DLJ LBO Plans Management
Corporation
Its: Manager
By:
---------------------------------------
Signature
Its:
--------------------------------------
Title
3000 Sand Hill Road, Building 3, Suite 170
------------------------------------------
Principal Place of Business of Subscriber
Menlo Park, California 94025
------------------------------------------
(City and State) (Zip Code)
(650) 234-2700
------------------------------------------
Telephone Number
------------------------------------------
Tax Identification Number of Subscriber
<PAGE>
ENTITY INVESTOR
SPROUT CAPITAL VII, L.P.
------------------------------------------
Name of Subscriber (Print or Type)
By: DLJ Capital Corp.
Its: Managing General Partner
By:
---------------------------------------
Signature
Its:
--------------------------------------
Title
3000 Sand Hill Road, Building 3, Suite 170
------------------------------------------
Principal Place of Business of Subscriber
Menlo Park, California 94025
------------------------------------------
(City and State) (Zip Code)
(650) 234-2700
------------------------------------------
Telephone Number
------------------------------------------
Tax Identification Number of Subscriber
<PAGE>
ENTITY INVESTOR
SPROUT GROWTH II, L.P.
------------------------------------------
Name of Subscriber (Print or Type)
By: DLJ Capital Corp.
Its: Managing General Partner
By:
---------------------------------------
Signature
Its:
--------------------------------------
Title
3000 Sand Hill Road, Building 3, Suite 170
------------------------------------------
Principal Place of Business of Subscriber
Menlo Park, California 94025
------------------------------------------
(City and State) (Zip Code)
(650) 234-2700
------------------------------------------
Telephone Number
------------------------------------------
Tax Identification Number of Subscriber
<PAGE>
ENTITY INVESTOR
THE SPROUT CEO FUND, L.P.
------------------------------------------
Name of Subscriber (Print or Type)
By: DLJ Capital Corp.
Its: General Partner
By:
---------------------------------------
Signature
Its:
--------------------------------------
Title
3000 Sand Hill Road, Building 3, Suite 170
------------------------------------------
Principal Place of Business of Subscriber
Menlo Park, California 94025
------------------------------------------
(City and State) (Zip Code)
(650) 234-2700
------------------------------------------
Telephone Number
------------------------------------------
Tax Identification Number of Subscriber
<PAGE>
ACCEPTANCE
The foregoing subscription is hereby accepted, subject to the terms and
conditions hereof, as of the date set forth above.
ID RECAP, INC.
a Delaware corporation
By:
------------------------------------------
Name: John Danhakl
Title: President
<PAGE>
SCHEDULE 1
<TABLE>
<CAPTION>
Common Junior Preferred Senior Preferred
Investor Aggregate Value Exchange Shares Exchange Shares Exchange Shares
-------- --------------- --------------- ---------------- ----------------
<S> <C> <C> <C> <C>
CB Capital Investors, L.P. $26, 000,000 242,005 181,854 226,184
DLJ Capital Corp. $12,500,000 (1) 503,370 (1) 378,256 (1) 470,463 (1)
DLJ First ESC L.L.C.
Sprout Capital VII, L.P.
Sprout Growth II, L.P.
The Sprout CEO Fund, L.P.
</TABLE>
(1) Aggregate for all DLJ and Sprout Entities
<PAGE>
CONFIDENTIAL INVESTMENT QUALIFICATION QUESTIONNAIRE
ID RECAP, INC.
A DELAWARE CORPORATION
SPECIAL INSTRUCTIONS
In order to establish the availability under federal and state
securities laws of an exemption from registration or qualification requirements
for the proposed Exchange, you are required to represent and warrant, and by
executing and delivering this questionnaire will be deemed to have represented
and warranted, that the information stated herein is true, accurate and complete
to the best of your knowledge and belief, and may be relied on by the Company.
Further, by executing and delivering this questionnaire you agree to notify the
Company and supply corrective information promptly if, prior to the consummation
of your exchange of the Rollover Shares for the Shares, any such information
becomes inaccurate or incomplete. Your execution of this questionnaire does not
constitute any indication of your intent to subscribe for the Shares.
A subscriber who is a NATURAL PERSON must complete each Question EXCEPT
for 2 and 5.
A subscriber that is an ENTITY other than a trust must complete each
Question EXCEPT for 3 and 5.
A subscriber that is a TRUST must complete each Question EXCEPT for 3.
GENERAL INFORMATION
1. ALL SUBSCRIBERS.
a. Name(s) of prospective investor(s):____________________________
b. Address:_______________________________________________________
c. Tel. No.: (___) ______________
2. SUBSCRIBERS THAT ARE ENTITIES.
a. Type of entity:
/ / Trust
/ / Corporation
/ / Partnership
/ / Other:
b. State and date of legal formation:_____________________________
c. Nature of Business:____________________________________________
<PAGE>
d. Was the entity organized for the specific purpose of
acquiring the Shares in this Exchange?
Yes _____ No _____
e. Federal tax identification number: ________________________
3. SUBSCRIBERS WHO ARE INDIVIDUALS.
a. State where registered to vote:________________________________
b. Social Security Number:________________________________________
c. Please state the subscriber's education and degrees earned:
DEGREE SCHOOL YEAR
------ ------ ----
______ _______________________________________ _____
______ _______________________________________ _____
d. Current occupation (if retired, describe last occupation):
Employer:__________________________________________________________
Nature of Business:________________________________________________
Position:__________________________________________________________
Business Address:__________________________________________________
Tel. No.: (___) ___________
4. ACCREDITATION. Does the subscriber satisfy one or more of the
following accredited investor requirements? Contact the Company if none of the
following is applicable.
Investor is:
/ / A natural person whose net worth (or joint net worth with my spouse) is
in excess of $1,000,000 as of the date hereof.
/ / A natural person whose income in the prior two years was, and whose
income in the current year is reasonably expected to be in excess of
$200,000 or joint income with my spouse in the prior two years was, and
is reasonably expected to be in the current year in excess of $300,000.
/ / A director or executive officer of ID Recap, Inc.
/ / A trust with total assets in excess of $5,000,000, not formed for the
specific purpose
<PAGE>
of investing in the Shares of ID Recap, Inc., whose purchases are
directed by a sophisticated person, who has such knowledge and
experience in financial and business matters that he or she is
capable of evaluating the merits and risks of an investment in the
Shares of ID Recap, Inc.
/ / A "bank", "savings and loan association", or "insurance company" as
defined in the Securities Act of 1933.
/ / A broker/dealer registered pursuant to Section 15 of the Securities
Exchange Act of 1934.
/ / An investment company registered under, or a "business development
company" as defined in Section 2(a)(48) of the Investment Company Act
of 1940.
/ / A Small Business Investment Company licensed by the U.S. Small Business
Administration under the Small Business Investment Act of 1958.
/ / A plan established and maintained by a state, its political
subdivisions, or any agency or instrumentality of a state or its
political subdivisions, for the benefit of its employees and having
total assets in excess of $5,000,000.
/ / An "employee benefit plan" as defined in the Employee Retirement Income
Security Act of 1974 (a "Plan") which has total assets in excess of
$5,000,000.
/ / A Plan whose investment decisions, including the decision to subscribe
for the Shares of ID Recap, Inc., are made solely by (i) a "plan
fiduciary" as defined in Section 3(21) of the Employee Retirement
Income Security Act of 1974, which includes a bank, a savings and loan
association, an insurance company or a registered investment adviser,
or (ii) an "accredited investor" as defined under Rule 501(a) of the
Securities Act of 1933.
/ / A private business development company as defined in Section 202(a)(22)
of the Investment Advisers Act of 1940.
/ / Any organization described in Section 501(c)(3) of the Internal Revenue
Code, corporation, Massachusetts or similar business Trust, or
partnership, not formed for the specific purpose of investing in the
Shares and having total assets in excess of $5,000,000.
/ / Any entity in which all of the equity owners meet one of the above
descriptions.
5. TRUSTS.
Does the trust meet the following tests:
a. Has total assets in excess of $5,000,000?
Yes _____ No _____
<PAGE>
b. Was formed for the purpose of the investment in the
Shares in this Exchange?
Yes _____ No _____
c. Are the purchases by the Trust directed by a sophisticated
investor who, alone or with his or her subscriber representative, understands
the merits and risks of the investment in the Shares?
Yes _____ No _____
[The remainder of this page is blank]
<PAGE>
INDIVIDUAL(S) SIGN HERE:
________________________________
(Signature)
________________________________
(Print Name)
________________________________
(Address)
Social Security #:____________
Spouse of Subscriber:
________________________________
(Signature)
ORGANIZATIONS SIGN HERE:
________________________________
(Print Name of Organization)
By:
________________________________
(Signature)
________________________________
(Print Name and Title)
________________________________
(Address)
Federal ID#:____________________
<PAGE>
CONFIDENTIAL PURCHASER REPRESENTATIVE QUESTIONNAIRE
ID RECAP, INC.
A DELAWARE CORPORATION
1. Has the subscriber relied on the advice of a Purchaser
Representative in connection with evaluating the merits and risks of the
Purchase of the Shares in the Exchange?
Yes _____ No _____
If yes, please give the name, address and telephone number of the
person who is acting as the Purchaser Representative.
Name: ________________________________________________________
Address: _____________________________________________________
Telephone number: (___) ____________
2. How often does the subscriber invest in securities?
Often ______ Occasionally _____ Never _____
3. Please list below the subscriber's most recent investments (up to
three):
Amount of
Name of Investment Investment
_____________________________________________ ______________
_____________________________________________ ______________
_____________________________________________ ______________
4. Does the subscriber, either alone or together with its Purchaser
Representative identified above, have such knowledge and experience in financial
and business matters as to be capable of evaluating the merits and risks of an
investment in the Shares in the Exchange?
Yes _____ No _____
5. Does the subscriber, either alone by reason of its business or
financial experience or together with its Purchaser Representative, have the
capacity to protect its own interests in connection with the contribution of the
Rollover Shares in exchange for the Shares in the Exchange?
Yes _____ No _____
6. Is the subscriber (or the trust beneficiary for which it is the
fiduciary) able to bear the
<PAGE>
economic risk of the Investment, including a complete loss of the investment
in the Shares?
Yes _____ No _____
7. Does the subscriber have any other investments or contingent
liabilities which could cause the need for sudden cash requirements in excess of
cash readily available to the subscriber?
Yes _____ No _____
If Yes, explain:
8. Does the subscriber have a net worth or joint net worth with his or
her spouse which is at least five times as great as the fair market value of the
Shares subscribed for in the Exchange?
Yes _____ No _____
9. If 25% or more of the subscriber's total assets are represented by
investments in the subscriber's own company or real estate, are all liabilities
associated with them included as personal liabilities?
Yes _____ No _____
If No, what is the dollar amount of each such liability?
10. Has the subscriber ever been subject to bankruptcy, reorganization
or debt restructuring?
Yes _____ No _____
If Yes, provide details:
11. Is the subscriber involved in any litigation which, if an adverse
decision occurred, would adversely affect the subscriber's financial condition?
Yes _____ No _____
<PAGE>
If Yes, provide details:
12. Does the subscriber confirm that neither the subscriber nor the
subscriber's broker nor Purchaser Representative became aware of or was
introduced to the Company by means of any general advertisement?
Yes _____ No _____
13. Does the subscriber confirm that the foregoing statements are
complete and accurate to the best of its knowledge and belief, and that it
undertakes to notify the Company regarding any material change in the
information set forth above prior to the Closing of the Exchange?
Yes _____ No _____
[The remainder of this page is blank]
<PAGE>
INDIVIDUAL(S) SIGN HERE:
________________________________
(Signature)
________________________________
(Print Name)
________________________________
(Address)
Social Security #:_____________
Spouse of Subscriber:
________________________________
(Signature)
ORGANIZATIONS SIGN HERE:
________________________________
(Print Name of Organization)
By:
______________________________
(Signature)
________________________________
(Print Name and Title)
________________________________
(Address)
Federal ID#: ___________________
<PAGE>
THE SHARES OF COMMON STOCK AND PREFERRED STOCK SUBSCRIBED FOR BY THIS AGREEMENT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR ANY
OTHER APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE OFFERED OR SOLD UNLESS
REGISTERED THEREUNDER OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE. TRANSFER OF SUCH SHARES IS ALSO RESTRICTED BY THE TERMS OF THIS
AGREEMENT AND BY THE TERMS OF THE VOTING AGREEMENT OF ID RECAP, INC.
EXCHANGE AND SUBSCRIPTION AGREEMENT
This EXCHANGE AND SUBSCRIPTION AGREEMENT (the "AGREEMENT"), dated as of
October 22, 1999, by and between SRM 1993 Children's Trust (the "INVESTOR"), and
ID Recap, Inc., a Delaware corporation (the "COMPANY").
WHEREAS, Investor is currently a stockholder in InterDent, Inc., a
Delaware corporation ("INTERDENT"), and is the owner of the number of shares set
forth opposite Investor's name under the caption "Rolled Securities" in SCHEDULE
1 attached hereto.
WHEREAS, in connection with that certain Agreement and Plan of Merger,
dated contemporaneously herewith (the "MERGER AGREEMENT"), the Company will
merge with and into InterDent with InterDent as the surviving corporation (the
"MERGER").
WHEREAS, subject to the terms and conditions in this Agreement,
Investor desires to contribute the shares (the "ROLLOVER SHARES") set forth
under the caption "Rolled Securities" in SCHEDULE 1 attached hereto in a
transaction intended to qualify under Section 351 of the Internal Revenue Code,
as amended in exchange (the "EXCHANGE") for newly issued shares of capital stock
of the Company (the "SHARES"), in the amounts set forth under the captions
"Common Exchange Shares," "Senior Preferred Exchange Shares," and "Junior
Preferred Exchange Shares" in SCHEDULE 1.
NOW, THEREFORE, in order to implement the foregoing and in
consideration of the mutual representations, warranties, covenants and
agreements contained herein and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto agree
as follows.
1. CONTRIBUTION OF THE ROLLOVER SHARES.
1.1. CONTRIBUTION OF THE ROLLOVER SHARES IN SUBSCRIPTION FOR THE
SHARES. On the terms and conditions set forth herein, Investor
agrees to subscribe for and the Company agrees to issue to
Investor the Shares of the Company set forth under the
captions "Common Exchange Shares," "Senior Preferred Exchange
Shares," and "Junior Preferred Exchange Shares" in SCHEDULE 1
in exchange for the Rollover Shares set forth in SCHEDULE 1.
1.2. CLOSING . The closing (the "CLOSING") of the Exchange shall be
at the time and date
<PAGE>
established by the Company; provided, the Company shall
provide at least three (3) business days notice of such time
and date to Investor. The Closing shall take place at the
offices of Irell & Manella LLP, 333 South Hope Street, Los
Angeles, California 90071.
1.3. CONDITIONS TO CLOSING. The Closing shall be subject to the
following conditions unless waived in writing by the Company:
(a) NO LAW OR ORDERS. No law or order shall have been
enacted, entered, issued or promulgated by any
governmental entity (and be in effect) which
prohibits or materially restricts the consummation of
the transactions contemplated hereby.
(b) LEGAL PROCEEDINGS. No governmental entity shall have
notified either party to this Agreement that it
intends to commence proceedings to restrain or
prohibit the transactions contemplated hereby or
force rescission, unless such governmental entity
shall have withdrawn such notice and abandoned any
such proceedings prior to the time which otherwise
would have been the Closing date.
