UNITED DENTAL CARE INC /DE/, S-1, 1996-09-20

UNITED DENTAL CARE INC /DE/
S-1, 1996-09-20
HOSPITAL & MEDICAL SERVICE PLANS

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 20, 1996

REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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

FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

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

UNITED DENTAL CARE, INC.
(Exact name of registrant as specified in its charter)

<TABLE>
<S> <C> <C>
DELAWARE 6324 75-2309712
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or Classification Code Number) Identification No.)
organization)

14755 PRESTON ROAD, SUITE 300 WILLIAM H. WILCOX
DALLAS, TEXAS 75240 PRESIDENT AND CHIEF EXECUTIVE OFFICER
(972) 458-7474 14755 PRESTON ROAD, SUITE 300
(Address, including zip code, and telephone DALLAS, TEXAS 75240
number, including area code, of registrant's (972) 458-7474
principal executive offices) (Name, address, including zip code, and
telephone number, including area code, of
agent for service)
</TABLE>

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Copies to:

<TABLE>
<S> <C>
DAVID K. MEYERCORD, ESQ. TERRY M. SCHPOK, P.C.
PATRICK OWENS, ESQ. DREW F. NACHOWIAK, ESQ.
STRASBURGER & PRICE, L.L.P. AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P.
901 MAIN STREET, SUITE 4300 1700 PACIFIC AVENUE, SUITE 4100
DALLAS, TEXAS 75202 DALLAS, TEXAS 75201
(214) 651-4300 (214) 969-2800
</TABLE>

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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /

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

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

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

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CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
==================================================================================================
PROPOSED PROPOSED
MAXIMUM MAXIMUM
OFFERING AGGREGATE
TITLE OF EACH CLASS OF AMOUNT TO BE PRICE PER OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(1) SHARE(2) PRICE(1)(2) REGISTRATION FEE
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.10 par value...... 2,300,000 $37.625 $86,537,500 $29,841
==================================================================================================
</TABLE>

(1) Includes up to 300,000 shares that the Underwriters may purchase to cover
over-allotments, if any.

(2) Estimated solely for the purpose of computing the amount of the
registration fee in accordance with Rule 457(c) under the Securities Act
of 1933, as amended, based on the average of the high and low sales prices
of the Common Stock on September 13, 1996, as reported on the Nasdaq
National Market.

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

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2

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

SUBJECT TO COMPLETION
SEPTEMBER 20, 1996

2,000,000 SHARES

[UNITED DENTAL CARE LOGO]

COMMON STOCK

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All of the 2,000,000 shares of Common Stock offered hereby are being sold by
United Dental Care, Inc. ("UDC" or the "Company"). The Company's Common Stock is
quoted on the Nasdaq National Market (the "Nasdaq National Market") under the
symbol "UDCI." On September 13, 1996, the last reported sale price of the
Company's Common Stock was $37.50 per share.

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

THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS," PAGE 6.

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

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

<TABLE>
<CAPTION>
===============================================================================================
PRICE UNDERWRITING PROCEEDS
TO DISCOUNTS AND TO
PUBLIC COMMISSIONS COMPANY(1)

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<S> <C> <C> <C>
Per Share................................ $ $ $
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Total(2)................................. $ $ $
===============================================================================================
</TABLE>

(1) Before deducting expenses of the offering estimated at $550,000 payable by
the Company.
(2) The Company and a stockholder of the Company have granted the Underwriters a
30-day option to purchase up to an additional 225,000 and 75,000 shares of
Common Stock, respectively, solely to cover over-allotments, if any. To the
extent that the option is exercised, the Underwriters will offer the
additional shares at the Price to Public shown above. If the option is
exercised in full, the total Price to Public, Underwriting Discounts and
Commissions and Proceeds to Company will be $ , $ and
$ , respectively. See "Underwriting."
------------------
The shares of Common Stock are offered by the several Underwriters, subject
to prior sale, when, as and if delivered to and accepted by them, and subject to
the right of the Underwriters to reject any order in whole or in part. It is
expected that delivery of the shares of Common Stock will be made at the offices
of Alex. Brown & Sons Incorporated, Baltimore, Maryland, on or about
, 1996.

ALEX. BROWN & SONS
INCORPORATED
COWEN & COMPANY

VOLPE, WELTY & COMPANY

THE DATE OF THIS PROSPECTUS IS , 1996.
<PAGE> 3

AVAILABLE INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-1 (including all amendments,
exhibits and schedules thereto, the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
Common Stock offered hereby. As permitted by the rules and regulations of the
Commission, this Prospectus omits certain information contained in the
Registration Statement. For further information with respect to the Company and
the Common Stock offered hereby, reference is hereby made to the Registration
Statement. Statements contained in this Prospectus regarding the contents of any
agreement or other document filed as an exhibit to the Registration Statement
are not necessarily complete, and in each instance reference is made to the copy
of such agreement filed as an exhibit to the Registration Statement, each such
statement being qualified in all respects by such reference. The Registration
Statement may be inspected at the public reference facilities maintained by the
Commission as described below, and copies of all or any part thereof may be
obtained from such facilities upon payment of the prescribed fees.

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information filed by the
Company can be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549, and at the regional offices of the Commission at 500 West Madison
Street, Suite 1400, Chicago, IL 60661-2511 and Seven World Trade Center, Suite
1300, New York, NY 10048. Copies of such material can also be obtained from the
Public Reference Section of the Commission at 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549 at prescribed rates. In addition, electronically filed
documents, including reports, proxy statements and other information filed by
the Company, can be obtained from the Commission's Web site at
http://www.sec.gov. The Common Stock of the Company is quoted on the Nasdaq
National Market. Reports, proxy statements and other information concerning the
Company can be inspected at the offices of the National Association of
Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C. 20006.

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

This Prospectus includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act. All
statements other than statements of historical facts included in this
Prospectus, including, without limitation, statements under "Risk Factors,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business" regarding the Company's financial position, business
strategy and plans and objectives of management of the Company for future
operations, are forward-looking statements. Although the Company believes that
the expectations reflected in such forward-looking statements are reasonable, it
can give no assurance that such expectations will prove to have been correct.
Important factors that could cause actual results to differ materially from the
Company's expectations are disclosed under "Risk Factors" and elsewhere in this
Prospectus, including, without limitation, in conjunction with the
forward-looking statements included in this Prospectus. All subsequent written
and oral forward-looking statements attributable to the Company or persons
acting on its behalf are expressly qualified in their entirety by this section.

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

IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS AND SELLING GROUP
MEMBERS OR THEIR AFFILIATES MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN
THE COMMON STOCK OF THE COMPANY ON THE NASDAQ NATIONAL MARKET IN ACCORDANCE WITH
RULE 10B-6A UNDER THE SECURITIES EXCHANGE ACT OF 1934. SEE "UNDERWRITING."

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

UNITED DENTAL CARE(R) IS A REGISTERED TRADEMARK OF UNITED DENTAL CARE, INC.

2
<PAGE> 4

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and financial statements and notes thereto appearing elsewhere in
this Prospectus. This Prospectus contains forward-looking statements that
involve risks and uncertainties. The Company's actual results may differ
significantly from the results discussed in the forward-looking statements. See
"Disclosure Regarding Forward-Looking Statements."

THE COMPANY

UDC is a managed dental benefits company that is licensed to operate
prepaid dental plans in 25 states and, as of June 30, 1996, provided dental
coverage to approximately 1,175,000 members. The Company offers a comprehensive
range of prepaid dental plans capable of meeting the needs of employer groups of
all sizes as well as individuals. UDC's dentist networks, as of June 30, 1996,
consisted of approximately 3,000 general dentists as well as specialist dentists
providing a broad range of dental services. The Company markets its services
through multiple distribution channels, including a direct sales force of over
70 persons, independent brokers and third-party arrangements with medical health
maintenance organizations ("HMOs"). The Company recently entered into agreements
to acquire five managed dental benefits companies and a multi-state dental
referral plan having approximately 500,000 members in the aggregate at June 30,
1996. See "Pending and Recent Acquisitions."

Managed dental benefits plans are usually offered as an alternative to
traditional dental indemnity insurance, although the Company has the capability
of offering dual choice plans that provide both prepaid and indemnity plans.
Industry sources report that prepaid dental plans are typically priced 20% or
more below comparable indemnity benefits based on 1992 indemnity-industry
statistical information. Prepaid dental plans are offered by employers to
employees frequently on a voluntary-participation basis with all or part of the
premium being paid by the employee. At the time of enrollment, participating
employees and dependents become members of the prepaid dental plan and, under
most of the Company's plans, each member is entitled to select his or her own
dentist from the dentist network. The Company pays the network dentist a fixed
monthly amount, or capitation payment, for each member who selected that
dentist, regardless of the services rendered in any particular month. In
addition, the dentist is paid a separate fee, or copayment, by the member at the
time of service for many of the dental services covered under the plan. Under
the prepaid dental plans of the Company, virtually all covered dental services
are provided through these capitation arrangements, in which the Company bears
little financial risk for either utilization levels or cost of services.

Based on data compiled by the U.S. Office of National Health Statistics,
total expenditures for dental care in the United States grew from approximately
$14.4 billion in 1980 to approximately $43.2 billion in 1993. The number of
people with dental benefits was estimated by the National Association of Dental
Plans to be approximately 125 million in 1995, of which approximately 16% were
covered under a prepaid dental plan. Prepaid dental plans have reportedly grown
from approximately 10.4 million covered members in 1991 to an estimated 19.5
million in 1995, an annual compounded growth rate of approximately 17.0%. The
Company believes the relatively high growth rate for prepaid dental plans is
attributable to: (i) the greater acceptance of managed care by employers and
employees; (ii) the significant price advantage of prepaid dental plans relative
to indemnity plans; (iii) the cost effectiveness to employers of prepaid dental
plans as an employee benefit; and (iv) the growing acceptance of capitated
dental plans by dentists, resulting in improved accessibility and convenience
for members. The Company believes there will continue to be significant growth
for the managed dental benefits industry.

The Company's objective is to be the leading managed dental benefits
company in the United States by both increasing its market share in its current
markets and selectively entering new markets. The Company believes this
objective can be achieved by: (i) offering a full range of prepaid dental plan
benefits designed to meet the needs of small and large employers as well as
individuals; (ii) ensuring quality dental care through a locally managed network
of private practice dentists; (iii) utilizing multiple distribution channels to
access single-market and multi-state employer groups and members of third-party
HMOs; (iv) providing high levels of customer service through local service
representatives and regional customer service centers; and (v) acquiring other
managed dental benefits companies.

3
<PAGE> 5

Unless the context otherwise requires, references in this Prospectus to
"UDC" or the "Company" refer to United Dental Care, Inc. and its subsidiaries.
The Company's executive offices are located at 14755 Preston Road, Suite 300,
Dallas, Texas 75240, and its telephone number is (972) 458-7474.

PENDING AND RECENT ACQUISITIONS

The Company recently entered into definitive agreements to acquire five
managed dental benefits companies operating prepaid dental plans in New Jersey,
Florida, Oklahoma, Missouri, Kansas and Michigan having approximately 440,000
members in the aggregate at June 30, 1996. In addition, the Company recently
entered into a definitive agreement to acquire a company operating a multi-state
dental referral plan having approximately 60,000 members at June 30, 1996. The
companies to be acquired had combined revenues of approximately $35.9 million
for the year ended December 31, 1995 and $21.3 million for the six months ended
June 30, 1996. Upon completion of the acquisitions, the Company will be licensed
to operate prepaid dental plans in four additional states and will be licensed
to operate an indemnity plan in one additional state. The acquisitions are
subject to various conditions, including receipt of regulatory approvals. There
can be no assurance as to whether or when such acquisitions will be completed.
The proposed acquisitions are referred to in this Prospectus as the "Pending
Acquisitions."

Effective February 1, 1996, the Company acquired Associated Health Plans,
Inc., a managed dental benefits company that operated prepaid dental plans in
Arizona having approximately 220,000 members at the time of the acquisition, and
an affiliated management company (collectively, "AHP"). Effective November 1,
1995, the Company acquired U.S. Dental Management, Inc. ("US Dental"), a managed
dental benefits company that operated prepaid dental plans in Arizona, New
Mexico, Nebraska and Colorado having approximately 163,000 members at the time
of the acquisition and that administered a prepaid dental plan owned by a third
party in Nevada. See "Pending and Recent Acquisitions."

RISK FACTORS

The Common Stock offered hereby involves a high degree of risk. See "Risk
Factors."

THE OFFERING

<TABLE>
<S> <C>
Common Stock offered by the Company................... 2,000,000 shares
Common Stock to be outstanding after the offering..... 8,908,416 shares(1)
Use of proceeds....................................... To fund the Pending Acquisitions, to
pay existing indebtedness and for
general corporate purposes, including
working capital. See "Use of
Proceeds."
Nasdaq National Market symbol......................... UDCI
</TABLE>

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(1) Excludes 617,000 shares of Common Stock issuable upon the exercise of stock
options outstanding at June 30, 1996 at a weighted average exercise price of
$22.42 per share. Also excludes 40,000 shares of Common Stock issuable upon
the exercise of warrants outstanding at June 30, 1996 at a purchase price of
$6.00 per share. A total of 48,000 of these stock options and warrants are
exercisable at the date of this Prospectus. See "Management -- Stock Option
Plans" and "Certain Transactions."

Except as otherwise specified, all information in this Prospectus assumes
no exercise of the Underwriters' over-allotment option. See "Underwriting."
Except as otherwise noted, (i) information in this Prospectus regarding the
Company reflects a two-for-one stock split effected in the form of a stock
dividend on July 17, 1995, (ii) information in this Prospectus regarding the
Company and its subsidiaries excludes information regarding the companies to be
acquired in the Pending Acquisitions and (iii) pro forma information in this
Prospectus (other than pro forma membership data) does not include financial
information regarding Independent Dental Plan, Inc. ("Independent"), a company
to be acquired in the Pending Acquisitions. See "Pending and Recent
Acquisitions."

4
<PAGE> 6

SUMMARY CONSOLIDATED FINANCIAL AND STATISTICAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AND STATISTICAL DATA)

<TABLE>
<CAPTION>
PRO FORMA
FOR THE PRO FORMA AS PRO FORMA AS
US DENTAL ADJUSTED FOR ADJUSTED FOR
AND AHP THE PENDING THE PENDING
ACQUISITIONS ACQUISITIONS SIX MONTHS ENDED ACQUISITIONS
YEAR ENDED DECEMBER 31, YEAR ENDED YEAR ENDED JUNE 30, SIX MONTHS
--------------------------- DECEMBER 31, DECEMBER 31, ----------------- ENDED JUNE
1993 1994 1995(1) 1995(2) 1995(3) 1995 1996(4) 30, 1996(5)
------- ------- ------- ------------ ------------ ------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Managed benefits............... $16,805 $31,607 $61,352 $ 86,606 $ 115,133 $29,175 $43,118 $ 64,157
Indemnity...................... -- 5,514 16,622 16,622 22,093 8,459 7,422 7,600
Interest income and other
revenue...................... 173 254 1,255 1,462 1,714 393 585 869
------- ------- ------- -------- -------- ------- ------- -------
Total revenues............... 16,978 37,375 79,229 104,690 138,940 38,027 51,125 72,626
Income before Federal income
taxes, cumulative effect of a
change in accounting
principle and extraordinary
charge....................... 2,879 3,352 5,862 8,391 9,891 2,051 4,828 6,590
Net income applicable to common
stock........................ 1,863 2,096 3,589 5,137 5,689 1,251 3,056 3,922
Net income per common share.... $ 0.40 $ 0.44 $ 0.66 $ 0.94 $ 0.76 $ 0.26 $ 0.42 $ 0.43
Weighted average common shares
outstanding.................. 4,662 4,717 5,449 5,449 7,449 4,740 7,222 9,222
STATISTICAL DATA:
Members (in thousands):
Managed benefits............. 214 642 855 1,075 1,515 675 1,095 1,535
Indemnity.................... -- 95 76 76 76 93 76 76
Dental referral.............. -- 4 6 6 66 4 4 64
Total.................... 214 741 937 1,157 1,657 772 1,175 1,675
Number of network general
dentists....................... 545 2,530 2,872 2,485 3,000
</TABLE>

<TABLE>
<CAPTION>
JUNE 30, 1996
-----------------------------------------------
PRO FORMA
AS ADJUSTED
FOR THE
PENDING
ACTUAL(4) AS ADJUSTED(6) ACQUISITIONS(7)
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<S> <C> <C> <C>
BALANCE SHEET DATA:
Working capital..................................................... $ 18,449 $ 85,176 $ 30,107
Total assets........................................................ 76,142 141,891 145,944
Total debt.......................................................... 4,576 -- --
Stockholders' equity................................................ 64,671 134,996 134,996
</TABLE>

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(1) Included in the historical consolidated statement of operations of the
Company for the year ended December 31, 1995 are the results of operations
of US Dental after October 31, 1995. See "Pending and Recent
Acquisitions -- Recent Acquisitions" and the Company's Consolidated
Financial Statements and the Notes thereto.
(2) Pro forma to give effect to: (i) the US Dental and AHP acquisitions; and
(ii) the Company's initial public offering that occurred in September 1995,
as if all of such transactions had occurred at January 1, 1995. See "Pending
and Recent Acquisitions -- Recent Acquisitions," "Financial Statements -- US
Dental and AHP" and "Unaudited Pro Forma Condensed Consolidated Financial
Statements."
(3) Adjusted to give effect to: (i) the US Dental and AHP acquisitions; (ii) the
Company's initial public offering that occurred in September 1995; (iii) the
issuance of the 2,000,000 shares of Common Stock offered by the Company
hereby at an assumed offering price of $37.50 per share and the payment of
existing indebtedness; and (iv) the completion of the Pending Acquisitions,
as if all of such transactions had occurred at January 1, 1995. See "Use of
Proceeds," "Pending and Recent Acquisitions," "Financial Statements -- US
Dental and AHP," "Financial Statements -- OraCare, UICI and KCDC" and
"Unaudited Pro Forma Condensed Combined Financial Statements."
(4) Included in the historical consolidated statement of operations of the
Company for the six months ended June 30, 1996 are the results of operations
of AHP after January 31, 1996. The June 30, 1996 historical consolidated
balance sheet of the Company includes AHP. See "Pending and Recent
Acquisitions -- Recent Acquisitions" and the Company's Consolidated
Financial Statements and the Notes thereto.
(5) Adjusted to give effect to: (i) the AHP acquisition; (ii) the issuance of
the 2,000,000 shares of Common Stock offered by the Company hereby at an
assumed offering price of $37.50 per share and the payment of existing
indebtedness; and (iii) the completion of the Pending Acquisitions, as if
all of such transactions had occurred at January 1, 1995. See "Use of
Proceeds," "Pending and Recent Acquisitions," "Financial Statements -- AHP,"
"Financial Statements -- OraCare, UICI and KCDC" and "Unaudited Pro Forma
Condensed Combined Financial Statements."
(6) Adjusted to give effect to the issuance of the 2,000,000 shares of Common
Stock offered by the Company hereby at an assumed offering price of $37.50
per share and the payment of existing indebtedness, as if such transactions
had occurred at June 30, 1996.
(7) Adjusted to give effect to: (i) the issuance of the 2,000,000 shares of
Common Stock offered by the Company hereby at an assumed offering price of
$37.50 per share and the payment of existing indebtedness; and (ii) the
completion of the Pending Acquisitions, as if all of such transactions had
occurred at June 30, 1996. See "Use of Proceeds," "Pending and Recent
Acquisitions," "Financial Statements -- OraCare, UICI and KCDC" and
"Unaudited Pro Forma Condensed Combined Financial Statements."

5
<PAGE> 7

RISK FACTORS

In addition to the other information in this Prospectus, the following
factors should be considered carefully in evaluating an investment in the shares
of Common Stock offered by this Prospectus. This Prospectus contains
forward-looking statements which involve risks and uncertainties. The Company's
actual results could differ materially from those anticipated in these
forward-looking statements as a result of certain factors, including those set
forth in the following risk factors and elsewhere in this Prospectus. See
"Disclosure Regarding Forward-Looking Statements."

Pending and Future Acquisitions. The Company's growth strategy is dependent
in part upon the Company's ability to pursue and complete strategic acquisition
opportunities as they arise. The necessity for regulatory approvals prior to an
acquisition as well as the substantial amount of time and effort required to
evaluate and negotiate a proposed acquisition may result in substantial
uncertainty as to whether a proposed acquisition will be successfully
consummated. In addition, even after an acquisition is consummated, no assurance
can be given that management will be able to successfully and efficiently
integrate and operate the acquired business or that unforeseen problems will not
arise requiring financial commitments or management efforts not contemplated in
connection with such acquisition. The Pending Acquisitions are subject to
receipt of regulatory approvals and other conditions that may not occur or that
may occur only if the terms of the acquisition vary from the terms described
herein. No assurance can be given that the Company will be able to successfully
implement its growth strategy through acquisitions, or that any acquisition,
including the Pending Acquisitions, will be consummated and successfully
integrated into the Company's operations. Any delay or failure to successfully
assimilate such acquisitions could result in cash expenditures and increased
demands on management's time and could have a material adverse effect on the
Company's business, financial condition and results of operations and on the
price of the Common Stock. One of the Pending Acquisitions involves a dental
practice management company which manages dental clinics operated by a licensed
dentist. The laws of the state in which the dental clinics are located prohibit
dentists from sharing fees with non-dentists and prohibits non-dentist entities
from practicing dentistry. Although the Company believes the operations of the
dental practice company are and will be in material compliance with existing
applicable laws, the structure of the management relationship between the
Company and the dentist has not been the subject of any state regulatory
interpretations. In addition, the Company has not previously engaged in the
dental practice management business. See "Business -- Business Strategy" and
"Pending and Recent Acquisitions."

Regulation. State insurance laws and other governmental regulations
establish various licensing, operational, financial and other requirements
relating to the prepaid dental plan business. State insurance departments and
other regulatory agencies are typically empowered to interpret such laws and
promulgate regulations applicable to the prepaid dental plan business. The laws
and regulations relating to the health care industry in general, and prepaid
dental plans specifically, are rapidly developing and have been the subject of
numerous past and present proposals which, if adopted, could adversely affect
the Company's business. Such proposals have included proposals that would
require the Company to admit "any willing provider" to its dental networks,
create mandatory minimum capitation payments to dental providers and specify
minimum loss ratios or mandate schedules of benefits. In addition, the Company's
insurance company subsidiary is subject to numerous laws and regulations
applicable to insurance companies generally. The Company is unable to predict
the extent to which changes to existing laws and regulations will be adopted or
the effect that any such changes may have on the Company's business. The
Company's ability to conduct its business in additional states is subject to
regulatory approvals required in connection with either acquisitions of existing
dental plan businesses or the application of the Company to conduct its existing
business in additional states. Approvals to acquire another licensed prepaid
dental plan business often require six months or longer to obtain, while
licenses and approvals necessary to commence operations of the Company's
existing business in an additional state can require two years or longer to
obtain. In addition, no assurance can be given that the Company's applications
for any such licenses or approvals will be granted. In the event any such
licenses or approvals are not granted, the Company's plans to expand in
additional states would be adversely affected. See "Business -- Business
Strategy" and "-- Government Regulation."

Medicare/Medicaid Programs. The Company contracts with certain medical HMOs
that provide health services to members under the Medicare or Medicaid programs
administered by certain state agencies. The

6
<PAGE> 8

Company provides the dental benefits coverage under such plans of the medical
HMOs. The medical HMOs receive reimbursement under either the Medicare or
Medicaid programs for the benefits provided. As a result, the availability of
such reimbursement or decreases in the level of reimbursement or changes in
regulatory requirements could have a significant impact on the decisions of the
medical HMOs to continue to offer dental benefits. In addition, in the event
that the contracts between such medical HMOs and the state agencies are
terminated or not renewed, such termination or nonrenewal would also terminate
the Company's contract with such medical HMO as a provider for dental benefits.
The membership of one of the Pending Acquisitions consists primarily of Medicaid
members of medical HMOs. See "Business -- Government Regulation."

Competition. The Company competes not only with other companies offering
prepaid dental plans similar to those offered by the Company, but also with
numerous other types of businesses in the health care industry, such as
insurance companies offering both prepaid dental plans and indemnity insurance,
medical HMOs offering dental benefit plans, self-funded employer plans,
preferred provider organizations ("PPOs") and dental referral plans. The Company
believes that the competition from all of such sources will continue to increase
in the future and that insurance companies and HMOs in particular will continue
to seek to enter the managed dental benefits business and expand their dental
care markets. Many of the Company's competitors are better known to the public
and have substantially greater financial and other resources than those of the
Company. Price considerations have been a significant competitive factor in the
past and the Company believes pricing will continue to be a significant
competitive factor in the future, especially with respect to contracts awarded
on the basis of competitive bidding. No assurance can be given that the Company
will be able to compete effectively in the future. See
"Business -- Competition."

Dentist Relationships. The Company's business strategy is dependent to a
large extent upon the Company's continued maintenance of a large network of
quality general and specialty dentists in each of the Company's markets.
Generally, the Company and network dentists enter into nonexclusive contracts
that can be terminated by either party with limited notice (generally 90 days).
Primarily for such reasons, the Company did not allocate for financial statement
purposes any portion of the consideration paid in the acquisitions of US Dental
and AHP to the dentist networks of the acquired companies. The Company's
business may be adversely affected if the Company is unable to establish and
maintain contracts with an adequate number of dentists in any market. See
"Business -- Dentist Networks" and "Pending and Recent
Acquisitions -- Acquisition Accounting Principles."

Specialty Care and Indemnity Benefits. Under many of the prepaid dental
plans offered by the Company, specialist dental care by specialist dentists is
made available to members. Specialist dentists are reimbursed by the Company on
a discounted, fee-for-service basis and are not reimbursed on a capitated basis.
Accordingly, the Company retains the risk for the payment of specialist care
benefits in such situations. In the event that the utilization of specialist
care benefits increases under the outstanding plans of the Company, it could
substantially adversely affect the profitability of the Company. With the
acquisition of United Dental Care Insurance Company ("UDCIC") as part of the
acquisition of International Dental Health, Inc. ("IDH") in 1994, the Company
for the first time became involved in the operation of an indemnity insurance
carrier subject to underwriting risk. The Company's present strategy regarding
UDCIC is, in situations where the employer declines to use the Company's dual
choice products, to primarily offer its indemnity policy to employer groups with
greater than 250 employees. To the extent additional members select the UDCIC
indemnity policy, UDCIC would become subject to additional underwriting risk.
One of the Pending Acquisitions involves the acquisition of another indemnity
insurance company through which a prepaid dental plan is operated in one state.
Capital requirements applicable to insurers such as UDCIC may require capital
contributions in the future to the extent earnings from operations are
insufficient to satisfy these requirements. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources."

Arizona Regulatory Issues. On May 24, 1996, the Arizona Department of
Insurance filed a Notice of Administrative Hearing against the Company alleging
that the Company consummated its acquisition of AHP in January 1996 without
complying with the requirements of the Arizona Insurance Holding Company Act
(the "Act"). AHP is licensed in Arizona as a prepaid dental plan organization.
The Company did not make a filing under the Act because the Company's
interpretation is that the Act does not apply to AHP since AHP is

7
<PAGE> 9

not an "insurer" as defined by and subject to the Act. The Notice seeks fines of
up to $50,000 for each violation against the Company and any officer or director
of the Company who knowingly violated the Act, and also seeks an order directing
compliance with the Act in connection with the AHP acquisition. The Arizona
Department of Insurance has broad powers to seek other remedies, including
injunctive relief and license revocation. There can be no assurance as to what
relief may ultimately be sought or obtained by the Arizona Department of
Insurance. The Company has filed an answer denying the allegations. A final
determination against the Company could have a material adverse effect on the
Company. See "Business -- Legal Proceedings."

Anti-takeover Effect of Regulatory and Charter Provisions. State insurance
laws applicable to the Company typically require regulatory approval for any
proposed change of control of the Company. Generally, a change of control would
be deemed to result if anyone acquired 10% or more of the outstanding voting
stock of the Company, although regulatory authorities generally have discretion
to determine whether a change of control in a particular case would occur
whether or not 10% of the voting stock of the Company is acquired. Therefore, no
one can acquire beneficial ownership of 10% or more of the outstanding Common
Stock of the Company, whether pursuant to this offering, open market purchases
or otherwise, without obtaining prior regulatory approval. Such regulatory
approval requirement could also apply to the solicitation of proxies to vote 10%
or more of the outstanding Common Stock and therefore could impair the ability
of a stockholder to conduct a proxy contest. The Company could seek a regulatory
hearing with respect to any stockholder proposal to acquire beneficial ownership
or proxies for 10% or more of the Company's Common Stock, and any stockholder
that fails to obtain regulatory approval in such circumstances may be subject to
regulatory sanctions including the possibility of a divestiture order. In
addition, failure to comply with such regulatory requirements could result in
adverse consequences to the Company. Certain provisions of the Company's
Certificate of Incorporation and Bylaws, certain sections of the Delaware
General Corporation Law, and the ability of the Board of Directors to issue
shares of Preferred Stock and to establish the voting rights, preferences and
other terms thereof without further action by the stockholders, may be deemed to
have an anti-takeover effect and may discourage takeover attempts not first
approved by the Board of Directors and also could delay or frustrate the removal
of incumbent directors, even if such takeover or removal would be beneficial to
stockholders. These provisions also could discourage or make more difficult a
merger, tender offer or proxy contest, even if such events would be beneficial
to the interests of stockholders. The Delaware General Corporation Law imposes
restrictions upon certain acquirors (including their affiliates and associates)
of 15% or more of the Company's Common Stock. See "Business -- Government
Regulation," "Description of Capital Stock -- Certain Provisions of Certificate
of Incorporation and Bylaws" and "-- Business Combinations."

Possible Control by Existing Stockholders. Upon consummation of this
offering, the Company's executive officers and directors will, in the aggregate,
beneficially own approximately 21.3% of the then outstanding Common Stock
(approximately 20.0% if the Underwriters' over-allotment option is exercised in
full). As a result, these stockholders, acting together, will be able to
influence significantly and possibly control most matters requiring approval by
the stockholders of the Company, including the election of directors. Such a
concentration of ownership may have the effect of delaying or preventing a
change in control of the Company, including transactions in which stockholders
might otherwise receive a premium for their shares over then current market
prices. See "Management," "Principal Stockholders" and "Description of Capital
Stock."

Dividends. The Company has never paid cash dividends on its Common Stock.
The Company currently intends to retain earnings to finance the growth and
development of its business and does not anticipate paying cash dividends in the
foreseeable future. In addition, future bank borrowings may limit the ability of
the Company to pay, or may prohibit the payment of, cash dividends. Applicable
regulatory requirements may also restrict the ability of certain operating
subsidiaries of the Company to pay dividends. See "Dividend Policy,"
"Capitalization," "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Credit Facilities," and "Business -- Governmental
Regulation."

Risks Associated with Intangible Assets. At June 30, 1996, approximately
$41.7 million, or 55.0%, of the Company's total assets were intangible assets.
As adjusted for this offering, approximately 29.0% of the Company's total assets
at June 30, 1996 would have been intangible assets. Giving effect to the Pending

8
<PAGE> 10

Acquisitions as if such transactions occurred at June 30, 1996, approximately
$95.9 million, or 65.7%, of the Company's total assets (as adjusted for this
offering) would have been intangible assets. In the event of a sale or
liquidation of the Company, there could be no assurance that the value of such
intangible assets would be realized. In addition, any significant decrease in
the value of such intangible assets could have a material adverse effect on the
Company. See "Pending and Recent Acquisitions" and "Unaudited Pro Forma
Condensed Combined Financial Statements."

Possible Volatility of Stock Price. The stock market has experienced
significant price and volume fluctuations that have affected the market price
for many health care companies and that have often been unrelated to the
operating performance of such companies. The trading price of the Common Stock
may also be subject to significant fluctuations in response to variations in
quarterly operating results, the gain or loss of significant contracts, changes
in management, future announcements concerning the Company, legislative or
regulatory changes, general trends in the industry and other events or factors.
See "Business -- Competition," "-- Government Regulation" and "Underwriting."

9
<PAGE> 11

USE OF PROCEEDS

The net proceeds from the sale of the 2,000,000 shares of Common Stock
offered by the Company hereby are estimated to be $70.3 million, based upon an
assumed offering price of $37.50 per share (the last reported sale price of the
Common Stock on the Nasdaq National Market on September 13, 1996) and after
deducting estimated underwriting discounts and commissions and estimated
offering expenses payable by the Company. The Company intends to use
approximately $58.5 million of such net proceeds to fund the Pending
Acquisitions and approximately $4.6 million to pay certain amounts owed under
agreements entered into in connection with the IDH, US Dental and AHP
acquisitions. The remaining net proceeds to the Company will be used for general
corporate purposes including future acquisitions and working capital. The
Company currently has no agreements or understandings relating to any
acquisitions other than the Pending Acquisitions. Until needed, the net proceeds
of this offering will be invested in short-term investment grade, interest
bearing obligations. See "Pending and Recent Acquisitions" and "Certain
Transactions."

Most of the Pending Acquisitions are anticipated to be completed after the
completion of this offering. However, none of the Pending Acquisitions are
subject to completion of this offering, and this offering is not subject to
completion of any of the Pending Acquisitions. The Company intends to obtain a
commitment for a $35 million line of credit with an unaffiliated bank to finance
certain of the Pending Acquisitions if they are consummated prior to completion
of this offering. The Company believes based on discussions with such bank that
it will be able to obtain such line of credit. The Company also believes that it
will be able to increase such line of credit to $50 million if necessary to
finance, together with available cash of the Company, all the Pending
Acquisitions if they are consummated prior to completion of this offering. If
any of the Pending Acquisitions are consummated prior to the completion of this
offering, the Company intends to utilize such line of credit to fund such
acquisitions. In that event, the loan will be repaid in full out of the net
proceeds of this offering. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Credit Facilities" and "Pending
and Recent Acquisitions."