(c) STOCKHOLDER APPROVAL. The Merger and the other
transactions contemplated by the Merger Agreement
shall have been approved by the requisite vote of the
holders of the outstanding capital stock of InterDent
entitled to vote thereon.
(d) REPRESENTATIONS AND WARRANTIES. All representations
and warranties in this Agreement by the Investor
shall be true and correct in all respects on the date
when made and on and as of the Closing date with the
same effect as if made on and as of the Closing date.
(e) COVENANTS AND AGREEMENTS. The Investor shall have
performed or complied in all material respects with
all covenants and conditions contained in this
Agreement or in any agreement, certificate or
instrument to be executed pursuant hereto required to
be performed or complied with at or prior to the
Closing.
(f) PERMITS AND APPROVALS. The Company shall have
obtained, on terms reasonably satisfactory to it, all
permits and approvals required from any governmental
entity or any third party in order to consummate the
transactions contemplated hereby.
(g) COMPANY ADVERSE CHANGES. There shall not have
occurred any events which individually or in the
aggregate have had or are reasonably expected to have
a material adverse effect on the Company or its
ability to consummate the Merger.
1.4. COMPANY DELIVERIES. At the Closing, the Company shall deliver
to Investor stock certificates representing the Shares to be
received by Investor.
1.5. INVESTOR DELIVERIES. At the Closing, Investor shall deliver
to the Company the following:
(a) an executed Investment Qualification Questionnaire in
the form attached hereto;
(b) certificate(s) evidencing the Rollover Shares
together with duly executed stock powers thereof; and
<PAGE>
(c) a certificate of Investor confirming the fulfillment
of the conditions set forth in Sections 1.3(d) and
(e).
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to the Investor as follows.
2.1. ORGANIZATION. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the
State of Delaware, having full power and authority to own its
properties and to carry on its business as conducted.
2.2. AUTHORITY. The Company has the requisite corporate power and
authority to deliver this Agreement, perform its obligations
herein, and consummate the transactions contemplated hereby.
The Company has duly executed and delivered this Agreement.
This Agreement is a valid, legal and binding obligation of the
Company enforceable against the Company in accordance with its
terms, except to the extent that enforceability may be limited
by applicable bankruptcy, insolvency or similar laws affecting
the enforcement of creditors' rights generally and subject to
general principles of equity (regardless of whether such
enforcement is considered in a proceeding at law or at
equity).
2.3. SHARES DULY AUTHORIZED. All of the Shares to be issued to the
Investor pursuant to this Agreement, when issued and delivered
in accordance with the terms of this Agreement, will be duly
authorized, validly issued, fully paid and non-assessable.
3. REPRESENTATIONS AND WARRANTIES OF EACH INVESTOR. Investor hereby
represents and warrants to the Company as follows.
3.1. ORGANIZATION. Investor, if an entity, is duly organized,
validly existing and in good standing under the laws of state
of its incorporation or organization, having full power and
authority to own its properties and to carry on its business
as conducted. Investor, if a natural person, is of legal age,
competent to enter into a contractual obligation, and a
citizen of the United States of America. The principal place
of business or principal residence of Investor is as shown on
the signature page of this Agreement.
3.2. OWNERSHIP OF THE ROLLOVER SHARES. Investor is the sole record
and beneficial owner of the Rollover Shares set forth under
Investor's name in SCHEDULE 1 hereto, free and clear of any
claim, lien, security interest, mortgage, deed of trust,
pledge, charge, conditional sale or other title retention
agreement, lease, preemptive right, right of first refusal,
option, restriction, tenancy, easement, license or other
encumbrance of any kind. Except as set forth in SCHEDULE 3.2,
neither Investor nor any of its affiliates is a party to, or
bound by, any arrangement, agreement, instrument or order (i)
relating to the sale, repurchase, assignment, or other
transfer of any capital stock or equity securities of
InterDent, (ii) relating to the receipt of dividends, proxy
rights, or voting rights of any capital stock or other equity
securities of InterDent, or (iii) relating to rights to
registration under the Securities Act of 1933 or the
Securities Exchange Act of 1934 of any capital stock or equity
securities of InterDent.
3.3. AUTHORITY. Investor has the requisite power and authority to
deliver this Agreement, perform
<PAGE>
Investor's obligations herein, and consummate the transactions
contemplated hereby. Investor has duly executed and delivered
this Agreement and has obtained the necessary authorization to
execute and deliver this Agreement and to perform Investor's
obligations herein and to consummate the transactions
contemplated hereby. This Agreement is a valid, legal and
binding obligation of Investor enforceable against Investor
in accordance with its terms, except to the extent that
enforceability may be limited by applicable bankruptcy,
insolvency or similar laws affecting the enforcement of
creditors' rights generally and subject to general
principles of equity (regardless of whether such enforcement
is considered in a proceeding at law or at equity).
3.4. INVESTOR INTENT. Unless Investor is acting in a fiduciary
capacity as provided in Section 3.5 below, Investor is
acquiring the Shares for Investor's own account as principal,
for investment purposes only, not for any other person or
entity and not for the purpose of resale or distribution.
3.5. FIDUCIARY CAPACITY. If Investor is subscribing for the Shares
from the Company in a fiduciary capacity, Investor makes these
representations and warranties on behalf of the person(s) or
entity(ies) for whom Investor will contribute and exchange the
Rollover Shares for the Company's Shares.
3.6. FINANCIAL STATUS. Investor, alone or together with its
Purchase Representative (as defined in Rule 501(h) of
Regulation D), if applicable, has such knowledge and
experience in financial and business matters as will enable
Investor to evaluate the merits and risks of an investment in
the Company. Investor, if a natural person, has adequate means
of providing for his or her current financial needs and
personal contingencies, and has no need for liquidity in the
investment in the Shares, understands that he or she may not
be able to liquidate his or her investment in the Company in
an emergency, if at all, and can afford a complete loss of the
investment.
3.7. ACCREDITED INVESTOR OR PURCHASER REPRESENTATIVE. Investor (or
acting together a Purchaser Representative) is an Accredited
Investor, as defined by Rule 501 of Regulation D of the
Securities Act. If Investor is a natural person, (i)
Investor's individual net worth or joint net worth with
Investor's spouse at the time of the execution of this
Agreement is in excess of $1,000,000; or (ii) Investor had an
individual income in excess of $200,000 in each of the two (2)
most recent years or joint income with that person's spouse in
excess of $300,000 in each of those years and has a reasonable
expectation of reaching the same income level in the current
year.
3.8. NO GENERAL SOLICITATION. Investor has received no general
solicitation or general advertisement in connection with the
Exchange or an investment in the Company. Investor has
received no other representations or warranties from the
Company or any other person acting on behalf of the Company,
other than those contained in this Agreement.
3.9. ACCURACY OF INFORMATION. As of the date hereof and as of the
Closing, the representations and warranties of Investor
contained herein and all information provided by Investor to
the Company concerning Investor, its financial position and
its knowledge of financial and business matters including, but
not limited to, the information set forth in the Investment
<PAGE>
Qualification Questionnaire, is correct and complete, and if
there should be any changes in that information prior to an
Investor receiving the Shares, Investor will immediately
provide the Company with the correct information.
4. AGREEMENTS AND ACKNOWLEDGEMENTS OF EACH INVESTOR. Investor hereby
agrees and acknowledges to the Company as follows.
4.1. ACCEPTANCE OF SUBSCRIPTION. The Company shall have the right,
in its sole discretion, to terminate this Agreement prior to
effecting the subscription and exchange.
4.2. NO REGISTRATION. Investor understands that the Shares being
acquired by Investor have not been registered under the
Securities Act, in reliance on an exemption therefrom for
transactions not involving any public offering, that such
Shares have not been approved or disapproved by the Securities
and Exchange Commission or by any other federal or state
agency, and that no such agency has passed on the accuracy or
adequacy of disclosures made to Investor by the Company. No
federal or state governmental agency has passed on or made any
recommendation or endorsement of the Shares or an investment
in the Company.
4.3. LIMITATIONS ON DISPOSITION AND RESALE. Investor understands
that the Shares cannot be sold, transferred or otherwise
disposed of unless the Shares have been registered by the
Company pursuant to the Securities Act of 1933 and any
applicable state securities laws, unless an exemption
therefrom is available. Investor understands that it may not
be possible for Investor to liquidate the investment in the
Company; and Investor agrees not to sell, transfer or
otherwise dispose of the Shares unless the Shares have been so
registered or an exemption from the requirement of
registration is available under the Securities Act of 1933.
Investor recognizes that there will not be any public trading
market for the Shares and, as a result, Investor may be unable
to sell or dispose of its interest in the Company.
4.4. NEWLY FORMED ENTITY. Investor recognizes that the Company was
only recently formed and, accordingly, has no financial or
operating history and that the investment in the Company is
extremely speculative and involves a high degree of risk.
4.5. COMPLIANCE WITH AGREEMENT. Investor agrees to execute any and
all further documents necessary to become a stockholder of the
Company. Investor agrees to execute and deliver any and all
further documents and writings, and to perform such other
actions, as may be or become reasonably necessary or expedient
to effect and carry out the terms of this Agreement.
4.6. IRREVOCABLE SUBSCRIPTION AND CANCELLATION. Investor
understands that this subscription is irrevocable, except as
otherwise provided in any applicable federal or state law
governing this Agreement and the transactions contemplated
herein.
4.7. PURCHASER REPRESENTATIVE. If Investor used or will use the
services of a Purchaser Representative in connection with the
Exchange, such Purchaser Representative has disclosed or will
disclose, by submitting to the Company a Purchaser
Representative Questionnaire in the form given Investor by the
Company, any material relationship which now exists between
each Purchaser Representative or his affiliates and the
Company and its
<PAGE>
affiliates, or which is mutually understood to be
contemplated, or which has existed at any time during the
previous two (2) years, and further setting forth any
compensation received or to be received as a result of such
relationship.
5. ATTORNEY'S FEES. In the event of any litigation or other legal
proceeding involving the interpretation of this Agreement or
enforcement of the rights or obligations of the parties hereto, the
prevailing party or parties shall be entitled to recover reasonable
attorney's fees and costs as determined by a court or other
adjudicator.
6. GOVERNING LAW. This Agreement is governed by and shall be construed in
accordance with the law of the State of Delaware, excluding any
conflict-of-laws rule or principle that might refer the governance or
construction of this Agreement to the law of another jurisdiction. If
any provision of this Agreement or the application thereof to any
person or circumstance is held invalid or unenforceable to any extent,
the remainder of this Agreement and the application of that provision
to other persons or circumstances is not affected thereby, and that
provision shall be enforced to the greater extent permitted by law.
7. ASSIGNMENT. Investor shall have neither the right nor the power to
assign or delegate any provision of this Agreement except with the
prior written consent of the Company. Except as provided in the
preceding sentence, this Agreement shall be binding upon and shall
inure to the benefit of the parties' respective successors, assigns,
executors and administrators.
8. COUNTERPARTS. This Agreement may be executed in separate counterparts,
each of which shall be deemed an original and both of which shall
constitute one and the same document.
9. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof
and may be amended only in a writing executed by the party to be bound
thereby.
10. TERMINATION OF AGREEMENT. This Agreement may be terminated: (i) by the
mutual written consent of the parties hereto; (ii) by the Company if a
condition set forth in Section 1.3 hereof is not satisfied or otherwise
waived by the Company; or (iii) by either party if the Merger Agreement
is terminated for any reason whatsoever.
11. FURTHER ASSURANCES. Subject to the terms and conditions provided
herein, each party hereto agrees to use all commercially reasonable
efforts to take, or cause to be taken, all action, and to do, or cause
to be done, all things necessary, proper or advisable, whether under
applicable laws and regulations or otherwise, in order to consummate
and make effective the transactions contemplated by this Agreement.
[The remainder of this page is blank]
<PAGE>
IN WITNESS WHEREOF, the parties have hereby executed this Exchange and
Subscription Agreement as of the date set forth above.
ENTITY INVESTOR
SRM 1993 Children's Trust
-----------------------------------------
Name of Subscriber (Print or Type)
-----------------------------------------
Signature
-----------------------------------------
Principal Place of Business of Subscriber
-----------------------------------------
(City and State) (Zip Code)
-----------------------------------------
Telephone Number
-----------------------------------------
Tax Identification Number of Subscriber
<PAGE>
ACCEPTANCE
The foregoing subscription is hereby accepted, subject to the terms and
conditions hereof, as of the date set forth above.
ID RECAP, INC.
a Delaware corporation
By:
-----------------------------------------
Name: John Danhakl
Title: President
<PAGE>
SCHEDULE 1
<TABLE>
<CAPTION>
Common Rollover Shares Common Exchange Shares Junior Exchange Shares
- ---------------------- ---------------------- ----------------------
<S> <C> <C>
1,422,789 ($13,516,495.50) 724,105 ($6,868.997.50) 265,500 ($6,637,500)
</TABLE>
<PAGE>
SCHEDULE 3.2
AGREEMENTS
REGISTRATION RIGHTS AGREEMENT, DATED AS OF MARCH 11, 1999, BETWEEN INTERDENT,
INC. AND THE HOLDERS (AS DEFINED THEREIN).
<PAGE>
CONFIDENTIAL INVESTMENT QUALIFICATION QUESTIONNAIRE
ID RECAP, INC.
A DELAWARE CORPORATION
SPECIAL INSTRUCTIONS
In order to establish the availability under federal and state
securities laws of an exemption from registration or qualification requirements
for the proposed Exchange, you are required to represent and warrant, and by
executing and delivering this questionnaire will be deemed to have represented
and warranted, that the information stated herein is true, accurate and complete
to the best of your knowledge and belief, and may be relied on by the Company.
Further, by executing and delivering this questionnaire you agree to notify the
Company and supply corrective information promptly if, prior to the consummation
of your exchange of the Rollover Shares for the Shares, any such information
becomes inaccurate or incomplete. Your execution of this questionnaire does not
constitute any indication of your intent to subscribe for the Shares.
A subscriber who is a NATURAL PERSON must complete each Question EXCEPT
for 2 and 5.
A subscriber that is an ENTITY other than a trust must complete each
Question EXCEPT for 3 and 5.
A subscriber that is a TRUST must complete each Question EXCEPT for 3.
GENERAL INFORMATION
1. ALL SUBSCRIBERS.
a. Name(s) of prospective investor(s):__________________
b. Address:_____________________________________________
c. Tel. No.: (___) ______________
2. SUBSCRIBERS THAT ARE ENTITIES.
a. Type of entity:
/ / Trust
/ / Corporation
/ / Partnership
/ / Other:
b. State and date of legal formation: __________________
c. Nature of Business:__________________________________
<PAGE>
d. Was the entity organized for the specific purpose of
acquiring the Shares in this Exchange?
Yes _____ No _____
e. Federal tax identification number: _________________
3. SUBSCRIBERS WHO ARE INDIVIDUALS.
a. State where registered to vote:______________________
b. Social Security Number:______________________________
c. Please state the subscriber's education and degrees
earned:
Degree School Year
------ ------ ----
_______ ____________________________________ ____
_______ ____________________________________ ____
d. Current occupation (if retired, describe last
occupation):
Employer:_____________________________________________________
Nature of Business:___________________________________________
Position:_____________________________________________________
Business Address:_____________________________________________
Tel. No.: (___) ___________
4. ACCREDITATION. Does the subscriber satisfy one or more of the
following accredited investor requirements? Contact the Company if none of the
following is applicable.