10
<PAGE> 12

PRICE RANGE OF COMMON STOCK

The Common Stock of the Company has been included for quotation in the
Nasdaq National Market under the symbol "UDCI" since the Company's initial
public offering of Common Stock on September 21, 1995. Prior to that time, there
was no public market for the Common Stock. The following tables set forth the
high and low closing prices for the Common Stock for the periods indicated as
reported by the Nasdaq National Market:

<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
1995:
Third Quarter (from September 22, 1995)................................ $30.00 $27.75
Fourth Quarter......................................................... 41.13 29.50
1996:
First Quarter.......................................................... $43.75 $34.25
Second Quarter......................................................... 44.25 37.25
Third Quarter (through September 13, 1996)............................. 45.75 32.75
</TABLE>

On September 13, 1996, the last reported sale price of the Common Stock was
$37.50 per share, and there were approximately 93 holders of record.

DIVIDEND POLICY

The Company has not paid or declared any cash dividends on its Common Stock
since its inception. The Company currently intends to retain all future earnings
for use in the expansion and operation of its business. In addition, future
borrowings may limit the Company's ability to pay cash dividends. It is
anticipated that the line of credit financing that may be used to finance the
Pending Acquisitions will contain a restriction on the payment of dividends. Any
payments of cash dividends in the future will depend upon the financial
condition, capital requirements and earnings of the Company, limitations on
dividend payments by subsidiaries of the Company under applicable state laws,
and such other factors as the Board of Directors may deem relevant. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources," "-- Credit Facilities" and
"Business -- Government Regulation."

11
<PAGE> 13

CAPITALIZATION

The following table sets forth the capitalization of the Company at June
30, 1996, and (i) as adjusted to give effect to the sale of the 2,000,000 shares
of Common Stock by the Company hereby at an assumed offering price of $37.50 per
share, after deducting underwriting discounts and commissions and estimated
offering expenses payable by the Company and (ii) as further adjusted to give
pro forma effect to the Pending Acquisitions. This table should be read in
conjunction with the Company's Consolidated Financial Statements and Notes
thereto and the Unaudited Pro Forma Condensed Combined Financial Statements and
Notes thereto that appear elsewhere in this Prospectus. See "Use of Proceeds,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources" and "Pending and Recent
Acquisitions."

<TABLE>
<CAPTION>
JUNE 30, 1996
-----------------------------------
PRO FORMA
AS ADJUSTED
FOR THE
AS PENDING
ACTUAL ADJUSTED ACQUISITIONS
------- -------- ------------
(IN THOUSANDS)
<S> <C> <C> <C>
Cash and short-term investments.............................. $20,345 $ 86,094 $ 33,125
======= ======== ========
Total long-term debt (including current maturities).......... 4,576 -- --
------- -------- --------
Stockholders' equity:
Preferred Stock, $.10 par value: 500,000 shares authorized;
no shares issued and outstanding........................ -- -- --
Common Stock, $.10 par value: 15,000,000 shares authorized;
6,908,416 shares issued and outstanding; 8,908,416
shares issued and outstanding as adjusted(1)............ 691 891 891
Additional paid-in capital................................. 52,100 122,225 122,225
Retained earnings.......................................... 11,880 11,880 11,880
------- -------- --------
Total stockholders' equity......................... 64,671 134,996 134,996
------- -------- --------
Total capitalization.......................... $69,247 $134,996 $134,996
======= ======== ========
</TABLE>

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

12
<PAGE> 14

SELECTED FINANCIAL DATA

The selected financial data presented below for the Company for the years
ended December 31, 1993, 1994 and 1995, and at December 31, 1994 and 1995, are
derived from the audited consolidated financial statements of the Company
included elsewhere in this Prospectus. The selected financial data presented
below for the Company for the six months ended June 30, 1995 and 1996, and at
June 30, 1996, are derived from the unaudited consolidated financial statements
of the Company included elsewhere in this Prospectus. The selected financial
data presented below for the Company for each of the years ended December 31,
1991 and 1992, and at December 31, 1991, 1992 and 1993, are derived from the
audited consolidated financial statements of the Company not included herein.
The unaudited financial data includes all adjustments consisting of normal
recurring adjustments which are considered necessary for a fair presentation of
the financial position and results of operations of the Company for the periods
covered thereby. Results for interim periods are not necessarily indicative of
those to be expected for the year. This data is not necessarily indicative of
the Company's future performance. The selected financial data set forth below
should be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the Company's Consolidated
Financial Statements and the related Notes thereto included herein.

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
--------------------------------------------------- ------------------
1991 1992 1993 1994 1995(1) 1995 1996(2)
------- ------- ------- ------- ------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:....................
Revenues:
Managed benefits............................. $10,846 $13,854 $16,805 $31,607 $61,352 $29,175 $43,118
Indemnity.................................... -- -- -- 5,514 16,622 8,459 7,422
Interest income and other revenue............ 130 147 173 254 1,255 393 585
------- ------- ------- ------- ------- ------- -------
Total revenues........................... 10,976 14,001 16,978 37,375 79,229 38,027 51,125
Dental services expense:
Managed benefits............................. 4,692 5,934 7,283 15,559 33,068 15,775 25,127
Indemnity.................................... -- -- -- 4,567 13,682 7,035 5,547
------- ------- ------- ------- ------- ------- -------
Total dental services expense............ 4,692 5,934 7,283 20,126 46,750 22,810 30,674
------- ------- ------- ------- ------- ------- -------
Gross margin................................... 6,284 8,067 9,695 17,249 32,479 15,217 20,451
Sales and marketing............................ 2,105 2,445 3,025 5,756 9,637 5,012 5,726
General and administrative..................... 2,571 3,101 3,632 7,062 14,785 6,988 8,685
Depreciation and amortization.................. 157 324 159 541 1,190 557 1,003
Acquisition-related expenses................... -- -- -- 178 -- -- --
Interest expense............................... -- -- -- 360 1,005 609 209
------- ------- ------- ------- ------- ------- -------
Income before Federal income taxes and
cumulative effect of a change in accounting
principle and extraordinary charge........... 1,451 2,197 2,879 3,352 5,862 2,051 4,828
Provision for Federal income taxes............. 493 747 934 1,256 2,131 800 1,772
------- ------- ------- ------- ------- ------- -------
Income before cumulative effect of a change in
accounting principle and extraordinary
charge....................................... 958 1,450 1,945 2,096 3,731 1,251 3,056
Preferred stock dividends...................... 96 58 38 -- -- -- --
Cumulative effect of a change in accounting
principle.................................... -- -- 44 -- -- -- --
Extraordinary charge, net of tax............... -- -- -- -- 142 -- --
------- ------- ------- ------- ------- ------- -------
Net income applicable to common stock.......... $ 862 $ 1,392 $ 1,863 $ 2,096 $ 3,589 $ 1,251 $ 3,056
======= ======= ======= ======= ======= ======= =======
Net income per common share.................... $ 0.20 $ 0.30 $ 0.40 $ 0.44 $ 0.66 $ 0.26 $ 0.42
Weighted average common shares outstanding..... 4,410 4,575 4,662 4,717 5,449 4,740 7,222
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------------------ JUNE 30,
1991 1992 1993 1994 1995 1996
------ ------ ------ ------- ------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital............................................ $2,241 $3,474 $3,907 $ 1,365 $30,892 $18,449
Total assets............................................... 3,927 5,485 7,283 31,404 86,588 76,142
Total debt including current portion....................... -- -- -- 14,558 15,182 4,576
Stockholders' equity....................................... 3,278 4,795 6,730 8,974 61,600 64,671
</TABLE>

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

(2) Included in the historical consolidated statement of operations of the
Company for the six months ended June 30, 1996 are the results of operations
of AHP after January 31, 1996. See "Pending and Recent
Acquisitions -- Recent Acquisitions" and the Company's Consolidated
Financial Statements and the Notes thereto.

13
<PAGE> 15

SELECTED UNAUDITED PRO FORMA CONDENSED
FINANCIAL INFORMATION

The selected unaudited pro forma condensed financial information set forth
below gives effect to: (i) the US Dental and AHP acquisitions; (ii) the sale of
the 2,000,000 shares of Common Stock offered by the Company hereby and the
application of the net proceeds therefrom as described in "Use of Proceeds;" and
(iii) the Pending Acquisitions, excluding the acquisition of Independent. The
historical and unaudited pro forma financial information set forth below has
been derived from, and is qualified by reference to, the consolidated financial
statements of the Company, US Dental, AHP and the companies to be acquired in
the Pending Acquisitions, except Independent, and the unaudited pro forma
financial statements included elsewhere in this Prospectus and should be read in
conjunction with those financial statements and the notes thereto.

The pro forma financial information set forth below reflects certain
adjustments, including, among others, to record the amortization of goodwill and
other intangible assets resulting from the US Dental, AHP and the Pending
Acquisitions, except Independent. The information set forth below should be read
in conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations," and the Unaudited Pro Forma Condensed Consolidated
Financial Statements and Unaudited Pro Forma Condensed Combined Financial
Statements and the related Notes thereto included elsewhere in this Prospectus.
The pro forma financial information set forth below does not purport to
represent what the results of operations or financial condition of the Company
would actually have been if this offering and the transactions reflected therein
had in fact occurred on such dates or to project the future consolidated results
of operations or financial condition of the Company:

FOR THE YEAR ENDED DECEMBER 31, 1995:

<TABLE>
<CAPTION>
PRO FORMA FOR PRO FORMA AS
THE US DENTAL PENDING ADJUSTED FOR
UDC AND AHP ACQUISITIONS THE PENDING
ACTUAL(1) ACQUISITIONS(2) COMBINED ACQUISITIONS(3)
--------- --------------- ------------ ---------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Revenues:
Premiums earned and other revenues........................ $78,626 $ 104,034 $ 34,076 $ 138,110
Interest income........................................... 603 656 174 830
------- -------- -------- -------
Total revenues.......................................... 79,229 104,690 34,250 138,940
------- -------- -------- -------
Costs and expenses:
Dental services and claims expense........................ 46,750 65,049 19,177 84,226
Sales and marketing & general and administrative.......... 24,422 29,119 11,603 40,722
Depreciation and amortization............................. 1,190 2,131 1,870 4,001
Interest expense.......................................... 1,005 -- 100 100
------- -------- -------- -------
Total costs and expenses............................ 73,367 96,299 32,750 129,049
------- -------- -------- -------
Income before Federal income taxes and extraordinary
charge.................................................... 5,862 8,391 1,500 9,891
Provision for Federal income taxes.......................... 2,131 3,254 948 4,202
------- -------- -------- -------
Net income before extraordinary charge...................... $ 3,731 $ 5,137 $ 552 $ 5,689
======= ======== ======== =======
Net income per common share before extraordinary charge..... $ 0.68 $ 0.94 $ -- $ 0.76
Weighted average number of common shares outstanding........ 5,449 5,449 -- 7,449
</TABLE>

14
<PAGE> 16

FOR THE SIX MONTHS ENDED JUNE 30, 1996:

<TABLE>
<CAPTION>
PRO FORMA
PRO PENDING AS ADJUSTED
UDC FORMA AS ACQUISITIONS FOR THE PENDING
ACTUAL(4) ADJUSTED(5) COMBINED ACQUISITIONS(6)
--------- ----------- ------------ ---------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Revenues:
Premiums earned and other revenues......................... $50,728 $ 51,904 $ 20,248 $ 72,152
Interest income............................................ 397 399 75 474
------- -------- -------- --------
Total revenues....................................... 51,125 52,303 20,323 72,626
------- -------- -------- --------
Costs and expenses:
Dental services and claims expense......................... 30,674 31,555 11,207 42,762
Sales and marketing & general and administrative........... 14,411 14,663 6,615 21,278
Depreciation and amortization.............................. 1,003 1,059 929 1,988
Interest expense........................................... 209 -- 8 8
------- -------- -------- --------
Total costs and expenses............................. 46,297 47,277 18,759 66,036
------- -------- -------- --------
Income before Federal income taxes........................... 4,828 5,026 1,564 6,590
Provision for Federal income taxes........................... 1,772 1,850 818 2,668
------- -------- -------- --------
Net income applicable to common stock........................ $ 3,056 $ 3,176 $ 746 $ 3,922
------- -------- -------- --------
Net income per common share.................................. $ 0.42 $ 0.34 $ -- $ 0.43
Weighted average number of common shares outstanding......... 7,222 9,222 -- 9,222
As of June 30, 1996:
Total current assets......................................... $26,322 $ 92,071 $ 6,309 $ 41,055
Total assets................................................. 76,142 141,891 4,053 145,944
Total current liabilities.................................... 7,873 6,895 4,053 10,948
Total liabilities............................................ 11,471 6,895 4,053 10,948
Stockholders' equity......................................... 64,671 134,996 -- 134,996
</TABLE>

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

(2) Pro forma to give effect to: (i) the US Dental and AHP acquisitions; and
(ii) the Company's initial public offering that occurred in September 1995,
as if all of such transactions had occurred at January 1, 1995. See "Pending
and Recent Acquisitions -- Recent Acquisitions," "Financial Statements -- US
Dental and AHP" and "Unaudited Pro Forma Condensed Consolidated Financial
Statements."

(3) Adjusted to give effect to: (i) the US Dental and AHP acquisitions; (ii) the
Company's initial public offering that occurred in September 1995; (iii) the
issuance of the 2,000,000 shares of Common Stock offered by the Company
hereby at an assumed offering price of $37.50 per share and the payment of
existing indebtedness; and (iv) the completion of the Pending Acquisitions,
as if all of such transactions had occurred at January 1, 1995. See "Use of
Proceeds," "Pending and Recent Acquisitions," "Financial Statements -- US
Dental and AHP," "Financial Statements -- OraCare, UICI and KCDC" and
"Unaudited Pro Forma Condensed Combined Financial Statements."

(4) Included in the historical consolidated statement of operations of the
Company for the six months ended June 30, 1996 are the results of operations
of AHP after January 31, 1996. The June 30, 1996 historical consolidated
balance sheet of the Company includes AHP. See "Pending and Recent
Acquisitions -- Recent Acquisitions" and the Company's Consolidated
Financial Statements and the Notes thereto.

(5) Adjusted to give effect to: (i) the AHP acquisition as if such transaction
had occurred at January 1, 1995; and (ii) the issuance of the 2,000,000
shares of Common Stock offered by the Company hereby at an assumed offering
price of $37.50 per share and the payment of existing indebtedness, as if
all of such transactions had occurred at January 1, 1995 (or at June 30,
1996 for pro forma balance sheet information). See "Use of Proceeds,"
"Pending and Recent Acquisitions -- Recent Acquisitions," "Financial
Statements -- AHP" and "Unaudited Pro Forma Condensed Consolidated Financial
Statements."

(6) Adjusted to give effect to the Pending Acquisitions and the payment of
existing indebtedness, as if all of such transactions had occurred at
January 1, 1995 (or at June 30, 1996 for pro forma balance sheet
information). See "Use of Proceeds," "Pending and Recent Acquisitions,"
"Financial Statements -- OraCare, UICI and KCDC" and "Unaudited Pro Forma
Condensed Combined Financial Statements."

15
<PAGE> 17

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

This Prospectus contains forward-looking statements that involve risks and
uncertainties. The Company's actual results could differ materially from the
results discussed in the forward-looking statements. See "Disclosure Regarding
Forward-Looking Statements."

OVERVIEW

UDC is a managed dental benefits company that is licensed to operate
prepaid dental plans in 25 states and, as of June 30, 1996, provides dental
coverage to approximately 1,175,000 members. The Company offers a comprehensive
range of prepaid dental plans capable of meeting the needs of employer groups of
all sizes as well as individuals. UDC's dentist networks, as of June 30, 1996,
consisted of approximately 3,000 general dentists as well as specialist dentists
providing a broad range of dental services. The Company markets its services
through multiple distribution channels, including a direct sales force of over
70 persons, independent brokers and third-party arrangements with medical HMOs.

Membership

The following table sets forth the number of members in the Company's
managed benefit plans and indemnity plans and the growth rates
period-over-period as of the indicated dates:

<TABLE>
<CAPTION>
PRO PRO
DECEMBER 31, FORMA JUNE 30, FORMA
-------------------- DECEMBER 31, ------------- JUNE 30,
1993 1994 1995 1995(1) 1995 1996 1996(2)
---- ---- ---- ------------ ---- ----- --------
(IN THOUSANDS, EXCEPT PERCENTAGES)
<S> <C> <C> <C> <C> <C> <C> <C>
Membership:.............................................
Managed benefits...................................... 214 642 855 1,075 675 1,095 1,535
Indemnity............................................. -- 95 76 76 93 76 76
Dental referral....................................... -- 4 6 6 4 4 64
--- --- --- ----- --- ----- -----
Total membership................................ 214 741 937 1,157 772 1,175 1,675
--- --- --- ----- --- ----- -----
Total membership growth................................. -- 246% 26% 56% -- 52% 117%
Membership growth excluding acquisitions(3)............. -- 31% 4% -- -- 3% --
</TABLE>

- ---------------
(1) Pro forma to give effect to the AHP acquisition.
(2) Pro forma to give effect to the Pending Acquisitions.
(3) Excludes 460,000 members from IDH, 163,000 members from US Dental and
220,000 members from AHP, in each case for the periods in which the
acquisitions were made when compared to the prior period.

Total membership has grown at a compounded annual growth rate of 109% from
1993 to 1995. Membership growth is concentrated during employer group benefits
enrollment periods generally occurring in the first and fourth quarters of each
year. Membership growth excluding acquisitions has slowed as compared to the
prior periods primarily as a result of higher than expected sales force turnover
and management's emphasis on acquisition opportunities during the current year.
The Company is currently addressing these issues through increased focus on
mid-size and large employer groups, modified incentives in sales force
compensation and increased emphasis on sales through independent brokers.

The Company began operations in Texas in 1986 and expanded to Ohio in 1990
and Missouri in 1993. Since September 1994, the Company has acquired three
companies which had approximately 843,000 members in the aggregate as of the
respective acquisition dates. In addition, the Pending Acquisitions had
approximately 500,000 members in the aggregate as of June 30, 1996.

16
<PAGE> 18

Revenues

The Company's revenues are primarily derived from managed benefits premiums
for the prepaid dental plans offered by the Company and, to a lesser extent,
from indemnity premiums received by a subsidiary of the Company. The table below
sets forth the Company's revenue components as a percentage of total revenue for
the periods indicated:

<TABLE>
<CAPTION>
SIX MONTHS
ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
----------------------- ---------------
1993 1994 1995 1995 1996
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Premium revenue
Managed benefits.................................. 99.0% 84.6% 77.4% 76.8% 84.4%
Indemnity......................................... -- 14.7 21.0 22.2 14.5
Interest income and other revenue................... 1.0 0.7 1.6 1.0 1.1
----- ----- ----- ----- -----
- - - - -
Total..................................... 100.0% 100.0% 100.0% 100.0% 100.0%
===== ===== ===== ===== =====
</TABLE>

The revenue contribution from indemnity increased to 21.0% of revenues in
1995 primarily as a result of having a full year of revenues from the dental
indemnity insurance subsidiary acquired on September 1, 1994. The Company had no
indemnity premiums prior to that date. The Company expects revenue from
indemnity products to represent a lower percentage of total revenue in the
future as the Company continues to emphasize prepaid dental plans.

The Company's product pricing varies based on the type of plan, the
services provided (both general and specialty) and the amount of member
copayment. In addition, pricing varies by marketplace based on employer and
employee preference and competition. Pricing also may vary as a result of
different pricing terms of the plans in effect at companies when acquired by
UDC. As a result, per member pricing can fluctuate based on product mix,
shifting marketplace preferences and acquisition timing. As contracts are
renewed, the Company seeks to improve profitability on renewed plans by
increasing pricing, by offering plans with additional services at higher prices
and margins and by offering higher margin plans with fewer services at lower
costs. The Company estimates that premium rate increases have generally averaged
less than 3.5% per year during the three year period ended December 31, 1995.

Dental Services Expense Ratio

The following table sets forth the dental services expense ratios (dental
services expense as a percentage of premium revenue) for the Company's managed
benefit plans for the periods indicated:

<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED DECEMBER ENDED
31, JUNE 30,
---------------------- -------------
1993 1994 1995 1995 1996
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Managed benefits....................................... 43.3% 49.2% 53.9% 54.1% 58.3%
Indemnity.............................................. -- 82.8 82.3 83.2 74.7
Total dental services expense ratio.......... 43.3 54.2 60.0 60.6 60.7
</TABLE>

The dental services expense ratio for the managed benefit plans increased
during the last three fiscal years and the latest six month period as a result
of integrating acquisitions that had higher dental services expense ratios. Some
of the companies acquired by UDC offered plans that paid dentists a percentage
of premiums higher than the plans of UDC. The Company expects prepaid dental
services expense ratios on such plans to improve in the future as acquired
contracts are converted to the Company's plans and less profitable contracts are
not renewed. The dental services expense ratio for the indemnity plans has
improved in the six months ended June 30, 1996 as compared to the prior period
primarily as a result of the Company's efforts to standardize its indemnity
products and the Company's emphasis on product pricing and profitability.

17
<PAGE> 19

Prior Acquisitions

Effective September 1, 1994, the Company completed the acquisition of IDH
for $14.3 million in cash and additional payments of $5.4 million over the six
year period beginning September 16, 1994. Effective November 1, 1995, the
Company completed the acquisition of US Dental for $1.3 million in cash at the
closing, deferred payments of $1.0 million over the three-year period commencing
November 30, 1995, and a promissory note in the amount of $10.3 million which
was paid in January 1996. In addition, on February 1, 1996, the Company
completed the acquisition of AHP for $14.3 million in cash at the closing and
deferred payments of $600,000 over the three-year period commencing February 22,
1996. See "Pending and Recent Acquisitions -- Recent Acquisitions."

The acquisitions of IDH, US Dental and AHP increased the Company's
enrollment by approximately 843,000 members, further increased UDC's market
presence in existing markets, permitted the Company to offer its prepaid dental
plans in 17 new states and augmented the Company's product line by adding an
indemnity insurance business. These acquisitions have resulted in greater
penetration of new accounts within UDC's current markets and currently allow the
Company to market its dental benefit programs to a broader customer base on a
multi-state level.

RESULTS OF OPERATIONS

The following table sets forth for the periods indicated the percentages of
revenues represented by certain items reflected in the Company's consolidated
statements of operations:

<TABLE>
<CAPTION>
SIX MONTHS
ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
----------------------- --------------
1993 1994 1995 1995 1996
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Total revenue.......................................... 100.0% 100.0% 100.0% 100.0% 100.0%
----- ----- ----- ----- -----
Costs and expenses:
Dental services expense.............................. 42.9 53.8 59.0 60.0 60.0
----- ----- ----- ----- -----
Gross margin...................................... 57.1 46.2 41.0 40.0 40.0
Sales and marketing.................................. 17.8 15.4 12.2 13.2 11.2
General and administrative........................... 21.4 18.9 18.7 18.4 17.0
Depreciation and amortization........................ 0.9 1.4 1.5 1.4 2.0
Acquisition-related expenses......................... -- 0.5 -- -- --
Interest expense..................................... -- 1.0 1.2 1.6 0.4
----- ----- ----- ----- -----
Total costs and expenses.......................... 83.0 91.0 92.6 94.6 90.6
----- ----- ----- ----- -----
Net income before Federal income taxes, cumulative
effect of a change in accounting principle and
extraordinary charge................................. 17.0 9.0 7.4 5.4 9.4
Provision for Federal income taxes..................... 5.5 3.4 2.7 2.1 3.4
----- ----- ----- ----- -----
Net income before cumulative effect of a change in
accounting principle and extraordinary charge........ 11.5 5.6 4.7 3.3 6.0
Preferred stock dividends.............................. 0.2 -- -- -- --
Cumulative effect of a change in accounting
principle............................................ 0.3 -- -- -- --
Extraordinary charge................................... -- -- 0.2 -- --
----- ----- ------ ----- -----
Net income applicable to common stock.................. 11.0% 5.6% 4.5% 3.3% 6.0%
===== ===== ===== ===== =====
</TABLE>

SIX MONTHS ENDED JUNE 30, 1996 AND 1995

Revenues. Managed benefits revenues increased by $13.9 million, or 47.8%,
to $43.1 million in 1996 from $29.2 million in 1995. Interest income and other
revenue increased $0.2 million. The increase in premium revenues was primarily a
result of an increase in the number of members. During the first six months of
1996, managed benefits membership increased from 861,051 at December 31, 1995 to
1,099,508 at June 30, 1996, including an increase of approximately 220,000
members from the AHP acquisition. The increase in the comparable period in 1995
was from 740,984 to 771,714. Indemnity revenues declined from $8.5 million

18
<PAGE> 20

(22.2% of revenues) to $7.4 million (14.5% of revenues) largely due to the
termination of a large New Mexico group in December 1995.

Dental Services. Dental services expenses increased $7.9 million, or 34.5%,
to $30.7 million in 1996 from $22.8 million in 1995, primarily due to the
increase in membership discussed above. Total dental services as a percentage of
premium revenues remained relatively unchanged at 60.7% of premiums (60.6% in
1995). Dental service expenses for the Company's managed benefits plans, which
consist primarily of capitation payments to general dentists, increased to 58.3%
of managed benefits revenues in 1996, from 54.1% in 1995. The managed benefits
plans offered by US Dental and AHP historically were sold at lower premium
levels than the Company's pre-existing managed benefits plans, thereby resulting
in the payment to general dentists of a relatively higher percentage of
premiums. Claims expense for the indemnity business was 74.7% of indemnity
revenues. See above discussion for additional information concerning trends in
dental expenses.

Sales and Marketing. Sales and marketing expenses increased $0.7 million,
or 14.2%, to $5.7 million in 1996 from $5.0 million in 1995. Sales and marketing
expenses as a percentage of revenue declined to 11.2% in 1996 from 13.2% in
1995. This decrease was largely attributable to the increase in the percentage
of revenues from managed dental benefits plans relative to indemnity plans in
1996 as compared to 1995. Since the indemnity business generates a higher per
member per month revenue than is generated by the managed dental benefits plans,
and a portion of the sales and marketing costs, such as base salaries and
printing costs, are fixed, the expenses as a percentage of revenues decline. In
addition, the commissions paid on the indemnity business are lower as a
percentage of revenues than those paid on the managed dental benefits plans.

General and Administrative. General and administrative expenses increased
$1.7 million, or 24.3%, to $8.7 million in 1996 from $7.0 million in 1995. The
decline in general and administrative expenses as a percentage of revenues to
17.0% in 1996 from 18.4% in 1995 was primarily attributable to efficiencies
achieved through the consolidation of executive staffs and accounting
departments due to the acquisition of IDH, US Dental and AHP. In addition, there
was a decrease in premium taxes as a percentage of revenue because the Company
now generates a greater percentage of its revenues in states that have lower
premium taxes.

Depreciation and Amortization. Depreciation and amortization expenses
increased $0.4 million, or 80.1%, to $1.0 million in 1996 from $0.6 million in
1995. This increase was the result of amortization of the goodwill and
consulting and non-competition agreements attributable to the acquisitions of US
Dental and AHP.

Interest. Interest expense decreased to $0.2 million in 1996 from $0.6
million in 1995. The 1996 interest expense was composed of the imputed interest
on the agreements incurred to finance the Company's acquisitions. The weighted
average interest rate on these agreements during the first six months of 1996
was 7.9%. This weighted average interest rate also includes the fees for letters
of credit related to the agreements.

Taxes. The average tax rate was 36.7% and 39.0% in 1996 and 1995,
respectively. The lower tax rate in 1996 was largely the result of the $0.4
million tax exempt interest income earned on cash balances. During the
comparable period in 1995, the Company did not have significant cash balances
and interest income was fully taxable. The average tax rate was higher than the
statutory Federal tax rate of 34%, primarily as the result of the
non-deductibility of the amortization of goodwill.

YEARS ENDED DECEMBER 31, 1995 AND 1994

Revenues. Revenues increased by $41.8 million, or 112.0%, to $79.2 million
in 1995 from $37.4 million in 1994. Of this increase, $2.2 million, or 5.3%, was
attributable to the operations added through the acquisition of US Dental in
November 1995. The remaining $39.6 million increase was a 106.1% increase in
revenues to $77.0 million in 1995 from $37.4 million in 1994, in markets where
the Company had operations in both periods. This increase was primarily a result
of having IDH operations for the full year in 1995 compared to only four months
in 1994 and the increase in the membership numbers. During 1995, members
increased from 740,984 at December 31, 1994 to 937,355 at December 31, 1995. The
increase in the comparable period in 1994 was from 214,455 to 740,984. Interest
income and other revenue increased $1.0 million, or 394.1%, from

19
<PAGE> 21

$0.3 million to $1.3 million in 1995. This increase was due to the interest
income derived from the cash proceeds of the initial public offering in
September 1995.

Dental Services. Dental services expenses increased $26.6 million, or
132.3%, to $46.7 million in 1995 from $20.1 million in 1994. Total dental
services as a percentage of revenue increased to 59.0% in 1995 from 53.8% in
1994, primarily due to the effect of a higher dental expense loss ratio in the
indemnity insurance business that the Company acquired through IDH. Claims
expense for the indemnity business was 82.3% of indemnity revenues in 1995 as
compared to 82.8% in 1994. Dental service expenses for the Company's managed
benefits plans, which consist primarily of capitation payments to general
dentists, increased to 53.9% of managed benefits revenues in 1995, from 49.2% in
1994. This increase is attributable to the fact that the managed benefits plans
offered by IDH have historically paid general dentists a higher percentage of
premiums than the Company's pre-existing managed benefits plans. It is
management's intention to increase premiums over the next several years, as
market conditions permit, thereby increasing revenues. In most markets, amounts
paid to general dentists will also be increased to maintain the Company's
competitive position and to improve the economics for general dentists.

Sales and Marketing. Sales and marketing expenses increased $3.8 million,
or 67.4%, to $9.6 million in 1995 from $5.8 million in 1994. Sales and marketing
expenses as a percentage of revenue declined to 12.2% in 1995 from 15.4% in
1994. This decrease was largely attributable to the change in product mix from
primarily managed benefits plans in 1994 to a combination of indemnity and
managed benefits plans in 1995, resulting from the acquisition of IDH effective
September 1, 1994. Since the indemnity business generates a higher per-
member-per-month revenue than is generated by the managed benefits plans, and a
portion of the sales and marketing costs, such as base salaries and printing
costs, are fixed, the expenses as a percentage of revenues decline. In addition,
the commissions paid on the indemnity business are lower as a percentage of
revenues than those paid on the managed benefits plans.

General and Administrative. General and administrative expenses increased
$7.7 million, or 109.4%, to $14.8 million in 1995 from $7.1 million in 1994. The
decline in general and administrative expenses as a percentage of revenues to
18.7% in 1995 from 18.9% in 1994 was primarily attributable to efficiencies
achieved through the consolidation of executive staffs and accounting
departments due to the acquisition of IDH. In addition, there was a decrease in
premium taxes as a percentage of revenue because the Company now generates a
greater percentage of its revenues in states that have lower premium taxes.

Depreciation and Amortization. Depreciation and amortization expenses
increased $0.7 million, or 120.0%, to $1.2 million in 1995 from $0.5 million in
1994. Most of this increase was the result of amortization of goodwill and
consulting and non-competition agreements (the "Agreements") attributable to the
acquisitions of IDH and US Dental and the depreciation of the assets acquired.

Interest. Interest expenses increased to $1.0 million in 1995 from $0.4 in
1994. The $1.0 million was composed of the interest on a bank loan incurred in
1994 to finance the IDH acquisition (the "Bank Loan"), a $10.3 million
promissory note maturing January 18, 1996, that was issued in November 1995 as
part of the consideration for the US Dental acquisition (the "Promissory Note"),
and the imputed interest on the consulting and non-competition agreements
incurred to finance the IDH and US Dental acquisitions (the "Agreements"). The
weighted average interest rates on the Bank Loan, the Promissory Note and the
Agreements during 1995 were 9.5%, 4.4% and 8.6%, respectively. These weighted
average interest rates include the effects of amortization of debt issuance
costs and the fees for letters of credit related to the Agreements.

Taxes. The average tax rate was 36.4% and 37.5% in 1995 and 1994,
respectively. In 1995 and 1994, the average tax rate was higher than the
statutory Federal tax rate of 34.0%, primarily as the result of the
nondeductibility of the amortization of goodwill. The average rate decrease from
1994 to 1995 was primarily due to tax exempt interest income in 1995.

Extraordinary Charge. Upon completion of the Company's initial public
offering in September 1995, the Company used a portion of the offering's
proceeds to repay the Bank Loan. This required the write off of the

20
<PAGE> 22

unamortized debt-financing expenses capitalized in connection with the Bank Loan
incurred to finance the IDH acquisition and the financing obtained (but not
used) for the US Dental acquisition.

YEARS ENDED DECEMBER 31, 1994 AND 1993

Revenues. Revenues increased by $20.4 million, or 120.1%, to $37.4 million
in 1994 from $17.0 million in 1993. Of this increase, $16.9 million, or 82.8%,
was attributable to the operations added through the acquisition of IDH
effective September 1, 1994. The remaining $3.5 million was a 20.7% increase in
revenues to $20.5 million in 1994 from $17.0 million in 1993 in markets where
the Company had operations in both periods. This increase was primarily a result
of an increase in the number of members and to a lesser extent, to premium rate
increases. During the year, members increased from 214,455 at December 31, 1993
to 740,984 at December 31, 1994. The increase for all of 1993 was from 160,885
to 214,455.

Dental Services. Dental services expenses increased $12.8 million, or
176.3%, to $20.1 million in 1994 from $7.3 million in 1993. Total dental
services as a percentage of revenues increased to 53.8% in 1994 from 42.9% in
1993 primarily due to the effect of a higher dental expense loss ratio in the
indemnity insurance business that the Company acquired through IDH in September
1994. Claims expense for the indemnity business was 82.8% of indemnity revenues.
Dental service expenses for the Company's managed benefits business, which
consist primarily of capitation to dentists, increased to 49.2% of managed
benefits revenues in 1994 from 43.3% in 1993. This increase is attributable to
the fact that the managed benefits plans offered by IDH have historically paid
dentists a higher percentage of premiums than the Company's pre-existing plans
paid.

Sales and Marketing. Sales and marketing expenses increased $2.7 million,
or 90.3%, to $5.7 million in 1994 from $3.0 million in 1993. Sales and marketing
expenses as a percentage of revenues declined to 15.4% in 1994 from 17.8% in
1993. This decrease was largely attributable to the change in product mix from
managed benefits plans only in 1993 to a combination of indemnity and managed
benefits plans in 1994 as a result of the IDH acquisition. Since the indemnity
business generates a higher per member per month revenue than generated by the
managed benefits plans, and a portion of the sales and marketing costs, such as
base salaries and printing costs, are fixed, the expenses as a percentage of
revenues decline. In addition, the commissions paid on the indemnity business
are lower as a percentage of revenues than those paid on the managed benefits
plans.