Investor is:
/ / A natural person whose net worth (or joint net worth with my spouse) is
in excess of $1,000,000 as of the date hereof.
/ / A natural person whose income in the prior two years was, and whose
income in the current year is reasonably expected to be in excess of
$200,000 or joint income with my spouse in the prior two years was, and
is reasonably expected to be in the current year in excess of $300,000.
/ / A director or executive officer of ID Recap, Inc.
/ / A trust with total assets in excess of $5,000,000, not formed for the
specific purpose
<PAGE>
of investing in the Shares of ID Recap, Inc., whose purchases are
directed by a sophisticated person, who has such knowledge and
experience in financial and business matters that he or she is
capable of evaluating the merits and risks of an investment in
the Shares of ID Recap, Inc.
/ / A "bank", "savings and loan association", or "insurance company" as
defined in the Securities Act of 1933.
/ / A broker/dealer registered pursuant to Section 15 of the Securities
Exchange Act of 1934.
/ / An investment company registered under, or a "business development
company" as defined in Section 2(a)(48) of the Investment Company Act
of 1940.
/ / A Small Business Investment Company licensed by the U.S. Small Business
Administration under the Small Business Investment Act of 1958.
/ / A plan established and maintained by a state, its political
subdivisions, or any agency or instrumentality of a state or its
political subdivisions, for the benefit of its employees and having
total assets in excess of $5,000,000.
/ / An "employee benefit plan" as defined in the Employee Retirement Income
Security Act of 1974 (a "Plan") which has total assets in excess of
$5,000,000.
/ / A Plan whose investment decisions, including the decision to subscribe
for the Shares of ID Recap, Inc., are made solely by (i) a "plan
fiduciary" as defined in Section 3(21) of the Employee Retirement
Income Security Act of 1974, which includes a bank, a savings and loan
association, an insurance company or a registered investment adviser,
or (ii) an "accredited investor" as defined under Rule 501(a) of the
Securities Act of 1933.
/ / A private business development company as defined in Section 202(a)(22)
of the Investment Advisers Act of 1940.
/ / Any organization described in Section 501(c)(3) of the Internal Revenue
Code, corporation, Massachusetts or similar business Trust, or
partnership, not formed for the specific purpose of investing in the
Shares and having total assets in excess of $5,000,000.
/ / Any entity in which all of the equity owners meet one of the above
descriptions.
5. TRUSTS.
Does the trust meet the following tests:
a. Has total assets in excess of $5,000,000?
Yes _____ No _____
<PAGE>
b. Was formed for the purpose of the investment in the
Shares in this Exchange?
Yes _____ No _____
c. Are the purchases by the Trust directed by a sophisticated
investor who, alone or with his or her subscriber representative, understands
the merits and risks of the investment in the Shares?
Yes _____ No _____
[The remainder of this page is blank]
<PAGE>
INDIVIDUAL(S) SIGN HERE:
_______________________________________
(Signature)
_______________________________________
(Print Name)
_______________________________________
(Address)
Social Security #:______________________
Spouse of Subscriber:
_______________________________________
(Signature)
ORGANIZATIONS SIGN HERE:
_______________________________________
(Print Name of Organization)
By:____________________________________
(Signature)
_______________________________________
(Print Name and Title)
_______________________________________
(Address)
Federal ID#:___________________________
<PAGE>
CONFIDENTIAL PURCHASER REPRESENTATIVE QUESTIONNAIRE
ID RECAP, INC.
A DELAWARE CORPORATION
1. Has the subscriber relied on the advice of a Purchaser
Representative in connection with evaluating the merits and risks of the
Purchase of the Shares in the Exchange?
Yes _____ No _____
If yes, please give the name, address and telephone number of the
person who is acting as the Purchaser Representative.
Name: _______________________________________
Address: ____________________________________
Telephone number: (___) ____________
2. How often does the subscriber invest in securities?
Often ______ Occasionally _____ Never _____
3. Please list below the subscriber's most recent investments (up to
three):
Amount of
Name of Investment Investment
____________________________________________ ___________
____________________________________________ ___________
____________________________________________ ___________
4. Does the subscriber, either alone or together with its Purchaser
Representative identified above, have such knowledge and experience in financial
and business matters as to be capable of evaluating the merits and risks of an
investment in the Shares in the Exchange?
Yes _____ No _____
5. Does the subscriber, either alone by reason of its business or
financial experience or together with its Purchaser Representative, have the
capacity to protect its own interests in connection with the contribution of the
Rollover Shares in exchange for the Shares in the Exchange?
Yes _____ No _____
6. Is the subscriber (or the trust beneficiary for which it is the
fiduciary) able to bear the
<PAGE>
economic risk of the Investment, including a complete loss of the investment in
the Shares?
Yes _____ No _____
7. Does the subscriber have any other investments or contingent
liabilities which could cause the need for sudden cash requirements in excess of
cash readily available to the subscriber?
Yes _____ No _____
If Yes, explain:
8. Does the subscriber have a net worth or joint net worth with his or
her spouse which is at least five times as great as the fair market value of the
Shares subscribed for in the Exchange?
Yes _____ No _____
9. If 25% or more of the subscriber's total assets are represented by
investments in the subscriber's own company or real estate, are all liabilities
associated with them included as personal liabilities?
Yes _____ No _____
If No, what is the dollar amount of each such liability?
10. Has the subscriber ever been subject to bankruptcy, reorganization
or debt restructuring?
Yes _____ No _____
If Yes, provide details:
11. Is the subscriber involved in any litigation which, if an adverse
decision occurred, would adversely affect the subscriber's financial condition?
Yes _____ No _____
<PAGE>
If Yes, provide details:
12. Does the subscriber confirm that neither the subscriber nor the
subscriber's broker nor Purchaser Representative became aware of or was
introduced to the Company by means of any general advertisement?
Yes _____ No _____
13. Does the subscriber confirm that the foregoing statements are
complete and accurate to the best of its knowledge and belief, and that it
undertakes to notify the Company regarding any material change in the
information set forth above prior to the Closing of the Exchange?
Yes _____ No _____
[The remainder of this page is blank]
<PAGE>
INDIVIDUAL(S) SIGN HERE:
_______________________________________
(Signature)
_______________________________________
(Print Name)
_______________________________________
(Address)
Social Security #:______________________
Spouse of Subscriber:
_______________________________________
(Signature)
ORGANIZATIONS SIGN HERE:
_______________________________________
(Print Name of Organization)
By:_____________________________________
(Signature)
_______________________________________
(Print Name and Title)
_______________________________________
(Address)
Federal ID#:___________________________
<PAGE>
THE SHARES OF COMMON STOCK AND PREFERRED STOCK SUBSCRIBED FOR BY THIS AGREEMENT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR ANY
OTHER APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE OFFERED OR SOLD UNLESS
REGISTERED THEREUNDER OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE. TRANSFER OF SUCH SHARES IS ALSO RESTRICTED BY THE TERMS OF THIS
AGREEMENT AND BY THE TERMS OF THE VOTING AGREEMENT OF ID RECAP, INC.
EXCHANGE AND SUBSCRIPTION AGREEMENT
This EXCHANGE AND SUBSCRIPTION AGREEMENT (the "AGREEMENT"), dated as of
October 22, 1999, by and between Michael T. Fiore, an individual (the
"INVESTOR"), and ID Recap, Inc., a Delaware corporation (the "COMPANY").
WHEREAS, Investor is currently a stockholder in InterDent, Inc., a
Delaware corporation ("INTERDENT"), and is the owner of the number of shares set
forth opposite Investor's name under the caption "Rolled Securities" in SCHEDULE
1 attached hereto.
WHEREAS, in connection with that certain Agreement and Plan of Merger,
dated contemporaneously herewith (the "MERGER AGREEMENT"), the Company will
merge with and into InterDent with InterDent as the surviving corporation (the
"MERGER").
WHEREAS, subject to the terms and conditions in this Agreement,
Investor desires to contribute the shares (the "ROLLOVER SHARES") set forth
under the caption "Rolled Securities" in SCHEDULE 1 attached hereto in a
transaction intended to qualify under Section 351 of the Internal Revenue Code,
as amended, in exchange (the "EXCHANGE") for newly issued shares of capital
stock of the Company (the "SHARES"), in the amounts set forth under the captions
"Common Exchange Shares," "Senior Preferred Exchange Shares," and "Junior
Preferred Exchange Shares" in SCHEDULE 1.
NOW, THEREFORE, in order to implement the foregoing and in
consideration of the mutual representations, warranties, covenants and
agreements contained herein and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto agree
as follows.
1. CONTRIBUTION OF THE ROLLOVER SHARES.
1.1. CONTRIBUTION OF THE ROLLOVER SHARES IN SUBSCRIPTION FOR THE
SHARES. On the terms and conditions set forth herein, Investor
agrees to subscribe for and the Company agrees to issue to
Investor the Shares of the Company set forth under the
captions "Common Exchange Shares," "Senior Preferred Exchange
Shares," and "Junior Preferred Exchange Shares" in SCHEDULE 1
in exchange for the Rollover Shares set forth in SCHEDULE 1.
<PAGE>
1.2. CLOSING . The closing (the "CLOSING") of the Exchange shall be
at the time and date established by the Company; provided, the
Company shall provide at least three (3) business days notice
of such time and date to Investor. The Closing shall take
place at the offices of Irell & Manella LLP, 333 South Hope
Street, Los Angeles, California 90071.
1.3. CONDITIONS TO CLOSING. The Closing shall be subject to the
following conditions unless waived in writing by the Company:
(a) NO LAW OR ORDERS. No law or order shall have been
enacted, entered, issued or promulgated by any
governmental entity (and be in effect) which
prohibits or materially restricts the consummation of
the transactions contemplated hereby.
(b) LEGAL PROCEEDINGS. No governmental entity shall have
notified either party to this Agreement that it
intends to commence proceedings to restrain or
prohibit the transactions contemplated hereby or
force rescission, unless such governmental entity
shall have withdrawn such notice and abandoned any
such proceedings prior to the time which otherwise
would have been the Closing date.
(c) STOCKHOLDER APPROVAL. The Merger and the other
transactions contemplated by the Merger Agreement
shall have been approved by the requisite vote of the
holders of the outstanding capital stock of InterDent
entitled to vote thereon.
(d) REPRESENTATIONS AND WARRANTIES. All representations
and warranties in this Agreement by the Investor
shall be true and correct in all respects on the date
when made and on and as of the Closing date with the
same effect as if made on and as of the Closing date.
(e) COVENANTS AND AGREEMENTS. The Investor shall have
performed or complied in all material respects with
all covenants and conditions contained in this
Agreement or in any agreement, certificate or
instrument to be executed pursuant hereto required to
be performed or complied with at or prior to the
Closing.
(f) PERMITS AND APPROVALS. The Company shall have
obtained, on terms reasonably satisfactory to it, all
permits and approvals required from any governmental
entity or any third party in order to consummate the
transactions contemplated hereby.
(g) COMPANY ADVERSE CHANGES. There shall not have
occurred any events which individually or in the
aggregate have had or are reasonably expected to have
a material adverse effect on the Company or its
ability to consummate the Merger.
<PAGE>
1.4. COMPANY DELIVERIES. At the Closing, the Company shall deliver
to Investor stock certificates representing the Shares to be
received by Investor.
1.5. INVESTOR DELIVERIES. At the Closing, Investor shall deliver to
the Company the following:
(a) an executed Investment Qualification Questionnaire in
the form attached hereto;
(b) certificate(s) evidencing the Rollover Shares
together with duly executed stock powers thereof; and
(c) a certificate of Investor confirming the fulfillment
of the conditions set forth in Sections 1.3(d) and
(e).
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to the Investor as follows.
2.1. ORGANIZATION. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the
State of Delaware, having full power and authority to own its
properties and to carry on its business as conducted.
2.2. AUTHORITY. The Company has the requisite corporate power and
authority to deliver this Agreement, perform its obligations
herein, and consummate the transactions contemplated hereby.
The Company has duly executed and delivered this Agreement.
This Agreement is a valid, legal and binding obligation of the
Company enforceable against the Company in accordance with its
terms, except to the extent that enforceability may be limited
by applicable bankruptcy, insolvency or similar laws affecting
the enforcement of creditors' rights generally and subject to
general principles of equity (regardless of whether such
enforcement is considered in a proceeding at law or at
equity).
2.3. SHARES DULY AUTHORIZED. All of the Shares to be issued to the
Investor pursuant to this Agreement, when issued and delivered
in accordance with the terms of this Agreement, will be duly
authorized, validly issued, fully paid and non-assessable.
3. REPRESENTATIONS AND WARRANTIES OF EACH INVESTOR. Investor hereby
represents and warrants to the Company as follows.
3.1. ORGANIZATION. Investor, if an entity, is duly organized,
validly existing and in good standing under the laws of state
of its incorporation or organization, having full power and
authority to own its properties and to carry on its business
as conducted. Investor, if a natural person, is of legal age,
competent to enter into a contractual obligation, and a
citizen of the United States of America. The principal place
of business or principal residence of Investor is as shown
<PAGE>
on the signature page of this Agreement.
3.2. OWNERSHIP OF THE ROLLOVER SHARES. Investor is the sole record
and beneficial owner of the Rollover Shares set forth under
Investor's name in SCHEDULE 1 hereto, free and clear of any
claim, lien, security interest, mortgage, deed of trust,
pledge, charge, conditional sale or other title retention
agreement, lease, preemptive right, right of first refusal,
option, restriction, tenancy, easement, license or other
encumbrance of any kind. Except as set forth in SCHEDULE 3.2,
neither Investor nor any of its affiliates is a party to, or
bound by, any arrangement, agreement, instrument or order (i)
relating to the sale, repurchase, assignment, or other
transfer of any capital stock or equity securities of
InterDent, (ii) relating to the receipt of dividends, proxy
rights, or voting rights of any capital stock or other equity
securities of InterDent, or (iii) relating to rights to
registration under the Securities Act of 1933 or the
Securities Exchange Act of 1934 of any capital stock or equity
securities of InterDent.
3.3. AUTHORITY. Investor has the requisite power and authority to
deliver this Agreement, perform Investor's obligations herein,
and consummate the transactions contemplated hereby. Investor
has duly executed and delivered this Agreement and has
obtained the necessary authorization to execute and deliver
this Agreement and to perform Investor's obligations herein
and to consummate the transactions contemplated hereby. This
Agreement is a valid, legal and binding obligation of Investor
enforceable against Investor in accordance with its terms,
except to the extent that enforceability may be limited by
applicable bankruptcy, insolvency or similar laws affecting
the enforcement of creditors' rights generally and subject to
general principles of equity (regardless of whether such
enforcement is considered in a proceeding at law or at
equity).
3.4. INVESTOR INTENT. Unless Investor is acting in a fiduciary
capacity as provided in Section 3.5 below, Investor is
acquiring the Shares for Investor's own account as principal,
for investment purposes only, not for any other person or
entity and not for the purpose of resale or distribution.
3.5. FIDUCIARY CAPACITY. If Investor is subscribing for the Shares
from the Company in a fiduciary capacity, Investor makes these
representations and warranties on behalf of the person(s) or
entity(ies) for whom Investor will contribute and exchange the
Rollover Shares for the Company's Shares.