General and Administrative. General and administrative expenses increased
$3.5 million, or 94.4%, to $7.1 million in 1994 from $3.6 million in 1993. The
decline in general and administrative expenses as a percentage of revenues to
18.9% in 1994 from 21.4% in 1993 was primarily attributable to efficiencies
achieved through the consolidation of executive staffs and accounting
departments due to the acquisition of IDH. In addition, there was a decrease in
premium taxes as a percentage of revenue because the Company now generates a
greater percentage of its revenues in states that charge lower premium taxes.

Depreciation and Amortization. Depreciation and amortization expenses
increased $0.3 million, or 240.3%, to $0.5 million in 1994 from $0.2 million in
1993. Most of this increase was the result of amortization of goodwill and the
Agreements entered into in connection with the acquisition of IDH and the
depreciation of the assets acquired.

Acquisition-Related Expenses. During 1994, the Company incurred $0.2
million of acquisition-related expenses. These expenses were all due to the
acquisition of IDH in September 1994.

Interest. Interest expenses increased to $0.4 million in 1994 from $0 in
1993. The $0.4 million was entirely attributable to the interest on the Bank
Loan and the imputed interest on the Agreements incurred to finance the IDH
acquisition. The weighted average interest rates on the Bank Loan and the
Agreements during the portion of 1994 subsequent to the IDH acquisition were
8.3% and 8.8%, respectively. These weighted average interest rates include the
effects of amortization of debt issuance costs and the fees for letters of
credit related to the Agreements.

Change in Accounting Principle. During 1993, the Company incurred a minor
charge for the cumulative effect of a change in accounting principle as required
by SFAS 109 for "Accounting for Income Taxes."

21
<PAGE> 23

RESULTS OF OPERATIONS -- QUARTERLY INFORMATION

The following table sets forth certain unaudited condensed consolidated
financial data for the periods indicated:

<TABLE>
<CAPTION>
THREE MONTHS ENDED
---------------------------------------------------------------------------------------
SEPT. 30, DEC. 31, MAR. 31, JUNE 30, SEPT. 30, DEC. 31, MAR. 31, JUNE 30,
1994 1994 1995 1995 1995 1995 1996 1996
--------- -------- -------- -------- --------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Premiums earned........................ $ 9,164 $ 18,271 $18,683 $ 18,951 $19,058 $ 21,282 $24,490 $ 26,050
Interest income and other revenue...... 55 100 188 205 282 580 304 281
------- -------- ------- -------- ------- -------- ------- --------
Total revenues................... $ 9,219 $ 18,371 $18,871 $ 19,156 $19,340 $ 21,862 $24,794 $ 26,331
Costs and expenses:
Dental services expense................ 4,957 11,002 11,343 11,467 11,422 12,518 14,931 15,743
Sales and marketing.................... 1,459 2,334 2,586 2,426 2,298 2,327 2,798 2,928
General and administrative............. 1,636 3,311 3,509 3,479 3,487 4,310 4,282 4,403
Depreciation and amortization.......... 140 270 275 282 288 345 465 538
Interest expense....................... 49 311 315 294 310 86 94 115
------- -------- ------- -------- ------- -------- ------- --------
Total costs and expenses......... $ 8,241 $ 17,228 $18,028 $ 17,948 $17,805 $ 19,586 $22,570 $ 23,727
------- -------- ------- -------- ------- -------- ------- --------
Income before Federal income taxes and
extraordinary charges.................. 978 1,143 843 1,208 1,535 2,276 2,224 2,604
Provision for Federal income taxes....... 333 504 320 480 575 756 813 959
Extraordinary charge, net of tax......... -- -- -- -- 142 -- -- --
------- -------- ------- -------- ------- -------- ------- --------
Net income applicable to common stock.... $ 645 $ 639 $ 523 $ 728 $ 818 $ 1,520 $ 1,411 $ 1,645
======= ======== ======= ======== ======= ======== ======= ========
Net income per common share.............. $ 0.14 $ 0.14 $ 0.11 $ 0.15 $ 0.16 $ 0.21 $ 0.19 $ 0.23
</TABLE>

LIQUIDITY AND CAPITAL RESOURCES

In September 1995, the Company completed an initial public offering of
2,375,000 shares of its Common Stock at an offering price of $22.00 per share
resulting in net proceeds of approximately $48.0 million. The Company used
approximately $9.9 million of such proceeds for the repayment of all outstanding
indebtedness on the Bank Loan, which had been incurred in 1994 to finance the
acquisition of IDH.

The Company's historical operating cash requirements have been met through
cash provided by operations. Net cash provided by operating activities was $2.9
million for the year ended December 31, 1995. Net cash provided by operating
activities was $0.6 million for the six months ended June 30, 1996, composed of
$1.3 million in cash provided by operating activities in the first quarter of
1996 partially offset by the use of $0.7 million in the second quarter. The
second quarter's use of cash was a result of (i) a change to earlier capitation
payments to certain network dentists that resulted in a one-time increase in
cash outflow and (ii) a change to later collection of prepaid revenues from
certain groups that resulted in a one-time decrease in cash flows. Both changes
were instituted to provide better customer service and had no effect on
operating earnings. The decrease in unearned premiums of $2.2 million and the
decrease in accounts payable, accrued expenses and claims reserves of $2.0
million reflect this one-time impact on cash from operating activities.

The Company's primary cash need after operations is for debt service on the
Agreements entered into as a part of the prior acquisitions. The principal
amount of such indebtedness of the Company at June 30, 1996 was $4.6 million.
The various Agreements have fixed rates of interest ranging from 5.0% to 7.5%
and require aggregate payments of principal and interest of $1.4 million per
year. The $10.3 million Promissory Note was paid in full on January 18, 1996.

Under applicable insurance laws of most states in which the Company
conducts business, the Company's subsidiary operating in the particular state is
required to maintain a minimum level of net worth and reserves. In general,
minimum capital requirements are more stringent for insurance companies, such as
United Dental Care Insurance Company ("UDCIC"). The Company may be required from
time to time to invest funds in one or more of its subsidiaries to meet
regulatory capital requirements. The implementation of risk-based capital
regulations in states having jurisdiction over UDCIC may require that the
Company increase its investment in UDCIC. However, the Company does not believe
that compliance with such regulations will

22
<PAGE> 24

adversely affect the Company's ability to meet its operating cash requirements.
The Company believes that UDCIC will be able to satisfy such regulations without
the need for significant capital contributions by the Company. Applicable laws
generally limit the ability of the Company's subsidiaries to pay dividends to
the extent that required regulatory capital would be impaired. See
"Business -- Governmental Regulation."

Capital expenditures were $2.2 million during the year ended December 31,
1995 and $2.0 million in the six months ended June 30, 1996. Such expenditures
in 1995 primarily consisted of telephone equipment and the capitalized cost
related to the new information system. In June 1995, the Company entered into a
contract to acquire a new information system to replace its existing system. The
project is currently expected to cost approximately $4.0 million and to be
completed in the fourth quarter of 1996. Capital expenditures, other than the
cost of the new information system, were $0.8 million during the six months
ended June 30, 1996. Such expenditures primarily consisted of computer equipment
and furniture purchased in connection with the integration of US Dental and AHP
into the Company. Capital expenditures for the remainder of 1996, excluding the
costs associated with the new information system, are expected to be
approximately $0.7 million.

The Company believes that cash flow generated by operations will be
sufficient to fund its normal working capital needs and capital expenditures
(other than any acquisitions) for at least the next twelve months.

The Company believes that its operations are not materially affected by
inflation. The Company's principal costs, such as dental services expense and
sales and marketing expenses, are largely related to membership levels and are
therefore variably related to premium revenues. Historically, the Company's rate
of premium increases has been less than the rate of increase in the cost of
dental services in general.

CREDIT FACILITIES

Pending Acquisitions Commitment. The Company intends to use the net
proceeds of this offering to finance the Pending Acquisitions most of which are
anticipated to be completed following completion of this offering. However, none
of the Pending Acquisitions are subject to completion of this offering, and this
offering is not subject to completion of any of the Pending Acquisitions. The
Company intends to obtain a commitment for a $35 million line of credit with an
unaffiliated bank to finance certain of the Pending Acquisitions if they are
consummated prior to completion of this offering. The Company believes based on
discussions with such bank that it will be able to obtain such line of credit.
The Company also believes it will be able to increase such line of credit to $50
million if necessary to finance, together with available cash of the Company,
all the Pending Acquisitions if they are consummated prior to completion of this
offering. If any of the Pending Acquisitions are consummated prior to the
completion of this offering, the Company intends to utilize such line of credit
to fund such acquisitions. In that event, the loan will be repaid in full out of
the net proceeds of this offering. The commitment will be subject to various
conditions and, accordingly, there can be no assurance that the Company will be
able to complete such financing, if necessary.

Letters of Credit. The Company has arranged for the issuance of two letters
of credit in the aggregate amount of $4.8 million. The letters of credit secure
the obligations of the Company under certain agreements executed in connection
with the IDH acquisition. The letters of credit decline in amount annually and
expire in September 1998. The Company pays an annual fee equal to 1% of the
amount remaining to be drawn under the letters of credit. The letters of credit
will remain outstanding after the offering.

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<PAGE> 25

BUSINESS

GENERAL

UDC is a managed dental benefits company that is licensed to operate
prepaid dental plans in 25 states and, as of June 30, 1996, provided dental
coverage to approximately 1,175,000 members. The Company offers a comprehensive
range of prepaid dental plans capable of meeting the needs of employer groups of
all sizes as well as individuals. UDC's dentist networks, as of June 30, 1996,
consisted of approximately 3,000 general dentists as well as specialist dentists
providing a broad range of dental services. The Company markets its services
through multiple distribution channels, including a direct sales force of over
70 persons, independent brokers and third-party arrangements with medical HMOs.
The Company recently entered into agreements to acquire five managed dental
benefits companies and one dental referral plan having approximately 500,000
members in the aggregate as of June 30, 1996. See "Pending and Recent
Acquisitions."

THE MANAGED DENTAL BENEFITS INDUSTRY

Background

According to the U.S. Office of National Health Statistics, total
expenditures for dental care in the United States grew from approximately $14.4
billion in 1980 to approximately $43.2 billion in 1993. According to the
American Dental Association, there were approximately 138,000 active licensed
dentists engaged in private practice in the United States in 1991. The American
Dental Association estimated that in 1993 approximately 68% of the nation's
private dentists were in solo practice and approximately 20% were in two-person
practices.

Historically, payment for dental services has been on a fee-for-service
basis. Under this system, the individual, or a dental indemnity insurance
company, pays fees established by the dentist for the dental services provided
by the dentist and the dentist has little incentive to control costs or minimize
expenses. The charges for such services generally vary widely among dentists.
Since the individual pays all or a portion of the established fees, the
individual is reluctant to incur the costs of preventive dental care. In
addition, the individual has limited access to information regarding cost and
quality on which to select a dentist.

Dental Indemnity Insurance

The number of individuals in the United States with dental benefits was
estimated by the National Association of Dental Plans to be approximately 125
million in 1994, representing approximately 48% of the total United States
population. Historically, dental coverage was not an employee benefit
customarily provided by employers. The Company believes that dental benefits are
a frequently requested employee benefit. In response to employee demand,
employers have increasingly offered dental coverage to employees usually in the
form of indemnity insurance. According to a 1993 survey performed by Foster
Higgins, an employee benefits consulting firm, approximately 87% of employers
with more than 200 employees, approximately 63% of employers with 50-199
employees and approximately 39% of employers with 10-49 employees offer dental

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<PAGE> 26

coverage as an available employee benefit. Dental coverage is typically offered
as a separate benefit from medical coverage with the employer frequently paying
none, or only a portion, of the premium for the dental coverage.

Dental indemnity insurance is similar to medical indemnity insurance in
that the individual or the employer pays a premium for the dental insurance
coverage and the insurance company pays or reimburses the dentist in whole or in
part for the charges for dental services. While dental indemnity insurance
companies have utilized mechanisms to control costs such as limiting charges to
reasonable and customary charges for the community in which the services are
rendered and utilizing preferred providers with whom discounted fee schedules
are negotiated, such mechanisms do not transfer significant risk to the dentist
or provide significant incentives to the dentist to control costs or reduce fees
or to the individual to utilize preventative dental services.

Managed Dental Benefits

Increasing concern with the costs of health care, including dental care,
has resulted in a greater willingness by employers and consumers to consider
managed health care delivery systems. The Company believes that these alternate
delivery systems are able to provide for services, or benefits, at a lower cost,
or premium, than fee-for-service alternatives.

Companies having the management expertise and industry knowledge required
to establish and maintain a network of specialized providers such as dentists
have developed specialized managed delivery systems to provide such health care
services. HMOs, PPOs and other forms of managed health care plans for general
medical services have not customarily devoted the resources to develop specialty
managed delivery systems and frequently subcontract with companies providing
single-specialty managed delivery systems such as the Company's prepaid dental
plans.

According to the National Association of Dental Plans, prepaid dental plans
have grown from approximately 10.4 million covered members in 1991 to an
estimated 19.5 million in 1995, an annual compounded growth rate of
approximately 17.0%. The Company believes the relatively high growth rate for
prepaid dental plans is attributable to: (i) the greater acceptance and
utilization of managed care alternatives by employers and employees to reduce
costs; (ii) the significant price advantage relative to indemnity plans; (iii)
the cost effectiveness to employers of prepaid plans as an employee benefit; and
(iv) the growing acceptance of capitated dental plans by dentists, resulting in
improved accessibility and convenience for members. The number of people with
dental benefits was estimated by the National Association of Dental Plans to be
approximately 125 million in 1995, of which approximately 16% were covered under
prepaid dental plans representing approximately 8% of the total United States
population. The Company believes there is significant growth opportunity for the
managed dental benefits industry.

A prepaid dental plan pays a fixed monthly capitation payment to the
network dentist who provides dental services as needed at either no cost to the
member or at reduced fees (copayments) paid by the member. Consequently, the
risk of high utilization is shifted to the dentist, although generally the
dentist receives copayments for many covered services that are often greater
than the direct costs of the dentist, reducing financial risk. The capitation
method rewards efficient providers who stress routine, preventive care and
control their fixed expenses. In comparison, under the traditional
fee-for-service payment system, the risk of utilization is borne by the insurer
or the consumer, with little incentive to the dentist to be an efficient
provider. The Company believes that the ability of a managed dental benefits
plan to volume purchase, shift risk to providers and manage both the costs and
utilization of dental care typically results in premiums 20% or more below
premiums for a traditional indemnity plan.

In addition, some prepaid dental plans provide for specialty care at fixed
copayments by the member. Unlike medical care, the majority of dental care is
provided by general dentists with some specialty care provided by endodontists
(specialists in root canal therapy), oral surgeons (specialists in extractions),
pedodontists (specialists in dentistry for children) and periodontists
(specialists in gum-related treatment). Companies such as UDC that arrange for
specialist care at fixed copayments are further able to manage the costs and
utilization of dental services through specialist referral authorization
programs and discounted fee

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<PAGE> 27

arrangements with specialist dentists. Medium to large employers increasingly
expect comprehensive dental care, including specialty care from prepaid dental
plans, at stipulated copayments comparable to the type of coverage provided by a
general medical plan.

According to the National Association of Dental Plans, the number of
dentists affiliated with prepaid dental plans was approximately 26,000 in 1994
or approximately 19% of all active dentists. The Company believes that
significant growth of prepaid dental plans will continue as a result of: (i)
growing acceptance and participation in such plans by dentists; (ii) greater
acceptance of such plans by consumers who are becoming increasingly aware of the
price advantages, improved service and convenience offered by such plans; and
(iii) recognition by employers that such plans can be used to provide important
employee benefits at little or no cost to the employer. Consequently, the
Company believes prepaid dental plans will be increasingly used to replace more
expensive forms of dental coverage and provide dental coverage to greater
portions of the population that presently have no dental coverage.

The Company believes that the managed dental benefits industry has the
potential for significant growth and is highly fragmented. The National
Association of Dental Plans estimated that, at the beginning of 1994,
approximately 40% of its members operating prepaid dental plans were
single-state companies. The Company believes that large independent managed
dental benefits companies will have a greater opportunity to grow and expand
because of growing interest in multi-state coverage by medium and large
employers and increased use by medical HMOs to contract with large dental plans
to provide dental coverage to the medical HMO members. The Company believes that
large dental plans have the resources and systems required to satisfy demands of
employers and requirements of dentists and achieve economies of scale. The
Company believes that the factors supporting the growth of large dental plans
will give rise to consolidation opportunities.

BUSINESS STRATEGY

The Company's goal is to be the leading managed dental benefits company in
the United States with the ability to offer prepaid dental plans to employers of
all sizes. The Company intends to maintain and develop a leadership position
within each of its existing key markets and to strategically enter new markets
that afford significant growth opportunities. At present, the Company is
licensed to operate prepaid dental plans in 25 states (not including four
additional states to be entered through the Pending Acquisitions). The Company
believes that as a large, multi-state managed dental benefits company with
significant management depth and financial resources, the Company will have a
competitive advantage over smaller and single-market companies in gaining market
share and participating in the consolidation of the managed dental benefits
industry. In order to implement its strategy, the Company will:

Offer a Full Range of Comprehensive Dental Benefits Plans. One of the keys
to the Company's success has been its ability to offer a broad range of prepaid
dental plans providing different levels of dental coverage, including specialist
care, tailored to meet the various needs of its customers. The variety of its
prepaid dental plans has enabled the Company to attract both small,
single-market employers and large, multi-state employers, as well as
individuals. In addition, the Company has developed prepaid dental plans that
may be offered in substantially all states where it is licensed so that large,
multi-state employers can provide the same dental coverage to all of their
employees.

Ensure Quality Dental Care Through Accessible Dentist Networks. The
Company's strategy is to be one of the three largest dentist networks in its key
markets, providing a full spectrum of dental care, including specialty care. The
Company believes that having provider relations representatives located in each
of its key markets enhances the quality of its dentist networks. The local
knowledge and expertise provided through these local representatives enables the
Company to develop highly accessible dentist networks convenient for members,
which is an important factor to employers in selecting a prepaid dental plan.
All local efforts are supported by the Company's corporate and regional dental
directors.

Utilize Multiple Distribution Channel Marketing Efforts. The Company
markets its prepaid dental plans to employers through (i) its direct sales force
of over 70 persons focusing on medium to large groups such as multi-state
employers and trade or professional organizations and (ii) a network of
independent insurance brokers who market to smaller employers and individuals.
In addition, the Company markets to third-party

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<PAGE> 28

medical HMOs to offer its prepaid dental plans as an additional benefit to
members of the medical HMO. The Company believes that its multiple distribution
channel approach is a competitive advantage that provides the flexibility to
meet the needs of the full spectrum of customers.

Emphasize an Integrated Approach to Customer Service. The Company utilizes
an integrated service approach involving local and regional specialized service
representatives to optimize its operations and product strategy for each target
market. Local offices are maintained in each of the Company's key markets with
specialized sales and service representatives for employer groups and insurance
brokers and with the local provider relations representatives for dentists.
Customer service is performed by regional member service centers, accessed via
an 800-telephone number, with the objective of providing consistent, responsive
and efficient member service.

Acquire Other Managed Dental Benefits Companies. The Company intends to
continue with acquisition efforts to enter target markets and to expand its
market penetration in current markets. The US Dental acquisition in November
1995 resulted in approximately 163,000 additional members, and the AHP
acquisition in January 1996 resulted in approximately 220,000 additional
members. The Pending Acquisitions, if completed, will result in approximately
500,000 additional members (including approximately 60,000 referral plan
members) in the aggregate. The Company currently has no agreements or
understandings relating to any acquisitions other than the Pending Acquisitions.
See "Pending and Recent Acquisitions."

BENEFITS PLANS

Managed Dental Plans

The Company offers a full spectrum of managed dental plans ("Plans")
through numerous state-level subsidiaries. The Plans range from lower coverage,
higher copayment plans with low premiums to higher coverage, low copayment plans
with higher premiums.

Under each of the Company's Plans, a premium is paid to the Company for the
type of coverage selected making the employee and each participating dependent a
member of the Plan. Premium payments are made by the employer or by the employee
(usually by payroll deduction) with respect to employer offered Plans or by the
member directly. Over half of the Company's revenues are derived from Plans in
which the member pays the entire premium. The remainder of the Plans are paid
either entirely by the employer or partially by the employer with the member
contributing the balance of the premium. Typically, the premiums charged are
fixed for a 12-month contract, except for certain multiple year contracts that
are subject to limitations on premium increases. Recently, the increase in the
dental component of the Consumer Price Index has averaged approximately 6% per
year. The Company estimates that its increases in premiums have averaged less
than 3.5% per year and that the premiums charged by the Company are typically
20% or more below premiums for comparable indemnity dental benefits.
Consequently, the Company believes that it is able to offer Plans that are not
only less expensive than the indemnity competition, but also have had lower
increases than most dental costs and indemnity premiums.

Many of the Company's Plans permit each member to select his or her own
individual general dentist from the Company's dentist network at the time of
enrollment. The Company intends to incorporate this flexibility into all its
Plans. Each month, the Company pays a fixed payment, or capitation, to the
member's general dentist regardless of which services are rendered in the month.
In return for the capitation payment and the specified copayments, the general
dentist agrees to provide all covered services for the member.

Although the Plans vary, typically routine preventive and diagnostic care
(exams, x-rays, sealants, teeth cleanings) is provided at no charge or at a
small copayment while basic care (including fillings and extractions) and
specialty care (root canal therapy and gum disease, or periodontal services) is
provided at stipulated copayments. More involved major care (such as crowns and
bridges) is also provided at copayments that are frequently lower than the
member's cost of coinsurance under a comparable indemnity insurance plan. The
Company believes that a specialty care referral program with specialist dentists
providing services at fixed copayments is necessary for the cost management of
dental care services. Orthodontic care is also available under many of the
Company's Plans.

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<PAGE> 29

Dual Choice Plans

The Company is able to offer employers Plans providing both managed dental
benefits and traditional indemnity insurance coverage, commonly referred to as
dual choice plans. Such Plans allow an employee to select the most suitable type
of coverage at the beginning of the contract year by offering each employee the
choice of a prepaid plan utilizing the Company's dentist network or traditional
indemnity insurance coverage utilizing any dentist but usually at higher
premiums and with lower coverage than the prepaid plan alternative. A dual
choice plan is particularly useful when some employees reside in areas where the
Company's dentist network is less developed or in states where the Company is
not yet licensed to offer managed dental benefits.

The indemnity portion of the dual choice plans is made available either
through the Company's subsidiary that is licensed to offer dental indemnity
insurance in all states where the Company operates a prepaid dental plan or
through contractual arrangements with third party insurers. An employee who
selects the indemnity insurance option pays a portion of the charges for covered
services (or coinsurance) after satisfying any deductible. Although coinsurance
payments are typically higher than the copayments charged for the same services
under the other Company Plans, the employee may select any dentist for dental
services. In certain states, the Company has contracted with PPOs for discounted
fees for services covered under the Company's indemnity insurance.

Currently, the Company offers its dual choice plans and its point of
service plan as an enhancement to the marketing of its core business of prepaid
dental benefits. As of June 30, 1996, the Company had approximately 76,000
individuals covered through its indemnity insurance subsidiary, excluding point
of service members who are considered prepaid members.

Third-Party Plans

The Company offers customized plans and services through contractual
arrangements with medical HMOs, including contracts under which the Company acts
as a dental benefits subcontractor to HMO's that have contracted with state
agencies to provide Medicare or Medicaid benefits. Under these arrangements, the
Company often provides only preventive and diagnostic dental benefits but may
also provide more comprehensive coverages, in each case either on a
"private-label" basis or directly through the Company's Plans. As of June 30,
1996, the Company had 15 such arrangements which accounted for approximately
6.3% of its managed dental benefits membership and approximately 2.3% of its
revenues. The Company believes its size and geographic scope give it a
competitive advantage in developing additional third-party medical HMO
relationships.

Point of Service Plan

The Company has developed a point of service plan ("POS") that provides
members of the Company's prepaid dental plans the option of receiving dental
services from dentists outside the Company's dentist network on an indemnity
basis providing less coverage. The POS Plan allows the member to select the
dentist of the member's choice each time services are obtained. Although the
Company charges higher premiums under the POS Plan, the Company has somewhat
greater risk exposure than under its managed dental benefit plans.

Dental Referral Plan

Through its pending acquisition of Association Dental Plan, Inc., the
Company plans to offer a referral plan. This plan will initially be delivered
through a network of approximately 9,400 providers in 36 states. The referral
plan contracts with the dental providers to provide dental services to referral
plan members at certain scheduled fee-for-service rates. Members of the referral
plan pay a fixed fee per month for the member's ability to access the Company's
referral plan network. The Company will bear no financial risk or responsibility
for dental services provided to members in conjunction with its referral
product.

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<PAGE> 30

DENTIST NETWORKS

The Company designs its plans and capitation programs to create dentist
networks of general and specialist dentists that the Company believes provide
the quality of care and convenience needed to attract and retain members. The
Company's strategy is to be one of the three largest dentist networks in each of
its key markets. As of June 30, 1996, the Company had provider contracts with
approximately 3,000 general dentists. The Company also had contracts with
specialist dentists, representing the specialties of endodontics, oral surgery,
orthodontics, periodontics and pedodontics. Since specialist care is covered
under most of the Company's Plans, the Company has a specialist care referral
review program in order to manage the specialist care provided.

The Company employs 32 provider relations representatives located in local
offices situated in its key markets who recruit general and specialty dentists,
determine their qualifications for participation in the Company's network,
provide administrative training to the dentist's office staff and assist the
dentists with respect to participation in the Company's network. Collectively,
the dental directors are responsible for establishing and monitoring the
Company's quality review efforts, including credentialing and re-credentialing
for network participation, review of specialty referrals and utilization review.

Typically, the Company seeks established, private-practice dentists who
have capacity in their practice to see at least 200 of the Company's members as
new patients. Most general dentists and specialist dentists with whom the
Company contracts have small dental offices similar to those familiar to most
consumers. Both the dentist and the facility are reviewed in the Company's
credentialing process, which includes verification of licensure and malpractice
coverage, as well as a review of any actions that may have been taken by state
regulatory authorities. In addition to professional practice capabilities, the
Company also reviews the service amenities of the office, including available
parking, days and hours of operation, a patient recall system for routine,
preventive check-ups and radiographic and sterilization equipment and
procedures. Upon determining that a dentist meets the Company's requirements for
participation in the Company's dental network, the Company offers the dentist a
provider contract setting forth the capitation payments, copayments, limitations
and exclusions and other terms and conditions applicable to the specific Plans
in which such dentist will participate. Provider contracts are typically
non-exclusive and permit the Company or the dentist to terminate the contract
with 90 days prior written notice. The Company periodically reviews its general
and specialist dentists for continued compliance with Company requirements for
participation in the Company's dentist network.

The Company believes that the advantages to a dentist who participates in a
managed dental benefits plan include: (i) increasing the size of the dentist's
practice as a result of selection of the dentist by plan members and referrals
from plan members; (ii) increasing practice profitability through utilization of
excess capacity to accept additional patients; (iii) generation of predictable
incremental cash flow from regular capitation payments; (iv) retention of
patients seeking managed dental plan participation; and (v) reduction of paper
work and collection risks associated with conventional fee-for-service
practices.

The general and specialist dentists are independent from the Company,
providing service to members of the Company's Plans based upon dental practice
standards in the community and their contractual arrangements with the Company.
The Company requires that its network dentists maintain malpractice insurance
and satisfy quality service standards.

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<PAGE> 31

MARKETS AND OPERATIONS

The Company currently is licensed to market its prepaid dental plans in 25
states, and its indemnity plan in 25 states. As of June 30, 1996, approximately
75.1% of all UDC prepaid plan members were located in four states, Arizona,
Texas, New Mexico and Colorado. The table below shows the approximate number of
managed benefits members, indemnity members, referral plan members and total
members of the Company as of June 30, 1996.

<TABLE>
<CAPTION>
MANAGED
BENEFITS INDEMNITY REFERRAL PLAN
STATE MEMBERS MEMBERS MEMBERS TOTAL MEMBERS
- ------------------------------------------- --------- --------- --------------- -------------
<S> <C> <C> <C> <C>
Arizona.................................... 373,805 18,250 3,715 395,770
Texas...................................... 269,390 -- -- 269,390
New Mexico................................. 115,883 2,676 -- 118,559
Colorado................................... 90,648 7,898 -- 98,546
Ohio....................................... 63,640 -- -- 63,640
Utah....................................... 44,095 15,368 -- 59,463
California................................. 36,134 10,086 -- 46,220
Washington................................. 38,214 4,684 -- 42,898
Other states............................... 63,984 16,710 -- 80,694
--------- ------- ----- ---------
Totals........................... 1,095,793 75,672 3,715 1,175,180
</TABLE>

The acquisition of US Dental added approximately 163,000 members located in
four states where the Company already operated prepaid plans. The acquisition of
AHP added approximately 220,000 members, all of whom were located in Arizona.
The Pending Acquisitions are expected to add approximately 500,000 members in
the aggregate, of which approximately 350,000 members will be in four states
where the Company presently has no members. See "Pending and Recent
Acquisitions."

The Company markets its plans to small, single-market employers and large,
multi-state employers, as well as to individuals. No single employer group
accounted for more than 2% of the Company's revenues for the six months ended
June 30, 1996.

The Company maintains its regional customer service centers in Phoenix,
Arizona, San Diego, California, Denver, Colorado and Dallas, Texas. In addition,
the Company maintains 23 local offices with group sales and service
representatives and provider relations representatives in its key markets having
significant concentrations of members.

SALES AND MARKETING

The Company markets its Plans primarily to employers through: (i) its
direct sales force of over 70 persons focusing on medium to large groups such as
multi-state employers and trade or professional organizations; and (ii) a
network of independent insurance brokers who market to smaller employers and
individuals. In addition, the Company markets to medical HMOs to offer the
Company's Plans as an additional benefit to HMO members. The Company believes
its multiple distribution channel approach is a competitive advantage that
provides the flexibility to meet the needs of the full spectrum of customers.

The Company has focused the efforts of its direct sales representatives on
medium-to-large employers typically employing more than 250 employees and having
no relationship with an insurance broker. If an employer utilizes an insurance
broker, the Company generally sells through the broker to maintain its broker
relationships. The Company's direct sales representatives are compensated by a
combination of base salary and commissions based upon membership growth. The
Company has implemented a direct sales effort in all of its major markets.

The Company also sells its Plans through independent insurance brokers who
typically have relationships with small and medium size employers. Approximately
two-thirds of the Company's membership is the result

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<PAGE> 32

of sales through brokers who receive commissions based on premiums received by
the Company from such sales.

The Company has actively pursued alliances with HMOs to offer its Plans to
HMO members either on a private label basis or as a separate benefit and
currently has 15 such agreements in place. The Company believes that, as HMOs
seek to differentiate their services, many will consider contracting for dental
benefit plans and that the Company has a competitive advantage in arranging
alliances with HMOs as a result of the Company's experience, size and geographic
scope.

Sales to employers, regardless of distribution channel, involve selling
both the employer and its employees. Typically, the employee has the opportunity
to select the Company's Plans during an annual open enrollment period.
Frequently, representatives of the Company have the opportunity to make
presentations directly to the employees, while in other cases the employer
distributes the Company's marketing materials that explain the features and
benefits of the Company's Plan. The Company stresses: (i) the quality and size
of its dentist networks; (ii) the comprehensiveness of its Plan, including
specialty care coverage; (iii) its integrated customer service approach in
responding to member inquiries or complaints, including requests to change
general dentists; and (iv) the value of the Plan in relation to Plan premiums
and copayments.

CUSTOMER SERVICE

The Company employs 92 group sales and service representatives, 32 provider
relations representatives and 51 customer service representatives with primary
responsibility to service the needs of its groups and brokers, general and
specialist network dentists, and members, respectively. The Company's group
sales and service representatives and provider relations representatives are
based at the local market level, while the Company's customer service
representatives are located at four regional customer service centers in
Arizona, California, Colorado and Texas. Inquiries or complaints from members
are handled over the telephone via 800-telephone numbers by the regional
customer service representatives who provide consistent, responsive and
efficient member services. The Company believes this integrated approach enables
it to respond quickly and personally to group, broker and dentist issues where
direct interaction is critical.

MANAGEMENT INFORMATION SYSTEMS

All administrative, accounting, finance and information services are
provided from the Company's administrative offices in Dallas, Texas. The Company
believes that, in the managed dental benefits industry, an advanced information
system can be a significant competitive advantage. Accordingly, in 1995, the
Company entered into a contract to acquire an advanced software program
specifically designed for the managed dental benefits industry and subsequently
has acquired the necessary hardware to fully utilize such software. The Company
believes its new information system will significantly enhance the Company's
capabilities to provide customer service, analyze provider utilization, create
opportunities to take advantage of market conditions and support new product
development.

All of the Company's business is in the process of being converted to the
new information system. The conversion of the internally developed systems
formerly in use by IDH and AHP prior to their respective acquisitions by the
Company has been substantially completed. The Company's internally developed
system and the internally developed system used by US Dental at the time of the
US Dental acquisition are in the process of being converted. Until the
conversion is completed, the Company believes its system and the US Dental
system are adequate for the Company's current needs. The Company expects that
all of these systems will be fully integrated to the new system by the end of
1996. The information systems of the Pending Acquisitions will be converted to
the new system as rapidly as possible, although the timing for the completed
integration of such systems cannot currently be estimated.

The Company has an administrative services agreement with R.E. Harrington,
Inc. ("Harrington") pursuant to which Harrington provides indemnity claim
administrative services to the Company. The Company pays Harrington 3.85% of all
claims paid by Harrington, which percentage may be reduced if Harrington does
not meet performance guarantees. The term of this agreement is from January 1,
1995 to December 31, 1996, but the Company may terminate the contract with
90-day advance written notice and the payment of a contractual penalty.

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<PAGE> 33

COMPETITION

There are numerous competitors wherever the Company conducts business,
creating a highly competitive marketplace. The Company's competitors include:
(i) large insurance companies with the capability to offer both managed dental
benefits and traditional dental indemnity insurance; (ii) HMOs that also offer
dental benefits; (iii) self-funded employer programs; (iv) dental PPOs; (v)
discounted, fee-for-service membership plans; and (vi) other local or regional
companies offering prepaid dental plans.