3.6. FINANCIAL STATUS. Investor, alone or together with its
Purchase Representative (as defined in Rule 501(h) of
Regulation D), if applicable, has such knowledge and
experience in financial and business matters as will enable
Investor to evaluate the merits and risks of an investment in
the Company. Investor, if a natural person, has adequate means
of providing for his or her current financial needs and
personal contingencies, and has no need for liquidity in
<PAGE>
the investment in the Shares, understands that he or she may
not be able to liquidate his or her investment in the Company
in an emergency, if at all, and can afford a complete loss of
the investment.
3.7. ACCREDITED INVESTOR OR PURCHASER REPRESENTATIVE. Investor (or
acting together a Purchaser Representative) is an Accredited
Investor, as defined by Rule 501 of Regulation D of the
Securities Act. If Investor is a natural person, (i)
Investor's individual net worth or joint net worth with
Investor's spouse at the time of the execution of this
Agreement is in excess of $1,000,000; or (ii) Investor had an
individual income in excess of $200,000 in each of the two (2)
most recent years or joint income with that person's spouse in
excess of $300,000 in each of those years and has a reasonable
expectation of reaching the same income level in the current
year.
3.8. NO GENERAL SOLICITATION. Investor has received no general
solicitation or general advertisement in connection with the
Exchange or an investment in the Company. Investor has
received no other representations or warranties from the
Company or any other person acting on behalf of the Company,
other than those contained in this Agreement.
3.9. ACCURACY OF INFORMATION. As of the date hereof and as of the
Closing, the representations and warranties of Investor
contained herein and all information provided by Investor to
the Company concerning Investor, its financial position and
its knowledge of financial and business matters including, but
not limited to, the information set forth in the Investment
Qualification Questionnaire, is correct and complete, and if
there should be any changes in that information prior to an
Investor receiving the Shares, Investor will immediately
provide the Company with the correct information.
4. AGREEMENTS AND ACKNOWLEDGEMENTS OF EACH INVESTOR. Investor hereby
agrees and acknowledges to the Company as follows.
4.1. ACCEPTANCE OF SUBSCRIPTION. The Company shall have the right,
in its sole discretion, to terminate this Agreement prior to
effecting the subscription and exchange.
4.2. NO REGISTRATION. Investor understands that the Shares being
acquired by Investor have not been registered under the
Securities Act, in reliance on an exemption therefrom for
transactions not involving any public offering, that such
Shares have not been approved or disapproved by the Securities
and Exchange Commission or by any other federal or state
agency, and that no such agency has passed on the accuracy or
adequacy of disclosures made to Investor by the Company. No
federal or state governmental agency has passed on or made any
recommendation or endorsement of the Shares or an investment
in the Company.
4.3. LIMITATIONS ON DISPOSITION AND RESALE. Investor understands
that the Shares cannot be sold, transferred or otherwise
disposed of unless the Shares have been
<PAGE>
registered by the Company pursuant to the Securities Act of
1933 and any applicable state securities laws, unless an
exemption therefrom is available. Investor understands that it
may not be possible for Investor to liquidate the investment
in the Company; and Investor agrees not to sell, transfer or
otherwise dispose of the Shares unless the Shares have been so
registered or an exemption from the requirement of
registration is available under the Securities Act of 1933.
Investor recognizes that there will not be any public trading
market for the Shares and, as a result, Investor may be unable
to sell or dispose of its interest in the Company.
4.4. NEWLY FORMED ENTITY. Investor recognizes that the Company was
only recently formed and, accordingly, has no financial or
operating history and that the investment in the Company is
extremely speculative and involves a high degree of risk.
4.5. COMPLIANCE WITH AGREEMENT. Investor agrees to execute any and
all further documents necessary to become a stockholder of the
Company. Investor agrees to execute and deliver any and all
further documents and writings, and to perform such other
actions, as may be or become reasonably necessary or expedient
to effect and carry out the terms of this Agreement.
4.6. IRREVOCABLE SUBSCRIPTION AND CANCELLATION. Investor
understands that this subscription is irrevocable, except as
otherwise provided in any applicable federal or state law
governing this Agreement and the transactions contemplated
herein.
4.7. PURCHASER REPRESENTATIVE. If Investor used or will use the
services of a Purchaser Representative in connection with the
Exchange, such Purchaser Representative has disclosed or will
disclose, by submitting to the Company a Purchaser
Representative Questionnaire in the form given Investor by the
Company, any material relationship which now exists between
each Purchaser Representative or his affiliates and the
Company and its affiliates, or which is mutually understood to
be contemplated, or which has existed at any time during the
previous two (2) years, and further setting forth any
compensation received or to be received as a result of such
relationship.
5. ATTORNEY'S FEES. In the event of any litigation or other legal
proceeding involving the interpretation of this Agreement or
enforcement of the rights or obligations of the parties hereto, the
prevailing party or parties shall be entitled to recover reasonable
attorney's fees and costs as determined by a court or other
adjudicator.
6. GOVERNING LAW. This Agreement is governed by and shall be construed in
accordance with the law of the State of Delaware, excluding any
conflict-of-laws rule or principle that might refer the governance or
construction of this Agreement to the law of another jurisdiction. If
any provision of this Agreement or the application thereof to any
person or circumstance is held invalid or unenforceable to any extent,
the remainder of this Agreement and the application of that provision
to other persons or
<PAGE>
circumstances is not affected thereby, and that provision shall be
enforced to the greater extent permitted by law.
7. ASSIGNMENT. Investor shall have neither the right nor the power to
assign or delegate any provision of this Agreement except with the
prior written consent of the Company. Except as provided in the
preceding sentence, this Agreement shall be binding upon and shall
inure to the benefit of the parties' respective successors, assigns,
executors and administrators.
8. COUNTERPARTS. This Agreement may be executed in separate counterparts,
each of which shall be deemed an original and both of which shall
constitute one and the same document.
9. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof
and may be amended only in a writing executed by the party to be bound
thereby.
10. TERMINATION OF AGREEMENT. This Agreement may be terminated: (i) by the
mutual written consent of the parties hereto; (ii) by the Company if a
condition set forth in Section 1.3 hereof is not satisfied or otherwise
waived by the Company; or (iii) by either party if the Merger Agreement
is terminated for any reason whatsoever.
11. FURTHER ASSURANCES. Subject to the terms and conditions provided
herein, each party hereto agrees to use all commercially reasonable
efforts to take, or cause to be taken, all action, and to do, or cause
to be done, all things necessary, proper or advisable, whether under
applicable laws and regulations or otherwise, in order to consummate
and make effective the transactions contemplated by this Agreement.
[The remainder of this page is blank]
<PAGE>
IN WITNESS WHEREOF, the parties have hereby executed this Exchange and
Subscription Agreement as of the date set forth above.
INDIVIDUAL INVESTOR
MICHAEL T. FIORE
-----------------------------------
Name of Subscriber (Print or Type)
-----------------------------------
Signature of Subscriber
-----------------------------------
Signature of Joint Subscriber
-----------------------------------
Residence Address
(Street Address)
-----------------------------------
(City and State) (Zip Code)
----------------------------------
Telephone Number
-----------------------------------
Social Security Number or
Taxpayer Number of Subscriber
<PAGE>
ACCEPTANCE
The foregoing subscription is hereby accepted, subject to the terms and
conditions hereof, as of the date set forth above.
ID RECAP, INC.
a Delaware corporation
By:
-----------------------------------
Name: John Danhakl
Title: President
<PAGE>
SCHEDULE 1
<TABLE>
<CAPTION>
Common Rollover Shares Common Exchange Shares
- ---------------------- ----------------------
<S> <C>
39,579 ($376,000.50) 39,579 ($376,000.50)
</TABLE>
<PAGE>
SCHEDULE 3.2
AGREEMENTS
Registration Rights Agreement, dated as of March 11, 1999, between Interdent,
Inc. and the Holders (as defined therein).
Promissory Note, dated as of April 1, 1997, between GMS Dental Group, Inc. and
Michael T. Fiore, in the principal amount of $150,000.
Security Agreement, dated as of April 1, 1997, between GMS Dental Group, Inc.
and Michael T. Fiore.
<PAGE>
CONFIDENTIAL INVESTMENT QUALIFICATION QUESTIONNAIRE
ID RECAP, INC.
A DELAWARE CORPORATION
SPECIAL INSTRUCTIONS
In order to establish the availability under federal and state
securities laws of an exemption from registration or qualification requirements
for the proposed Exchange, you are required to represent and warrant, and by
executing and delivering this questionnaire will be deemed to have represented
and warranted, that the information stated herein is true, accurate and complete
to the best of your knowledge and belief, and may be relied on by the Company.
Further, by executing and delivering this questionnaire you agree to notify the
Company and supply corrective information promptly if, prior to the consummation
of your exchange of the Rollover Shares for the Shares, any such information
becomes inaccurate or incomplete. Your execution of this questionnaire does not
constitute any indication of your intent to subscribe for the Shares.
A subscriber who is a NATURAL PERSON must complete each Question EXCEPT
for 2 and 5.
A subscriber that is an ENTITY other than a trust must complete each
Question EXCEPT for 3 and 5.
A subscriber that is a TRUST must complete each Question EXCEPT for 3.
GENERAL INFORMATION
1. ALL SUBSCRIBERS.
a. Name(s) of prospective investor(s):__________________
b. Address:_____________________________________________
c. Tel. No.: (___) ______________
2. SUBSCRIBERS THAT ARE ENTITIES.
a. Type of entity:
/ / Trust
/ / Corporation
/ / Partnership
/ / Other:
b. State and date of legal formation:___________________
<PAGE>
c. Nature of Business:__________________________________
d. Was the entity organized for the specific purpose of
acquiring the Shares in this Exchange?
Yes _____ No _____
e. Federal tax identification number: _________________
3. SUBSCRIBERS WHO ARE INDIVIDUALS.
a. State where registered to vote:______________________
b. Social Security Number:______________________________
c. Please state the subscriber's education and degrees
earned:
Degree School Year
------ ------ ----
______ ________________________________________ ____
______ ________________________________________ ____
d. Current occupation (if retired, describe last
occupation):
Employer:_____________________________________________________
Nature of Business:___________________________________________
Position:_____________________________________________________
Business Address:_____________________________________________
Tel. No.: (___) ___________
4. ACCREDITATION. Does the subscriber satisfy one or more of the
following accredited investor requirements? Contact the Company if none of the
following is applicable.
Investor is:
/ / A natural person whose net worth (or joint net worth with my spouse) is
in excess of $1,000,000 as of the date hereof.
/ / A natural person whose income in the prior two years was, and whose
income in the current year is reasonably expected to be in excess of
$200,000 or joint income with my spouse in the prior two years was, and
is reasonably expected to be in the current year in excess of $300,000.
/ / A director or executive officer of ID Recap, Inc.
<PAGE>
/ / A trust with total assets in excess of $5,000,000, not formed for the
specific purpose of investing in the Shares of ID Recap, Inc., whose
purchases are directed by a sophisticated person, who has such
knowledge and experience in financial and business matters that he or
she is capable of evaluating the merits and risks of an investment in
the Shares of ID Recap, Inc.
/ / A "bank", "savings and loan association", or "insurance company" as
defined in the Securities Act of 1933.
/ / A broker/dealer registered pursuant to Section 15 of the Securities
Exchange Act of 1934.
/ / An investment company registered under, or a "business development
company" as defined in Section 2(a)(48) of the Investment Company Act
of 1940.
/ / A Small Business Investment Company licensed by the U.S. Small Business
Administration under the Small Business Investment Act of 1958.
/ / A plan established and maintained by a state, its political
subdivisions, or any agency or instrumentality of a state or its
political subdivisions, for the benefit of its employees and having
total assets in excess of $5,000,000.
/ / An "employee benefit plan" as defined in the Employee Retirement Income
Security Act of 1974 (a "Plan") which has total assets in excess of
$5,000,000.
/ / A Plan whose investment decisions, including the decision to subscribe
for the Shares of ID Recap, Inc., are made solely by (i) a "plan
fiduciary" as defined in Section 3(21) of the Employee Retirement
Income Security Act of 1974, which includes a bank, a savings and loan
association, an insurance company or a registered investment adviser,
or (ii) an "accredited investor" as defined under Rule 501(a) of the
Securities Act of 1933.
/ / A private business development company as defined in Section 202(a)(22)
of the Investment Advisers Act of 1940.
/ / Any organization described in Section 501(c)(3) of the Internal Revenue
Code, corporation, Massachusetts or similar business Trust, or
partnership, not formed for the specific purpose of investing in the
Shares and having total assets in excess of $5,000,000.
/ / Any entity in which all of the equity owners meet one of the above
descriptions.
5. TRUSTS.
Does the trust meet the following tests:
a. Has total assets in excess of $5,000,000?
<PAGE>
Yes _____ No _____
b. Was formed for the purpose of the investment in the
Shares in this Exchange?
Yes _____ No _____
c. Are the purchases by the Trust directed by a sophisticated
investor who, alone or with his or her subscriber representative, understands
the merits and risks of the investment in the Shares?
Yes _____ No _____
[The remainder of this page is blank]
<PAGE>
INDIVIDUAL(S) SIGN HERE:
_________________________________________
(Signature)
_________________________________________
(Print Name)
_________________________________________
(Address)
Social Security #:______________________
Spouse of Subscriber:
_________________________________________
(Signature)
ORGANIZATIONS SIGN HERE:
_________________________________________
(Print Name of Organization)
By:______________________________________
(Signature)
_________________________________________
(Print Name and Title)
_________________________________________
(Address)
Federal ID#: ____________________________
<PAGE>
CONFIDENTIAL PURCHASER REPRESENTATIVE QUESTIONNAIRE
ID RECAP, INC.
A DELAWARE CORPORATION
1. Has the subscriber relied on the advice of a Purchaser
Representative in connection with evaluating the merits and risks of the
Purchase of the Shares in the Exchange?
Yes _____ No _____
If yes, please give the name, address and telephone number of the
person who is acting as the Purchaser Representative.
Name: __________________________________________
Address: _______________________________________
Telephone number: (___) ____________
2. How often does the subscriber invest in securities?
Often ______ Occasionally _____ Never _____
3. Please list below the subscriber's most recent investments (up to
three):
Amount of
Name of Investment Investment
____________________________________ __________
____________________________________ __________
____________________________________ __________
4. Does the subscriber, either alone or together with its Purchaser
Representative identified above, have such knowledge and experience in financial
and business matters as to be capable of evaluating the merits and risks of an
investment in the Shares in the Exchange?
Yes _____ No _____
5. Does the subscriber, either alone by reason of its business or
financial experience or together with its Purchaser Representative, have the
capacity to protect its own interests in connection with the contribution of the
Rollover Shares in exchange for the Shares in the Exchange?
Yes _____ No _____
6. Is the subscriber (or the trust beneficiary for which it is the
fiduciary) able to bear the
<PAGE>
economic risk of the Investment, including a complete loss of the investment in
the Shares?
Yes _____ No _____
7. Does the subscriber have any other investments or contingent
liabilities which could cause the need for sudden cash requirements in excess of
cash readily available to the subscriber?
Yes _____ No _____
If Yes, explain:
8. Does the subscriber have a net worth or joint net worth with his or
her spouse which is at least five times as great as the fair market value of the
Shares subscribed for in the Exchange?