The Company believes the key factors in selecting a particular managed
dental benefits company include: (i) the comprehensiveness and range of prepaid
plans offered; (ii) the quality, accessibility and convenience of dentist
networks; (iii) the responsiveness of customer service; and (iv) the premium
charged. In all of the Company's markets, other prepaid dental plans and
insurance companies compete aggressively on all of these factors, particularly
in situations where the selection is through a competitive bidding process.
Certain markets also have intense price competition that could occur in all
markets in the future. In recent years, the Company has seen increasing
competition coming from all competitive sectors and the Company anticipates that
this trend will continue.

Larger, national indemnity insurance companies that offer both prepaid and
indemnity dental coverage may have a competitive advantage over independent
dental plans due to availability of multiple product lines, established business
relationships, better name recognition and greater financial and information
systems resources. The Company believes that it can effectively compete with
insurance companies due to the specialized focus of its management team and
resources directed towards developing competitive dental benefits plans at
generally lower premiums.

While some medical HMOs offer their own prepaid dental plans, others
contract with independent managed dental plans for those services. The Company
believes that it can compete with HMOs that offer dental benefits and pursue
opportunities to form alliances with HMOs to offer dental benefits to HMO
members. See "-- Sales and Marketing."

GOVERNMENT REGULATION

General

State insurance laws and other governmental regulations establish various
licensing, operational, financial and other requirements relating to the prepaid
dental plan business. State insurance departments and other regulatory agencies
are typically empowered to interpret such laws and promulgate regulations
applicable to the prepaid dental plan business. The laws and regulations
relating to the health care industry in general, and prepaid dental plans
specifically, are rapidly developing and have been the subject of numerous past
and present proposals which, if adopted, could adversely affect the Company's
business. Such proposals have included proposals that would require the Company
to admit "any willing provider" to its dental networks, create mandatory minimum
capitation payments to dental providers and specify minimum loss ratios or
mandate schedules of benefits. In addition, the Company's insurance company
subsidiary is subject to numerous laws and regulations applicable to insurance
companies generally. The Company is unable to predict the extent to which
changes to existing laws and regulations will be adopted or the effect that any
such changes may have on the Company's business.

The Company's ability to conduct its business in additional states is
subject to regulatory approvals required in connection with either acquisitions
of existing prepaid dental plan businesses or the application of the Company to
conduct its existing business in additional states. Approvals to acquire another
licensed prepaid dental plan business often require six months or longer to
obtain while licenses and approvals necessary to commence operations of the
Company's existing business in an additional state can require two years or
longer to obtain. In addition, no assurance can be given that the Company's
applications for any such licenses or approvals will be granted, in which case
the Company's plans to expand in additional states would be adversely affected.
In circumstances where the Company is unable to obtain licenses to conduct its
business in a particular state or pending the grant of a license, the Company
would be required to conduct business through contractual arrangements with a
licensed insurance company or a licensed HMO, which arrange-

32
<PAGE> 34

ments are typically less advantageous to the Company than its independent
offering of its prepaid dental plans. See "-- Business Strategy."

In addition to regulatory approvals for acquisitions and additional
licenses, various regulatory approvals and filing requirements may apply to
ongoing aspects of the Company's business such as approvals for benefits plans
offered, premium rates and certain contractual relationships with HMOs and
insurance companies. If the Company fails to maintain compliance with all
material regulations, regulatory authorities are empowered to take certain
actions against the Company such as license revocations that could adversely
affect the Company's ability to conduct business.

United Dental Care Insurance Company

UDCIC is licensed to conduct business in 25 states. UDCIC is a traditional
indemnity insurance carrier and therefore assumes underwriting risk. Currently,
UDCIC provides the indemnity portion of some of the Company's dual choice plans.
UDCIC has not issued any other form of insurance, and its maximum coverage under
each dental insurance policy is generally $1,000.

UDCIC is regulated by the Arizona Department of Insurance and the
departments of insurance of the other states in which UDCIC is licensed to
transact insurance business. The Company's ability to expand UDCIC's insurance
operations into states in which UDCIC is not currently licensed is dependent,
for the most part, on prior regulatory approval, which must be sought from the
department of insurance in each state in which the Company is applying. Such
reviews may take from six months to two years or more. Insurance companies are
heavily regulated and require significant cash deposits for capital and surplus.
The regulations of the various state insurance departments include specific
requirements with regard to such matters as minimum capital and surplus,
permitted investments, advertising, policy forms and claims processing
requirements. See "-- Legal Proceedings."

In December 1992, the National Association of Insurance Commissioners
approved risk-based capital ("RBC") standards for life and/or health insurance
companies, as well as a Model Act (the "RBC Model Act") to apply to such
standards at the state level. The RBC Model Act requires an insurance company to
submit an annual RBC report which compares its total adjusted capital with its
risk-based capital as calculated by an RBC formula which takes into account the
risk characteristics of the company's investments and products. The RBC formula
includes capital requirements for four categories of risk: asset risk, insurance
risk, interest rate risk and business risk, with capital requirements increasing
for higher levels of risk. There are four levels of progressively more intense
regulatory action against insurance companies whose total adjusted capital does
not meet the RBC standards, starting with the company being required to submit a
plan to improve its capitalization and ending with the state insurance
department placing the company under regulatory control. The State of Arizona
adopted the RBC Model Act effective January 1, 1996. At December 31, 1995,
UDCIC's total adjusted capital was $6.7 million, or 299%, of the "company action
level" of the RBC standard of $2.2 million. If the capital and surplus of UDCIC
does not exceed the "company action level" at December 31, 1997, UDCIC would be
required to submit a business plan to the state regulators. The Company does not
believe that compliance with the RBC standards will adversely affect the
Company's business since the Company estimates that UDCIC will be able to
satisfy such standards without the need for significant capital contributions by
the Company. In addition, the Company does not consider that compliance with the
RBC standards will adversely affect the ability of the Company to meet its
anticipated operating cash requirements.

FACILITIES

The Company leases approximately 26,634 square feet of office space for its
corporate offices in Dallas, Texas under a lease expiring in March 1997. In
addition, the Company leases an aggregate of approximately 55,363 square feet of
space for its other regional and local offices with lease terms expiring at
various times through August 2001.

33
<PAGE> 35

EMPLOYEES

At June 30, 1996, the Company employed approximately 296 employees, of
which 92 were sales personnel, 51 were customer service personnel, 32 were
provider relations personnel, seven were dental directors and 114 were
administrative personnel. The Company has no collective bargaining agreements
with any unions and believes that its overall relations with its employees are
good.

INSURANCE

The Company carries general liability, comprehensive property damage,
workers' compensation and other insurance coverages that management considers
adequate for the protection of the Company's assets and operations. There can be
no assurance, however, that the coverage limits of such policies will be
adequate. A successful claim against the Company in excess of its insurance
coverage could have a material adverse effect on the Company.

LEGAL PROCEEDINGS

On May 24, 1996, the Arizona Department of Insurance filed a Notice of
Administrative Hearing against the Company alleging that the Company consummated
its acquisition of AHP in January 1996 without complying with the requirements
of the Arizona Insurance Holding Company Act (the "Act"). AHP is licensed in
Arizona as a prepaid dental plan organization. The Company did not make a filing
under the Act in connection with the AHP acquisition because the Company's
interpretation is that the Act does not apply to AHP since AHP is not an
"insurer" as defined by and subject to the Act. The Notice seeks fines of up to
$50,000 for each violation against the Company and any officer or director of
the Company who knowingly violated the Act, and also seeks an Order directing
compliance with the Act in connection with the AHP acquisition. The Arizona
Department of Insurance has broad powers to seek other remedies, including
injunctive relief and license revocation. There can be no assurance as to what
relief may ultimately be sought or obtained by the Arizona Department of
Insurance. The Company has filed an answer denying the allegations. A final
determination against the Company could have a material adverse effect on the
Company.

The Company is, and may be in the future, party to litigation arising in
the course of its business. The Company carries insurance protecting it against
liability arising out of the provision of dental care services by contracting
dentists, who are not employees or agents of the Company. Claims against the
Company arising out of the provision of dental care services by contracting
dentists historically have been rare, but there can be no assurance that the
Company will not become involved in such litigation or otherwise become subject
to claims relating to its contracting dentists in the future. While the Company
has no significant pending claims, there can be no assurance that the Company's
insurance coverage will be adequate to cover all liabilities arising out of such
claims or that any such claims will be covered by the Company's insurance. Any
material claim which is not covered by insurance may have an adverse effect on
the Company's business. Claims against the Company, regardless of their merit or
outcome, may also have an adverse effect on the Company's reputation and
business.

34
<PAGE> 36

PENDING AND RECENT ACQUISITIONS

PENDING ACQUISITIONS

The Company has recently entered into agreements to acquire five managed
dental benefits companies operating prepaid dental plans in New Jersey, Florida,
Oklahoma, Missouri, Kansas and Michigan having approximately 440,000 members in
the aggregate at June 30, 1996. In addition, the Company has recently entered
into an agreement to acquire a company that operates a multi-state dental
referral plan having approximately 60,000 members at June 30, 1996. Upon
completion of the acquisitions, the Company will obtain licenses to operate
prepaid dental plans in four additional states and a license to operate an
indemnity plan in one additional state.

OraCare Transaction

On September 5, 1996, the Company entered into agreements to acquire
OraCare DPO ("OraCare"), a New Jersey prepaid dental plan having approximately
150,000 members at June 30, 1996, and to acquire a management company affiliated
with OraCare. Approximately 75.6% of OraCare's members are Medicaid members of
medical HMOs that contract with OraCare to provide the dental benefits under
their plans. Members of one medical HMO represent approximately 34.4% of
OraCare's total membership. In addition, as a part of the transaction, the
Company agreed to cause one of its affiliates to acquire a dental professional
association owned by the majority stockholder of OraCare. The affiliated
management company provides management services to both the prepaid dental plan
and the professional association which, as of June 30, 1996, operated eight
dental clinics servicing both members of the OraCare prepaid dental plan and
other third-party prepaid and fee-for-service patients.

The OraCare entities had combined revenues of $9.2 million and $7.6 million
for the years ended December 31, 1995 and 1994, respectively, and $6.7 million
for the six months ended June 30, 1996. The consideration to be paid by the
Company in connection with the OraCare transaction is $30.5 million plus certain
contingent payments up to a maximum aggregate amount of $6.0 million based on
the financial performance of the Company in the States of New Jersey and
Pennsylvania in 1997 and 1998. The Company presently anticipates that
approximately $30.4 million of the initial consideration in the OraCare
transaction will be allocated to goodwill for financial statement purposes. See
"-- Acquisition Accounting Principles," the OraCare Combined Financial
Statements and the Notes thereto and the Unaudited Pro Forma Condensed Combined
Financial Statements.

In connection with the OraCare transaction, the Company will enter into
employment agreements with two former OraCare stockholders as operating officers
of the OraCare management company and two former stockholders as dental
directors and dental providers of the professional association. In addition, the
OraCare management company will enter into a long-term management contract
pursuant to which it will furnish the facilities and equipment and certain
management services to the OraCare professional association relating to the
operation of its dental clinics. The capital stock of the OraCare professional
association will be acquired by a licensed New Jersey dentist designated by the
Company because of New Jersey regulations prohibiting the corporate practice of
dentistry. The OraCare transaction is subject to the receipt of New Jersey
regulatory approvals.

UICI Transactions

On September 10, 1996, the Company entered into definitive agreements to
acquire three companies, two of which are wholly owned by UICI, formerly known
as United Insurance Companies, Inc., and one of which is majority owned by UICI.
The companies that will be acquired are: (i) United Dental Care, Inc.
("United"), which, through an indemnity insurance subsidiary, operates a prepaid
dental plan in Oklahoma having approximately 90,000 members at June 30, 1996;
(ii) International Dental Plan, Inc. ("IDP"), which operates a prepaid dental
plan in Florida having approximately 100,000 members at June 30, 1996; and (iii)
Association Dental Plan, Inc. ("ADP"), which operates a multi-state dental
referral plan having approximately 60,000 members at June 30, 1996.

35
<PAGE> 37

The consideration to be paid by the Company in connection with the United
transaction is approximately $5.8 million (subject to adjustment based on the
net worth of United at the time of closing less $750,000, which at June 30, 1996
would have resulted in additional consideration of approximately $1.6 million).
In connection with the United transaction, the Company will enter into four-year
employment agreements with two employees of United. The consideration to be paid
by the Company in the IDP transaction is $4.5 million and the consideration to
be paid in the ADP transaction is $2.5 million. In addition, in connection with
the ADP transaction, a note owed by ADP to UICI having a balance of
approximately $770,000 will be repaid in full.

United, IDP and AHP had combined revenues of approximately $16.6 million
for the year ended December 31, 1995 and $8.9 million for the six months ended
June 30, 1996. The Company presently anticipates that approximately $10.4
million will be allocated to goodwill for financial statement purposes in
connection with these transactions. See "-- Acquisition Accounting Principles,"
the UICI Dental Companies Combined Financial Statements and the Notes thereto
and the Unaudited Pro Forma Condensed Combined Financial Statements.

The United transaction is subject to receipt of Oklahoma regulatory
approval. The United and ADP transactions are conditioned upon the simultaneous
closing of each transaction. The IDP transaction is subject to the receipt of
Florida regulatory approval. The United and ADP transactions are also subject to
the Company and two marketing entities affiliated with UICI having approximately
5,000 dedicated agents entering into a marketing agreement pursuant to which
such agents will market the dental benefit products of the Company.

Kansas City Dental Care Transaction

On September 11, 1996, the Company entered into an agreement to acquire
Kansas City Dental Care, Inc. ("KCDC"), which operates prepaid dental plans in
Missouri and Kansas having approximately 90,000 members in the aggregate as of
June 30, 1996. KCDC had revenues of approximately $8.4 million for the year
ended December 31, 1995 and approximately $4.8 million for the six months ended
June 30, 1996. The consideration to be paid by the Company in connection with
the KCDC transaction is $12.5 million plus a contingent payment up to a maximum
of $2.0 million based on the financial performance of the Company operations in
the states of Missouri and Kansas in the second year after completion of the
acquisition. The Company presently contemplates that approximately $12.4 million
of the consideration to be paid in the KCDC transaction will be allocated to
goodwill for financial statement purposes. In connection with the KCDC
transaction, the Company will enter into three-year employment agreements with
two management officers of KCDC, one of whom is a stockholder and officer of
KCDC and the other of whom is the current chief executive officer (and stock
option holder) of KCDC. The KCDC transaction is subject to the receipt of
Missouri and Kansas regulatory approvals. The Company currently operates prepaid
dental plans in both states. See the Kansas City Dental Care Financial
Statements and the Notes thereto and "Unaudited Pro Forma Condensed Combined
Financial Statements."

Independent Dental Plan Transaction

On June 28, 1996, the Company entered into an agreement to acquire
Independent Dental Plan, Inc. ("Independent"), which operates a prepaid dental
plan in Michigan having approximately 10,000 members at June 30, 1996.
Independent had revenues of approximately $1.7 million for the year ended
December 31, 1995 and $0.9 million for the six months ended June 30, 1996. The
consideration to be paid by the Company in connection with the Independent
transaction is approximately $1.2 million. In addition, in connection with the
Independent transaction, the Company will enter into employment agreements with
two of the operating officers of Independent.

The Company intends to use the net proceeds of this offering to finance the
Pending Acquisitions, most of which are anticipated to be completed following
completion of this offering. However, none of the Pending Acquisitions are
subject to completion of this offering, and this offering is not subject to
completion of any of the Pending Acquisitions. The Company intends to obtain a
commitment for a $35 million line of credit with

36
<PAGE> 38

an unaffiliated bank to finance certain of the Pending Acquisitions if they are
consummated prior to completion of this offering. The Company believes based on
discussions with such bank that it will be able to obtain such line of credit.
The Company also believes that it will be able to increase such line of credit
to $50 million if necessary to finance, together with available cash of the
Company, all the Pending Acquisitions if they are consummated prior to
completion of this offering. See "Management's Discussion And Analysis Of
Financial Condition and Results Of Operations -- Credit Facilities."

Except as otherwise noted in this Prospectus, all information in this
Prospectus regarding the Company and its subsidiaries excludes information
relating to the Pending Acquisitions.

RECENT ACQUISITIONS

US Dental Transaction

Effective November 1, 1995, the Company acquired U.S. Dental Management,
Inc. ("US Dental"), which operated prepaid dental plans in Arizona, New Mexico,
Nebraska and Colorado and administered a prepaid dental plan owned by a third
party in Nevada. The US Dental plans had approximately 163,000 members at the
time of the acquisition. US Dental had revenues of approximately $13.3 million
and $13.0 million for the years ended December 31, 1995 and 1994, respectively.
The consideration paid by the Company in the US Dental acquisition was
approximately $12.6 million, which included the present value of amounts payable
under 50-month consulting agreements and 36-month non-competition agreements
with the two former stockholders of US Dental.

The consideration paid in the US Dental acquisition was allocated for
financial statement purposes in the amounts of approximately $11.7 million to
goodwill, approximately $0.2 million to the non-competition and consulting
agreements and the balance to tangible assets. See "-- Acquisition Accounting
Principles."

AHP Transaction

Effective February 1, 1996, the Company acquired Associated Health Plans,
Inc. ("AHP"), which operated prepaid dental plans in Arizona having
approximately 220,000 members at the time of the acquisition. AHP had revenues
of approximately $14.2 million and $12.6 million for the years ended December
31, 1995 and 1994, respectively. The consideration paid by the Company in the
AHP transaction was approximately $15.0 million, which includes the present
value of amounts payable under 36-month non-competition agreements with four
former stockholders of AHP. The consideration paid in the AHP transaction was
allocated for financial statement purposes in amounts of approximately $14.1
million to goodwill, approximately $0.6 million to the non-competition
agreements and the balance to tangible assets. In making such allocation, the
Company applied the same accounting principles that it applied in connection
with the US Dental acquisition. See "-- Acquisition Accounting Principles."

ACQUISITION ACCOUNTING PRINCIPLES

A substantial majority of the consideration paid by the Company in the US
Dental and AHP acquisitions was allocated to goodwill for financial statement
purposes. Goodwill relates to items traditionally associated with going concern
values such as the reputation of an acquired entity in its markets, name
recognition, the ability to maintain and further develop systems and market
position in geographic areas in which the Company previously did not have a
market position. The allocations made in the US Dental and AHP acquisitions were
not based on third-party appraisals. The Company relied on its own expertise and
experience in the industry in making the valuation for such allocation. Other
than the amounts allocated to the non-competition and consulting agreements, the
Company did not allocate any portion of the consideration to other intangibles
such as dentist networks and subscriber contracts. The amounts allocated as the
values of the non-competition and consulting agreements were significantly below
the contractual payments due under such agreements based on an estimate by the
Company of the value of the benefits expected under such agreements. See the
Company's Consolidated Financial Statements and the Notes thereto, the US Dental
Financial Statements and the Notes thereto, the AHP Combined Financial
Statements and the Notes thereto and the Unaudited Pro Forma Condensed
Consolidated Financial Statements.

37
<PAGE> 39

The Company did not allocate any portion of the US Dental or AHP
consideration to dentist networks because the dentist provider contracts were
non-exclusive and could be terminated on limited notice. The Company believes
that the expense attributable to recruiting new dentists does not constitute a
material portion of the Company's expenses incurred with respect to its ongoing
activities relating to credentialing dentists and maintaining its dental
provider relationships. The Company did not allocate any portion of the US
Dental or AHP consideration to subscriber contracts because the employer group
agreements generally had terms of less than one year. Additionally, individual
subscribers could terminate participation in the plan periodically during the
term of the employer group agreement, or at any time, if they cease to be
employed by the employer. The cost relating to recruiting, credentialing and
maintaining dentist networks and to sales and to account maintenance efforts are
expensed by the Company as incurred.

The Company intends to apply the same accounting principles it applied in
connection with the US Dental and AHP acquisitions in allocating for financial
statement purposes the consideration to be paid in connection with the Pending
Acquisitions.

38
<PAGE> 40

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The following table sets forth certain information concerning the executive
officers and directors of the Company:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------------- --- -------------------------------------------------
<S> <C> <C>
William H. Wilcox(1)................. 44 President, Chief Executive Officer and Director
Mark E. Pape......................... 46 Senior Vice President, Chief Financial Officer,
Treasurer and Secretary
Peter R. Barnett, DMD................ 44 Senior Vice President and Chief Operating Officer
Jack R. Anderson(1)(2)............... 71 Chairman of the Board of Directors
James B. Kingston.................... 43 Vice Chairman of the Board of Directors
James K. Newman(1)................... 52 Director
William H. Longfield(2).............. 58 Director
George E. Bello(3)................... 60 Director
James E. Buncher(3).................. 60 Director
Donald E. Steen...................... 49 Director
Robert J. Nettinga................... 45 Director
</TABLE>

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

(1) Member of the Executive Committee.
(2) Member of the Compensation Committee.
(3) Member of the Audit Committee.

Mr. Wilcox has been the President and Chief Executive Officer and a
Director of the Company since May 1996. He succeeded Mr. Kingston who had served
as the President of the Company since its inception in December 1985. From
September 1994 to May 1996, he served as a Group President of Columbia/HCA
Healthcare Corporation, a health care services corporation primarily involved in
the ownership and operation of hospitals and the provision of related services.
From September 1992 to September 1994, Mr. Wilcox was Chief Operating Officer of
Medical Care America, Inc., a corporation that operated ambulatory surgery
centers. Medical Care America, Inc. was acquired by Columbia/HCA Healthcare
Corporation in September 1994. Mr. Wilcox served as Executive Vice President and
Chief Operating Officer of Medical Care International, a predecessor to Medical
Care America, from 1983 to September 1992.

Mr. Pape has been Senior Vice President and Chief Financial Officer,
Treasurer and Secretary of the Company since January 1995. From September 1991
to January 1995, he was the Executive Vice President and Chief Financial Officer
of American Income Holding, Inc., an insurance holding company with subsidiaries
that issued individual supplemental life and accident insurance. From January
1988 to September 1991, he was an associate director of Bear, Stearns & Co.
Inc., an investment banking company.

Dr. Barnett served as Senior Vice President, Operations of the Company from
January 1995 until January 1996, when he became Senior Vice President and Chief
Operating Officer. From August 1994 to January 1995 he was the Executive
Director of Prudential DMO, a managed dental care company, where he was
responsible for its southeastern United States operations. From March 1993 to
August 1994, he was an independent consultant to managed health care companies.
From October 1991 to March 1993, he was a Senior Vice President of Pearle
Vision, Inc., an optical care company, where he had responsibility for managed
vision care programs, quality assurance, professional affairs and franchise
operations. He served as a Vice President of Pearle Vision, Inc. from July 1988
to October 1991.

Mr. Anderson has been Chairman of the Board of Directors of the Company
since December 1985. Mr. Anderson has been the President of Calver Corporation,
a health care consulting and investment firm, and a private investor since 1982.
Mr. Anderson currently serves on the board of directors of FHP International
Corporation and Horizon Mental Health Management, Inc.

39
<PAGE> 41

Mr. Kingston has served as a Director of the Company since December 1985.
He became Vice Chairman of the Board in February 1996. He served as the
President and Chief Executive Officer of the Company from December 1985 until
May 1996. Since May 1996, Mr. Kingston has been a private investor. He served as
Chairman of the National Association of Dental Plans for 1994 and 1995 and
previously served as a director of that organization from 1989 to 1992 and as
chairman of its legislative committee from 1990 to 1992.

Mr. Newman has been a Director of the Company since January 1986. Mr.
Newman has been the President and Chief Executive Officer of Horizon Mental
Health Management, Inc., a contract manager of mental health services and
programs for general acute care hospitals, since July 1989. Mr. Newman currently
serves on the board of directors of Horizon Mental Health Management, Inc. and
Telecare Corporation.

Mr. Longfield has been a Director of the Company since January 1986. He has
been the Chairman and Chief Executive Officer of C.R. Bard, Inc., a
multi-national developer, manufacturer and marketer of health care products,
since September 1995. He was President and Chief Executive Officer of C.R. Bard,
Inc. from October 1993 to September 1995, President and Chief Operating Officer
from September 1991 to October 1993 and Executive Vice President and Chief
Operating Officer from February 1989 to September 1991. Mr. Longfield currently
serves on the board of directors of C.R. Bard, Inc., Manor Care, Inc., Horizon
Mental Health Management, Inc., The West Company, Health Industry Manufacturers
Association and Atlantic Health Systems. He is currently a Trustee of Centenary
College.

Mr. Bello was elected to the Board of Directors in December 1995. Mr. Bello
has been Executive Vice President and Controller of Reliance Group Holdings,
Inc., an insurance holding company, since 1979. Mr. Bello serves on the board of
directors of Reliance Group Holdings, Inc., Reliance Financial Services
Corporation, Zenith National Insurance Corp. and Horizon Mental Health
Management, Inc.

Mr. Buncher was elected to the Board of Directors in February 1996. Mr.
Buncher has served as President of Health Plans Group of Value Health, Inc., a
national specialty managed care company, since September 1995 and as President
and Chief Executive Officer of Community Care Network, Inc., a Value Health
subsidiary, since August 1992. During 1992, he served as a general management
consultant to TakeCare, Inc., a managed care company, and, from 1987 through
1991, he served as a general partner in Lake Investments, a Dallas, Texas-based
investment company. He currently serves on the board of directors of Alliance
Imaging, Inc.

Mr. Steen was elected to the Board of Directors in April 1996. He has been
President of the International Group of Columbia/HCA Healthcare Corporation
since September 1994. From August 1981 to September 1994, Mr. Steen was Chief
Executive Officer of Medical Care America, Inc. Mr. Steen currently serves on
the board of directors of Horizon Mental Health Management, Inc.

Mr. Nettinga, a private investor, has been a Director of the Company since
September 1994. Mr. Nettinga was a founder of the predecessor to IDH and served
as a director of IDH and its predecessor from 1977 until 1994. Since September
1994, Mr. Nettinga has been a private investor.

There are no family relationships between any executive officers and
directors of the Company. The Board of Directors is presently authorized to
consist of nine members.

The Company, certain of its stockholders and Mr. Nettinga entered into a
Stockholders Agreement dated September 16, 1994 pursuant to which such
stockholders agreed to vote all shares of Common Stock owned by them for the
election of Mr. Nettinga as a Director of the Company, and the Company and such
stockholders agreed that the Board of Directors of the Company would consist of
not less than seven members. The Stockholders Agreement has a term ending upon
the earlier of four years from the date of the agreement or the date on which
all obligations are paid under a non-competition agreement and a consulting
agreement among the Company, Mr. Nettinga and an affiliated entity. The
stockholders who are parties to the Stockholders Agreement include Messrs.
Kingston, Anderson, Newman and Longfield. The stockholders who are parties to
the Stockholders Agreement beneficially own in the aggregate approximately 15.6%
of the Common Stock of the Company outstanding prior to this offering and will
beneficially own in the aggregate approximately 12.1% of the Common Stock
outstanding after this offering. See "Principal Stockholders" and "Certain
Transactions."

40
<PAGE> 42

EXECUTIVE COMPENSATION

The following table provides certain summary information concerning
compensation awarded to, earned by or paid to the Chief Executive Officer and
other officers of the Company named below (collectively, the "Named Executive
Officers") for the periods indicated.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
----------------------------------------- ------------
OTHER ANNUAL SECURITIES
COMPENSATION UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(1) (2) OPTIONS(#)
- --------------------------------- ---- -------- -------- --------------- ------------
<S> <C> <C> <C> <C> <C>
James B. Kingston(3)............. 1995 $180,000 $200,000 $ 4,901 --
Vice Chairman of the Board 1994 150,000 60,000 3,728 48,000
Mark E. Pape(4).................. 1995 137,760 53,400 2,467 40,000
Senior Vice President and Chief
Financial Officer
Peter R. Barnett, DMD(5)......... 1995 123,216 51,200 2,586 30,000
Senior Vice President and Chief
Operating Officer
</TABLE>

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

(1) Amounts shown for 1995 represent bonuses earned in the year ended December
31, 1995 and paid in 1996. Amounts shown for 1994 represent bonuses earned
in 1994 and paid in 1995. Excludes deferred bonus payments not payable until
1997, or later, that are contingent upon continued employment with the
Company. Such deferred amounts for Mr. Kingston, Mr. Pape and Dr. Barnett
were $32,200, $19,320, and $18,030, respectively.

(2) Represents premiums paid by the Company for the employee's health insurance,
net of employee's contribution.

(3) Mr. Kingston served as President and Chief Executive Officer of the Company
until May 1996. He continues to serve as Vice Chairman of the Board of
Directors. Mr. Kingston does not currently hold any stock options.

(4) Mr. Pape joined the Company in January 1995. In January 1995, Mr. Pape was
granted stock options to purchase 40,000 shares of Common Stock at a price
of $6.00 per share. Such options vest in five equal annual installments
beginning January 1997. In January 1995, Mr. Pape purchased from the Company
warrants to purchase 40,000 shares of Common Stock.

(5) Dr. Barnett joined the Company in January 1995. In January 1995, Dr. Barnett
was granted stock options to purchase 30,000 shares of Common Stock at a
price of $6.00 per share. Such options vest in five equal annual
installments beginning in January 1997.

41
<PAGE> 43

STOCK OPTIONS

The following table sets forth information regarding the grant of options
to purchase shares of Common Stock to the executive officers of the Company who
received such grants in the year ended December 31, 1995. No stock appreciation
rights have been granted.

OPTION GRANTS IN YEAR ENDED DECEMBER 31, 1995

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
------------------------------------------------------------------ ANNUAL RATES OF
NUMBER OF PERCENT OF STOCK
SECURITIES TOTAL OPTIONS PRICE APPRECIATION
UNDERLYING OPTIONS GRANTED TO EXERCISE OR FOR OPTION TERMS(3)
GRANTED(1) EMPLOYEES IN BASE PRICE(2) EXPIRATION --------------------
NAME (#) FISCAL YEAR ($/SH) DATE 5% 10%
- ----------------------- ------------------ ------------- ------------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Mark E. Pape........... 40,000 50.0% $6.00 01/01/2002 $150,800 $382,400
Peter R. Barnett,
DMD.................. 30,000 37.5 6.00 01/01/2002 113,100 286,800
</TABLE>

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

(1) The options shown have a maximum term of eight years, subject to earlier
termination in the event employment with the Company is terminated. The
options vest and are exercisable cumulatively in equal installments over a
five-year period commencing two years from the date of grant.

(2) The exercise price per share of the options equaled or exceeded the fair
market value of the underlying shares of Common Stock on the date the
options were granted, as determined by the Company's Board of Directors.

(3) There is no assurance provided to any executive officer or any other holder
of the Company's securities that the actual stock price appreciation over
the option term will be at the assumed 5% and 10% levels or at any other
defined level. Unless the market price of the Common Stock does in fact
appreciate over the option term, no value will be realized from the option
grants.

OPTION HOLDINGS

The following table sets forth certain information concerning stock options
exercised in the year ended December 31, 1995 and the number of shares covered
by unexercised stock options held by the executive officers of the Company who
held stock options outstanding as of December 31, 1995. Also reported are values
of "in-the-money" stock options representing the difference between the
respective exercise prices of such outstanding stock options and the fair market
value of the Common Stock as of December 31, 1995.

AGGREGATED OPTION EXERCISES
IN YEAR ENDED DECEMBER 31, 1995
AND
OPTION VALUES AS OF DECEMBER 31, 1995

<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS
YEAR-END(#)(1) AT FISCAL YEAR-END(2)
SHARES ACQUIRED --------------------------- ---------------------------
NAME ON EXERCISE(#) VALUE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------ --------------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
James B. Kingston(3).... 260,000 $1,490,000 -- 110,000 -- $ 4,062,750
Mark E. Pape............ -- -- -- 40,000 -- 1,405,000
Peter R. Barnett, DMD... -- -- -- 30,000 -- 1,053,750
</TABLE>

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

(1) The options shown for each of the executive officers have a maximum term of
ten years, subject to earlier termination in the event of the optionee's
cessation of service with the Company.

(2) Calculated based on $41.13 per share, the closing sales price of the Common
Stock on the Nasdaq National Market on the last business day of 1995
(December 29), less the applicable exercise price.

(3) Mr. Kingston exercised options for 260,000 shares on June 19, 1995. The
aggregate exercise price for such options was $330,000, and the value of
the Common Stock on the exercise date was estimated to be $7.00 per share.
Mr. Kingston currently does not hold any stock options.

42
<PAGE> 44

1996 EXECUTIVE INCENTIVE PLAN

The Company has adopted an incentive bonus plan for its executive and other
officers for 1996. Under the bonus plan, officers are entitled to earn certain
cash bonuses if specified performance criteria are satisfied. The target bonuses
that may be earned by the executive officers of the Company under the bonus plan
are: (i) $170,000 for Mr. Wilcox; (ii) $110,000 for Mr. Pape; and (iii) $110,000
for Dr. Barnett. The bonuses are payable in 1997, except a portion of the bonus
earned may be deferred and payable in future years.

STOCK OPTION PLANS

1989 Stock Option Plan

The Company has a 1989 Key Employee Stock Option Plan (the "1989 Stock
Option Plan") that was adopted in April 1989. The 1989 Stock Option Plan
provides that a total of 724,000 shares of Common Stock of the Company may be
issued pursuant to nonqualified options granted thereunder. At June 30, 1996,
options for the entire 724,000 shares were outstanding or had been exercised.
The Board of Directors has terminated the 1989 Stock Option Plan for the
purposes of any additional stock option grants thereunder.

1995 Stock Option Plan

The Company has a 1995 Stock Option Plan (the "1995 Stock Option Plan")
that was adopted by the Company's Board of Directors in April 1995 and approved
by the stockholders of the Company in September 1995. The 1995 Stock Option Plan
provides that a total of 800,000 shares of Common Stock of the Company may be
issued pursuant to nonqualified options granted thereunder. In addition to
discretionary grants of stock options to employees, the 1995 Stock Option Plan
provides for the automatic one-time grant of stock options for 16,000 shares of
Common Stock to certain qualifying non-employee directors who were either
serving on the Board of Directors of the Company when the 1995 Stock Option Plan
was adopted by the Board of Directors or who are elected to the Board of
Directors in the future to the extent that options are available under the 1995
Stock Option Plan. At June 30, 1996, options for 405,000 shares had been granted
under the 1995 Stock Option Plan.

401(K) PLAN

The Company maintains the United Dental Care, Inc. 401(k) Plan (the "401(k)
Plan"). The 401(k) Plan is an individual account, defined contribution plan
which provides for deferred compensation as described in Section 401(k) of the
Internal Revenue Code of 1986. The 401(k) Plan is subject to the principal
protective provisions of Titles I and II of the Employee Retirement Income
Security Act of 1974.

EMPLOYMENT AGREEMENTS

The Company has entered into an employment agreement with William H. Wilcox
pursuant to which he is employed as the President and Chief Executive Officer of
the Company at a base salary of $300,000 per year. The employment agreement has
a term until May 31, 1999 but may be terminated by either party upon 60 days
prior notice. Termination by the Company requires the approval of 75% of the
members of the Board of Directors. In the event of termination without cause,
the Company is required to pay a severance payment to Mr. Wilcox in an amount
equal to the amount of his base salary for the lesser of 24 months or the then
remaining term of the employment agreement, plus a bonus equal to the average of
the annual bonuses paid to Mr. Wilcox in the preceding two calendar years. In
addition, in such event, all stock options then held by Mr. Wilcox become fully
vested and exercisable within 90 days after the date of termination, although,
under certain conditions, the Board may continue the exercisability of such
options as originally scheduled (but without any vesting conditions other than
the passage of time). In the event Mr. Wilcox cannot obtain third-party
financing to exercise the options, the Company is obligated to make a one-year
loan to Mr. Wilcox in an amount necessary to exercise the options. In the event
a change of control of the Company occurs, Mr. Wilcox may resign with good
reason if there is a material diminution of his responsibilities, position or
authority, or the Company fails to perform its obligations under the agreement
and, in such event, all stock options held by Mr. Wilcox will become fully
vested and exercisable for a period of 90 days but no severance payments will be

43
<PAGE> 45

due. The employment agreement contains non-competition provisions that survive
for the greater of one year or the period of time severance payments are being
made or stock options remain exercisable or a loan from the Company to Mr.
Wilcox is outstanding. In connection with his employment, Mr. Wilcox was also
granted stock options for 300,000 shares of Common Stock at an exercise price of
$33.38 per share.

The Company has entered into an employment agreement with Mark E. Pape
pursuant to which he is employed as the Senior Vice President and Chief
Financial Officer of the Company. The employment agreement is on substantially
the same terms as the employment agreement with Mr. Wilcox except the agreement
has a term until May 31, 1998, the base salary for Mr. Pape is $165,000, the
severance payment is based on the lesser of 12 months of base salary or the base
salary payable over the remaining term of the agreement and only 50% of the
unvested stock options held by Mr. Pape are accelerated in the event of
termination without cause by the Company or resignation for good reason by Mr.
Pape after a change of control.

The Company has entered into an employment agreement with Peter R. Barnett
pursuant to which he is employed as a Senior Vice President and Chief Operating
Officer of the Company. The employment agreement has identical terms, including
base salary, as the employment agreement with Mr. Pape.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Executive officer compensation decisions are made by the Compensation
Committee of the Board of Directors of the Company. Members of the Compensation
Committee currently are Messrs. Anderson and Longfield. Neither of these
individuals were at any time during the year ended December 31, 1995, or at any
time prior thereto, an officer or employee of the Company or any of its
subsidiaries. Upon completion of the offering, executive officer compensation
decisions will continue to be made by the Compensation Committee. During 1995,
no executive officer of the Company served as a director or as a member of the
compensation committee of any entity in which an executive officer of such
entity served as a director of the Company or as a member of the Company's
Compensation Committee. See "Principal Stockholders."

DIRECTOR COMPENSATION

Directors do not receive compensation for service on the Board of Directors
or any committee thereof but are reimbursed for their out-of-pocket expenses
incurred in attending meetings of the Board of Directors and committees.
Qualifying directors who are not employees of the Company receive an automatic
one-time grant of options for 16,000 shares of Common Stock of the Company under
the 1995 Stock Option Plan. See "-- 1995 Stock Option Plan."

INDEMNIFICATION OF DIRECTORS AND OFFICERS

Under Section 145 of the Delaware General Corporation Law ("Delaware Law"),
the Company has broad powers to indemnify its directors and officers against
liabilities they may incur in such capacities, including liabilities under the
Securities Act. The Company's Bylaws provide that the Company shall indemnify
its directors and officers to the full extent permitted by law. The Bylaws also
provide that rights conferred thereunder shall not be deemed to be exclusive of
any other right such persons may have or acquire under any statute, the
Certificate of Incorporation, the Bylaws, agreement, vote of stockholders or
disinterested directors, or otherwise.

The Certificate of Incorporation provides that, pursuant to Delaware Law,
the Company's directors shall not be liable for monetary damages for breach of
the directors' fiduciary duty of care to the Company and its stockholders. This
provision in the Certificate of Incorporation does not eliminate the duty of
care, and in appropriate circumstances equitable remedies such as injunctive or
other forms of non-monetary relief will remain available under Delaware Law. In
addition, each director will continue to be subject to liability for breach of
the director's duty of loyalty to the Company or its stockholders, for acts or
omissions not in good faith or involving intentional misconduct or knowing
violations of law, for actions leading to improper personal benefit to the
director, and for payment of dividends or approval of stock repurchases or
redemptions that are unlawful under Delaware Law. The provision also does not
effect a director's responsibilities under any other law, such as the Federal
securities laws or state or Federal environmental laws.

44
<PAGE> 46

CERTAIN TRANSACTIONS

On September 16, 1994, the Company acquired all the issued and outstanding
capital stock of International Dental Health, Inc., a dental benefits company
("IDH"), for a total purchase price of approximately $14.3 million. Mr. Robert
J. Nettinga, a director of the Company, was the president of IDH. The Adaven
Group Limited Partnership was the principal stockholder of IDH and received
approximately $7.5 million in payment for its IDH shares in the transaction. Mr.
Nettinga is the president and principal stockholder of the corporation that is
the general partner of The Adaven Group Limited Partnership. In connection with
such transaction, IDH also paid an outstanding promissory note to Mr. Nettinga
in the amount of $183,770.

The Company also entered into a non-competition agreement with Robert J.
Nettinga and The Adaven Group Limited Partnership and a consulting agreement
with The Adaven Group Limited Partnership. Under the non-competition agreement,
the Company was obligated to pay, in six annual installments commencing in 1994,
approximately $3.3 million in the aggregate. Under the consulting agreement, the
Company was obligated to pay, in six annual installments commencing in 1994,
approximately $1.2 million in the aggregate. The Company has the right to prepay
such installments on a discounted present value basis using a discount rate of
5%. The obligations of the Company under the non-competition agreement and the
consulting agreement are secured by a letter of credit in the original amount of
approximately $4.0 million which amount declines annually after the payment
dates of the annual installments under such agreements.

In the IDH transaction, On-Line, Inc., an assignee of Paul C. Nettinga, the
brother of Robert J. Nettinga, received approximately $1.8 million in payment
for IDH shares. The Company also entered into a non-competition agreement with
Omega Marine Development, Inc. and Paul C. Nettinga under which the Company was
obligated to pay, in six annual installments commencing in 1994, approximately
$0.6 million in the aggregate and a consulting agreement with Omega Marine
Development, Inc. under which the Company was obligated to pay, in six annual
installments commencing in 1994, approximately $0.3 million in the aggregate.
Paul C. Nettinga is the president of Omega Marine Development, Inc. The terms of
the non-competition agreement and the consulting agreement for Paul C. Nettinga
and Omega Marine Development, Inc. are substantially the same as the agreements
with Robert J. Nettinga and The Adaven Group Limited Partnership. IDH also paid
an outstanding promissory note to Paul C. Nettinga in the amount of
approximately $0.3 million. The obligations of the Company under the
non-competition agreement and the consulting agreement are secured by a letter
of credit in the original amount of approximately $0.8 million which amount
declines annually after the payment dates of the annual installments under such
agreements.

The non-competition agreements restrict the parties thereto from competing,
directly or indirectly, with the business of the Company in the continental
United States and from soliciting the employment of any employee of the Company
until September 16, 2000. Under the consulting agreements, the parties thereto
agreed to provide to the Company services as an independent consultant and
adviser with respect to such business and financial matters as may be reasonably
requested by the Company from time to time for a period of six years. The party
providing such consulting services may not be required to render such services
outside of the state of residence of such party without the consent of such
party or at any time that the rendering of such services would interfere with
other business obligations of such party. The Company has not requested any
specific consulting services under the consulting agreements since the IDH
acquisition.

The Company, certain stockholders of the Company and Robert J. Nettinga
entered into a Stockholders Agreement on September 16, 1994 pursuant to which
such stockholders agreed to vote shares of Common Stock of the Company owned by
them for the election of Robert J. Nettinga as a director of the Company until
the earlier of the expiration of four years from the date of such agreement or
the date when all monetary obligations of the Company have been paid under the
non-competition agreement and the consulting agreement with Robert J. Nettinga.
See "Management."

In January 1995, Mark E. Pape, Senior Vice President, Chief Financial
Officer, Treasurer and Secretary of the Company, purchased from the Company
warrants to purchase 40,000 shares of Common Stock. The purchase price of the
40,000 warrants was $2.00 per warrant, and the warrants have an exercise price
of $6.00 per share of Common Stock.

45
<PAGE> 47

PRINCIPAL STOCKHOLDERS

The following table sets forth certain information with respect to the
beneficial ownership of Common Stock as of September 12, 1996 by: (i) each
person known by the Company to own beneficially more than 5% of the outstanding
shares of the Company's Common Stock; (ii) each of the Company's executive
officers and directors; and (iii) all directors and executive officers of the
Company as a group. Except as otherwise noted, the person named has sole voting
and investment power over the shares indicated:

<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY OWNED(1)
---------------------
NUMBER PERCENT
--------- -------
<S> <C> <C>
5% STOCKHOLDERS
Citibank, N.A. and George E. Bello, Trustees(2)...................... 778,500 11.3%
T. Rowe Price........................................................ 457,500 6.6
EXECUTIVE OFFICERS AND DIRECTORS
Jack R. Anderson(3).................................................. 1,081,700 15.7
William H. Wilcox.................................................... -- *
George E. Bello(4)................................................... 352,168 5.1
James B. Kingston(5)................................................. 270,704 3.9
James K. Newman...................................................... 95,666 1.4
William H. Longfield................................................. 64,000 1.0
James E. Buncher..................................................... -- --
Donald E. Steen...................................................... 2,000 *
Robert J. Nettinga................................................... 250 *
Mark E. Pape......................................................... 40,139 *
Peter R. Barnett..................................................... 1,541 *
All directors and executive officers as a group (11 persons)(6)...... 1,908,168 27.4%
</TABLE>

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

* Less than 1%.

(1) The address of Citibank, N.A. and George E. Bello, Trustees is c/o Citibank,
N.A., 153 East 53rd Street, 25th Floor, New York, NY 10043. The address of
T. Rowe Price is 100 E. Pratt Street, Baltimore, MD 21202. The address of
Jack R. Anderson is 14755 Preston Road, Suite 515, Dallas, TX 75240. The
address of George E. Bello is Park Avenue Plaza, 29th Floor, 55 East 52nd
Street, New York, NY 10055.

(2) Citibank, N.A. and George E. Bello are trustees having shared voting and
investment power under two trusts owning in the aggregate the number of
shares shown in the table. Relatives of Jack R. Anderson are beneficiaries
of both trusts. Mr. Anderson disclaims beneficial ownership of the shares
owned by the trusts.

(3) Includes 778,500 shares held by the two trusts of which Citibank, N.A. and
George E. Bello are trustees. Relatives of Mr. Anderson are beneficiaries of
both trusts. Excludes 54,300 shares of Common Stock held by other trusts of
which relatives of Mr. Anderson are beneficiaries. Mr. Anderson disclaims
beneficial ownership of the shares owned by all of the trusts.

(4) Excludes 778,500 shares of Common Stock held by the two trusts of which
Citibank, N.A. and George E. Bello are trustees. Relatives of Mr. Anderson
are beneficiaries of both trusts. Mr. Anderson disclaims beneficial
ownership of the shares owned by the trusts.

(5) Excludes 13,500 shares held by trusts for the benefit of the children of Mr.
Kingston. Mr. Kingston is not a trustee of such trusts, does not have voting
or investment power over such shares and disclaims beneficial ownership of
the shares owned by the trusts. Mr. Kingston has granted the Underwriters a
30-day option to purchase up to 75,000 shares of Common Stock solely to
cover over-allotments, if any. In the event such option is exercised in
full, Mr. Kingston will beneficially own approximately 2.1% of the
outstanding Common Stock of the Company after the offering and the directors
and executive officers of the Company will beneficially own approximately
20.0% of the outstanding Common Stock of the Company after the offering.

(6) After completion of this offering, all directors and executive officers will
collectively beneficially own approximately 21.3% of the outstanding Common
Stock of the Company assuming no exercise of the Underwriters'
over-allotment option.

46
<PAGE> 48

DESCRIPTION OF CAPITAL STOCK

The authorized capital stock of the Company consists of 15,000,000 shares
of Common Stock, $.10 par value per share, and 500,000 shares of Preferred
Stock, $.10 par value per share.

CAPITAL STOCK

At September 13, 1996, there were 6,908,416 shares of Common Stock
outstanding, and such shares were held by approximately 93 stockholders of
record. Each holder of Common Stock is entitled to one vote for each share held.
The shares of Common Stock do not have cumulative voting rights. Following this
offering, the holders of Common Stock, voting as a single class, will be
entitled to elect all of the directors of the Company. Matters submitted for
stockholder approval generally require a majority vote.

Holders of Common Stock are entitled to receive ratably such dividends as
may be declared by the Board of Directors out of funds legally available
therefor. In the event of a liquidation, dissolution or winding up of the
Company, holders of Common Stock will be entitled to share ratably in the
Company's assets remaining after the payment of liabilities and the satisfaction
of any liquidation preference granted to the holders of any outstanding shares
of Preferred Stock. Holders of Common Stock have no preemptive or other
subscription rights. The shares of Common Stock are not convertible into any
other security. The outstanding shares of Common Stock are, and the shares being
offered hereby will be, upon issuance and sale, fully paid and nonassessable.
See "Dividend Policy."

At June 30, 1996, there were no shares of Preferred Stock outstanding. The
Company is authorized to issue up to 500,000 shares of undesignated Preferred
Stock.

CERTAIN EFFECTS OF AUTHORIZED BUT UNISSUED STOCK

Upon completion of the offering, there will be 6,091,584 authorized but
unissued shares of Common Stock and 500,000 authorized but unissued shares of
Preferred Stock, all of which can be issued without stockholder approval. These
additional shares may be utilized for a variety of corporate purposes, including
future public offerings to raise additional capital or to facilitate corporate
acquisitions. The Company does not currently have any plans to issue additional
shares of Common Stock or Preferred Stock (other than shares of Common Stock
which may be issued upon the exercise of options or warrants which have been
granted or which may be granted in the future by the Company).

One of the effects of the existence of unissued and unreserved Common Stock
and Preferred Stock of the Company may be to enable the Board of Directors to
issue shares to persons friendly to current management which could render more
difficult or discourage an attempt to obtain control of the Company by means of
a merger, tender offer, proxy contest or otherwise, and thereby protect the
continuity of the Company's management and possibly deprive the stockholders of
opportunities to sell their shares of Common Stock at prices higher than
prevailing market prices. Such additional shares could also be used to dilute
the stock ownership of persons seeking to obtain control of the Company.

The Board of Directors is authorized, without any further action by the
stockholders, to determine the rights, preferences, privileges and restrictions
of the unissued Preferred Stock. One purpose of authorizing the Board of
Directors to determine such rights and preferences is to eliminate delays
associated with a stockholder vote on specific issuances. The Board of Directors
may issue Preferred Stock with voting and conversion rights which could
adversely affect the voting power of the holders of Common Stock and which
could, among other things, have the effect of delaying, deferring or preventing
a change in control of the Company.

CERTAIN PROVISIONS OF CERTIFICATE OF INCORPORATION AND BYLAWS

The Delaware General Corporation Law provides that Delaware corporations
may amend their certificates of incorporation to relieve directors of monetary
liability for breach of their fiduciary duty including acts constituting gross
negligence, except under certain circumstances (including breach of the
director's duty of loyalty, acts or omissions not in good faith or involving
intentional misconduct and a knowing violation of law

47
<PAGE> 49

or any transaction from which the director derived improper personal benefit).
The Company's certificate of incorporation provides that the Company's directors
are not liable to the Company or its stockholders for monetary damages for
breach of their fiduciary duties, subject to the exceptions specified by
Delaware law.

Under Delaware law, the exclusive power to adopt, amend and repeal bylaws
is conferred solely on the stockholders unless the corporation's certificate of
incorporation also confers this power upon its board of directors. Under the
Company's Certificate of Incorporation, the Board of Directors has been granted
this power. The Company's Bylaws also provide that the number of directors shall
be as from time to time fixed by resolution of the Board. These provisions, in
addition to the existence of authorized but unissued capital stock, may have the
effect, either alone or in combination with each other, of making more difficult
or discouraging an acquisition of the Company deemed undesirable by the Board of
Directors.

BUSINESS COMBINATIONS

Delaware law prohibits Delaware corporations from engaging in a wide range
of specified transactions with any interested stockholder, defined to include,
among others, any person or entity who in the last three years obtained 15% or
more of any class or series of stock entitled to vote generally in the election
of directors, unless, among other exceptions, the transaction is approved by (i)
the board of directors prior to the date the interested stockholder obtained
such status or (ii) the holders of two-thirds of the outstanding shares of each
class or series of stock entitled to vote generally in the election of
directors, not including those shares owned by the interested stockholder. The
provisions of this statute apply to the Company.

The effect of this statute may be to deter unfriendly offers or other
efforts to obtain control of the Company that are not approved by the Board of
Directors and thereby protect the continuity of the Company's management and
possibly deprive the stockholders of opportunities to sell their shares of
Common Stock at prices higher than prevailing market prices. Such statute may
also tend to induce any persons seeking control of the Company or a business
combination with the Company to negotiate on terms acceptable to the then
elected Board of Directors.

REGULATORY REQUIREMENTS

State insurance laws applicable to the Company typically require regulatory
approval for any proposed change of control of the Company. Generally, a change
of control would be deemed to result if anyone acquired 10% or more of the
outstanding voting stock of the Company, although regulatory authorities
generally have discretion to determine whether a change of control in a
particular case would occur whether or not 10% of the voting stock of the
Company is acquired. Therefore, no one can acquire beneficial ownership of 10%
or more of the outstanding Common Stock of the Company, whether pursuant to this
offering, open market purchases or otherwise, without obtaining prior regulatory
approval. Such regulatory approval requirement could also apply to the
solicitation of proxies to vote 10% or more of the outstanding Common Stock and
therefore could impair the ability of a stockholder to conduct a proxy contest.
The Company could seek a regulatory hearing with respect to any stockholder
proposal to acquire beneficial ownership or proxies for 10% or more of the
Company's Common Stock, and any stockholder that fails to obtain regulatory
approval in such circumstances may be subject to regulatory sanctions including
the possibility of a divestiture order. In addition, failure to comply with such
regulatory requirements could result in adverse consequences to the Company.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Company's Common Stock is First
Union National Bank of North Carolina.

48
<PAGE> 50

UNDERWRITING

Subject to the terms and conditions of the Underwriting Agreement, the
Underwriters named below (the "Underwriters"), through their Representatives,
Alex. Brown & Sons Incorporated, Cowen & Company and Volpe, Welty & Company,
have severally agreed to purchase from the Company the following respective
numbers of shares of Common Stock at the public offering price less the
underwriting discounts and commissions set forth on the cover page of this
Prospectus:

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
- ----------------------------------------------------------------------------------- ---------
<S> <C>
Alex. Brown & Sons Incorporated....................................................
Cowen & Company....................................................................
Volpe, Welty & Company.............................................................
---------
Total.............................................................................. 2,000,000
=========
</TABLE>

The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent and that the
Underwriters will purchase all shares of the Common Stock offered hereby if any
of such shares are purchased.

The Company has been advised by the Representatives of the Underwriters
that the Underwriters propose to offer the shares of Common Stock to the public
at the public offering price set forth on the cover page of this Prospectus and
to certain dealers at such price less a concession not in excess of $
per share. The Underwriters may allow, and such dealers may reallow, a
concession not in excess of $ per share to certain other dealers. After
the public offering, the offering price and other selling terms may be changed
by the Representatives of the Underwriters.

The Company and James B. Kingston, a director of the Company, have granted
the Underwriters an option, exercisable not later than 30 days after the date of
this Prospectus, to purchase up to 300,000 additional shares of Common Stock in
the aggregate at the public offering price less the underwriting discounts and
commissions set forth on the cover page of this Prospectus. To the extent that
the Underwriters exercise such option, each of the Underwriters will have a firm
commitment to purchase approximately the same percentage thereof that the number
of shares of Common Stock to be purchased by it shown in the above table bears
to 2,000,000, and the Company and Mr. Kingston will be obligated, pursuant to
the option, to sell 225,000 and 75,000 shares, respectively, to the
Underwriters. To the extent that the Underwriters exercise such option, the
first 75,000 shares would be purchased from Mr. Kingston. The Underwriters may
exercise such option only to cover over-allotments made in connection with the
sale of the Common Stock offered hereby. If purchased, the Underwriters will
offer such additional shares on the same terms as those on which the 2,000,000
shares are being offered.

The Company and the selling stockholder have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act.

The Company, its directors, executive officers and certain stockholders
have agreed that, subject to certain limited exceptions, they will not, for a
period of 90 days after the date of this Prospectus, sell, offer to sell,
contract to sell or otherwise dispose of any shares of Common Stock or any other
securities of the Company without the prior written consent of the
Representatives of the Underwriters, except that the Company may, without such
consent, issue shares of Common Stock under the 1989 Stock Option Plan and grant
options and issue shares of Common Stock under the 1995 Stock Option Plan. In
addition, the Company may issue shares of Common Stock in connection with any
acquisition of another company if the terms of such issuance provide that such
Common Stock shall not be sold prior to the expiration of the 90 day period
referenced in the preceding sentence.

In connection with this offering, the Underwriters and selling group
members, if any, or their respective affiliates who are qualified registered
market makers on the Nasdaq National Market, may engage in passive market making
transactions in the Common Stock on the Nasdaq National Market during the two
business

49
<PAGE> 51

day period prior to the commencement of the offers or sales of the Common Stock,
in accordance with Rule 10b-6A under the Exchange Act. Passive market making
consists of displaying bids on the Nasdaq National Market limited by the bid
prices of market makers not connected with this offering and purchases limited
by such prices and effected in response to order flow. Net purchases by a
passive market maker on each day are generally limited in amount to 30% of the
passive market maker's average daily trading volume in the Common Stock during
the two full consecutive calendar months immediately prior to the filing with
the Commission of the Registration Statement and must be discontinued when such
limit is reached. Passive market making may stabilize the market price of the
Common Stock at a level above that which might otherwise prevail and, if
commenced, may be discontinued at any time.

LEGAL MATTERS

The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by Strasburger & Price, L.L.P., Dallas, Texas. David K.
Meyercord, a partner in Strasburger & Price, L.L.P., is an Assistant Secretary
of the Company. Certain legal matters in connection with this offering will be
passed upon for the Underwriters by Akin, Gump, Strauss, Hauer & Feld, L.L.P.,
Dallas, Texas.

EXPERTS

The consolidated financial statements of United Dental Care, Inc. at
December 31, 1994 and 1995, and for each of the three years in the period ended
December 31, 1995, and the combined financial statements of Associated Health
Plans, Inc. and Associated Companies, Inc. at December 31, 1995, and for the
year ended December 31, 1995, appearing in this Prospectus have been so included
in reliance on the report of Price Waterhouse LLP, independent accountants,
given upon the authority of such firm as experts in accounting and auditing.

The combined financial statements of OraCare Dental Health Plans, Inc. at
December 31, 1994 and 1995, and for each of the two years in the period ended
December 31, 1995, appearing in this Prospectus have been audited by Ernst &
Young LLP, independent auditors, as set forth in their report thereon appearing
elsewhere herein, and are included in reliance on such report given upon the
authority of such firm as experts in accounting and auditing.

The combined financial statements of Kansas City Dental Care, Inc. at
December 31, 1995, and for the year then ended, appearing in this Prospectus
have been so included in reliance on the report of James L. Gordon, C.P.A.,
independent accountant, given upon the authority of such person as an expert in
accounting and auditing.

The consolidated financial statements of U.S. Dental Management, Inc. at
December 31, 1993 and 1994, and for each of the three years in the period ended
December 31, 1994, appearing in this Prospectus have been so included in
reliance on the report of Andrew C. Sarager, C.P.A., P.C., independent
accountant, given upon the authority of such person as an expert in accounting
and auditing.

50
<PAGE> 52

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
UNITED DENTAL CARE, INC.
Report of Independent Accountants.................................................... F-3
Consolidated Balance Sheets as of December 31, 1994 and 1995, and June 30,
1996 (unaudited).................................................................. F-4
Consolidated Statements of Operations for the years ended December 31, 1993, 1994 and
1995, and the six months ended June 30, 1995 and 1996 (unaudited)................. F-5
Consolidated Statements of Changes in Stockholders' Equity for the years ended
December 31, 1993, 1994 and 1995, and the six months ended June 30, 1996
(unaudited)....................................................................... F-6
Consolidated Statements of Cash Flows for the years ended December 31, 1993, 1994 and
1995, and the six months ended June 30, 1995 and 1996 (unaudited)................. F-7
Notes to Consolidated Financial Statements........................................... F-8
ORACARE DENTAL HEALTH PLANS, INC.
Report of Independent Auditors....................................................... F-16
Combined Balance Sheets as of December 31, 1994 and 1995, and June 30, 1996
(unaudited)....................................................................... F-17
Combined Statements of Income for the years ended December 31, 1994 and 1995, and the
six months ended June 30, 1995 and 1996 (unaudited)............................... F-18
Combined Statements of Changes in Stockholders' Deficiency for the years ended
December 31, 1994 and 1995, and the six months ended June 30, 1996 (unaudited).... F-19
Combined Statements of Cash Flows for the years ended December 31, 1994 and 1995, and
the six months ended June 30, 1995 and 1996 (unaudited)........................... F-20
Notes to Combined Financial Statements............................................... F-21
UICI DENTAL COMPANIES
Combined Balance Sheets as of December 31, 1995 and June 30, 1996.................... F-27
Combined Statements of Operations for the year ended December 31, 1995, and the six
months ended June 30, 1995 and 1996............................................... F-28
Combined Statements of Changes in Equity for the year ended December 31, 1995 and the
six months ended June 30, 1996.................................................... F-29
Combined Statements of Cash Flows for the year ended December 31, 1995, and the six
months ended June 30, 1995 and 1996............................................... F-30
Notes to Combined Financial Statements............................................... F-31
KANSAS CITY DENTAL CARE, INC.
Report of Independent Accountants.................................................... F-37
Balance Sheet as of December 31, 1995, and June 30, 1996 (unaudited)................. F-38
Statement of Income for the year ended December 31, 1995, and the six months ended
June 30, 1995 and 1996 (unaudited)................................................ F-39
Statement of Retained Earnings for the year ended December 31, 1995, and the six
months ended June 30, 1996 (unaudited)............................................ F-40
Statement of Cash Flows for the year ended December 31, 1995, and the six months
ended June 30, 1995 and 1996 (unaudited).......................................... F-41
Notes to Financial Statements........................................................ F-42
</TABLE>

F-1
<PAGE> 53

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
U.S. DENTAL MANAGEMENT, INC.
Report of Independent Accountant..................................................... F-45
Consolidated Balance Sheets as of December 31, 1993 and 1994, and June 30, 1995
(unaudited)....................................................................... F-46
Consolidated Statements of Operations for the years ended December 31, 1992, 1993 and
1994, and the six months ended June 30, 1994 and 1995 (unaudited)................. F-47
Consolidated Statements of Changes in Stockholders' Equity for the years ended
December 31, 1992, 1993 and 1994, and the six months ended June 30, 1995
(unaudited)....................................................................... F-48
Consolidated Statements of Cash Flows for the years ended December 31, 1992, 1993 and
1994, and the six months ended June 30, 1994 and 1995 (unaudited)................. F-49
Notes to Consolidated Financial Statements........................................... F-50
ASSOCIATED HEALTH PLANS, INC. AND ASSOCIATED COMPANIES, INC.
Report of Independent Accountants.................................................... F-53
Combined Balance Sheet as of December 31, 1995....................................... F-54
Combined Statement of Operations and Changes in Retained Earnings for the year ended
December 31, 1995................................................................. F-55
Combined Statement of Cash Flows for the year ended December 31, 1995................ F-56
Notes to Combined Financial Statements............................................... F-57
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Introduction to Unaudited Pro Forma Condensed Consolidated Financial Statements...... F-61
Unaudited Pro Forma Condensed Consolidated Statement of Operations for the year ended
December 31, 1995................................................................. F-62
Unaudited Pro Forma Condensed Consolidated Statement of Operations for the six months
ended June 30, 1996............................................................... F-63
Unaudited Pro Forma Condensed Consolidated Balance Sheet as of June 30, 1996......... F-64
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements............. F-65
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
Introduction to Unaudited Pro Forma Condensed Combined Financial Statements.......... F-67
Unaudited Pro Forma Condensed Combined Statement of Operations for the year ended
December 31, 1995................................................................. F-68
Unaudited Pro Forma Condensed Combined Statement of Operations for the six months
ended June 30, 1995............................................................... F-69
Unaudited Pro Forma Condensed Combined Balance Sheet as of June 30, 1996............. F-70
Notes to Unaudited Pro Forma Condensed Combined Financial Statements................. F-71
</TABLE>

F-2
<PAGE> 54

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of
United Dental Care, Inc.

In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of operations, of changes in stockholders'
equity and of cash flows present fairly, in all material respects, the financial
position of United Dental Care, Inc. and its subsidiaries at December 31, 1994
and 1995, and the results of their operations and their cash flows for each of
the three years in the period ended December 31, 1995, in conformity with
generally accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.

As discussed in Notes 1 and 7, the Company adopted Statement of Financial
Account Standards No. 109, "Accounting for Income Taxes," effective January 1,
1993.

PRICE WATERHOUSE LLP

Dallas, Texas
February 5, 1996

F-3
<PAGE> 55

UNITED DENTAL CARE, INC.

CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE DATA)

ASSETS

<TABLE>
<CAPTION>
DECEMBER 31,
------------------ JUNE 30,
1994 1995 1996
------- ------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents................................... $ 8,821 $46,940 $20,345
Premiums receivable, net of allowance for doubtful accounts
of $210, $307 and $350 at December 31, 1994 and 1995, and
June 30, 1996, respectively.............................. 1,862 4,757 4,387
Accrued interest and other current assets................... 398 522 861
Deferred taxes, current..................................... 304 392 729
------- ------- -------
Total current assets................................ 11,385 52,611 26,322
Regulatory deposits........................................... 2,316 3,155 3,437
Furniture and equipment, net of accumulated depreciation of
$714, $1,289 and $1,650 at December 31, 1994 and 1995, and
June 30, 1996, respectively................................. 1,254 2,855 4,498
Intangible assets, net of accumulated amortization of $138,
$669 and $1,303 at December 31, 1994 and 1995, and June 30,
1996, respectively.......................................... 16,037 27,354 41,667
Pre-operational costs, net of accumulated amortization of
$121, $204 and $220 at December 31, 1994 and 1995, and June
30, 1996, respectively...................................... 93 40 --
Unamortized loan fees......................................... 171 -- --
Other assets.................................................. 41 434 109
Deferred taxes, noncurrent.................................... 107 139 109
------- ------- -------
TOTAL ASSETS.................................................. $31,404 $86,588 $76,142
======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses....................... $ 1,852 $ 2,633 $ 2,108
Current portion of debt..................................... 2,148 11,913 978
Claims reserve.............................................. 2,628 2,446 2,015
Unearned premiums........................................... 3,089 4,612 2,614
Other current liabilities................................... 303 115 158
------- ------- -------
Total current liabilities........................... 10,020 21,719 7,873
Long-term debt -- net of current portion................... 12,410 3,269 3,598
------- ------- -------
Total liabilities................................... 22,430 24,988 11,471
------- ------- -------
Stockholders' equity:
Preferred stock, $.10 par value; 491,077 shares authorized
at December 31, 1994 and 500,000 shares authorized at
December 31, 1995 and June 30, 1996; 1 share issued and
outstanding in 1994 and no shares outstanding at December
31, 1995 and June 30, 1996............................... -- -- --
Common stock, $.10 par value; 10,000,000 shares authorized
at December 31, 1994 and 15,000,000 shares authorized at
December 31, 1995 and June 30, 1996; 4,179,914 shares
issued and outstanding in 1994, 6,898,416 at December 31,
1995 and 6,908,416 at June 30, 1996...................... 418 690 691
Additional paid-in capital.................................. 3,321 52,086 52,100
Retained earnings........................................... 5,235 8,824 11,880
------- ------- -------
Total stockholders' equity.......................... 8,974 61,600 64,671
------- ------- -------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY.................... $31,404 $86,588 $76,142
======= ======= =======
</TABLE>

See accompanying notes.