Yes _____ No _____
9. If 25% or more of the subscriber's total assets are represented by
investments in the subscriber's own company or real estate, are all liabilities
associated with them included as personal liabilities?
Yes _____ No _____
If No, what is the dollar amount of each such liability?
10. Has the subscriber ever been subject to bankruptcy, reorganization
or debt restructuring?
Yes _____ No _____
If Yes, provide details:
11. Is the subscriber involved in any litigation which, if an adverse
decision occurred, would adversely affect the subscriber's financial condition?
Yes _____ No _____
<PAGE>
If Yes, provide details:
12. Does the subscriber confirm that neither the subscriber nor the
subscriber's broker nor Purchaser Representative became aware of or was
introduced to the Company by means of any general advertisement?
Yes _____ No _____
13. Does the subscriber confirm that the foregoing statements are
complete and accurate to the best of its knowledge and belief, and that it
undertakes to notify the Company regarding any material change in the
information set forth above prior to the Closing of the Exchange?
Yes _____ No _____
[The remainder of this page is blank]
<PAGE>
INDIVIDUAL(S) SIGN HERE:
_________________________________________
(Signature)
_________________________________________
(Print Name)
_________________________________________
(Address)
Social Security #:______________________
Spouse of Subscriber:
_________________________________________
(Signature)
ORGANIZATIONS SIGN HERE:
_________________________________________
(Print Name of Organization)
By:______________________________________
(Signature)
_________________________________________
(Print Name and Title)
_________________________________________
(Address)
Federal ID#: ____________________________
<PAGE>
VOTING AGREEMENT
VOTING AGREEMENT, dated as of November 18, 1999 (this "Agreement"),
by and among ID Recap, Inc., a Delaware corporation ("Recap"), and CB Capital
Investors, L.P., DLJ Capital Corp., DLJ First ESC L.L.C., Sprout Capital VII,
L.P., Sprout Growth II, L.P., The Sprout CEO Fund, L.P. (individually a
"Stockholder" and collectively the "Stockholders").
WHEREAS, InterDent, Inc., a Delaware corporation (the "Company"),
and Recap are entering into an Agreement and Plan of Merger, dated as of this
date, as may be modified or amended from time to time in a manner not adverse
to the Stockholders (the "Merger Agreement"), which provides, among other
things, for the merger of Recap with and into the Company with the Company as
the surviving corporation (the "Merger");
WHEREAS, in connection with the Merger Agreement, Recap has
requested that the Stockholder make certain agreements with respect to
certain shares of capital stock of the Company (the "Shares") beneficially
owned by the Stockholder, upon the terms and subject to the conditions of
this Agreement;
WHEREAS, in connection with the Merger Agreement, Recap and certain
stockholders of the Company are entering into an Exchange and Subscription
Agreement (the "Exchange Agreement"), which provides, among other things, for
such stockholders to exchange their shares of capital stock of the Company
for shares of capital stock of Recap prior to the Merger; and
WHEREAS, the Stockholder is willing to make certain agreements with
respect to the Subject Shares (as defined below).
NOW, THEREFORE, in consideration of the promises and the mutual
covenants and agreements set forth in this Agreement, the parties agree as
follows:
1. VOTING AGREEMENTS. For so long as this Agreement and the
Exchange Agreement are in effect, at any meeting of stockholders of the
Company, and in any action by consent of the stockholders of the Company, the
Stockholder shall vote, or, if applicable, give consents with respect to, all
of the Subject Shares that are held by the Stockholder on the record date
applicable to the meeting or consent (i) in favor of adoption of the Merger
Agreement and approval of the Merger as contemplated by the Merger Agreement;
(ii) against any competing Acquisition Proposal (as defined in the Merger
Agreement) or other similar proposal inconsistent with the Merger Agreement
or which may delay or adversely affect the likelihood of the completion of
the Merger; (iii) against any change in a majority of the persons who
constitute the board of directors of the Company inconsistent with the Merger
Agreement or the Merger; (iv) against any change in the capitalization of the
Company or any amendment of the Company's Certificate of Incorporation or
Bylaws inconsistent with the Merger Agreement or the Merger; and (v) in favor
of any other matter necessary for consummation of the transactions
contemplated by the Merger Agreement which is considered at any such meeting
or in any such consent. Such Stockholder shall not enter into any agreement
or understanding with any person the effect of which would be inconsistent
with or violate the provisions of agreements contained in this Section 1. The
<PAGE>
Stockholder shall use best efforts to cast the Stockholder's vote or give the
Stockholder's consent in accordance with the procedures communicated to the
Stockholder by the Company relating thereto so that the vote or consent shall
be duly counted for purposes of determining that a quorum is present and for
purposes of recording the results of that vote or consent.
2. SUBJECT SHARES. The term "Subject Shares" shall mean the Shares
set forth on SCHEDULE A hereto, together with any shares of capital stock of
the Company acquired by the Stockholder after the date hereof over which the
Stockholder has the power to vote or power to direct the voting.
3. COVENANTS. For so long as this Agreement is in effect, except
as otherwise contemplated by the Merger Agreement or the Exchange Agreement,
the Stockholder agrees not to (i) sell, transfer, pledge, assign,
hypothecate, encumber, tender or otherwise dispose of, or enter into any
contract with respect to the sale, transfer, pledge, assignment,
hypothecation, encumbrance, tender or other disposition of (each such
disposition or contract, a "Transfer"), any Subject Shares or Shares the
Stockholder then has or will have the right to acquire pursuant to options,
warrants, convertible securities or other such rights to purchase Shares
granted to the Stockholder by the Company; (ii) grant any powers of attorney,
consents, or proxies with respect to any shares that then constitute Subject
Shares, deposit any of the Subject Shares into a voting trust, enter into a
voting or option agreement with respect to any of the Subject Shares
inconsistent with the Merger Agreement or this Agreement, or otherwise
restrict or take any action adversely affecting the ability of the
Stockholder freely to exercise all voting rights with respect to the Subject
Shares; (iii) subject to Section 8, directly or indirectly, solicit,
initiate, encourage or otherwise facilitate any inquiries or the making of
any proposal or offer with respect to an Acquisition Proposal (as defined in
the Merger Agreement) or engage in any negotiation concerning, or provide any
confidential information or data to, or have any discussions with any person
relating to an Acquisition Proposal; and the Stockholder shall notify Recap
immediately if any such inquiries or proposals are received by, any such
information is requested from, or any such negotiations or discussions are
sought to be initiated or continued with the Stockholder; or (iv) permit,
cause, or take any action, or fail to take any action, which would make any
representation, warranty, covenant, or other undertaking of the Stockholder
in this Agreement untrue or incorrect or prevent, burden or materially delay
the consummation of the transactions contemplated by this Agreement;
PROVIDED, HOWEVER, that nothing in the foregoing provisions of this Section 3
shall prohibit the Stockholder: (i) effecting a transfer to an affiliate or
(ii) from effecting any transfer of Subject Shares pursuant to any bona fide
charitable gift or by will or applicable laws of descent and distribution, or
for estate planning purposes, if the transferee agrees in writing to be bound
by the provisions of this Agreement. As used in this Agreement, "person"
shall have the meaning specified in Sections 3(a)(9) and 13(d)(3) of the
Securities Exchange Act of 1934, as amended.
4. WAIVER OF DISSENTERS' RIGHTS. The Stockholder hereby waives any
rights to dissent from the Merger.
5. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER. The
Stockholder represents and warrants to Recap that:
<PAGE>
(a) CAPACITY; NO VIOLATIONS. The Stockholder has the
legal capacity to enter into this Agreement and to consummate the
transactions contemplated by this Agreement. This Agreement has been duly
executed and delivered by the Stockholder and constitutes a valid and binding
agreement of the Stockholder enforceable against the Stockholder in
accordance with its terms except as such enforceability may be limited by
applicable bankruptcy, insolvency and similar laws affecting creditors'
rights generally and general principles of equity (whether considered in a
proceeding in equity or at law). The execution, delivery and performance by
the Stockholder of this Agreement will not (i) conflict with, require a
consent, waiver or approval under, or result in a breach or default under,
any of the terms of any contract, commitment or other obligation to which the
Stockholder is a party or by which the Stockholder is bound, (ii) violate any
order, writ, injunction, decree or statute, or any law, rule or regulation
applicable to the Stockholder or the Subject Shares; or (iii) result in the
creation of, or impose any obligation on the Stockholder to create, any Lien
upon the Subject Shares that would prevent the Stockholder from voting the
Subject Shares. In this Agreement, "Lien" shall mean any lien, pledge,
security interest, claim, third party right or other encumbrance.
(b) SUBJECT SHARES. The Stockholder has the power to vote
or direct the voting of the Subject Shares. The Subject Shares are the only
shares of any class of capital stock of the Company which the Stockholder has
the right, power or authority (sole or shared) to sell or vote, and, other
than options, warrants or other convertible securities of the Company held by
the Stockholder as of this date and set forth on SCHEDULE B hereto, the
Stockholder does not have any right to acquire, nor is it the beneficial
owner of, any other shares of any class of capital stock of the Company or
any securities convertible into or exchangeable or exercisable for any shares
of any class of capital stock of the Company. The Stockholder is not a party
to any contracts (including proxies, voting trusts or voting agreements) that
would prevent the Stockholder from voting the Subject Shares or conflicts
with the provisions of this Agreement.
(c) TITLE TO SHARES. Except as set forth on SCHEDULE
5(C), the Stockholder is the sole record and beneficial owner of the Subject
Shares, free and clear of any pledge, lien, security interest, mortgage,
charge, claim, equity, option, proxy, voting restriction, voting trust or
agreement, understanding, arrangement, right of first refusal, limitation on
disposition, adverse claim of ownership or use or encumbrance of any kind,
other than restrictions imposed by the securities laws or pursuant to this
Agreement or the Merger Agreement.
(d) NO FINDER'S FEES. Except as disclosed in the Merger
Agreement, no broker, investment banker, financial advisor, or other person
is entitled to any broker's, finder's, financial advisor's, or other similar
fee or commission in connection with the transactions contemplated hereby
based upon arrangements made by or on behalf of the Stockholder the payment
of which could become the obligation of the Company or Recap. The
Stockholder, on behalf of itself and its affiliates, hereby acknowledges
that, except for an annual management fee payable pursuant to the management
fee agreement to be entered into between the Company and the Stockholders, it
is not entitled to receive any broker's, finder's, financial advisor's, or
other similar fee or commission in connection with the transactions
contemplated hereby or by the Merger Agreement.
<PAGE>
6. EXPENSES. Each party to this Agreement shall pay its own
expenses incurred in connection with this Agreement; PROVIDED, HOWEVER, ReCap
shall pay the reasonable fees and expenses of the Stockholder incurred in
connection with this Agreement.
7. SPECIFIC PERFORMANCE. The Stockholder acknowledges and agrees
that if Stockholder fails to perform any of Stockholder's obligations under
this Agreement, immediate and irreparable harm or injury would be caused to
Recap for which money damages would not be an adequate remedy. Accordingly,
the Stockholder agrees that Recap shall have the right, in addition to any
other rights it may have, to specific performance of this Agreement. If Recap
should institute an action or proceeding seeking specific enforcement of the
provisions of this Agreement, the Stockholder hereby waives the claim or
defense that Recap has an adequate remedy at law and hereby agrees not to
assert in that action or proceeding the claim or defense that a remedy at law
exists. The Stockholder further agrees to waive any requirements for the
securing or posting of any bond in connection with obtaining any equitable
relief.
8. STOCKHOLDER CAPACITY. If the Stockholder is or becomes during
the term hereof a director or officer of the Company, the Stockholder shall
not be deemed to have made any agreement or understanding herein in his or
her capacity as such director or officer. The Stockholder signs solely in
Stockholder's capacity as the beneficial owner of the Stockholder's Subject
Shares and nothing herein shall limit or affect any actions taken by the
Stockholder in any capacity as an officer or director of the Company to the
extent specifically permitted by the Merger Agreement. Nothing in this
Agreement shall be deemed to constitute a transfer of the beneficial
ownership of the Subject Shares by the Stockholder.
9. NOTICES. All notices and other communications given or made
pursuant to this Agreement shall be in writing and shall be deemed to have
been duly given or made as of the date of receipt and shall be delivered
personally or mailed by registered or certified mail (postage prepaid, return
receipt requested), sent by overnight courier or sent by telecopy, to the
applicable party at the following addresses or telecopy numbers (or at any
other address or telecopy number for a party as shall be specified by like
notice):
If to Recap, to: ID Recap, Inc.
c/o Leonard Green & Partners, L.P.
11111 Santa Monica Boulevard, Suite 2000
Los Angeles, California 90025
Attention: John Baumer
Telephone: (310) 954-0444
Facsimile: (310) 954-0404
With a copy to: Irell & Manella LLP
333 South Hope Street, Suite 3300
Los Angeles, California 90071-3042
Attention: Ed Kaufman, Esq.
Telephone: (213) 229-0500
Facsimile: (213) 229-0515
<PAGE>
If to the Stockholder: at the address and telephone number
set forth on the signature page
With a copy to: O'Sullivan Graev & Karabell, LLP
30 Rockerfeller Plaza, 41st Floor
New York, New York 10112
Attention: Phil Issom, Esq.
Telephone: (212) 408-2400
Facsimile: (212) 408-2420
10. PARTIES IN INTEREST. This Agreement shall inure to the benefit
of and be binding upon the parties and their respective successors and
assigns; provided, however, that any successor in interest or assignee shall
agree to be bound by the provisions of this Agreement. Nothing in this
Agreement, express or implied, is intended to confer upon any Person other
than Recap, the Stockholder or their successors or assigns, any rights or
remedies under, or by reason, of this Agreement.
11. ENTIRE AGREEMENT; AMENDMENTS. Other than the Merger Agreement,
the Exchange Agreement and the transactions contemplated therein, this
Agreement contains the entire agreement between the Stockholder and Recap
with respect to the subject matter of this Agreement and supersedes all prior
and contemporaneous agreements and understandings, oral or written, with
respect to these transactions. This Agreement may not be changed, amended or
modified orally, but may be changed only by an agreement in writing signed by
the party against whom any waiver, change, amendment, modification or
discharge may be sought.
12. ASSIGNMENT. No party to this Agreement may assign any of its
rights or obligations under this Agreement without the prior written consent
of the other party to this Agreement, except that (a) Recap may assign its
rights and obligations under this Agreement to GEI (as defined in the Merger
Agreement) or any of GEI's or Recap's direct or indirect wholly owned
subsidiaries or affiliates, and (b) the Stockholder may transfer the Subject
Shares to the extent permitted by Section 3 of this Agreement.
13. HEADINGS. The section headings in this Agreement are for
convenience only and shall not affect the construction of this Agreement.
14. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which, when executed, shall be deemed to be an original
and all of which together shall constitute one and the same document.
15. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without giving
effect to any choice or conflict of law provision or rule (whether of the
State of Delaware or any other jurisdiction) that would cause the application
of the laws of any jurisdiction other than the State of Delaware.
16. TERMINATION. This Agreement shall terminate automatically and
without further action on behalf of any party at the earlier of (i) the
Effective Time (as defined in the Merger Agreement), (ii) the date the Merger
Agreement is terminated pursuant to and in
<PAGE>
accordance with its terms,(iii) April 30, 2000 or (iv) upon the date on which
the stockholders of the Company, vote on adoption of the Merger Agreement and
approval of the Merger, in the event that on such date the requisite
stockholder vote to approve the Merger Agreement and Merger are not received.