F-4
<PAGE> 56

UNITED DENTAL CARE, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
FOR THE YEARS ENDED DECEMBER 31, JUNE 30,
-------------------------------- ------------------
1993 1994 1995 1995 1996
------- ------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues:
Managed benefits........................... $16,805 $31,607 $61,352 $29,175 $43,118
Indemnity.................................. -- 5,514 16,622 8,459 7,422
Interest income and other revenue.......... 173 254 1,255 393 585
------- ------- ------- ------- -------
16,978 37,375 79,229 38,027 51,125
Costs and expenses:
Dental services expense:
Managed benefits........................ 7,283 15,559 33,068 15,775 25,127
Indemnity............................... -- 4,567 13,682 7,035 5,547
Sales and marketing........................ 3,025 5,756 9,637 5,012 5,726
General and administrative................. 3,632 7,062 14,785 6,988 8,685
Depreciation and amortization.............. 159 541 1,190 557 1,003
Acquisition-related expenses............... -- 178 -- -- --
Interest expense........................... -- 360 1,005 609 209
------- ------- ------- ------- -------
14,099 34,023 73,367 35,976 46,297
Income before Federal income taxes,
cumulative effect of a change in accounting
principle and extraordinary charge......... 2,879 3,352 5,862 2,051 4,828
Provision for Federal income taxes........... 934 1,256 2,131 800 1,772
------- ------- ------- ------- -------
Income before cumulative effect of a change
in accounting principle and extraordinary
charge..................................... 1,945 2,096 3,731 1,251 3,056
Preferred stock dividends.................... 38 -- -- -- --
------- ------- ------- ------- -------
Net income applicable to common stock before
cumulative effect of a change in accounting
principle and extraordinary charge......... 1,907 2,096 3,731 1,251 3,056
Cumulative effect of a change in accounting
principle.................................. (44) -- -- -- --
Extraordinary charge, net of tax............. -- -- (142) -- --
------- ------- ------- ------- -------
Net income applicable to common stock........ $ 1,863 $ 2,096 $ 3,589 $ 1,251 $ 3,056
======= ======= ======= ======= =======
Per share amounts:
Net income per common share before
cumulative effect of a change in
accounting principle and extraordinary
charge.................................. $ 0.41 $ 0.44 $ 0.68 $ 0.26 $ 0.42
Cumulative effect of a change in
accounting principle.................. (0.01) -- -- -- --
Extraordinary charge, net of tax........ -- -- (0.02) -- --
------- ------- ------- ------- -------
Net income per common share............. $ 0.40 $ 0.44 $ 0.66 $ 0.26 $ .042
======= ======= ======= ======= =======
</TABLE>

See accompanying notes.

F-5
<PAGE> 57

UNITED DENTAL CARE, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
PREFERRED STOCK COMMON STOCK ADDITIONAL
------------------ ------------------- PAID-IN RETAINED
SHARES AMOUNT SHARES AMOUNT CAPITAL EARNINGS TOTAL
-------- ------ --------- ------ ---------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1992....... 194,872 $ 19 3,597,438 $360 $ 3,113 $ 1,303 $ 4,795
Conversion of preferred common
stock........................ (194,871) (19) 463,976 46 -- (27 ) --
Preferred stock dividends...... -- -- -- -- -- (38 ) (38)
Stock options exercised........ -- -- 25,000 3 32 -- 35
Tax effect of stock options
exercised.................... -- -- -- -- 37 -- 37
Net income before preferred
dividends.................... -- -- -- -- -- 1,901 1,901
-------- ---- --------- ---- -------- ------- -------
Balance, December 31, 1993....... 1 -- 4,086,414 409 3,182 3,139 6,730
Stock options exercised........ -- -- 93,500 9 64 -- 73
Tax effect of stock options
exercised.................... -- -- -- -- 75 -- 75
Net income....................... -- -- -- -- -- 2,096 2,096
-------- ---- --------- ---- -------- ------- -------
Balance, December 31, 1994....... 1 -- 4,179,914 418 3,321 5,235 8,974
Conversion of preferred to
common stock................. (1) -- 2 -- -- -- --
Stock options exercised........ -- -- 343,500 34 431 -- 465
Stock warrants issued.......... -- -- -- -- 80 -- 80
Tax effect of stock options
exercised.................... -- -- -- -- 527 -- 527
Shares issued in public
offering..................... -- -- 2,375,000 238 47,727 -- 47,965
Net income..................... -- -- -- -- -- 3,589 3,589
-------- ---- --------- ---- -------- ------- -------
Balance, December 31, 1995....... -- -- 6,898,416 690 52,086 8,824 61,600
-------- ---- --------- ---- -------- ------- -------
Stock options exercised...... -- -- 10,000 1 14 -- 15
Net income................... -- -- -- -- -- 3,056 3,056
-------- ---- --------- ---- -------- ------- -------
Balance, June 30, 1996
(unaudited).................... -- $ -- 6,908,416 $691 $ 52,100 $11,880 $64,671
======== ==== ========= ==== ======== ======= =======
</TABLE>

See accompanying notes.

F-6
<PAGE> 58

UNITED DENTAL CARE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
FOR THE YEARS ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
---------------------------- ------------------
1993 1994 1995 1995 1996
------- ------- -------- ------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Operating activities:
Net income before preferred stock
dividends................................. $ 1,901 $ 2,096 $ 3,589 $ 1,251 $ 3,056
Adjustments to reconcile net income to net
cash provided by (used in) operating
activities:
Depreciation and amortization............. 159 616 1,190 557 1003
Cumulative effect of accounting change.... 44 -- -- -- --
Changes in operating assets and
liabilities, net of effects from
purchase of IDH and US Dental:
Decrease (increase) in premiums
receivable........................... (99) (399) (1,049) (263) 822
Decrease (increase) in accrued interest
and other current assets............. (205) 60 134 47 (339)
Decrease (increase) in deferred income
taxes................................ 109 49 (27) -- (190)
Decrease (increase) in other assets..... (236) 229 (222) (142) 325
Increase (decrease) in accounts payable,
accrued expenses and claims
reserve.............................. (173) 386 (277) 947 (1,958)
Increase (decrease) in unearned
premiums............................. -- 180 (417) 138 (2,152)
------- ------- -------- ------- --------
Net cash provided by operating
activities......................... 1,500 3,217 2,921 2,535 567
Investing activities:
Decrease (increase) in regulatory deposits... (100) 33 (408) (217) (82)
Purchases of furniture and equipment......... (237) (662) (2,176) (482) (2,001)
Maturities of temporary investments.......... 840 1,295 -- -- --
Purchases of temporary and long-term
investments............................... (2,463) -- -- -- --
Proceeds from sale of long-term
investments............................... -- 2,124 -- -- --
Investment in new markets.................... -- -- (31) -- (148)
Purchase of IDH (net of cash acquired)....... -- (9,043) -- -- --
Purchase of US Dental (net of cash
acquired)................................. -- -- 726 -- --
Purchase of AHP (net of cash required)....... -- -- -- -- (13,575)
------- ------- -------- ------- --------
Net cash used in investing
activities......................... (1,960) (6,253) (1,889) (699) (15,806)
Financing activities:
Proceeds from long-term debt................. -- 11,000 1,154 135 --
Repayment of indebtedness.................... -- (1,734) (12,577) (1,917) (11,371)
Proceeds from IPO (net)...................... -- -- 47,965 -- --
Preferred stock dividend payments............ (38) -- -- -- --
Stock options exercised...................... 35 121 465 465 15
Issuance of stock warrants................... -- -- 80 80 --
------- ------- -------- ------- --------
Net cash provided by (used in)
financing activities............... (3) 9,387 37,087 (1,237) (11,356)
------- ------- -------- ------- --------
Net (decrease) increase in cash and cash
equivalents.................................. (463) 6,351 38,119 599 (26,595)
Cash and cash equivalents at beginning of
period....................................... 2,933 2,470 8,821 8,821 46,940
------- ------- -------- ------- --------
Cash and cash equivalents at end of period..... $ 2,470 $ 8,821 $ 46,940 $ 9,420 $ 20,345
======= ======= ======== ======= ========
Supplemental disclosure of cash flow
information:
Cash paid during the period for:
Interest.................................. $ -- $ 229 $ 989 $ 460 $ 175
======= ======= ======== ======= ========
Income Taxes.............................. $ 1,149 $ 1,147 $ 1,385 $ 901 $ 1,972
======= ======= ======== ======= ========
</TABLE>

See accompanying notes.

F-7
<PAGE> 59

UNITED DENTAL CARE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION: The consolidated financial statements include the
accounts of United Dental Care, Inc., and its subsidiaries (the "Company") for
all periods presented. All significant intercompany accounts and transactions
have been eliminated in consolidation. The Company, through its subsidiaries,
contracts with independent practitioners to provide dental services to members
in 19 states in the form of prepaid dental health contracts and/or indemnity
dental insurance.

REVENUE AND EXPENSE RECOGNITION: Premium revenue is recorded in the month
for which the member is entitled to service. Unearned premiums are reflected as
current liabilities and consist of amounts billed in the current period for
services to be rendered in a subsequent period. Included in unearned premiums
are deposits which will be applied against future months' services. Under
prepaid dental health contracts, the Company contracts with dentists for a set
per-member, per-month capitation fee to provide dental care for its members.
Specialty services not covered by capitation fees are recorded as incurred.

INTANGIBLE ASSETS: Goodwill resulting from acquisitions (see Note 2) is
being amortized on a straight-line basis over forty years. If facts and
circumstances were to indicate the carrying amount of goodwill is impaired, the
carrying amount would be reduced to an amount representing the undiscounted
future cash flows to be generated by the operation. Also included in intangible
assets are noncompetition and consulting agreements (a) related to the IDH
acquisition and valued at $400,000 at acquisition and (b) related to the US
Dental acquisition and valued at $175,000 at acquisition all of which are being
amortized on a straight-line basis over the three to six year terms of such
agreements. Accumulated amortization related to these agreements at December 31,
1994 and 1995, and June 30, 1996 was $23,000, $110,000, and $259,000,
respectively.

In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121 ("FAS-121") "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of,"
which becomes effective for fiscal years beginning after December 15, 1995.
FAS-121 establishes standards for determining when impairment losses on
long-lived assets have occurred and how impairment losses should be measured.
The Company adopted FAS-121 effective December 31, 1995. The financial statement
impact of adopting FAS-121 was not material.

PRE-OPERATIONAL COSTS: Organizational costs, costs associated with the
establishment of the provider network, and pre-operational costs are capitalized
and amortized over periods not exceeding 30 months. Pre-operational costs
include office rent, salaries, site selection costs, licensing and legal fees,
and other costs directly related to commencing business in a new state.

FURNITURE AND EQUIPMENT: Furniture and equipment are recorded at cost.
Depreciation is calculated using the straight-line method over a period of three
to five years based on the estimated useful life of the related asset.

CLAIMS RESERVE: The reserve for costs expected to be incurred for services
approved during the year as well as costs incurred but not reported are
actuarial estimates based on the Company's historical claims data.

RECLASSIFICATIONS: Certain reclassifications have been made to the 1993 and
1994 consolidated financial statements to conform to the classifications used
for 1994 and 1995, respectively.

CASH AND CASH EQUIVALENTS: For purposes of reporting cash flows, cash and
cash equivalents include cash on hand, amounts due from banks, money market
investment accounts held by brokers which are readily convertible to cash and
certificates of deposit with original maturities of less than 90 days. See Note
2.

INCOME TAXES: Effective January 1, 1993, the Company prospectively adopted
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes" (FAS-109), which requires the asset and liability method of accounting
for deferred income taxes. The asset and liability method requires recognition
of

F-8
<PAGE> 60

UNITED DENTAL CARE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

deferred tax assets and liabilities for the estimated future tax consequences
attributable to differences between the financial statement bases and the tax
basis of assets and liabilities. See Note 7 for additional information.

NET INCOME PER COMMON SHARE: Net income per common share is computed by
dividing net income by the weighted average number of common shares and dilutive
common stock equivalents outstanding during each period. Net income per common
share has been restated to reflect a two-for-one stock dividend that was
declared on July 17, 1995. The weighted average number of common shares and
dilutive common stock equivalents used in the calculation of net earnings per
common shares was 4,662,143; 4,716,713; 5,448,892 and 7,222,149 for the years
ended December 31, 1993, 1994, 1995, and the six months ended June 30, 1996,
respectively. Pursuant to the requirements of the Securities and Exchange
Commission, common stock equivalent shares issued at prices below the original
assumed public offering price of $18.00 per share during the twelve months
immediately preceding the date of the initial filing of the Registration
Statement related to the Company's initial public offering have been included in
the calculation of common shares and common equivalent shares using the treasury
stock method, as if they were outstanding for all periods presented.

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

UNAUDITED INTERIM FINANCIAL STATEMENTS: The unaudited interim financial
statements include all adjustments, consisting only of normal recurring
accruals, which the Company considers necessary for a fair presentation of the
financial position of the Company as of June 30, 1995 and 1996 and the results
of operations for the six months ended June 30, 1995 and 1996, as presented in
the accompanying unaudited interim financial statements.

2. ACQUISITIONS OF INTERNATIONAL DENTAL HEALTH, INC. AND U.S. DENTAL MANAGEMENT,
INC.

Effective September 1, 1994, the Company completed the acquisition of all
of the outstanding common stock of International Dental Health, Inc. ("IDH") for
$19.7 million, composed of $14.3 million in cash at the closing and additional
payments of $5.4 million over the six year period beginning September 16, 1994.
The cash portion of the purchase price was financed through bank borrowings of
$11.0 million and internal funds of $3.3 million.

The acquisition has been accounted for as a purchase and the net assets and
results of operations of IDH and its subsidiaries have been included in the
Company's consolidated financial statements beginning September 1, 1994. The
purchase price has been allocated to assets and liabilities of IDH based on
their estimated respective fair values. The purchase price exceeded the fair
value of IDH's net assets by $16.1 million of which $15.7 is recorded as
goodwill at the parent company level and $0.4 is recorded as the value of
non-competition and consulting agreements. The Company has not allocated any
portion of the purchase price to any other intangible assets considered to have
nominal value such as the dentist networks and subscriber contracts. Assets
acquired and liabilities assumed totaled $13.9 million and $9.6 million,
respectively.

Effective November 1, 1995, the Company completed the acquisition of all of
the outstanding common stock of U.S. Dental Management, Inc. ("US Dental") for
$12.6 million, composed of $1.3 million in cash at the closing, principal
payments totaling $1.0 million over the three year period beginning November 30,
1995 and an additional payment of $10.3 million in January 1996 from an amount
held in escrow.

The acquisition has been accounted for as a purchase and the net assets and
results of operations of US Dental and its subsidiaries have been included in
the Company's consolidated financial statements beginning November 1, 1995. The
purchase price has been allocated to assets and liabilities of US Dental based
on their

F-9
<PAGE> 61

UNITED DENTAL CARE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

estimated respective fair values. The purchase price exceeded the fair value of
US Dental's net assets by $11.9 million of which $11.7 is recorded as goodwill
and $0.2 is recorded as the value of non-competition and consulting agreements.
The Company has not allocated any portion of the purchase price to any other
intangible assets considered to have nominal value such as the dentist networks
and subscriber contracts. Assets acquired and liabilities assumed totaled $4.3
million and $3.6 million, respectively.

The following represents the unaudited pro forma results of operations as
if the IDH and US Dental acquisitions had occurred at the beginning of 1993
(dollars in thousands):

<TABLE>
<CAPTION>
UNAUDITED
---------------------------
1993 1994 1995
------- ------- -------
<S> <C> <C> <C>
Revenues.................................................. $69,884 $82,769 $90,307
Income before income taxes, cumulative effect of a change
in accounting principle and extraordinary charge........ $ 399 $ 1,981 $ 5,409
Net income (loss) applicable to common stock.............. $ (38) $ 1,012 $ 3,151
</TABLE>

The pro forma information is based on historical information adjusted to
give effect to the amortization of goodwill and other intangibles as well as the
increased interest expense due to the borrowings incurred to finance the
acquisition. The pro forma information does not necessarily reflect the actual
results that would have occurred nor is it necessarily indicative of future
results of operations of the combined companies.

3. REGULATORY DEPOSITS

At December 31, 1995, regulatory deposits were recorded at cost and
consisted of $1,453,000 in U.S. government obligations that renew in 1996 and
$1,702,000 in certificates of deposit insured by the Federal Deposit Insurance
Corporation. The Company has set aside certificates of deposit bearing interest
at variable rates as required by various state statutes. The fair value of all
financial instruments, determined by reference to market data, approximated
their recorded value at each of the balance sheet dates shown.

4. ACQUISITION-RELATED EXPENSES

Certain expenditures related to the acquisitions of IDH and US Dental
discussed in Note 2 that have not been included in the costs of the acquisitions
are reported separately for comparability of expense categories to prior
reported periods. These costs are primarily related to upgrades to UDC's
facilities and computer systems necessitated by the acquisitions.

5. LONG-TERM DEBT

On September 16, 1994, in conjunction with the acquisition of IDH (see Note
2), the Company borrowed $11.0 million from a commercial bank under a reducing
revolver arrangement. The interest rate on the unpaid principal amount was, at
the Company's option (i) 1.0% per annum over the lender's prime rate or (ii)
2.75% per annum over LIBOR. Interest payments are due at least quarterly. On
December 15, 1994, the Company repaid $275,000, on February 17, 1995, the
Company repaid $275,000, on March 15, 1995, the Company repaid $1.5 million of
such indebtedness and on September 27, 1995, the Company repaid $9.9 million,
the entire remaining balance.

An additional portion of the IDH purchase price was deferred and is payable
over the period ended January 1, 2000. The payments may be prepaid without
penalty and are not contingent upon the future operations of the Company. The
present value of the future payments (assuming no voluntary prepayments,
discounted at 7.25%) is recorded as long-term debt. One of the former
shareholders of IDH was subsequently appointed a director to the Company. On
September 16, 1994, the Company made the first of the payments required under
the agreements in a total amount of $755,000. The Company entered into a letter
of credit

F-10
<PAGE> 62

UNITED DENTAL CARE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

facility relating to the deferral agreements that requires annual fees of 1% of
the unpaid amounts under these agreements.

A portion of the US Dental purchase price was financed by a Promissory Note
in the amount of $10.31 million that was subsequently paid in full on January
18, 1996. In addition, a portion of the US Dental purchase price in the amount
of $1.0 million was deferred and is payable over the period ended December 31,
1999. The payments may be prepaid without penalty and are not contingent upon
the future operations of the Company. The present value of the future payments
(assuming no voluntary prepayments, discounted at 7.50%) is recorded as
long-term debt. On November 30, 1995, the Company made the first of the payments
required under the agreements.

The following table summarizes the minimum required future principal
reductions (dollars in thousands):

<TABLE>
<CAPTION>
US DENTAL DEFERRED DEFERRED US
US DENTAL PROMISSORY IDH PURCHASE DENTAL PURCHASE ANNUAL
NOTES PAYABLE NOTE PRICE PAYMENTS PRICE PAYMENTS TOTAL
------------- ---------- -------------- --------------- -------
<S> <C> <C> <C> <C> <C>
1996................... $ 690 $ 10,310 $ 683 $ 230 $11,913
1997................... -- -- 724 250 974
1998................... -- -- 790 263 1,053
1999................... -- -- 849 251 1,100
2000................... -- -- 142 -- 142
----- -------- ------ ----- -------
TOTAL........ $ 690 $ 10,310 $3,188 $ 994 $15,182
===== ======== ====== ===== =======
</TABLE>

6. COMMITMENTS

The Company leases office space and certain equipment under operating
leases. In 1992, the Company entered into a five-year lease for office space
commencing in April 1992. Rental expense for the years ended December 31, 1993,
1994 and 1995 was $336,000, $648,000 and $1,351,000, respectively. Rental
expense for the six months ended June 30, 1995 and 1996 was $639,000 and
$619,000, respectively.

Minimum obligations under the operating leases at December 31, 1995 are as
follows (dollars in thousands):

<TABLE>
<S> <C>
1996........................................................ $1,069
1997........................................................ 816
1998........................................................ 561
1999........................................................ 335
2000........................................................ 45
Thereafter.................................................. --
------
$2,826
======
</TABLE>

7. INCOME TAXES

The provision (benefit) for income taxes allocated to continuing operations
consisted of the following components (dollars in thousands):

<TABLE>
<CAPTION>
1993 1994 1995
---- ------ ------
<S> <C> <C> <C>
Current.................................................... $863 $1,253 $2,250
Deferred (benefit)......................................... 71 3 (119)
---- ------ ------
Provision for Federal income taxes......................... $934 $1,256 $2,131
==== ====== ======
</TABLE>

F-11
<PAGE> 63

UNITED DENTAL CARE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

In September 1995, the Company incurred an extraordinary charge due to the
early retirement of debt in the amount of $142,000, net of a tax benefit in the
amount of $73,000.

The Company pays premium taxes in lieu of state income taxes in most states
where it has operations. The Company paid no state income taxes in 1993 and
immaterial amounts in 1994 and 1995.

In January 1993, the Company adopted SFAS 109. The cumulative effect of
this change in accounting principle decreased net income by $44,000, which is
reflected separately in the consolidated statement of income for the year ended
December 31, 1993.

During 1993, 1994 and 1995, certain employees exercised 12,500, 26,083 and
171,500 nonqualified stock options, respectively, resulting in tax savings of
approximately $31,000, $73,000 and $527,000, respectively, and a corresponding
increase to capital.

A reconciliation of the difference between the Federal income tax rate and
the Company's effective tax rate is as follows:

<TABLE>
<CAPTION>
1993 1994 1995
---- ---- ----
<S> <C> <C> <C>
Federal income tax rate........................................ 34.0% 34.0% 34.0%
Amortization of goodwill....................................... -- 1.1 2.0
Tax exempt interest income..................................... -- -- (1.2)
Other.......................................................... (1.6) 2.3 1.6
---- ---- ----
Effective tax rate................................... 32.4% 37.4% 36.4%
==== ==== ====
</TABLE>

Deferred tax assets (liabilities) were comprised of the following at
December 31:

<TABLE>
<CAPTION>
1993 1994 1995
---- ---- -------
<S> <C> <C> <C>
Premium reserve............................................ $ 3 $ 68 $ 69
Prepaid assets............................................. -- 88 23
Depreciation............................................... 11 -- 256
Start Up Costs............................................. -- 68 38
Unearned Premium........................................... -- 113 83
Note Receivable............................................ -- 107 --
Consulting and non-competition agreements.................. -- -- 1,698
Miscellaneous accruals/reserves............................ -- -- 49
---- ---- -------
Gross deferred tax asset......................... 14 444 2,216
---- ---- -------
Prepaid asset.............................................. (1) -- --
Depreciation............................................... -- (19) --
Startup costs.............................................. (32) -- --
Consulting and non-competition agreements.................. -- -- (1,685)
Miscellaneous reserves/accruals............................ (15) (14) --
---- ---- -------
Gross deferred tax liability..................... (48) (33) (1,685)
---- ---- -------
Net deferred tax asset (liability)......................... $(34) $411 $ 531
==== ==== =======
</TABLE>

8. EXTRAORDINARY CHARGE

In September 1995, the Company incurred an extraordinary charge due to the
early retirement of debt in the amount of $142,000, consisting of bank fees of
$195,000 and legal fees of $20,000 less a tax benefit of $73,000.

F-12
<PAGE> 64

UNITED DENTAL CARE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

9. STOCKHOLDERS' EQUITY

On September 21, 1995, the Company completed its initial public offering of
common stock, issuing 2,375,000 shares at a price of $22.00 per share before
expenses. After deduction of underwriting discounts and expenses of the
offering, the aggregate net offering proceeds were $48.0 million.

On December 15, 1993, the holders of the preferred stock converted 194,871
shares of preferred stock into 463,976 shares of the common stock. At December
31, 1993 and December 31, 1994, there was one share of preferred stock
outstanding. In April 1995, the one share of preferred stock was converted into
2 shares of common stock. Certain of the Company's subsidiaries are subject to
various state insurance regulations, some of which restrict the payment of
dividends within the consolidated group. See Note 10.

The Company had an Incentive Stock Option Plan pursuant to which 200,000
shares of common stock were reserved. During 1994 and 1995, 60,000 and 80,000
stock options were exercised, respectively, at an exercise price of $1.25 per
share. These options are considered noncompensatory. The board of directors has
terminated the Incentive Stock Option Plan for the purposes of any additional
grants thereunder.

The Company also has a Key Employee Stock Option Plan pursuant to which
332,000 shares were reserved as of December 31, 1995. During 1995, 263,500 stock
options were exercised at an average exercise price of $1.39. At December 31,
1995, none of the 332,000 outstanding Key Employee Stock Option Plan options
were exercisable. These options are considered compensatory and have terms of
five to ten years; the options are exercisable at various times during the terms
of the options at exercise prices ranging from $1.25 to $6.25, which amounts, in
management's estimation, were equal to or exceeded market value at the date of
grant. The board of directors has terminated the Key Employee Stock Option Plan
for the purposes of any additional grants thereunder.

In 1995, the Company's board of directors adopted a new employee stock
option plan (the "1995 Plan") that provides only for the grant of nonqualified
stock options. The 1995 Plan provides that a total of 300,000 shares of common
stock may be issued pursuant to the options granted under the 1995 Plan. At
December 31, 1995, options for 42,000 shares had been granted under the 1995
Plan.

F-13
<PAGE> 65

UNITED DENTAL CARE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

The historical activity in the Incentive, Key Employee Stock and 1995
Option Plans since December 31, 1991 has been as follows:

<TABLE>
<CAPTION>
KEY EMPLOYEE
INCENTIVE AND 1995 PLAN
--------------------- -----------------------------
NUMBER OF EXERCISE NUMBER OF EXERCISE
OPTIONS PRICE OPTIONS PRICE
--------- -------- --------- ----------------
<S> <C> <C> <C> <C>
Options outstanding, December 31, 1991......... 200,000 $ 1.25 400,000 $1.25 - $ 1.50
------- -------
Options exercised............................ (60,000) 1.25 (40,000) $1.25 - $ 1.50
------- -------
Options outstanding, December 31, 1992......... 140,000 1.25 360,000 $ 1.25 - $ 1.50
Options granted.............................. -- -- 102,000 $4.00
Options exercised............................ -- -- (25,000) $ 1.25 - $ 1.50
------- -------
Options outstanding, December 31, 1993......... 140,000 1.25 437,000 $ 1.25 - $ 4.00
Options granted.............................. -- -- 224,000 $ 5.50 - $ 6.25
Options exercised............................ (60,000) 1.25 (33,500) $ 1.25 - $ 1.50
Options canceled............................. -- -- (72,000) $ 1.50 - $ 6.00
------- -------
Options outstanding, December 31, 1994......... 80,000 1.25 555,500 $ 1.25 - $ 6.25
Options granted.............................. -- -- 112,000 $ 6.00 - $31.88
Options exercised............................ (80,000) 1.25 (263,500) $ 1.25 - $ 4.00
Options canceled............................. -- -- (30,000) $6.25
------- -------
Options Outstanding, December 31, 1995......... -- -- 374,000 $ 1.50 - $31.88
------- -------
Options granted.............................. -- -- 363,000 $33.38 - $39.50
Options exercised............................ -- -- (10,000) $1.50
Options canceled............................. -- -- (110,000) $ 1.50 - $31.88
------- -------
Options Outstanding, June 30, 1996............. 617,000
======= =======
</TABLE>

In October 1995, the FASB issued Statement of Financial Accounting
Standards No. 123 ("FAS-123") "Accounting for Stock-Based Compensation," which
becomes effective for fiscal years beginning after December 15, 1995. FAS-123
establishes new financial accounting and reporting standards for stock-based
compensation plans. Entities will be allowed to measure compensation under
FAS-123 or APB Opinion No. 25, "Accounting for Stock Issued to Employees."
Entities electing to remain with the accounting in APB Opinion No. 25 will be
required to make pro forma disclosures of net income and earnings per share as
if the provisions of FAS-123 had been applied. The Company will continue to
measure compensation cost for stock-based compensation under APB Opinion No. 25
and will make the required disclosures for the year ending 1996.

10. STATUTORY NET WORTH COMPARED TO STOCKHOLDERS' EQUITY PER GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES

Certain assets recognized under generally accepted accounting principles
are considered nonadmissible under statutory accounting practices as filed and
submitted in the annual reports to the states of domicile of the various
subsidiaries required to submit such reports. These nonadmitted assets create
differences between statutory net worth as reported on the annual filing and
total stockholders' equity as recorded under generally accepted accounting
principles.

Statutory net worth of the Company's subsidiaries that are subject to state
insurance regulations totaled approximately $7 million and $18 million at
December 31, 1994 and 1995, respectively. Of these amounts, National Dental
Health Insurance Company (NDHIC) represents $4.3 million and $6.3 million at
December 31, 1994 and 1995, respectively. NDHIC is subject to the Arizona
insurance statutes and regulations and is required to maintain minimum capital
and surplus of $500,000 and without the prior

F-14
<PAGE> 66

UNITED DENTAL CARE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

approval of the Arizona Department of Insurance may not pay a dividend greater
than the lesser of 10% of capital and surplus as of the end of the prior year or
net investment income for the prior year. NDHIC received approval from the
Arizona Department of Insurance to pay a dividend of $315,000 in 1994.

At December 31, 1993 and for the year then ended, the difference between
statutory net worth and net income under the statutory accounting practices and
total stockholders' equity and net income as recorded under generally accepted
accounting principles was not material. Statutory net income of the Company's
subsidiaries for 1994 and 1995 was $4.6 million and $6.3 million, respectively,
and excludes a $3.9 million intercompany realized gain on the transfer of
subsidiaries among affiliates.

11. SUPPLEMENTARY FINANCIAL INFORMATION

SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
1994 QUARTERS 1995 QUARTERS
---------------------------------- -------------------------------------
FIRST SECOND THIRD FOURTH FIRST SECOND THIRD FOURTH
------ ------ ------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues................... $4,806 $4,979 $9,219 $18,371 $18,871 $19,156 $19,340 $21,862
Net income:
Before extraordinary
charge................ 374 438 645 639 523 728 960 1,520
Extraordinary charge..... -- -- -- -- -- -- (142) --
------ ------ ------ ------- ------- ------- ------- -------
Net income....... $ 374 $ 438 $ 645 $ 639 $ 523 $ 728 $ 818 $ 1,520
====== ====== ====== ======= ======= ======= ======= =======
Net income per share:
Before extraordinary
charge................ $ 0.08 $ 0.09 $ 0.14 $ 0.14 $ 0.11 $ 0.15 $ 0.19 $ 0.21
Extraordinary charge..... -- -- -- -- -- -- (0.03) --
------ ------ ------ ------- ------- ------- ------- -------
Net income per
share.......... $ 0.08 $ 0.09 $ 0.14 $ 0.14 $ 0.11 $ 0.15 $ 0.16 $ 0.21
====== ====== ====== ======= ======= ======= ======= =======
</TABLE>

12. SUBSEQUENT EVENTS

On January 18, 1996, the Company paid off the $10.3 million Promissory Note
made in connection with the purchase of all the outstanding capital stock of US
Dental.

On January 22, 1996, the Company completed the acquisition of Associated
Health Plans, Inc. and Associated Companies, Inc. (collectively, "AHP") for
$15.0 million, which included the present value of amounts payable under
non-competition agreements totaling $600,000 and payable in equal monthly
installments through January 1999.

On June 28, 1996, the Company entered into a definitive agreement to
purchase all the outstanding capital stock of Independent Dental Plan, Inc. for
an aggregate cash price of $1.2 million.

On September 5, 1996, the Company entered into a definitive agreement to
purchase all the outstanding capital stock of OraCare D.P.O., Inc., an
affiliated management company, and dental practices owned by the majority
stockholder of OraCare for an aggregate cash price of $30.5 million.

On September 10, 1996, the Company entered into a definitive agreement to
purchase all the outstanding stock of three companies wholly and majority owned
by UICI for an aggregate cash price of $12.75 million.

On September 11, 1996, the Company entered into a definitive agreement to
purchase all the outstanding stock of Kansas City Dental Plan, Inc. for an
aggregate cash price of $12.5 million.

F-15
<PAGE> 67

REPORT OF INDEPENDENT AUDITORS

To the Stockholders and Board of Directors of
OraCare Dental Health Plans, Inc.

We have audited the accompanying combined balance sheets as of December 31,
1994 and 1995, of the entities listed in Note 1, and the related combined
statements of income, changes in stockholders' deficiency and cash flows for the
years then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the combined financial position at December 31, 1994
and 1995, of the entities listed in Note 1, and the combined results of their
operations and their cash flows for the years then ended, in conformity with
generally accepted accounting principles.

ERNST & YOUNG LLP

May 2, 1996, except for Note 5, as to
which the date is May 10, 1996, and Note 14,
as to which the date is September 5, 1996

F-16
<PAGE> 68

ORACARE DENTAL HEALTH PLANS, INC.

COMBINED BALANCE SHEETS

ASSETS

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------- JUNE 30,
1994 1995 1996
----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Current assets:
Cash................................................. $ 28,455 $ 101,358 $ 121,183
Accounts receivable, net of allowance of $40,439 and -----------
$144,363 at December 31, 1994 and 1995,
respectively...................................... 811,343 953,631 1,245,267
Prepaid expenses and other current assets............ 15,748 177,775 56,265
----------- -----------
Total current assets......................... 855,546 1,232,764 1,422,715
Property and equipment, net (Note 4)................. 796,656 733,037 914,096
Deposits and other................................... 7,308 15,825 21,605
----------- ----------- -----------
TOTAL ASSETS........................................... $ 1,659,510 $ 1,981,626 $ 2,358,416
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities:
Accounts payable..................................... $ 425,009 $ 164,083 $ 591,653
Accrued payroll and related costs.................... 87,610 95,969 119,541
Other accrued expenses............................... 50,263 68,229 75,318
Current portion of capital lease obligations (Note
5)................................................ 88,806 75,130 116,978
Current portion of long-term debt (Note 5)........... 339,096 438,456 439,185
State income taxes payable........................... 95,000 214,234
Deferred subscriber revenue.......................... 180,477 215,225 189,531
----------- ----------- -----------
Total current liabilities.................... 1,171,261 1,152,092 1,746,440
----------- ----------- -----------
Long-term debt, excluding current portion (Note 5)... 1,675,501 1,414,654 1,240,139
Obligations under capital lease, excluding current
portion (Note 8).................................. 270,386 195,256 266,679
----------- ----------- -----------
Total liabilities............................ 3,117,148 2,762,002 3,253,258
----------- ----------- -----------
Stockholders' deficiency:
Common stock (8,500 shares authorized, 1,300 shares
issued and outstanding, in 1994 and 1995) (Note
8)................................................ 2,500 2,500 2,500
Additional paid-in capital........................... 1,849,098 1,953,844 1,953,844
Retained deficit..................................... (3,309,236) (2,736,720) (2,851,186)
----------- ----------- -----------
Total stockholders' deficiency............... (1,457,638) (780,376) (894,842)
----------- ----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY......... $ 1,659,510 $ 1,981,626 $ 2,358,416
=========== =========== ===========
</TABLE>

See accompanying notes.

F-17
<PAGE> 69

ORACARE DENTAL HEALTH PLANS, INC.

COMBINED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------- -------------------------
1994 1995 1995 1996
---------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Revenue (Note 6)........................ $7,589,720 $9,156,583 $4,357,604 $6,710,938
Dental service costs.................... 4,774,141 5,366,674 2,553,992 4,253,711
Selling, general and administrative
expense............................... 1,961,148 2,031,636 930,432 1,136,155
Interest expense........................ 187,104 241,694 109,901 128,729
---------- ---------- ---------- ----------
Total costs and expenses...... 6,922,393 7,640,004 3,594,325 5,518,595
---------- ---------- ---------- ----------
Income before provision for income
taxes................................. 667,327 1,516,579 763,279 1,192,343
Provision for income taxes (Note 2)..... 95,000 47,813 119,234
---------- ---------- ---------- ----------
Net income.............................. $ 667,327 $1,421,579 $ 715,466 $1,073,109
========== ========== ========== ==========
Pro forma (unaudited) (Note 2):
Historical income before provision for
federal income taxes............... $ 667,327 $1,421,579 $ 715,466 $1,073,109
Pro forma adjustment for federal
income taxes....................... 226,891 483,337 243,258 364,857
---------- ---------- ---------- ----------
Pro forma net income.................. $ 440,436 $ 938,242 $ 472,208 $ 708,252
========== ========== ========== ==========
</TABLE>

See accompanying notes.

F-18
<PAGE> 70

ORACARE DENTAL HEALTH PLANS, INC.

COMBINED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIENCY

<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL RETAINED TOTAL
--------------- PAID-IN EARNINGS STOCKHOLDERS'
SHARES AMOUNT CAPITAL (DEFICIT) DEFICIENCY
----- ------ ---------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1994............... 1,300 $2,500 $1,753,629 $(3,142,724) $ (1,386,595)
Net income........................... 667,327 667,327
Stockholder contributions............ 95,469 95,469
Stockholder withdrawals.............. (833,839) (833,839)
----- ------ ---------- ----------- ------------
Balance, December 31, 1994............. 1,300 2,500 1,849,098 (3,309,236) (1,457,638)
Net income........................... 1,421,579 1,421,579
Stockholder contributions............ 104,746 104,746
Stockholder withdrawals.............. (849,063) (849,063)
----- ------ ---------- ----------- ------------
Balance, December 31, 1995............. 1,300 $2,500 $1,953,844 $(2,736,720) $ (780,376)
Net income (unaudited)............... 1,073,109 1,073,109
Stockholder contributions
(unaudited).......................
Stockholder withdrawals
(unaudited)....................... (1,187,575) (1,187,575)
----- ------ ---------- ----------- ------------
Balance, June 30, 1996 (unaudited)..... 1,300 $2,500 $1,953,844 $(2,851,186) $ (894,842)
===== ====== ========== =========== ============
</TABLE>

See accompanying notes.

F-19
<PAGE> 71

ORACARE DENTAL HEALTH PLANS, INC.

COMBINED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
----------------------- ------------------------
1994 1995 1995 1996
--------- ---------- --------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income................................... $ 667,327 $1,421,579 $ 715,466 $ 1,073,109
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization.............. 100,533 107,780 53,890 61,866
Loss on the sale of fixed assets........... -- -- -- 1,446
Changes in operating assets and
liabilities:
Accounts receivable..................... (89,345) (142,288) (71,144) (291,636)
Prepaid expenses and other current
assets................................ (548) (162,027) (20,259) 121,510
Deposits and other assets............... (8,517) (4,259) (5,780)
Accounts payable, accrued payroll and
other accrued expenses................ 66,988 (234,601) (178,352) 458,230
State income taxes payable.............. 95,000 47,813 119,234
Deferred subscriber revenue............. 32,171 34,748 17,374 (25,694)
--------- ---------- --------- -----------
Net cash provided by operating
activities.............................. 777,126 1,111,674 560,529 1,512,285
--------- ---------- --------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment.......... (252,550) (44,161) (22,095) (244,370)
--------- ---------- --------- -----------
Net cash used in investing activities........ (252,550) (44,161) (22,095) (244,370)
--------- ---------- --------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Capital withdrawals.......................... (833,839) (849,063) (429,208) (1,187,575)
Capital contributions........................ 95,469 104,746 52,373 0
Payments of long-term debt and capital lease
obligations................................ (307,472) (444,217) (222,109) (210,509)
Proceeds from long-term debt................. 385,467 193,924 96,962 149,994
--------- ---------- --------- -----------
Net cash used in financing activities........ (660,375) (994,610) (501,982) (1,248,090)
---------- --------- --------- -----------
Increase (decrease) in cash and cash
equivalents................................ (135,799) 72,903 36,452 19,825
Cash at beginning of year.................... 164,254 28,455 28,455 101,358
--------- ---------- --------- -----------
Cash at end of year.......................... $ 28,455 $ 101,358 $ 64,907 $ 121,183
========== ========== ========= ===========
Interest paid for the year................... $ 143,325 $ 238,154 $ 109,901 $ 128,729
========== ========== ========= ===========
</TABLE>

See accompanying notes.

F-20
<PAGE> 72

ORACARE DENTAL HEALTH PLANS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION: The accompanying combined financial statements include the
accounts of the following entities collectively doing business as OraCare Dental
Health Plans, Inc.: OraCare Investors (a Partnership), OraCare Consultants, Inc.
("OC"), OraCare D.P.O., Inc. ("DPO"), OraCare Dental Labs, Inc. ("ODL"), and
prior to February 1, 1995, OraCare Dental Health Center -- Vineland, OraCare
Dental Health Center -- Blackwood, OraCare Dental Health Center -- Greentree,
OraCare Dental Health Center -- Atlantic City (the "Health Centers"). On
February 1, 1995, the Health Centers were combined into a single corporation
known as OraCare Dental Associates, P.A. ("ODA"). All of the outstanding stock
of these corporations are owned by members of a single family. The Board of
Directors of the corporations consists of the same individuals. OraCare
Investors, OC, DPO, ODL and ODA are collectively referred to hereinafter as the
"Company". The Company operates and markets managed dental care plans in New
Jersey and Pennsylvania. The Company also operates multi-specialty group dental
practices which provide services to plan members as well as out-of-plan
patients. The Company markets managed dental care plans to health maintenance
organizations (HMO's) and other groups as an alternative to traditional dental
indemnity insurance. With the exception of OraCare Investors, all organizations
within the Company operate as New Jersey corporations and are established as
S-Corporations for Federal income tax purposes.

OC provides administrative and marketing services to DPO, ODL and ODA. OC
is wholly-owned by five members of the Board of Directors.

DPO provides dental services to managed care corporations and other
employers in need of managed dental services. DPO is licensed under the New
Jersey Department of Insurance to operate as a prepaid dental plan organization
under the "Dental Plan Organization Act" ("DPO Act"). DPO enters into dental
agreements with each dentist who provides dental services for DPO enrollees.
Consistent with the DPO Act, DPO is limited to the amount of underwriting risk
it can assume. The Department of Insurance must approve all new or revised
schedule of charges prior to its effective date. In accordance with the DPO Act,
the charges must not be excessive, inadequate or unfairly discriminatory. Among
other provisions, the DPO Act requires DPO to meet certain net worth and deposit
requirements discussed more fully in Note 3. It is management's opinion that DPO
was in compliance with these provisions as of December 31, 1994 and 1995. DPO is
wholly-owned by the Chairman of the Board of Directors.

ODL provides laboratory work for the Company and outside dentists. ODL is
wholly-owned by the Chairman of the Board of Directors.

ODA consists of dental health centers located throughout New Jersey. The
Health Centers provide multi-specialty dental services including pediatric
dentistry, oral surgery, endodontics, orthodontics and periodontics. Dentists
within the Health Centers are compensated a fixed salary plus bonus incentives.
The bonus incentives are contingent upon meeting certain productivity targets.
Under some plans, the dentist is also paid a separate fee, or co-payment, by the
member at the time of the dental service. Dental service costs of dentists
within the Health Centers consisted of approximately 36% and 32% of total dental
service costs at December 31, 1994 and 1995, respectively. All Health Centers
are wholly-owned by the Chairman of the Board of Directors.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF COMBINATION: The accompanying combined financial statements
include the financial statements of each organization within the Company. All
intercompany transactions and balances have been eliminated in combination.

REVENUE: Amounts billed to out-of-plan patients are recognized as revenue
in the month in which services are rendered. Revenue is recognized on group
policy holders and prepaid arrangements in the month

F-21
<PAGE> 73

ORACARE DENTAL HEALTH PLANS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS -- CONTINUED

in which the subscribers are entitled to receive services. Unearned fees are
reflected as current liabilities and consist of amounts billed in the current
period for services to be rendered in a subsequent period.

Under prepaid arrangements, the DPO contracts with dentists for dental
services to be provided to its subscribers. Provider capitation consists of
monthly fees paid to dentists and is expensed in the month in which the dentist
is obligated to render dental services. DPO is not obligated to dentists for
services exceeding the capitated payment.

DENTAL SERVICE COSTS: Indemnity and managed care dental expenses are
charged to expense in the period that the services are incurred. The Company
contracts with dentists not compensated by the Health Centers to provide
services to covered enrollees. These costs consist of compensation to dentists
participating in the managed dental care plan and are paid by the Company on a
per member, per month capitation basis. Dental provider contracts are on a
yearly basis subject to cancellation by either party upon 90 days written
notice. Dental provider contracts consisted of approximately 5% and 12% of
dental service costs for the years ended December 31, 1994 and 1995,
respectively.

PROPERTY AND EQUIPMENT: Property and equipment is recorded at cost.
Depreciation is provided on a straight-line basis over the estimated useful life
of the asset. Capitalized leases are recorded at their present value at the
inception of the lease. Equipment under capital leases is amortized on the
straight-line method over the shorter period of the lease term or the estimated
useful life of the equipment.

STATE INCOME TAXES: For federal income tax purposes, the corporations
within the Company have elected to be treated as S corporations and,
accordingly, federal income taxes are not provided for by the Company. The
corporations within the Company are subject to New Jersey state income taxes.
During 1994, the Company had sufficient state net operating loss carryforwards
to offset taxable income. State income taxes are based on income reported for
financial statement purposes, adjusted for permanent differences. Permanent
differences principally relate to the non-deductible portion of travel and
entertainment expenses and premiums paid for officers' life insurance. The
Company utilized operating loss carryforwards for state tax purposes of
approximately $667,000 and $140,000 for the years ended December 31, 1994 and
1995, respectively. At December 31, 1995, there are no remaining net operating
loss carryforwards available.

MALPRACTICE INSURANCE: In addition to individual dentist coverage, the
Company maintains claims made umbrella policies covering employed dentists and
other dental professionals. The policies have a $1,000,000 occurrence and
$1,000,000 to $3,000,000 annual aggregate limits.

USE OF ESTIMATES: The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates that affect the amounts reported in the financial statements. Actual
results could differ from those estimates.

UNAUDITED PRO FORMA INFORMATION: The unaudited pro forma information
presented in the combined statements of income reflect the pro forma effects for
federal income taxes at an effective rate of 34%, as if the Company had been a
taxable entity for federal purposes.

3. REGULATORY REQUIREMENTS AND RESTRICTED FUNDS

The State of New Jersey Department of Insurance (DOI) requires that the
DPO, among other things, maintain a required general surplus. At December 31,
1995, DPO's general surplus exceeded the minimum required general surplus of
approximately $66,000.

F-22
<PAGE> 74

ORACARE DENTAL HEALTH PLANS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS -- CONTINUED

4. PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31
-------------------------
1994 1995
---------- ----------
<S> <C> <C>
Auto........................................................ $ 16,845 $ 16,845
Leasehold improvements...................................... 115,565 115,565
Furniture................................................... 25,573 33,335
Dental equipment............................................ 904,233 912,741
Computer equipment.......................................... 186,147 214,037
---------- ----------
1,248,363 1,292,523
Less accumulated depreciation and amortization.............. (451,707) (559,486)
---------- ----------
$ 796,656 $ 733,037
========== ==========
</TABLE>

The total cost of capitalized leased equipment at December 31, 1994 and
1995 was $474,305 and $497,138, respectively. Total amortization expense
associated with capital leases for the years ended December 31, 1994 and 1995
was $48,886 and $58,723, respectively.

5. LONG-TERM OBLIGATIONS

A summary of long-term obligations is as follows:

<TABLE>
<CAPTION>
DECEMBER 31
-------------------------
1994 1995
---------- ----------
<S> <C> <C>
$175,000 Senior Debenture, due December 29, 2000, interest
10% payable semi-annually beginning June 30, 1996(a)...... $ 175,000
$121,562 loan payable, bearing interest at 12.66% per annum,
payable in 48 monthly principal and interest installments
of $3,240, due April 1997................................. $ 78,209 47,480
$119,453 loan payable, bearing interest at 14.0% per annum,
payable in 84 monthly principal and interest installments
of $2,239, due November 1997.............................. 66,955 44,929
$65,000 loan payable, bearing interest at 14.0% per annum,
payable in 60 monthly principal and interest installments
of $1,512, due November 1999.............................. 64,246 53,625
$250,000 note payable, collateralized by substantially all
property and equipment of the Health Centers, and a
$400,000 life insurance policy on the Chairman of the
Board of Directors. The note bears interest of 9.0% and
matures in October, 1996. Principal and interest payments
of $2,500 are due monthly with a balloon payment of
$102,000 due October 1996................................. 123,500 116,498
Notes payable, bearing interest at 15%, maturing on January
31, 2000. Principal and interest payments of $913 are due
monthly................................................... 38,812 33,308
$437,500 unsecured note payable, bearing interest at 9.0%,
maturing on April 1, 2000, principal payments of $7,500
required monthly, plus interest........................... 437,500 400,025
$511,959 unsecured note payable, bearing interest at 9.67%,
maturing on January 31, 2000, monthly principal and
interest payments vary from $9,000 to $15,000 for the life
of the note(b)............................................ 492,960 481,063
</TABLE>

F-23
<PAGE> 75

ORACARE DENTAL HEALTH PLANS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS -- CONTINUED

<TABLE>
<CAPTION>
DECEMBER 31
1994 1995
---------- ----------
<S> <C> <C>
$458,090 unsecured loan payable, bearing interest at 9.5%,
maturing in May, 1999, with monthly principal varying from
$6,000 to $7,800 for the life of the loan. The loan is
guaranteed by certain officers and directors(c)........... $ 360,400 $ 260,809
$224,264 note payable, collateralized by dental supplies
bearing interest of 9%, maturing January 1, 1999. Monthly
principal and interest payments vary from $4,000 per month
to $7,500 per month....................................... 224,264 191,236
Other long-term obligations with interest rates varying from
9% to 10.5%, maturing through November 1999............... 127,751 49,137
---------- ----------
2,014,597 1,853,110
Less current portion........................................ 339,096 438,456
---------- ----------
Long-term obligations....................................... $1,675,501 $1,414,654
========== ==========
</TABLE>

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

(a) The holder has an option to acquire 5% of the authorized, issued and
outstanding stock of DPO during two exercise periods. The consideration for
the issuance of the common stock shall be the debenture which the holder
will surrender to DPO. The two exercise periods set forth are December 1,
1997 through March 1, 1998, or at any time prior to March 1, 1998 in the
event that DPO has exercised its right to call the debenture.

(b) Under the terms of the note, 25% of the outstanding balance will be forgiven
if the remainder of the note is paid in full by December 31, 1996.

(c) Under the terms of the loan, total compensation of certain officers and
directors shall not exceed limits described in the loan documents. The
Company was in compliance with these covenants for the years ended December
31, 1994 and 1995, respectively. The terms of the loan were renegotiated on
May 10, 1996. The terms of the renegotiated loan are reflected in the
financial statements. The effect of the renegotiation was to extend the
payments of the loan an additional 34 months from the previous July 1996
maturity.

Future minimum payments at December 31, 1995 are as follows:

<TABLE>
<CAPTION>
CAPITAL LONG-TERM
LEASES OBLIGATIONS
-------- -----------
<S> <C> <C>
Year ended December 1996..................................... $103,335 $ 438,456
1997....................................................... 118,043 371,584
1998....................................................... 70,179 415,970
1999....................................................... 32,836 300,799
2000....................................................... 1,656 264,764
Thereafter................................................. 61,537
-------- -----------
326,049 1,853,110
Less amount representing interest............................ 55,663
-------- -----------
Present value of minimum future obligations.................. 270,386 1,853,110
Less current portion......................................... 75,130 626,323
-------- -----------
Long-term portion............................................ $195,256 $ 1,226,787
======== ===========
</TABLE>

F-24
<PAGE> 76

ORACARE DENTAL HEALTH PLANS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS -- CONTINUED

Capital lease obligations, at interest rates ranging from 5% to 17%, are
collateralized by property and equipment.

The fair value of long-term debt is estimated by discounting the required
future cash flows using borrowings rates that could be currently obtained by the
Company. At December 31, 1995, the Company believes that the carrying value of
long-term debt approximates fair value.

6. SOURCES OF REVENUES

The following table shows the percentage of revenue attributable to each
type of product offered:

<TABLE>
<CAPTION>
1994 1995
---- ----
<S> <C> <C>
Managed care........................................................... 34% 43%
Indemnity.............................................................. 66 57
--- ---
100% 100%
=== ===
</TABLE>

7. SIGNIFICANT CUSTOMERS

In 1994 and 1995, one customer, the State of New Jersey, accounted for
approximately 19.7% and 19.6% of the Company's subscriber revenue, respectively.

8. COMMON STOCK

At December 31, 1994 and 1995, the authorized and issued common stock of
the Company is as follows:

<TABLE>
<CAPTION>
NUMBER OF SHARES
---------------------------
NO PAR $1 PAR
VALUE VALUE TOTAL
------ ------ -----
<S> <C> <C> <C>
Authorized:
OC........................................................ 2,500 2,500
ODA....................................................... 2,500 2,500
ODL....................................................... 2,500 2,500
DPO....................................................... 1,000 1,000
----- ----- -----
Total shares authorized..................................... 7,500 1,000 8,500
===== ===== =====
Issued:
OC........................................................ 1,000 1,000
ODA....................................................... 100 100
ODL....................................................... 100 100
DPO....................................................... 100 100
----- ----- -----
Total shares issued......................................... 1,200 100 1,300
===== ===== =====
</TABLE>

9. RETIREMENT PLAN

Effective January 1, 1995, the Company commenced a 401(k) profit sharing
plan in which all employees of the Company who have completed at least twelve
months of service and have attained age eighteen are eligible to participate.
Under the plan, the Company may elect to make matching contributions to eligible
plan members. The Company elected not to contribute to the plan for the year
ended December 31, 1995.

F-25
<PAGE> 77

ORACARE DENTAL HEALTH PLANS, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS -- CONTINUED

10. CONCENTRATION OF CREDIT RISK

The Company grants credit without collateral to its patients, most of whom
are local residents and are insured under third-party payer agreements. Revenue
from patients and third-party payers was as follows:

<TABLE>
<CAPTION>
DECEMBER 31
-------------
1994 1995
---- ----
<S> <C> <C>
Commercial insurance and managed care.................................. 90% 91%
Self-pay............................................................... 10 9
--- ---
100% 100%
=== ===
</TABLE>

11. OPERATING LEASE OBLIGATIONS

The Company leases office space and various office equipment. The related
expenses for the years ended December 31, 1994 and 1995 was approximately
$280,971 and $287,917, respectively. The following is a schedule of future
minimum payments under operating leases that have initial or remaining
noncancelable lease terms in excess of one year for the next five years:

12. COMMITMENTS AND CONTINGENCIES

LITIGATION: Various suits and claims arising in the normal course of
operations are pending or are on appeal against the Company. Such suits and
claims are either specifically covered by insurance or are not material. While
the outcome of these suits cannot be determined at this time, legal counsel and
management believe that any loss which may arise from these actions will not
have a material adverse effect on the financial position or results of
operations of the Company.

13. RELATED PARTY TRANSACTIONS

Accounting services and rental of a dental facility are provided by a
member of the Board of Directors. These services are provided at current market
rates. Amounts charged are as follows:

<TABLE>
<CAPTION>
DECEMBER 31
-------------------
1994 1995
------- -------
<S> <C> <C>
Accounting services.............................................. $15,032 $20,626
Rental of dental facility........................................ 43,800 43,800
------- -------
$58,832 $64,426
======= =======
</TABLE>

14. SUBSEQUENT EVENT

On September 5, 1996, the stockholders of OC and DPO entered into
agreements to sell all the issued and outstanding capital stock of such
companies to United Dental Care, Inc., a Delaware corporation ("UDC").
Additionally, the sole stockholder of ODA agreed to sell all the issued and
outstanding capital stock of ODA to a designee of UDC. The sale of the
outstanding capital stock of DPO is subject to New Jersey regulatory approval.

F-26
<PAGE> 78

UICI DENTAL COMPANIES

COMBINED BALANCE SHEETS
(IN THOUSANDS)

ASSETS

<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1995 1996
------------ ---------
<S> <C> <C>
Current assets:
Cash and cash equivalents......................................... $1,492 $ 2,160
Temporary investments............................................. 725 1,425
Accounts receivable............................................... 462 184
Notes receivable, current portion................................. 18 233
Other receivables................................................. 20 9
Marketable securities............................................. 700
Mortgage loans.................................................... 55 55
Other current assets.............................................. 161 108
------ -------
Total current assets...................................... 3,633 4,174
Notes receivable.................................................. 228 --
Regulatory deposits............................................... 350 350
Property and equipment, net of accumulated depreciation of $373 at
December 31, 1995 and $404 at June 30, 1996.................... 329 357
Other assets...................................................... 94 66
------ -------
Total assets.............................................. $4,634 $ 4,947
====== =======
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued liabilities.......................... $ 540 $ 581
Deferred revenues................................................. 735 840
Notes payable..................................................... 1,205 827
Accrued income taxes.............................................. 77 22
------ -------
Total current liabilities................................. 2,557 2,270
Future policy benefits -- annuity reserves........................ 305 305
Deferred income taxes............................................. 24 24
------ -------
Total liabilities......................................... 2,886 2,599
------ -------
Equity:
Contributed capital............................................... 15 19
Additional paid-in capital........................................ 285 400
Retained earnings................................................. 1,635 1,929
Treasury stock, at cost........................................... (187) --
------ -------
Total equity.............................................. 1,748 2,348
------ -------
Total liabilities and equity.............................. $4,634 $ 4,947
====== =======
</TABLE>

See accompanying notes.

F-27
<PAGE> 79

UICI DENTAL COMPANIES

COMBINED STATEMENTS OF OPERATIONS
(IN THOUSANDS)

<TABLE>
<CAPTION>
FOR THE YEAR SIX MONTHS ENDED
ENDED JUNE 30,
DECEMBER 31, -----------------
1995 1995 1996
------------ ------ ------
<S> <C> <C> <C>
Revenues:
Premiums -- managed benefits............................... $ 8,982 $4,707 $4,543
Premiums -- indemnity benefits............................. 4,485 2,217 2,639
Membership fees............................................ 2,868 1,311 1,488
Other income............................................... 275 129 160
-------- ------ ------
16,610 8,364 8,830
-------- ------ ------
Costs and expenses:
Provider service expense:
Managed benefits........................................ 5,337 2,944 2,566
Indemnity............................................... 2,779 1,939 1,629
Selling, general and administrative........................ 7,424 2,912 4,074
Depreciation and amortization.............................. 82 11 28
Interest................................................... 72 34 43
Other...................................................... 84 9 63
-------- ------ ------
15,778 7,849 8,403
-------- ------ ------
Income before income taxes................................. 832 515 427
Provision for income taxes................................. 213 90 133
-------- ------ ------
Net income......................................... $ 619 $ 425 $ 294
======== ====== ======
</TABLE>

See accompanying notes.

F-28
<PAGE> 80

UICI DENTAL COMPANIES

COMBINED STATEMENTS OF CHANGES IN EQUITY
(IN THOUSANDS)

<TABLE>
<CAPTION>
ADDITIONAL
CONTRIBUTED PAID-IN RETAINED TREASURY
CAPITAL CAPITAL EARNINGS STOCK TOTAL
----------- ---------- -------- -------- ------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1994................... $15 $ 285 $1,016 $ (25) $1,291
Purchase of treasury stock................. -- (162) (162)
Net income................................. 619 619
--- ------ ------ ------ ------
Balance, December 31, 1995................... 15 285 1,635 (187) 1,748
Net income................................. 294 294
Retirement of treasury stock............... (187) 187 --
Warrants issued............................ 302 302
Common stock issued........................ 4 4
--- ------ ------ ------ ------
Balance, June 30, 1996....................... $19 $ 400 $1,929 $ -- $2,348
=== ====== ====== ====== ======
</TABLE>

See accompanying notes.

F-29
<PAGE> 81

UICI DENTAL COMPANIES

COMBINED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
FOR THE YEAR SIX MONTHS ENDED,
ENDED JUNE 30,
DECEMBER 31, -----------------
1995 1995 1996
------------ ------ ------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income................................................. $ 619 $ 425 $ 294
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization.............................. 82 11 28
Deferred income taxes...................................... 16 -- --
Decrease in liability for future policy benefits........... (49) 102 --
Changes in assets and liabilities:
Accounts receivable..................................... (13) 253 278
Temporary investments................................... (200) (618) (700)
Accounts payable and accrued liabilities................ 208 38 10
Deferred revenues....................................... 40 8 105
Other current and noncurrent assets..................... 7 (9) 81
Other receivables....................................... (77) -- 10
------ ------ ------
Net cash provided by operating activities.......... 633 210 106
------ ------ ------
Cash flows from investing activities:
Capital expenditures....................................... (175) 3 (56)
Principal payments received on notes receivable............ 98 60 13
Proceeds of sale of marketable securities.................. -- 625 700
------ ------ ------
Net cash used in investing activities.............. (77) 688 657
------ ------ ------
Cash flows from financing activities:
Cash paid for treasury stock............................... (162) (162) --
Common stock issued........................................ -- -- 4
Warrants issued............................................ -- -- 302
Proceeds of borrowings..................................... 48 -- --
Principal payments on notes payable........................ (90) (101) (401)
------ ------ ------
Net cash used in financing activities.............. (204) (263) (95)
------ ------ ------
Net increase in cash......................................... 352 635 668
Cash and cash equivalents at beginning of period............. 1,140 1,290 1,492
------ ------ ------
Cash and cash equivalents at end of period................... $1,492 $1,925 $2,160
====== ====== ======
Cash paid during the period for:
Interest................................................ $ 31 $ 34 $ 43
Taxes................................................... $ 120 $ 87 $ 122
</TABLE>

See accompanying notes.

F-30
<PAGE> 82

UICI DENTAL COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS

1. ORGANIZATION AND DESCRIPTION OF BUSINESS

The accompanying combined financial statements include the accounts of the
following entities collectively doing business as UICI Dental Companies ("the
Companies"): United Dental Care of Oklahoma ("UDC-Oklahoma") and its wholly
owned subsidiary, UDC Life and Health Insurance Company, International Dental
Plan, Inc. ("IDP") and Association Dental Plans, Inc. ("ADP"). Any intercompany
transactions and balances have been eliminated in combination.

Each of these companies was acquired by UICI (formerly known as United
Insurance Companies, Inc.) ("UICI") during 1995. UICI is a publicly-traded
financial services company with interests in life and health insurance and
related services, including the administration and delivery of managed health
care program to select niche markets. In early 1995, UICI purchased a majority
interest in UDC-Oklahoma from its controlling stockholder. In November 1995,
UICI acquired 100% of the stock of ADP and, in December 1995, acquired 100% of
the stock of IDP. The accompanying combined financial statements present 100% of
the financial position and results of operations of UDC-Oklahoma

On September 10, 1996, UICI entered into a definitive agreement with United
Dental Care, Inc. ("UDC"), a publicly-traded prepaid dental plan unrelated to
UDC-Oklahoma, to sell 100% of the stock of IDP and ADP and their majority
interest in UDC-Oklahoma to UDC including a tender offer of the minority
interest in UDC-Oklahoma, for $12,500,000.

Both UDC-Oklahoma and IDP are licensed to operate and market managed dental
care plans in the states of Oklahoma and Florida, respectively. ADP is a
"referral-type" plan which operates a nationwide fee-for-service membership
plan. A "referral plan" generally is not considered an insurance product in most
states.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

REVENUE RECOGNITION

Premium revenue related to managed benefits is recorded in the month for
which the member is entitled to service. Premium revenue for indemnity benefits
is recognized over the coverage period to which the premiums relate. Member fees
related to ADP's fee-for-service membership plan are reported as revenue in the
period in which the member is entitled to plan benefits. Unearned premiums and
member fees are reflected as deferred revenue and consist of amounts billed or
collected in the current period which pertain to services (or entitlement to
services) in subsequent periods.

REGULATORY DEPOSITS

Under Florida law, IDP is required to maintain a minimum surplus of
$100,000 or 6% of total liabilities, whichever is greater. As of January 1,
1996, this increased to the greater of $150,000 or 10% of total liabilities. In
addition, an interest bearing deposit of $50,000 with the Florida Department of
Insurance and a fidelity bond on its officers and employees in an amount at
least equal to $50,000, is also required. As of December 31, 1995, IDP had
statutory surplus of approximately $496,000.

Under Oklahoma law, UDC-Oklahoma is required to keep interest-bearing
certificates of deposit issued by solvent insured banks and trust companies in
Oklahoma on deposit with the State Treasurer. The required deposit is held by
the State Treasurer in trust for the benefit and protection of persons covered
by the Plan and is not subject to attachment by any creditors.

CASH AND CASH EQUIVALENTS

The companies consider all highly liquid investments with an original
maturity of three months or less to be cash equivalents.

F-31
<PAGE> 83

UICI DENTAL COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS -- CONTINUED

TEMPORARY INVESTMENTS

Temporary investments include assets which are fully bonded or guaranteed
by the United States Government, such as bank Certificates of Deposit covered by
FDIC insurance, mutual funds invested exclusively in US Government debt
instruments and Repurchase Agreements backed by US Government securities. Time
deposits have an original maturity of greater than three months. Temporary
investments are recorded at cost which approximates market.

MARKETABLE SECURITIES

In accordance with FAS 115, the Companies have treated their marketable
securities as held to maturity type investments and have recorded them at cost.
Marketable securities consist of a US Treasury Note with a cost of $700,000 as
of December 31, 1995. The market value of the US Treasury Note was $700,000 as
of December 31, 1995. The note accrues interest at 4.25%.

MORTGAGE LOANS

Mortgage loans are stated at the aggregate unpaid balance.

FUTURE POLICY BENEFITS

The reserves for future policy benefits are computed in accordance with
state statutes and administrative regulations. The aggregate reserve for
accident and health policies consists of reserves for unearned premiums and
reported and incurred but not reported on life and annuity claims. The unearned
premiums reserve represents the portion of premiums paid in advance which have
not yet been earned.

The aggregate reserve for life and annuity policies represents the
actuarially determined present value of amounts not yet due on claims.

PROPERTY AND EQUIPMENT

Furniture and equipment are carried at cost, and are depreciated using the
straight line and double declining balance methods over estimated useful lives
of three to seven years. Leasehold improvements are carried at cost and
depreciated over fifteen years. Upon disposition, the cost and related
accumulated depreciation are removed from the accounts and the resulting gain or
loss is reflected in operations of the period.

ACQUISITION COSTS

Acquisition costs, such as commissions and other costs of obtaining new
members, are expensed as incurred.

INCOME TAXES

The Companies use SFAS No. 109, "Accounting for Income Taxes", which
requires an asset and liability approach to financial accounting and reporting
for income taxes. The difference between the financial statement and tax basis
of assets and liabilities is determined annually. Deferred income tax assets and
liabilities are computed for those differences that have future tax consequences
using the currently enacted tax laws and rates that apply to the periods in
which they are expected to affect taxable income. Valuation allowances are
established, if necessary, to reduce the deferred tax asset to the amount that
will, more likely than not, be realized.

F-32
<PAGE> 84

UICI DENTAL COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS -- CONTINUED

The principal source of temporary differences giving rise to the deferred
tax liability relate to differences in tax basis and financial reporting amounts
of property and equipment, net of accumulated depreciation which result from the
use of accelerated depreciation for income tax purposes.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at December 31, 1995 and June
30, 1996, and revenues and expenses during the periods then ended. The actual
outcome of the estimates could differ from the estimates made in the preparation
of the financial statements.

3. PROPERTY AND EQUIPMENT

Property and equipment at December 31, 1995 consist of the following:

<TABLE>
<S> <C>
Equipment................................................................. $502,187
Furniture................................................................. 37,233
Computer equipment........................................................ 123,392
Leasehold improvements.................................................... 38,550
--------
701,362
Accumulated depreciation and amortization................................. 372,804
--------
$328,558
========
</TABLE>

4. NOTES PAYABLE

A summary of notes payable at December 31, 1995 by entity is as follows:

<TABLE>
<S> <C>
UDC-Oklahoma..................................................... $ 550,000
IDP.............................................................. --
ADP.............................................................. 655,475
----------
$1,205,475
==========
</TABLE>

The UDC-Oklahoma notes payable consist of two promissory notes in the
amount of $100,000 and $450,000 payable on demand, but no later than December
31, 1997, and August 26, 1997, respectively. Interest is due monthly at an
annual rate equal to the net investment yield earned on the principal as
invested by UDC-Oklahoma's wholly-owned subsidiary, UDC Life and Health
Insurance Company. These notes are collateralized by 500,000 shares of the
capital stock of UDC Life and Health Insurance Company, and provide for certain
restrictions on UDC-Oklahoma to incur borrowings, sell assets, enter into
reinsurance agreements and invest assets. The notes are payable to The Mega Life
and Health Insurance Company ("MEGA"), formerly United Group Insurance Company.
One of MEGA's officers is a board member of UDC-Oklahoma.

In addition, UDC-Oklahoma has a revolving line of credit available from
MEGA. The amount of borrowings that can be made under this revolving line of
credit is restricted by certain financial requirements of MEGA. The maximum
amount that could be borrowed under the revolving line of credit is $850,000.
Borrowings under the line of credit shall bear interest at the rate of 1% per
month. As of December 31, 1995, no borrowings have been made against the line.