[Signature page follows]
<PAGE>
IN WITNESS WHEREOF, Recap and the Stockholder have caused this
Agreement to be duly executed and delivered on the day and year first above
written.
ID Recap, Inc.
By
--------------------------------------
Name:
Title:
CB Capital Investors, L.P.
By: CB Capital Investors, Inc.
Its: General Partner
-----------------------------------------
Name:
Title:
380 Madison Ave., 12th Floor
New York, New York 10017
(212) 622-3100
(212) 622-3818
DLJ Capital Corp.
-----------------------------------------
Name:
Title:
3000 Sand Hill Road
Building 3, Suite 170
Menlo Park, CA 94205
(650) 235-2700 - telephone
<PAGE>
DLJ First ESC L.L.C.
By: DLJ LBO Plans Management Corporation
Its: Manager
-----------------------------------------
Name:
Title:
3000 Sand Hill Road
Building 3, Suite 170
Menlo Park, CA 94205
(650) 235-2700 - telephone
Sprout Capital VII, L.P.
By: DLJ Capital Corp.
Its: Managing General Partner
-----------------------------------------
Name:
Title
3000 Sand Hill Road
Building 3, Suite 170
Menlo Park, CA 94205
(650) 235-2700 - telephone
Sprout Growth II, L.P.
By: DLJ Capital Corp.
Its: Managing General Partner
-----------------------------------------
Name:
Title:
3000 Sand Hill Road
Building 3, Suite 170
Menlo Park, CA 94205
(650) 235-2700 - telephone
<PAGE>
The Sprout CEO Fund, L.P.
By: DLJ Capital Corp.
Its: Managing General Partner
-----------------------------------------
Name:
Title:
3000 Sand Hill Road
Building 3, Suite 170
Menlo Park, CA 94205
(650) 235-2700 - telephone
<PAGE>
SCHEDULE A
SHARES OWNED
<TABLE>
<CAPTION>
Preferred Stock
Stockholder Common Stock (Dollar Value)
- ----------- ------------ ---------------
<S> <C> <C>
CB Capital Investors, L.P. -0- 1,085,767 ($9,999,900)
DLJ Capital Corp. 32,991 7,601 ($70,005.21)
DLJ First ESC L.L.C 164,956 38,003 ($350,007.63)
Sprout Capital VII, L.P. 793,600 182,833 ($1,683,891.93)
Sprout Growth II, L.P. 648,797 149,472 ($1,376,637.12)
The Sprout CEO Fund, L.P. 9,218 2,124 ($19,562.04)
--------------- ---------------------------
1,649,562 1,465,800 ($13,500,003.93)
</TABLE>
<PAGE>
SCHEDULE B
OPTION, WARRANT AND OTHER RIGHTS TO PURCHASE SHARES
<TABLE>
<CAPTION>
Stockholder Convertible Notes Into Common ($9.21)
- ----------- ----------------- -------------------
<S> <C> <C>
CB Capital Investors, L.P. $ 15,000,000 1,628,664
DLJ Capital Corp. $ 209,998.75 22,801
DLJ First ESC L.L.C. $ 1,049,999,70 114,006
Sprout Capital VII, L.P. $ 5,051,520.90 548,482
Sprout Growth II, L.P. $ 4,129,800.10 448,404
The Sprout CEO Fund, L.P. $ 58,680.55 6,371
----------------- -------------
$ 25,500,000 2,768,728**
</TABLE>
** Rounding error $25,500,000 converts into 2,768,730 shares.
<PAGE>
SCHEDULE 5.2(c)
TITLE TO SHARES
<PAGE>
VOTING AGREEMENT
VOTING AGREEMENT, dated as of October 22, 1999 (this "Agreement"),
by and between ID Recap, Inc., a Delaware corporation ("Recap"), and SRM 1993
Children's Trust (the "Stockholder").
WHEREAS, InterDent, Inc., a Delaware corporation (the "Company"),
and Recap are entering into an Agreement and Plan of Merger, dated as of this
date, as may be modified or amended from time to time in a manner not adverse
to the Stockholder (the "Merger Agreement"), which provides, among other
things, for the merger of Recap with and into the Company with the Company as
the surviving corporation (the "Merger");
WHEREAS, in connection with the Merger Agreement, Recap has
requested that the Stockholder make certain agreements with respect to
certain shares of capital stock of the Company (the "Shares") beneficially
owned by the Stockholder, upon the terms and subject to the conditions of
this Agreement;
WHEREAS, in connection with the Merger Agreement, Recap and certain
stockholders are entering into an Exchange and Subscription Agreement (the
"Exchange Agreement"), which provides, among other things, for such
stockholders to exchange their shares of capital stock of the Company for
shares of capital stock of Recap prior to the Merger; and
WHEREAS, the Stockholder is willing to make certain agreements with
respect to the Subject Shares (as defined below).
NOW, THEREFORE, in consideration of the promises and the mutual
covenants and agreements set forth in this Agreement, the parties agree as
follows:
1. VOTING AGREEMENTS. For so long as this Agreement is in effect,
at any meeting of Stockholders of the Company, and in any action by consent
of the Stockholders of the Company, the Stockholder shall vote, or, if
applicable, give consents with respect to, all of the Subject Shares that are
held by the Stockholder on the record date applicable to the meeting or
consent (i) in favor of the Merger Agreement and the Merger contemplated by
the Merger Agreement; (ii) against any competing Acquisition Proposal (as
defined in the Merger Agreement) or other proposal inconsistent with the
Merger Agreement or which may delay or adversely affect the likelihood of the
completion of the Merger; (iii) against any change in a majority of the
persons who constitute the board of directors of the Company inconsistent
with the Merger Agreement or the Merger; (iv) against any change in the
capitalization of the Company or any amendment of the Company's Certificate
of Incorporation or Bylaws inconsistent with the Merger Agreement or the
Merger; and (v) in favor of any other matter necessary for consummation of
the transactions contemplated by the Merger Agreement which is considered at
any such meeting or in any such consent. Such Stockholder shall not enter
into any agreement or understanding with any person the effect of which would
be inconsistent with or violate the provisions of agreements contained in
this Section 1. The Stockholder shall use best efforts to cast the
Stockholder's vote or
<PAGE>
give the Stockholder's consent in accordance with the procedures communicated
to the Stockholder by the Company relating thereto so that the vote or
consent shall be duly counted for purposes of determining that a quorum is
present and for purposes of recording the results of that vote or consent.
2. SUBJECT SHARES. The term "Subject Shares" shall mean the Shares
set forth on SCHEDULE A hereto, together with any shares of capital stock of
the Company acquired by the Stockholder after the date hereof over which the
Stockholder has the power to vote or power to direct the voting.
3. COVENANTS. For so long as this Agreement is in effect, except
as otherwise contemplated by the Merger Agreement or the Exchange Agreement,
the Stockholder agrees not to (i) sell, transfer, pledge, assign,
hypothecate, encumber, tender or otherwise dispose of, or enter into any
contract with respect to the sale, transfer, pledge, assignment,
hypothecation, encumbrance, tender or other disposition of (each such
disposition or contract, a "Transfer"), any Subject Shares or Shares the
Stockholder then has or will have the right to acquire pursuant to options,
warrants, convertible securities or other such rights to purchase Shares
granted to the Stockholder by the Company; (ii) grant any powers of attorney,
consents, or proxies with respect to any shares that then constitute Subject
Shares, deposit any of the Subject Shares into a voting trust, enter into a
voting or option agreement with respect to any of the Subject Shares
inconsistent with the Merger Agreement or this Agreement, or otherwise
restrict or take any action adversely affecting the ability of the
Stockholder freely to exercise all voting rights with respect to the Subject
Shares; (iii) subject to Section 8, directly or indirectly, solicit,
initiate, encourage or otherwise facilitate any inquiries or the making of
any proposal or offer with respect to an Acquisition Proposal (as defined in
the Merger Agreement) or engage in any negotiation concerning, or provide any
confidential information or data to, or have any discussions with any person
relating to an Acquisition Proposal; and the Stockholder shall notify Recap
immediately if any such inquiries or proposals are received by, any such
information is requested from, or any such negotiations or discussions are
sought to be initiated or continued with the Stockholder; or (iv) permit,
cause, or take any action, or fail to take any action, which would make any
representation, warranty, covenant, or other undertaking of the Stockholder
in this Agreement untrue or incorrect or prevent, burden or materially delay
the consummation of the transactions contemplated by this Agreement;
PROVIDED, HOWEVER, that nothing in the foregoing provisions of this Section 3
shall prohibit the Stockholder from effecting any transfer of Subject Shares
pursuant to any bona fide charitable gift or by will or applicable laws of
descent and distribution, or for estate planning purposes, if the transferee
agrees in writing to be bound by the provisions of this Agreement. As used in
this Agreement, "person" shall have the meaning specified in Sections 3(a)(9)
and 13(d)(3) of the Securities Exchange Act of 1934, as amended.
4. WAIVER OF DISSENTERS' RIGHTS. The Stockholder hereby waives any
rights to dissent from the Merger.
5. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER. The
Stockholder represents and warrants to Recap that:
<PAGE>
(a) CAPACITY; NO VIOLATIONS. The Stockholder has the
legal capacity to enter into this Agreement and to consummate the
transactions contemplated by this Agreement. This Agreement has been duly
executed and delivered by the Stockholder and constitutes a valid and binding
agreement of the Stockholder enforceable against the Stockholder in
accordance with its terms except as such enforceability may be limited by
applicable bankruptcy, insolvency and similar laws affecting creditors'
rights generally and general principles of equity (whether considered in a
proceeding in equity or at law). The execution, delivery and performance by
the Stockholder of this Agreement will not (i) conflict with, require a
consent, waiver or approval under, or result in a breach or default under,
any of the terms of any contract, commitment or other obligation to which the
Stockholder is a party or by which the Stockholder is bound, (ii) violate any
order, writ, injunction, decree or statute, or any law, rule or regulation
applicable to the Stockholder or the Subject Shares; or (iii) result in the
creation of, or impose any obligation on the Stockholder to create, any Lien
upon the Subject Shares that would prevent the Stockholder from voting the
Subject Shares. In this Agreement, "Lien" shall mean any lien, pledge,
security interest, claim, third party right or other encumbrance.
(b) SUBJECT SHARES. The Stockholder has the power to vote
or direct the voting of the Subject Shares. The Subject Shares are the only
shares of any class of capital stock of the Company which the Stockholder has
the right, power or authority (sole or shared) to sell or vote, and, other
than options, warrants or other convertible securities of the Company held by
the Stockholder as of this date and set forth on SCHEDULE B hereto, the
Stockholder does not have any right to acquire, nor is it the beneficial
owner of, any other shares of any class of capital stock of the Company or
any securities convertible into or exchangeable or exercisable for any shares
of any class of capital stock of the Company. The Stockholder is not a party
to any contracts (including proxies, voting trusts or voting agreements) that
would prevent the Stockholder from voting the Subject Shares or conflicts
with the provisions of this Agreement.
(c) TITLE TO SHARES. Except as set forth on SCHEDULE C,
the Stockholder is the sole record and beneficial owner of the Subject
Shares, free and clear of any pledge, lien, security interest, mortgage,
charge, claim, equity, option, proxy, voting restriction, voting trust or
agreement, understanding, arrangement, right of first refusal, limitation on
disposition, adverse claim of ownership or use or encumbrance of any kind,
other than restrictions imposed by the securities laws or pursuant to this
Agreement or the Merger Agreement.
(d) NO FINDER'S FEES. Except as disclosed in the Merger
Agreement, no broker, investment banker, financial advisor, or other person
is entitled to any broker's, finder's, financial advisor's, or other similar
fee or commission in connection with the transactions contemplated hereby
based upon arrangements made by or on behalf of the Stockholder the payment
of which could become the obligation of the Company or Recap. The
Stockholder, on behalf of itself and its affiliates, hereby acknowledges that
it is not entitled to receive any broker's, finder's, financial advisor's, or
other similar fee or commission in connection with the transactions
contemplated hereby or by the Merger Agreement.
6. EXPENSES. Each party to this Agreement shall pay its own
expenses incurred in
<PAGE>
connection with this Agreement.
7. SPECIFIC PERFORMANCE. The Stockholder acknowledges and agrees
that if Stockholder fails to perform any of Stockholder's obligations under
this Agreement, immediate and irreparable harm or injury would be caused to
Recap for which money damages would not be an adequate remedy. Accordingly,
the Stockholder agrees that Recap shall have the right, in addition to any
other rights it may have, to specific performance of this Agreement. If Recap
should institute an action or proceeding seeking specific enforcement of the
provisions of this Agreement, the Stockholder hereby waives the claim or
defense that Recap has an adequate remedy at law and hereby agrees not to
assert in that action or proceeding the claim or defense that a remedy at law
exists. The Stockholder further agrees to waive any requirements for the
securing or posting of any bond in connection with obtaining any equitable
relief.
8. STOCKHOLDER CAPACITY. If the Stockholder is or becomes during
the term hereof a director or officer of the Company, the Stockholder shall
not be deemed to have made any agreement or understanding herein in his or
her capacity as such director or officer. The Stockholder signs solely in
Stockholder's capacity as the beneficial owner of the Stockholder's Subject
Shares and nothing herein shall limit or affect any actions taken by the
Stockholder in any capacity as an officer or director of the Company to the
extent specifically permitted by the Merger Agreement. Nothing in this
Agreement shall be deemed to constitute a transfer of the beneficial
ownership of the Subject Shares by the Stockholder.
9. NOTICES. All notices and other communications given or made
pursuant to this Agreement shall be in writing and shall be deemed to have
been duly given or made as of the date of receipt and shall be delivered
personally or mailed by registered or certified mail (postage prepaid, return
receipt requested), sent by overnight courier or sent by telecopy, to the
applicable party at the following addresses or telecopy numbers (or at any
other address or telecopy number for a party as shall be specified by like
notice):
If to Recap, to: ID Recap, Inc.
c/o Leonard Green & Partners, L.P.
11111 Santa Monica Boulevard, Suite 2000
Los Angeles, California 90025
Attention: John Baumer
Telephone: (310) 954-0444
Facsimile: (310) 954-0404
With a copy to: Irell & Manella LLP
333 South Hope Street, Suite 3300
Los Angeles, California 90071-3042
Attention: Ed Kaufman, Esq.
Telephone: (213) 229-0500
Facsimile: (213) 229-0515
If to the Stockholder: at the address and telephone number
<PAGE>
set forth on the signature page
With a copy to: McDermott Will & Emery
13101 Von Karman Avenue, Suite 1100
Irvine, California 92612
Attention: Richard Babcock, Esq.
Telephone: (949) 757-7111
Facsimile: (949) 851-9348
10. PARTIES IN INTEREST. This Agreement shall inure to the benefit
of and be binding upon the parties and their respective successors and
assigns; provided, however, that any successor in interest or assignee shall
agree to be bound by the provisions of this Agreement. Nothing in this
Agreement, express or implied, is intended to confer upon any Person other
than Recap, the Stockholder or their successors or assigns, any rights or
remedies under, or by reason, of this Agreement.
11. ENTIRE AGREEMENT; AMENDMENTS. Other than the Merger Agreement,
the Exchange Agreement and the transactions contemplated therein, this
Agreement contains the entire agreement between the Stockholder and Recap
with respect to the subject matter of this Agreement and supersedes all prior
and contemporaneous agreements and understandings, oral or written, with
respect to these transactions. This Agreement may not be changed, amended or
modified orally, but may be changed only by an agreement in writing signed by
the party against whom any waiver, change, amendment, modification or
discharge may be sought.
12. ASSIGNMENT. No party to this Agreement may assign any of its
rights or obligations under this Agreement without the prior written consent
of the other party to this Agreement, except that (a) Recap may assign its
rights and obligations under this Agreement to GEI (as defined in the Merger
Agreement) or any of GEI's or Recap's direct or indirect wholly owned
subsidiaries or affiliates, and (b) the Stockholder may transfer the Subject
Shares to the extent permitted by Section 3 of this Agreement.
13. HEADINGS. The section headings in this Agreement are for
convenience only and shall not affect the construction of this Agreement.
14. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which, when executed, shall be deemed to be an original
and all of which together shall constitute one and the same document.
15. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without giving
effect to any choice or conflict of law provision or rule (whether of the
State of Delaware or any other jurisdiction) that would cause the application
of the laws of any jurisdiction other than the State of Delaware.
16. TERMINATION. This Agreement shall terminate automatically and
without further action on behalf of any party at the earlier of (i) the
Effective Time (as defined in the Merger Agreement) and (ii) the date the
Merger Agreement is terminated pursuant to and in
<PAGE>
accordance with its terms.
[Signature page follows]
<PAGE>
IN WITNESS WHEREOF, Recap and the Stockholder have caused this
Agreement to be duly executed and delivered on the day and year first above
written.
ID RECAP, INC.
By
-------------------------------------
Name: John Danhakl
Title: President
<PAGE>
SRM 1993 CHILDREN'S TRUST
By:
-------------------------------------
Name: Theodore L. Koenig,
not in his individual capacity,
but solely as Trustee
----------------------------------------
Address
----------------------------------------
----------------------------------------
Telephone Number
----------------------------------------
Facsimile Number
<PAGE>
SCHEDULE A
SHARES OWNED
2,553,617 shares of common stock
<PAGE>
SCHEDULE B
OPTION, WARRANT AND OTHER RIGHTS TO PURCHASE SHARES
None
<PAGE>
SCHEDULE C
TITLE TO SHARES
REGISTRATION RIGHTS AGREEMENT, DATED AS OF MARCH 11, 1999, BETWEEN INTERDENT,
INC. AND THE HOLDERS (AS DEFINED THEREIN).
<PAGE>
VOTING AGREEMENT
VOTING AGREEMENT, dated as of October 22, 1999 (this "Agreement"),
by and between ID Recap, Inc., a Delaware corporation ("Recap"), and Michael
T. Fiore, an individual (the "Stockholder").
WHEREAS, InterDent, Inc., a Delaware corporation (the "Company"),
and Recap are entering into an Agreement and Plan of Merger, dated as of this
date, as may be modified or amended from time to time in a manner not adverse
to the Stockholder (the "Merger Agreement"), which provides, among other
things, for the merger of Recap with and into the Company with the Company as
the surviving corporation (the "Merger");
WHEREAS, in connection with the Merger Agreement, Recap has
requested that the Stockholder make certain agreements with respect to
certain shares of capital stock of the Company (the "Shares") beneficially
owned by the Stockholder, upon the terms and subject to the conditions of
this Agreement;
WHEREAS, in connection with the Merger Agreement, Recap and certain
stockholders are entering into an Exchange and Subscription Agreement (the
"Exchange Agreement"), which provides, among other things, for such
stockholders to exchange their shares of capital stock of the Company for
shares of capital stock of Recap prior to the Merger; and
WHEREAS, the Stockholder is willing to make certain agreements with
respect to the Subject Shares (as defined below).
NOW, THEREFORE, in consideration of the promises and the mutual
covenants and agreements set forth in this Agreement, the parties agree as
follows:
1. VOTING AGREEMENTS. For so long as this Agreement is in effect,
at any meeting of Stockholders of the Company, and in any action by consent
of the Stockholders of the Company, the Stockholder shall vote, or, if
applicable, give consents with respect to, all of the Subject Shares that are
held by the Stockholder on the record date applicable to the meeting or
consent (i) in favor of the Merger Agreement and the Merger contemplated by
the Merger Agreement; (ii) against any competing Acquisition Proposal (as
defined in the Merger Agreement) or other proposal inconsistent with the
Merger Agreement or which may delay or adversely affect the likelihood of the
completion of the Merger; (iii) against any change in a majority of the
persons who constitute the board of directors of the Company inconsistent
with the Merger Agreement or the Merger; (iv) against any change in the
capitalization of the Company or any amendment of the Company's Certificate
of Incorporation or Bylaws inconsistent with the Merger Agreement or the
Merger; and (v) in favor of any other matter necessary for consummation of
the transactions contemplated by the Merger Agreement which is considered at
any such meeting or in any such consent. Such Stockholder shall not enter
into any agreement or understanding with any person the effect of which would
be inconsistent with or violate the provisions of agreements contained in
this Section 1. The Stockholder shall use best efforts to cast the
Stockholder's vote or
<PAGE>
give the Stockholder's consent in accordance with the procedures communicated
to the Stockholder by the Company relating thereto so that the vote or
consent shall be duly counted for purposes of determining that a quorum is
present and for purposes of recording the results of that vote or consent.
2. SUBJECT SHARES. The term "Subject Shares" shall mean the Shares
set forth on SCHEDULE A hereto, together with any shares of capital stock of
the Company acquired by the Stockholder after the date hereof over which the
Stockholder has the power to vote or power to direct the voting.
3. COVENANTS. For so long as this Agreement is in effect, except
as otherwise contemplated by the Merger Agreement or the Exchange Agreement,
the Stockholder agrees not to (i) sell, transfer, pledge, assign,
hypothecate, encumber, tender or otherwise dispose of, or enter into any
contract with respect to the sale, transfer, pledge, assignment,
hypothecation, encumbrance, tender or other disposition of (each such
disposition or contract, a "Transfer"), any Subject Shares or Shares the
Stockholder then has or will have the right to acquire pursuant to options,
warrants, convertible securities or other such rights to purchase Shares
granted to the Stockholder by the Company; (ii) grant any powers of attorney,
consents, or proxies with respect to any shares that then constitute Subject
Shares, deposit any of the Subject Shares into a voting trust, enter into a
voting or option agreement with respect to any of the Subject Shares
inconsistent with the Merger Agreement or this Agreement, or otherwise
restrict or take any action adversely affecting the ability of the
Stockholder freely to exercise all voting rights with respect to the Subject
Shares; (iii) subject to Section 8, directly or indirectly, solicit,
initiate, encourage or otherwise facilitate any inquiries or the making of
any proposal or offer with respect to an Acquisition Proposal (as defined in
the Merger Agreement) or engage in any negotiation concerning, or provide any
confidential information or data to, or have any discussions with any person
relating to an Acquisition Proposal; and the Stockholder shall notify Recap
immediately if any such inquiries or proposals are received by, any such
information is requested from, or any such negotiations or discussions are
sought to be initiated or continued with the Stockholder; or (iv) permit,
cause, or take any action, or fail to take any action, which would make any
representation, warranty, covenant, or other undertaking of the Stockholder
in this Agreement untrue or incorrect or prevent, burden or materially delay
the consummation of the transactions contemplated by this Agreement;
PROVIDED, HOWEVER, that nothing in the foregoing provisions of this Section 3
shall prohibit the Stockholder from effecting any transfer of Subject Shares
pursuant to any bona fide charitable gift or by will or applicable laws of
descent and distribution, or for estate planning purposes, if the transferee
agrees in writing to be bound by the provisions of this Agreement. As used in
this Agreement, "person" shall have the meaning specified in Sections 3(a)(9)
and 13(d)(3) of the Securities Exchange Act of 1934, as amended.
4. WAIVER OF DISSENTERS' RIGHTS. The Stockholder hereby waives any
rights to dissent from the Merger.
5. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER. The
Stockholder represents and warrants to Recap that:
<PAGE>
(a) CAPACITY; NO VIOLATIONS. The Stockholder has the
legal capacity to enter into this Agreement and to consummate the
transactions contemplated by this Agreement. This Agreement has been duly
executed and delivered by the Stockholder and constitutes a valid and binding
agreement of the Stockholder enforceable against the Stockholder in
accordance with its terms except as such enforceability may be limited by
applicable bankruptcy, insolvency and similar laws affecting creditors'
rights generally and general principles of equity (whether considered in a
proceeding in equity or at law). The execution, delivery and performance by
the Stockholder of this Agreement will not (i) conflict with, require a
consent, waiver or approval under, or result in a breach or default under,
any of the terms of any contract, commitment or other obligation to which the
Stockholder is a party or by which the Stockholder is bound, (ii) violate any
order, writ, injunction, decree or statute, or any law, rule or regulation
applicable to the Stockholder or the Subject Shares; or (iii) result in the
creation of, or impose any obligation on the Stockholder to create, any Lien
upon the Subject Shares that would prevent the Stockholder from voting the
Subject Shares. In this Agreement, "Lien" shall mean any lien, pledge,
security interest, claim, third party right or other encumbrance.
(b) SUBJECT SHARES. The Stockholder has the power to vote
or direct the voting of the Subject Shares. The Subject Shares are the only
shares of any class of capital stock of the Company which the Stockholder has
the right, power or authority (sole or shared) to sell or vote, and, other
than options, warrants or other convertible securities of the Company held by
the Stockholder as of this date and set forth on SCHEDULE B hereto, the
Stockholder does not have any right to acquire, nor is it the beneficial
owner of, any other shares of any class of capital stock of the Company or
any securities convertible into or exchangeable or exercisable for any shares
of any class of capital stock of the Company. The Stockholder is not a party
to any contracts (including proxies, voting trusts or voting agreements) that
would prevent the Stockholder from voting the Subject Shares or conflicts
with the provisions of this Agreement.
(c) TITLE TO SHARES. Except as set forth on SCHEDULE C,
the Stockholder is the sole record and beneficial owner of the Subject
Shares, free and clear of any pledge, lien, security interest, mortgage,
charge, claim, equity, option, proxy, voting restriction, voting trust or
agreement, understanding, arrangement, right of first refusal, limitation on
disposition, adverse claim of ownership or use or encumbrance of any kind,
other than restrictions imposed by the securities laws or pursuant to this
Agreement or the Merger Agreement.
(d) NO FINDER'S FEES. Except as disclosed in the Merger
Agreement, no broker, investment banker, financial advisor, or other person
is entitled to any broker's, finder's, financial advisor's, or other similar
fee or commission in connection with the transactions contemplated hereby
based upon arrangements made by or on behalf of the Stockholder the payment
of which could become the obligation of the Company or Recap. The
Stockholder, on behalf of itself and its affiliates, hereby acknowledges that
it is not entitled to receive any broker's, finder's, financial advisor's, or
other similar fee or commission in connection with the transactions
contemplated hereby or by the Merger Agreement.
6. EXPENSES. Each party to this Agreement shall pay its own
expenses incurred in
<PAGE>
connection with this Agreement.
7. SPECIFIC PERFORMANCE. The Stockholder acknowledges and agrees
that if Stockholder fails to perform any of Stockholder's obligations under
this Agreement, immediate and irreparable harm or injury would be caused to
Recap for which money damages would not be an adequate remedy. Accordingly,
the Stockholder agrees that Recap shall have the right, in addition to any
other rights it may have, to specific performance of this Agreement. If Recap
should institute an action or proceeding seeking specific enforcement of the
provisions of this Agreement, the Stockholder hereby waives the claim or
defense that Recap has an adequate remedy at law and hereby agrees not to
assert in that action or proceeding the claim or defense that a remedy at law
exists. The Stockholder further agrees to waive any requirements for the
securing or posting of any bond in connection with obtaining any equitable
relief.
8. STOCKHOLDER CAPACITY. If the Stockholder is or becomes during
the term hereof a director or officer of the Company, the Stockholder shall
not be deemed to have made any agreement or understanding herein in his or
her capacity as such director or officer. The Stockholder signs solely in
Stockholder's capacity as the beneficial owner of the Stockholder's Subject
Shares and nothing herein shall limit or affect any actions taken by the
Stockholder in any capacity as an officer or director of the Company to the
extent specifically permitted by the Merger Agreement. Nothing in this
Agreement shall be deemed to constitute a transfer of the beneficial
ownership of the Subject Shares by the Stockholder.
9. NOTICES. All notices and other communications given or made
pursuant to this Agreement shall be in writing and shall be deemed to have
been duly given or made as of the date of receipt and shall be delivered
personally or mailed by registered or certified mail (postage prepaid, return
receipt requested), sent by overnight courier or sent by telecopy, to the
applicable party at the following addresses or telecopy numbers (or at any
other address or telecopy number for a party as shall be specified by like
notice):
If to Recap, to: ID Recap, Inc.
c/o Leonard Green & Partners, L.P.
11111 Santa Monica Boulevard, Suite 2000
Los Angeles, California 90025
Attention: John Baumer
Telephone: (310) 954-0444
Facsimile: (310) 954-0404
With a copy to: Irell & Manella LLP
333 South Hope Street, Suite 3300
Los Angeles, California 90071-3042
Attention: Ed Kaufman, Esq.
Telephone: (213) 229-0500
Facsimile: (213) 229-0515
If to the Stockholder: at the address and telephone number
<PAGE>
set forth on the signature page
With a copy to: McDermott Will & Emery
13101 Von Karman Avenue, Suite 1100
Irvine, California 92612
Attention: Richard Babcock, Esq.
Telephone: (949) 757-7111
Facsimile: (949) 851-9348
10. PARTIES IN INTEREST. This Agreement shall inure to the benefit
of and be binding upon the parties and their respective successors and
assigns; provided, however, that any successor in interest or assignee shall
agree to be bound by the provisions of this Agreement. Nothing in this
Agreement, express or implied, is intended to confer upon any Person other
than Recap, the Stockholder or their successors or assigns, any rights or
remedies under, or by reason, of this Agreement.
11. ENTIRE AGREEMENT; AMENDMENTS. Other than the Merger Agreement,
the Exchange Agreement and the transactions contemplated therein, this
Agreement contains the entire agreement between the Stockholder and Recap
with respect to the subject matter of this Agreement and supersedes all prior
and contemporaneous agreements and understandings, oral or written, with
respect to these transactions. This Agreement may not be changed, amended or
modified orally, but may be changed only by an agreement in writing signed by
the party against whom any waiver, change, amendment, modification or
discharge may be sought.
12. ASSIGNMENT. No party to this Agreement may assign any of its
rights or obligations under this Agreement without the prior written consent
of the other party to this Agreement, except that (a) Recap may assign its
rights and obligations under this Agreement to GEI (as defined in the Merger
Agreement) or any of GEI's or Recap's direct or indirect wholly owned
subsidiaries or affiliates, and (b) the Stockholder may transfer the Subject
Shares to the extent permitted by Section 3 of this Agreement.
13. HEADINGS. The section headings in this Agreement are for
convenience only and shall not affect the construction of this Agreement.
14. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which, when executed, shall be deemed to be an original
and all of which together shall constitute one and the same document.
15. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without giving
effect to any choice or conflict of law provision or rule (whether of the
State of Delaware or any other jurisdiction) that would cause the application
of the laws of any jurisdiction other than the State of Delaware.
16. TERMINATION. This Agreement shall terminate automatically and
without further action on behalf of any party at the earlier of (i) the
Effective Time (as defined in the Merger Agreement) and (ii) the date the
Merger Agreement is terminated pursuant to and in
<PAGE>
accordance with its terms.
[Signature page follows]
<PAGE>
IN WITNESS WHEREOF, Recap and the Stockholder have caused this
Agreement to be duly executed and delivered on the day and year first above
written.
ID RECAP, INC.
By
-------------------------------------
Name: John Danhakl
Title: President
<PAGE>
MICHAEL T. FIORE
----------------------------------------
Michael T. Fiore
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Address
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Telephone Number
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Facsimile Number
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SCHEDULE A
SHARES OWNED
356,772 shares of common stock
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SCHEDULE B
OPTION, WARRANT AND OTHER RIGHTS TO PURCHASE SHARES
175,000 options
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SCHEDULE C
TITLE TO SHARES
Registration Rights Agreement, dated as of March 11, 1999, between Interdent,
Inc. and the Holders (as defined therein).
Promissory Note, dated as of April 1, 1997, between GMS Dental Group, Inc.
and Michael T. Fiore, in the principal amount of $150,000.
Security Agreement, dated as of April 1, 1997, between GMS Dental Group, Inc.
and Michael T. Fiore.
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VOTING AGREEMENT
VOTING AGREEMENT, dated as of October 22, 1999 (this "Agreement"),
by and between ID Recap, Inc., a Delaware corporation ("Recap"), and Steven
R. Matzkin, an individual (the "Stockholder").
WHEREAS, InterDent, Inc., a Delaware corporation (the "Company"),
and Recap are entering into an Agreement and Plan of Merger, dated as of this
date, as may be modified or amended from time to time in a manner not adverse
to the Stockholder (the "Merger Agreement"), which provides, among other
things, for the merger of Recap with and into the Company with the Company as
the surviving corporation (the "Merger");
WHEREAS, in connection with the Merger Agreement, Recap has
requested that the Stockholder make certain agreements with respect to
certain shares of capital stock of the Company (the "Shares") beneficially
owned by the Stockholder, upon the terms and subject to the conditions of
this Agreement;
WHEREAS, in connection with the Merger Agreement, Recap and certain
stockholders are entering into an Exchange and Subscription Agreement (the
"Exchange Agreement"), which provides, among other things, for such
stockholders to exchange their shares of capital stock of the Company for
shares of capital stock of Recap prior to the Merger; and
WHEREAS, the Stockholder is willing to make certain agreements with
respect to the Subject Shares (as defined below).
NOW, THEREFORE, in consideration of the promises and the mutual
covenants and agreements set forth in this Agreement, the parties agree as
follows:
1. VOTING AGREEMENTS. For so long as this Agreement is in effect,
at any meeting of Stockholders of the Company, and in any action by consent
of the Stockholders of the Company, the Stockholder shall vote, or, if
applicable, give consents with respect to, all of the Subject Shares that are
held by the Stockholder on the record date applicable to the meeting or
consent (i) in favor of the Merger Agreement and the Merger contemplated by
the Merger Agreement; (ii) against any competing Acquisition Proposal (as
defined in the Merger Agreement) or other proposal inconsistent with the
Merger Agreement or which may delay or adversely affect the likelihood of the
completion of the Merger; (iii) against any change in a majority of the
persons who constitute the board of directors of the Company inconsistent
with the Merger Agreement or the Merger; (iv) against any change in the
capitalization of the Company or any amendment of the Company's Certificate
of Incorporation or Bylaws inconsistent with the Merger Agreement or the
Merger; and (v) in favor of any other matter necessary for consummation of
the transactions contemplated by the Merger Agreement which is considered at
any such meeting or in any such consent. Such Stockholder shall not enter
into any agreement or understanding with any person the effect of which would
be inconsistent with or violate the provisions of agreements contained in
this Section 1. The Stockholder shall use best efforts to cast the
Stockholder's vote or
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give the Stockholder's consent in accordance with the procedures communicated
to the Stockholder by the Company relating thereto so that the vote or
consent shall be duly counted for purposes of determining that a quorum is
present and for purposes of recording the results of that vote or consent.
2. SUBJECT SHARES. The term "Subject Shares" shall mean the Shares
set forth on SCHEDULE A hereto, together with any shares of capital stock of
the Company acquired by the Stockholder after the date hereof over which the
Stockholder has the power to vote or power to direct the voting.
3. COVENANTS. For so long as this Agreement is in effect, except
as otherwise contemplated by the Merger Agreement or the Exchange Agreement,
the Stockholder agrees not to (i) sell, transfer, pledge, assign,
hypothecate, encumber, tender or otherwise dispose of, or enter into any
contract with respect to the sale, transfer, pledge, assignment,
hypothecation, encumbrance, tender or other disposition of (each such
disposition or contract, a "Transfer"), any Subject Shares or Shares the
Stockholder then has or will have the right to acquire pursuant to options,
warrants, convertible securities or other such rights to purchase Shares
granted to the Stockholder by the Company; (ii) grant any powers of attorney,
consents, or proxies with respect to any shares that then constitute Subject
Shares, deposit any of the Subject Shares into a voting trust, enter into a
voting or option agreement with respect to any of the Subject Shares
inconsistent with the Merger Agreement or this Agreement, or otherwise
restrict or take any action adversely affecting the ability of the
Stockholder freely to exercise all voting rights with respect to the Subject
Shares; (iii) subject to Section 8, directly or indirectly, solicit,
initiate, encourage or otherwise facilitate any inquiries or the making of
any proposal or offer with respect to an Acquisition Proposal (as defined in
the Merger Agreement) or engage in any negotiation concerning, or provide any
confidential information or data to, or have any discussions with any person
relating to an Acquisition Proposal; and the Stockholder shall notify Recap
immediately if any such inquiries or proposals are received by, any such
information is requested from, or any such negotiations or discussions are
sought to be initiated or continued with the Stockholder; or (iv) permit,
cause, or take any action, or fail to take any action, which would make any
representation, warranty, covenant, or other undertaking of the Stockholder
in this Agreement untrue or incorrect or prevent, burden or materially delay
the consummation of the transactions contemplated by this Agreement;
PROVIDED, HOWEVER, that nothing in the foregoing provisions of this Section 3
shall prohibit the Stockholder from effecting any transfer of Subject Shares
pursuant to any bona fide charitable gift or by will or applicable laws of
descent and distribution, or for estate planning purposes, if the transferee
agrees in writing to be bound by the provisions of this Agreement. As used in
this Agreement, "person" shall have the meaning specified in Sections 3(a)(9)
and 13(d)(3) of the Securities Exchange Act of 1934, as amended.
4. WAIVER OF DISSENTERS' RIGHTS. The Stockholder hereby waives any
rights to dissent from the Merger.
5. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER. The
Stockholder represents and warrants to Recap that:
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(a) CAPACITY; NO VIOLATIONS. The Stockholder has the
legal capacity to enter into this Agreement and to consummate the
transactions contemplated by this Agreement. This Agreement has been duly
executed and delivered by the Stockholder and constitutes a valid and binding
agreement of the Stockholder enforceable against the Stockholder in
accordance with its terms except as such enforceability may be limited by
applicable bankruptcy, insolvency and similar laws affecting creditors'
rights generally and general principles of equity (whether considered in a
proceeding in equity or at law). The execution, delivery and performance by
the Stockholder of this Agreement will not (i) conflict with, require a
consent, waiver or approval under, or result in a breach or default under,
any of the terms of any contract, commitment or other obligation to which the
Stockholder is a party or by which the Stockholder is bound, (ii) violate any
order, writ, injunction, decree or statute, or any law, rule or regulation
applicable to the Stockholder or the Subject Shares; or (iii) result in the
creation of, or impose any obligation on the Stockholder to create, any Lien
upon the Subject Shares that would prevent the Stockholder from voting the
Subject Shares. In this Agreement, "Lien" shall mean any lien, pledge,
security interest, claim, third party right or other encumbrance.
(b) SUBJECT SHARES. The Stockholder has the power to vote
or direct the voting of the Subject Shares. The Subject Shares are the only
shares of any class of capital stock of the Company which the Stockholder has
the right, power or authority (sole or shared) to sell or vote, and, other
than options, warrants or other convertible securities of the Company held by
the Stockholder as of this date and set forth on SCHEDULE B hereto, the
Stockholder does not have any right to acquire, nor is it the beneficial
owner of, any other shares of any class of capital stock of the Company or
any securities convertible into or exchangeable or exercisable for any shares
of any class of capital stock of the Company. The Stockholder is not a party
to any contracts (including proxies, voting trusts or voting agreements) that
would prevent the Stockholder from voting the Subject Shares or conflicts
with the provisions of this Agreement.
(c) TITLE TO SHARES. Except as set forth on SCHEDULE C,
the Stockholder is the sole record and beneficial owner of the Subject
Shares, free and clear of any pledge, lien, security interest, mortgage,
charge, claim, equity, option, proxy, voting restriction, voting trust or
agreement, understanding, arrangement, right of first refusal, limitation on
disposition, adverse claim of ownership or use or encumbrance of any kind,
other than restrictions imposed by the securities laws or pursuant to this
Agreement or the Merger Agreement.
(d) NO FINDER'S FEES. Except as disclosed in the Merger
Agreement, no broker, investment banker, financial advisor, or other person
is entitled to any broker's, finder's, financial advisor's, or other similar
fee or commission in connection with the transactions contemplated hereby
based upon arrangements made by or on behalf of the Stockholder the payment
of which could become the obligation of the Company or Recap. The
Stockholder, on behalf of itself and its affiliates, hereby acknowledges that
it is not entitled to receive any broker's, finder's, financial advisor's, or
other similar fee or commission in connection with the transactions
contemplated hereby or by the Merger Agreement.
6. EXPENSES. Each party to this Agreement shall pay its own
expenses incurred in
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connection with this Agreement.
7. SPECIFIC PERFORMANCE. The Stockholder acknowledges and agrees
that if Stockholder fails to perform any of Stockholder's obligations under
this Agreement, immediate and irreparable harm or injury would be caused to
Recap for which money damages would not be an adequate remedy. Accordingly,
the Stockholder agrees that Recap shall have the right, in addition to any
other rights it may have, to specific performance of this Agreement. If Recap
should institute an action or proceeding seeking specific enforcement of the
provisions of this Agreement, the Stockholder hereby waives the claim or
defense that Recap has an adequate remedy at law and hereby agrees not to
assert in that action or proceeding the claim or defense that a remedy at law
exists. The Stockholder further agrees to waive any requirements for the
securing or posting of any bond in connection with obtaining any equitable
relief.
8. STOCKHOLDER CAPACITY. If the Stockholder is or becomes during
the term hereof a director or officer of the Company, the Stockholder shall
not be deemed to have made any agreement or understanding herein in his or
her capacity as such director or officer. The Stockholder signs solely in
Stockholder's capacity as the beneficial owner of the Stockholder's Subject
Shares and nothing herein shall limit or affect any actions taken by the
Stockholder in any capacity as an officer or director of the Company to the
extent specifically permitted by the Merger Agreement. Nothing in this
Agreement shall be deemed to constitute a transfer of the beneficial
ownership of the Subject Shares by the Stockholder.
9. NOTICES. All notices and other communications given or made
pursuant to this Agreement shall be in writing and shall be deemed to have
been duly given or made as of the date of receipt and shall be delivered
personally or mailed by registered or certified mail (postage prepaid, return
receipt requested), sent by overnight courier or sent by telecopy, to the
applicable party at the following addresses or telecopy numbers (or at any
other address or telecopy number for a party as shall be specified by like
notice):
If to Recap, to: ID Recap, Inc.
c/o Leonard Green & Partners, L.P.
11111 Santa Monica Boulevard, Suite 2000
Los Angeles, California 90025
Attention: John Baumer
Telephone: (310) 954-0444
Facsimile: (310) 954-0404
With a copy to: Irell & Manella LLP
333 South Hope Street, Suite 3300
Los Angeles, California 90071-3042
Attention: Ed Kaufman, Esq.
Telephone: (213) 229-0500
Facsimile: (213) 229-0515
If to the Stockholder: at the address and telephone number
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set forth on the signature page
With a copy to: McDermott Will & Emery
13101 Von Karman Avenue, Suite 1100
Irvine, California 92612
Attention: Richard Babcock, Esq.
Telephone: (949) 757-7111
Facsimile: (949) 851-9348
10. PARTIES IN INTEREST. This Agreement shall inure to the benefit
of and be binding upon the parties and their respective successors and
assigns; provided, however, that any successor in interest or assignee shall
agree to be bound by the provisions of this Agreement. Nothing in this
Agreement, express or implied, is intended to confer upon any Person other
than Recap, the Stockholder or their successors or assigns, any rights or
remedies under, or by reason, of this Agreement.
11. ENTIRE AGREEMENT; AMENDMENTS. Other than the Merger Agreement,
the Exchange Agreement and the transactions contemplated therein, this
Agreement contains the entire agreement between the Stockholder and Recap
with respect to the subject matter of this Agreement and supersedes all prior
and contemporaneous agreements and understandings, oral or written, with
respect to these transactions. This Agreement may not be changed, amended or
modified orally, but may be changed only by an agreement in writing signed by
the party against whom any waiver, change, amendment, modification or
discharge may be sought.
12. ASSIGNMENT. No party to this Agreement may assign any of its
rights or obligations under this Agreement without the prior written consent
of the other party to this Agreement, except that (a) Recap may assign its
rights and obligations under this Agreement to GEI (as defined in the Merger
Agreement) or any of GEI's or Recap's direct or indirect wholly owned
subsidiaries or affiliates, and (b) the Stockholder may transfer the Subject
Shares to the extent permitted by Section 3 of this Agreement.
13. HEADINGS. The section headings in this Agreement are for
convenience only and shall not affect the construction of this Agreement.
14. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which, when executed, shall be deemed to be an original
and all of which together shall constitute one and the same document.
15. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without giving
effect to any choice or conflict of law provision or rule (whether of the
State of Delaware or any other jurisdiction) that would cause the application
of the laws of any jurisdiction other than the State of Delaware.
16. TERMINATION. This Agreement shall terminate automatically and
without further action on behalf of any party at the earlier of (i) the
Effective Time (as defined in the Merger Agreement) and (ii) the date the
Merger Agreement is terminated pursuant to and in
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accordance with its terms.
[Signature page follows]
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IN WITNESS WHEREOF, Recap and the Stockholder have caused this
Agreement to be duly executed and delivered on the day and year first above
written.
ID RECAP, INC.
By
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Name: John Danhakl
Title: President
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STEVEN R. MATZKIN
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Address
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Telephone Number
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Facsimile Number
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SCHEDULE A
SHARES OWNED
2,500,237 shares of common stock
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SCHEDULE B
OPTION, WARRANT AND OTHER RIGHTS TO PURCHASE SHARES
88,360 options
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SCHEDULE C
TITLE TO SHARES
Registration Rights Agreement, dated as of March 11, 1999, between Interdent,
Inc. and the Holders (as defined therein).