The ADP debt consists of a promissory note in the amount of $502,475 and a
line of credit of $153,000, both payable to UICI. Interest is paid monthly, and
is computed at a rate of 1% of the outstanding balance at

F-33
<PAGE> 85

UICI DENTAL COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS -- CONTINUED

the beginning of each month. The debt is collateralized by all tangible and
intangible assets of ADP. The promissory note is due on October 12, 1997.

5. STOCKHOLDERS' EQUITY

At December 31, 1995 the authorized and issued common stock of the
Companies is as follows:

<TABLE>
<CAPTION>
NUMBER OF SHARES
--------------------------------
$.001 PAR $2 PAR $.01 PAR
VALUE VALUE VALUE
---------- ------ --------
<S> <C> <C> <C>
Authorized:
IDP................................................... 50,000,000 -- --
UDC-Oklahoma.......................................... -- 25,000 --
ADP................................................... -- -- 1,000
---------- ------ -----
Total shares authorized................................. 50,000,000 25,000 1,000
========== ====== =====
Issued:
IDP................................................... 709,308 -- --
UDC-Oklahoma.......................................... -- 6,551 --
ADP................................................... -- -- 500
---------- ------ -----
Total shares issued..................................... 709,308 6,551 500
========== ====== =====
</TABLE>

UDC-Oklahoma has authority to issue two classes of preferred stock, Class
A, and Class B. Holders of the Class B preferred stock are entitled to receive a
fixed yearly dividend of 14% payable as authorized by the directors. This
dividend, which is cumulative, is to be set aside or paid before any dividends
are paid on the Class A preferred stock or common stock. The Class A preferred
stockholders are entitled to a 12% annual cumulative dividend which is to be set
aside or paid before the common stock dividends. The holders of common stock are
entitled to receive all moneys appropriated to dividends, after the cumulative
dividends on Class A and B preferred stocks have been fully paid. In 1995, only
common stock shares were outstanding.

In connection with the revolving line of credit discussed in Note 4,
UDC-Oklahoma issued a warrant which was exercisable up to an aggregate of 3,125
shares of its common stock at a price of $100 per share through April 1996.
Subsequent to December 31, 1995 this warrant was exercised and 3,125 shares of
common stock were issued.

In June 1993, the sole stockholder of UDC-Oklahoma approved a 1 for 200
reverse stock split. As of December 31, 1995, UDC-Oklahoma had repurchased
24,883 fractional shares (124 shares after the effect of the reverse stock
split) for $1.12 per share. These shares have been recorded in the financial
statements as treasury stock. Management estimates that approximately 15,760
fractional shares (79 shares after the effect of the reverse stock split) have
not yet been redeemed. Management expects these shares will be redeemed in the
future.

6. RELATED PARTY TRANSACTIONS

At December 31, 1995, IDP had certain notes receivable from participating
dental providers amounting to $43,884, of which $18,382 is included in current
assets in the accompanying balance sheets. The notes are payable monthly, bear
interest at an annual rate of 8%, are secured by dental office equipment, and
are due at various dates through September 1998. At December 31, 1995, ADP had
notes payable to UICI totaling $655,475 (see Note 4).

F-34
<PAGE> 86

UICI DENTAL COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS -- CONTINUED

UDC-Oklahoma leases office equipment from United Management and Consulting,
Inc. ("UMCI"), a company owned by a stockholder and officer of UDC-Oklahoma.
Lease payments made under the cancelable lease agreement amounted to $25,200 in
1995.

Included in selling, general and administrative expenses are management and
consulting fees charged by a professional association owned by certain former
shareholders of IDP totaling approximately $71,000 in 1995. Additionally, during
1995 consulting fees of $23,000 were charged by a former shareholder of IDP.
During 1995, management fees of $90,698 were paid to an officer of UDC-Oklahoma
for management and consulting services in lieu of salary.

Included in interest and other revenues in the accompanying statement of
operations is approximately $2,500 in net settlement income resulting from the
collection of approximately $601,000 in damages relating to a claim filed by IDP
in 1988, settled in 1991 and collected in 1995. IDP then paid bonuses to certain
employees in recognition of their contributions to the recovery related to this
claim and paid approximately $347,500 to a professional partnership owned by
certain former shareholders for professional services principally rendered in
prior years in connection with the claim. In connection with this claim, IDP
entered into an agreement with the professional partnership owned by certain
former shareholders whereby the professional partnership would be entitled to
additional amounts, up to $150,000, that may be received in the future. In July
1996, IDP received an additional $346,000 in damages as final settlement of this
claim, $150,000 of which was disbursed to the professional partnership in
accordance with the agreement noted above.

7. INCOME TAXES

The income tax provision is summarized as follows:

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1995
------------
<S> <C>
Current
Federal............................................................... $181,087
State................................................................. 16,000
--------
197,087
--------
Deferred
Federal............................................................... 13,200
State................................................................. 2,300
--------
15,500
--------
$212,587
========
</TABLE>

A reconciliation of the Federal income tax rate to the effective tax rate
is as follows:

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1995
------------
<S> <C>
Federal income tax rate................................................. 34.0%
Small life insurance company benefit.................................... (13.0%)
Other................................................................... 5.0%
------
Effective tax rate...................................................... 26.0%
======
</TABLE>

Because UDC Life and Health Insurance Company is a life insurance company,
its related tax information must be filed on a separate income tax return from
United Dental Care, Inc. UDC Oklahoma's

F-35
<PAGE> 87

UICI DENTAL COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS -- CONTINUED

provision for income tax differs from the amount computed by applying the
Federal statutory rate primarily due to the effect of a small life insurance
company deduction of 60% of life insurance company taxable income.

UDC-Oklahoma generally pays premium taxes in lieu of state income taxes.

8. PROFIT SHARING PLAN

During 1995, the Companies maintained qualified 401(k) profit-sharing plans
covering substantially all of their employees. The plans allow for employees to
contribute a percentage of their compensation up to the maximum limit allowable
by law. The plans also provide for a discretionary matching contribution by the
companies which totaled approximately $52,951 in 1995. The IDP plan was
terminated effective December 31, 1995, in connection with the Agreement and
plan of Exchange with UICI. The ADP plan was terminated effective December 31,
1995, at which time ADP adopted the UICI 401(k) plan.

9. OPERATING LEASE

The Companies lease office space and office equipment under various
noncancelable lease agreements. Rental expense for the year ended December 31,
1995 was $161,973. Future minimum lease payments required under the operating
leases as of December 31, 1995, are as follows:

<TABLE>
<S> <C>
1996.............................................. $157,130
1997.............................................. 101,130
1998.............................................. 56,130
1999.............................................. 55,574
2000.............................................. 55,574
Thereafter........................................ 243,735
</TABLE>

10. RISKS AND UNCERTAINTIES

The Companies contract with certain medical HMOs to provide dental benefits
to the HMO's members. In the event that the contracts between such HMOs and
significant customers (e.g., government programs such as Medicare or Medicaid,
major employer groups) are terminated or not renewed, such termination or
nonrenewal would also terminate the companies' contracts to provide dental
benefits to those HMOs. Furthermore, the contracts with the medical HMOs
generally are on a year-to-year basis. Decisions by any of the medical HMOs to
not renew the contracts (i.e., to change to a different dental care provider
organization, or to drop dental coverage as a plan benefit) could result in
significant membership loss.

The companies contract to provide services to government programs such as
Medicare and Medicaid, either though contractual relationships with medical HMOs
(as discussed above) or by contracting directly with the government program.
Changes in reimbursement regulations could have an impact on the amounts of
payments received under such contracts or on the timing of the payments received
under those contracts.

In 1996 IDP lost a major customer, PCA, through which it provided dental
benefits to approximately 62,000 Florida Medicaid beneficiaries.

F-36
<PAGE> 88

REPORT OF INDEPENDENT ACCOUNTANT

To the Board of Directors of
Kansas City Dental Care, Inc.

I have audited the accompanying balance sheet of Kansas City Dental Care,
Inc. as of December 31, 1995, and the related statements of income, retained
earnings and cash flows for the year then ended. These financial statements are
the responsibility of the Company's management. My responsibility is to express
an opinion on these financial statements based on my audit.

I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.

In my opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Kansas City Dental Care,
Inc. as of December 31, 1995 and the results of its operation and its cash flow
for the year then ended in conformity with generally accepted accounting
principles.

James L. Gordon, C.P.A.

September 6, 1996

F-37
<PAGE> 89

KANSAS CITY DENTAL CARE, INC.

BALANCE SHEET

ASSETS

<TABLE>
<CAPTION>
DECEMBER 31,
1995 JUNE 30, 1996
------------ -------------
(UNAUDITED)
<S> <C> <C>
Current Assets:
Cash............................................................... $271,547 $ 600,310
Accounts Receivable -- Trade....................................... 116,095 50,125
Accounts Receivable -- Salary Advances............................. 10,648 8,198
Accrued Interest Receivable........................................ 1,453 1,291
U.S. Treasury Bond................................................. 49,702 49,731
Prepaid Income Taxes............................................... -- 2,280
-------- ---------
Total Current Assets....................................... 449,445 711,935
-------- ---------
Fixed Assets:
Dental Equipment................................................... 199,597 199,597
Office Equipment................................................... 72,312 81,246
Vehicles........................................................... 10,139 10,138
Computer Equipment................................................. 58,027 76,125
Buildings.......................................................... 120,000 120,000
-------- ---------
460,075 487,106
Less: Accumulated Depreciation..................................... (231,540) (244,142)
-------- ---------
Net Book Value of Fixed Assets..................................... 228,535 242,964
Other Assets......................................................... 2,700 2,700
-------- ---------
TOTAL ASSETS......................................................... $680,680 $ 957,599
======== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable................................................... $ 23,078 $ --
Payroll Taxes Payable.............................................. 2,109 4,934
Accrued Pension Payable............................................ 8,618 7,922
Escheat Fund Account............................................... 10 10
Income Taxes Payable............................................... 1,891 104,216
Deferred Premiums.................................................. 269,084 257,338
Fringe benefits payable............................................ -- 2,673
Current portion of long-term debt.................................. 30,490 30,763
-------- ---------
Total Current Liabilities.................................. 335,280 407,856
-------- ---------
Long Term Liabilities:
Notes Payable...................................................... 93,418 85,936
Less: Current portion.............................................. (30,490) (30,763)
Deferred Income Taxes.............................................. 11,407 11,407
-------- ---------
Total Long Term Liabilities................................ 74,335 66,580
-------- ---------
Total Liabilities.......................................... 409,615 474,436
-------- ---------
Stockholders Equity:
Capital Stock...................................................... 50,010 50,010
Paid-In-Capital In Excess of Par................................... 43,808 43,808
Retained Earnings.................................................. 177,247 389,345
-------- ---------
Total Stockholders' Equity................................. 271,065 483,163
-------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY........................... $680,680 $ 957,599
======== =========
</TABLE>

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

F-38
<PAGE> 90

KANSAS CITY DENTAL CARE, INC.

STATEMENT OF INCOME

<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
YEAR ENDED ------------------------
DECEMBER 31, 1995 1995 1996
----------------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C>
Revenues
Sales -- Regular................................... $ 7,264,397 $3,699,127 $3,866,488
Sales -- Individual................................ 527,595 260,877 303,417
Sales -- Federal................................... 277,524 135,791 189,579
Sales -- ACH....................................... 68,742 36,194 38,396
Commissions and Other.............................. 281,782 101,930 381,835
----------- ---------- ----------
Total Revenues............................. 8,420,040 4,233,919 4,779,715
----------- ---------- ----------
Cost of Goods Sold
Broker Commission.................................. 536,330 269,185 345,906
Capitation......................................... 5,665,866 2,916,224 2,740,753
Refunds............................................ 27,249 13,468 17,419
Other Commissions.................................. 269,416 92,825 322,729
----------- ---------- ----------
Total Cost of Goods Sold................... 6,498,861 3,291,702 3,426,807
----------- ---------- ----------
Gross Profit............................... 1,921,179 942,217 1,352,908
----------- ---------- ----------
Operating Expenses
Sales & Marketing and General & Administrative..... 1,854,722 904,512 986,907
Depreciation....................................... 24,837 11,997 12,602
Interest........................................... 10,098 4,806 4,176
----------- ---------- ----------
Total Operating Expenses................... 1,889,657 921,315 1,003,685
----------- ---------- ----------
Income From Operations............................. 31,522 20,902 349,223
----------- ---------- ----------
Other Income (Expense)
Lease Income....................................... 6,216 -- --
Consulting Income.................................. 51,700 -- --
Interest Income.................................... 6,085 3,847 1,822
Gain on Sale of Equipment.......................... 50,002 50,656 --
Bonuses............................................ (137,166) (62,522) (34,731)
----------- ---------- ----------
Total Other Income (Expense)............... (23,163) (8,019) (32,909)
----------- ---------- ----------
Income Before Income Taxes......................... 8,359 12,883 316,314
Income Tax Expense................................. (1,680) (2,568) (104,216)
----------- ---------- ----------
Net Income......................................... $ 6,679 $ 10,315 $ 212,098
=========== ========== ==========
</TABLE>

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

F-39
<PAGE> 91

KANSAS CITY DENTAL CARE, INC.

STATEMENT OF RETAINED EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 1995

<TABLE>
<S> <C>
Retained earnings -- January 1, 1995.............................................. $170,568
Net income for the year........................................................... 6,679
Less: Dividends paid.............................................................. --
--------
-
Retained earnings -- December 31, 1995............................................ 177,247
Net income for the period......................................................... 212,098
--------
-
Retained earnings -- June 30, 1996 (unaudited).................................... $389,345
========
</TABLE>

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

F-40
<PAGE> 92

KANSAS CITY DENTAL CARE, INC.

STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
YEAR ENDED ----------------------
DECEMBER 31, 1995 1995 1996
----------------- --------- --------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income........................................... $ 6,679 $ 10,315 $212,098
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation....................................... 24,837 11,997 12,602
Deferred income taxes.............................. (3,504) -- --
Gain on sale of fixed assets....................... (50,002) (50,656) --
Amortization of discount........................... (264) (236) (29)
Changes in operating assets and liabilities:
Decrease (increase) in accounts
receivable -- trade............................. (61,624) -- 65,971
Decrease (increase) in prepaid expenses............ 4,841 2,000 (2,280)
Decrease (increase) in salary advances............. 4,376 (11,085) 450
Decrease in other receivables...................... 24,824 24,824 --
Increase (decrease) in accounts payable............ (23,421) (38,295) (23,248)
Increase (decrease) in deferred premiums........... 190,855 -- (11,747)
Increase in income taxes payable................... 1,393 2,071 102,496
Increase in other payables......................... 10,451 411 6,802
--------- --------- --------
Net cash provided by (used in) operations............ 129,441 (48,654) 363,115
--------- --------- --------
CASH FLOW FROM INVESTING ACTIVITIES
Proceeds from sale of fixed assets................... 70,000 70,000 --
Decrease in notes receivable......................... 63,065 6,841 --
Purchase of real estate.............................. (120,000) (120,000) --
Purchase of fixed assets............................. (33,397) (5,815) (27,032)
Decrease (increase) in interest receivable........... (1,453) (1,292) 162
--------- --------- --------
Net cash used by investing activities................ (21,785) (50,266) (26,870)
--------- --------- --------
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from notes.................................. 120,000 120,000 --
Payments on notes.................................... (61,831) (41,926) (7,482)
--------- --------- --------
Net cash provided by (used in) financing
activities......................................... 58,169 78,074 (7,482)
--------- --------- --------
Net increase (decrease) in cash...................... 165,825 (20,846) 328,763
Cash -- beginning of period.......................... 105,721 105,721 271,547
--------- --------- --------
Cash -- end of period................................ $ 271,546 $ 84,875 $600,310
========= ========= ========
SUPPLEMENTAL DISCLOSURES
Interest paid........................................ $ 10,098 $ 4,806 $ 4,176
========= ========= ========
Income taxes paid.................................... $ 3,791 $ 498 $ 4,000
========= ========= ========
</TABLE>

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

F-41
<PAGE> 93

KANSAS CITY DENTAL CARE, INC.

NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995

NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1. NATURE OF OPERATIONS

Kansas City Dental Care, Inc., a Missouri corporation, is a prepaid dental
care insurance company. The plan provides members with affordable, quality
dental care in an era of spiraling health care costs. Members of Kansas City
Dental Care, Inc. subscribe to coverage through a payroll deduction by their
employer, and may continue coverage upon separation from their employer by
renewing their subscription on an individual basis. Services are provided to
members by contracting dentists throughout the area.

2. BASIS OF ACCOUNTING

Financial statements are prepared on the accrual basis of accounting.
Revenues are recorded at the time of the sale or transaction. Expenditures are
recorded at the time the merchandise or service is received.

3. INVESTMENTS

Bonds and short-term investments are reported at amortized cost. Discounts
or premiums on bonds are amortized using the straight-line method. Interest
earned on investments is being accrued.

4. ACCOUNTS RECEIVABLE

Accounts receivable are stated at net realizable value. Doubtful accounts
are written directly to expense when in the opinion of management, amounts
involved are considered uncollectible, which approximates the allowance method
of bad debt write-off.

5. FIXED ASSETS

Fixed assets are stated at cost. Major improvements and betterments to
existing fixed assets have been capitalized. Expenditures for maintenance and
repairs which do not extend the life of the applicable fixed assets have been
charged to expense as incurred.

Depreciation is provided principally by the straight-line method over the
estimated useful lives of the assets.

6. ACCRUED LIABILITIES

Accrued liabilities are based on the accrual method of accounting and are
computed through December 31, 1995.

Unearned premiums are determined by prorating policy premiums over the
terms of the policies.

7. INCOME TAXES

Income taxes are provided for the tax effects of transactions reported in
the financial statements and consist of taxes currently due plus deferred taxes
related to temporary differences in reporting results of operations for income
tax and financial accounting purposes.

8. USE OF ESTIMATES

The preparation of financial statements on the accrual basis of accounting
requires management to make estimates and assumptions that affect certain
reported amounts and disclosures. Accordingly, actual results could differ from
those estimates.

F-42
<PAGE> 94

KANSAS CITY DENTAL CARE, INC.

NOTES TO FINANCIAL STATEMENTS -- CONTINUED

NOTE B -- CONCENTRATIONS OF CREDIT RISK

The Company maintains its cash balances primarily in one financial
institution located in Kansas City, Missouri. The balances are insured by the
Federal Deposit Insurance Corporation up to $100,000.00. At December 31, 1995
and June 30, 1996, the Company's uninsured cash balances total $242,422.46 and
$644,720, respectively.

NOTE C -- INVESTMENT -- TREASURY BOND

A $50,000 United States Treasury Bond paying interest at 7.75% was
purchased during the year ended November 30, 1991 for $49,437.50. The amortized
cost of the bond at December 31, 1995 and June 30, 1996 is $49,702 and $49,731,
respectively, which approximates market value. The bond matures February 15,
2001. The fair market value as of December 31, 1995 and June 30, 1996 is $55,094
and $52,844, respectively.

NOTE D -- COMMITMENTS -- LEASES

As Lessee: Kansas City Dental Care, Inc. is committed to a lease of their
office space until July 31, 2000. Monthly rent in the amount of $4,956.75 is
payable until July 31, 1998. Monthly rent will be $5,140.33 from August 1, 1998
through the end of the lease.

NOTE E -- 401(K) PLAN

Kansas City Dental Care, Inc. has in place a 401(k) plan which provides for
elective deferral of salaries for employees. The Company also invests a base
amount of 3% to all employees vested and will match employee contributions up to
an additional 4%. Contributions for the year ended December 31, 1995 and for the
six months ended June 30, 1996 of $52,145 and $33,309, respectively, reflect
both employee and employer contributions.

NOTE F -- NOTES PAYABLE

Notes payable consist of the following:

(a) 9.75% note for $95,000.00 payable in monthly installments of
$993.32 principal and interest to UMB Bank of Kansas City. This loan is
secured by real estate in Salina, Kansas, with a maturity date of February
1, 1998. The balance at December 31, 1995 and June 30, 1996 is $68,418 and
$60,936, respectively.

(b) 9.25% Line of Credit for $100,000.00 payable in quarterly
installments for interest only to UMB Bank of Kansas City on $25,000.00 of
this line. The remaining $75,000.00 is an open letter of credit for the
benefit of the State of Kansas which expires November 15, 1996. This open
letter must be renewed or replaced by August 15, 1996, or the commissioner
of insurance will be authorized to draw upon the letter of credit.

Principal maturities on notes payable are as follows:

<TABLE>
<S> <C>
Year ended December 31, 1996............................................... $30,490
December 31, 1997............................................. 6,050
December 31, 1998............................................. 56,878
-------
$93,418
=======
</TABLE>

F-43
<PAGE> 95

KANSAS CITY DENTAL CARE, INC.

NOTES TO FINANCIAL STATEMENTS -- CONTINUED

NOTE G -- COMMON STOCK

The corporation has authorized 10,000 shares of common stock with a par
value of $10.00. Issued capital stock at the financial statement date was 5,001
shares at par value of $10.00. The owners of the 5,001 shares on December 31,
1995 and on June 30, 1996 are as follows:

<TABLE>
<CAPTION>
SHARES
------
<S> <C>
John Carlin................................................................ 1,667
Frank Schloegel............................................................ 1,667
Dennis Dlabal.............................................................. 1,667
-----
Total............................................................ 5,001
=====
</TABLE>

NOTE H -- RELATED PARTY TRANSACTIONS

An officer of Kansas City Dental Care, Inc. owns stock in dental clinics
with which the corporation has provider contracts. The capitation fees paid to
the officer's clinics for the year ended December 31, 1995 and for the six
months ended June 30, 1996 were $941,890 and $252,999, respectively. Management
services of $21,750.00 are also provided by another related corporation.

NOTE I -- DEFERRED INCOME TAXES

Temporary differences giving rise to the deferred tax liability of
$11,406.90 as of December 31, 1995 and as of June 30, 1996 consist of
depreciation expense being reported differently for financial reporting and tax
purposes.

NOTE J -- INCOME TAXES -- CURRENT

Income taxes payable consist of the following:

<TABLE>
<CAPTION>
FEDERAL STATE TOTAL
---------- ---------- -----------
<S> <C> <C> <C>
1995 tax liability............................ $ 3,135.00 $ 2,049.00 $ 5,184.00
Less: Estimates paid and credits forwarded.... (2,841.00) (452.00) (3,293.00)
---------- ---------- -----------
Total............................... $ 294.00 $ 1,597.00 $ 1,891.00
========== ========== ===========
</TABLE>

<TABLE>
<CAPTION>
FEDERAL STATE TOTAL
---------- ---------- -----------
<S> <C> <C> <C>
1996 estimated tax liability.................. $89,093.24 $15,123.09 $104,216.33
Less: Estimates paid and credits forward...... (1,600.00) (680.00) (2,280.00)
---------- ---------- -----------
Total............................... $87,493.24 $14,443.09 $101,936.33
========== ========== ===========
</TABLE>

F-44
<PAGE> 96

REPORT OF INDEPENDENT ACCOUNTANT

To the Board of Directors and Stockholders of
U.S. Dental Management, Inc.

In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of operations, of changes in stockholders'
equity and of cash flows present fairly, in all material respects, the financial
position of U.S. Dental Management, Inc. and its subsidiaries at December 31,
1994 and 1993, and the results of their operations and their cash flows for each
of the three years ended December 31, 1994, 1993 and 1992, in conformity with
generally accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.

ANDREW C. SARAGER, C.P.A., P.C.

Phoenix, Arizona
February 14, 1995 except for
Notes 12 and 13 for which the date is
July 19, 1995

F-45
<PAGE> 97

U.S. DENTAL MANAGEMENT, INC.

CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
DECEMBER 31,
---------------- JUNE 30,
1993 1994 1995
------ ------ -----------
(UNAUDITED)
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents..................................... $1,128 $1,914 $ 1,823
Accounts receivable -- premiums............................... 1,316 2,098 1,695
Other receivables............................................. 2 41 350
------ ------ -------
Total current assets.................................. 2,446 4,053 3,868
------ ------ -------
Property and equipment net of accumulated depreciation of $238
and $258 at December 31, 1993 and 1994, respectively, and $276
at March 31, 1995 (unaudited)................................. 99 83 105
Deferred and prepaid income taxes............................... 180 -- --
Regulatory certificates of deposits............................. 391 365 390
Intangible assets, net of accumulated amortization of $3 at June
30, 1995...................................................... -- -- 545
Other assets.................................................... 111 122 83
------ ------ -------
TOTAL ASSETS.......................................... $3,227 $4,623 $ 4,991
====== ====== =======
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Current portion of long-term obligations...................... $ 45 $ 24 $ 24
Notes payable, officers....................................... -- -- 200
Line of credit................................................ -- 275 100
Accounts payable -- trade..................................... 98 609 294
Accrued payables.............................................. 359 95 79
Unearned revenue.............................................. 1,459 1,864 1,803
Dividends payable............................................. 27 34 --
Taxes payable................................................. -- 144 233
------ ------ -------
Total current liabilities............................. 1,988 3,045 2,733
Long-term liabilities:
Long-term obligations, net of current portion................. 26 3 623
Notes payable, officers....................................... 200 200 --
------ ------ -------
Total long-term liabilities........................... 226 203 623
------ ------ -------
Minority interests.............................................. 82 92 --
------ ------ -------
Stockholders' Equity:
Common stock -- $0.10 par value, 2,000,000 shares authorized;
500 shares issued and outstanding.......................... -- -- --
Additional paid-in capital.................................... 13 13 13
Retained earnings............................................. 918 1,270 1,622
------ ------ -------
TOTAL STOCKHOLDERS' EQUITY............................ 931 1,283 1,635
------ ------ -------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY............ $3,227 $4,623 $ 4,991
====== ====== =======
</TABLE>

See accompanying notes.

F-46
<PAGE> 98

U.S. DENTAL MANAGEMENT, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)

<TABLE>
<CAPTION>
FOR THE SIX
FOR THE YEARS ENDED MONTHS
DECEMBER 31, ENDED JUNE 30,
----------------------------- ----------------
1992 1993 1994 1994 1995
------- ------- ------- ------ ------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues:
Premiums...................................... $10,907 $11,654 $12,586 $6,040 $6,566
Interest income and other revenue............. 43 48 380 172 303
------- ------- ------- ------ ------
10,950 11,702 12,966 6,212 6,869
Expenses:
Dental care service........................... 7,390 8,423 8,773 4,270 4,372
General and administrative.................... 2,605 3,227 3,071 1,510 1,531
Sales and marketing........................... 664 297 245 124 134
Depreciation and amortization................. 71 67 55 33 29
Interest expense.............................. 20 16 24 16 29
------- ------- ------- ------ ------
10,750 12,030 12,168 5,953 6,095
Net income (loss) before taxes and minority
interests..................................... 200 (328) 798 259 774
Provision for taxes:
Federal income tax............................ 22 (178) 192 58 316
State premium tax............................. 137 182 210 102 106
------- ------- ------- ------ ------
159 4 402 160 422
------- ------- ------- ------ ------
Net income (loss) before minority interests..... 41 (332) 396 99 352
Minority Interests.............................. (1) 16 (11) -- --
------- ------- ------- ------ ------
Net income (loss)............................... $ 40 $ (316) $ 385 $ 99 $ 352
======= ======= ======= ====== ======
</TABLE>

See accompanying notes.

F-47
<PAGE> 99

U.S. DENTAL MANAGEMENT, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(IN THOUSANDS)

<TABLE>
<CAPTION>
ADDITIONAL
COMMON PAID IN RETAINED
STOCK CAPITAL EARNINGS
------ --------- --------
<S> <C> <C> <C>
Balance at 01/01/92.............................................. $ -- $ 13 $1,254
Net income..................................................... -- -- 40
Dividends...................................................... -- -- (27)
---- ----- ------
Balance at 12/31/92.............................................. -- 13 1,267
Net loss....................................................... -- -- (316)
Prior period adjustment........................................ -- -- (33)
---- ----- ------
Balance at 12/31/93.............................................. -- 13 918
Prior period adjustment........................................ -- -- (6)
Net income..................................................... -- -- 385
Dividends...................................................... -- -- (27)
---- ----- ------
Balance at 12/31/94.............................................. -- 13 1,270
Net income (unaudited)......................................... -- -- 352
---- ----- ------
Balance at 6/30/95 (unaudited)................................... $ -- $ 13 $1,622
==== ===== ======
</TABLE>

See accompanying notes.

F-48
<PAGE> 100

U.S. DENTAL MANAGEMENT, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
FOR THE
FOR THE YEARS ENDED SIX MONTHS
DECEMBER 31, ENDED JUNE 30,
------------------------ ---------------
1992 1993 1994 1994 1995
------ ------ ------ ------ ------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)................................. $ 40 $ (316) $ 385 $ 99 $ 352
Reconciliation of net income to net cash provided by
operating activities:
Amortization and depreciation.................. 71 67 55 33 29
Loss on equipment sale......................... 6 -- 11 -- --
Minority interests............................. 1 (16) 11 -- --
(Increase) decrease in:
Accounts receivable-Premiums................... (365) (533) (782) (56) 403
Other receivables.............................. (7) 10 (39) (63) (309)
Deferred and prepaid income taxes.............. 22 (123) 181 180 --
Other assets................................... 10 (5) (17) (25) 39
Increase (decrease) in:
Accounts payable -- Trade...................... (51) 46 512 (38) (315)
Accrued payables............................... 63 268 (264) (59) (16)
Unearned revenue............................... 131 254 405 258 (61)
Taxes payable.................................. -- -- 144 103 89
Dividends payable.............................. -- -- 6 (27) (34)
------ ------ ------ ------ ------
Net cash provided (used) by operating activities:... (79) (348) 608 405 177
Cash flows from investing activities:
Capital expenditures.............................. (55) (13) (37) (9) (48)
Reclassification of regulatory certificates of
deposit ....................................... -- -- 26 26 (25)
Purchase of investments........................... (15) (31) (15) -- --
Proceeds from sale of assets...................... -- -- 1 -- --
Purchase of client accounts....................... (40) -- -- -- --
Purchase of minority interest in subsidiary ...... -- -- -- -- (640)
------ ------ ------ ------ ------
Net cash used in investing activities:.............. (110) (44) (25) 17 (713)
Financing activities:
Proceeds from long term debt...................... -- -- -- -- 640
Principal payments on loans....................... (39) (50) (45) (26) (20)
Proceeds from line of credit...................... -- -- 275 -- --
Principal payments on line of credit.............. -- -- -- -- (175)
Dividends declared................................ -- -- (27) -- --
Proceeds from stockholders' loans................. -- 150 -- -- --
------ ------ ------ ------ ------
Net cash provided (used) by financing activities:... (39) 100 203 (26) 445
------ ------ ------ ------ ------
Net increase (decrease) in cash and cash
equivalents:...................................... (228) (292) 786 396 (91)
Cash and cash equivalents at beginning of period:... 1,648 1,420 1,128 1,128 1,914
------ ------ ------ ------ ------
Cash and cash equivalents at end of period:......... $1,420 $1,128 $1,914 $1,524 $1,823
====== ====== ====== ====== ======
Supplemental disclosure of cash flow information:
Cash paid for interest............................ 20 16 24 16 29
Cash paid for income taxes........................ -- -- 10 -- 53
</TABLE>

See accompanying notes.

F-49
<PAGE> 101

U.S. DENTAL MANAGEMENT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation: The consolidated financial statements include the
accounts of U.S. Dental Management, Inc. and its subsidiaries ("US Dental"). All
significant intercompany accounts and transactions have been eliminated in
consolidation. The company, through its subsidiaries, contracts with independent
practitioners to provide dental services to members in the form of pre-paid
dental health contracts.

Cash and Cash Equivalents: US Dental considers debt instruments purchased
with a maturity of three months or less to be cash equivalents.

Property and Equipment: Property and equipment are recorded at cost.
Depreciation is determined using the declining balance method over useful lives
of five to seven years.

Income taxes: US Dental and its subsidiaries file a consolidated income tax
return for federal income tax purposes. The subsidiaries of US Dental are
required to pay the State Treasurer a tax (premium tax) for transacting business
as a prepaid dental plan. The subsidiaries are exempt from state corporate
income tax due to the payment of the premium tax.

Significant Customer: During 1994 one customer accounted for approximately
16% of the aggregate revenue of US Dental.

Prior period adjustment: The prior period adjustment for the year ended
December 31, 1993, resulted from the payment of additional taxes not previously
accrued. The adjustment for the year ended December 31, 1994, resulted from the
write off of certain expenses that were incorrectly capitalized.

2. UNEARNED REVENUE

Unearned revenue consists of subscriber fees received or billed in the
current year for services to be rendered in a subsequent year.

3. STATUTORY RESERVE

Prepaid dental plan organizations are required to maintain a reserve in an
amount equal to two percent of subscription fees received, up to a maximum
reserve of $500,000 per state. These reserves are included in retained earnings.

4. DENTAL CARE SERVICE

Under prepaid dental health contracts, US Dental contracts with dentists
for a set per member per month capitation fee to provide for its members.
Specialty services not covered by capitation fees are recorded as incurred. In
addition, US Dental is liable for out of area emergency care for subscribers
under certain benefit packages. Subscriber reimbursements amounted to $20,000,
$16,000, and $7,000 in 1992, 1993 and 1994, respectively, and were recorded as
incurred.

5. REGULATORY DEPOSIT AND FINANCIAL INSTRUMENTS

State codes provide that prepaid dental plans shall maintain trust funds,
varying according to membership, with the Department of Insurance. The
regulatory deposits consist of certificates of deposit. The fair value of all
financial instruments, determined by reference to market data, approximated
their recorded value at each of the balance sheet dates shown.

6. LONG-TERM OBLIGATIONS

At December 31, 1994, there were 3 notes payable totaling $27,000 with
monthly payments ranging from $550 to $2,500, at interest rates ranging from 5%
to 11% maturing through March 1996.

F-50
<PAGE> 102

U.S. DENTAL MANAGEMENT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

7. OPERATING LEASES

US Dental leases its facilities and certain equipment under noncancelable
operating lease agreements which expire in 1999. Rental expense under these
agreements for the years ended December 31, 1994, 1993 and 1992 totaled
$206,000, $226,000 and $120,000, respectively. Future minimum lease payments at
December 31, 1994 are as follows (dollars in thousands):

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31
-----------
<S> <C>
1995..................................................... $ 243
1996..................................................... 154
1997..................................................... 144
1998..................................................... 138
1999..................................................... 138
</TABLE>

8. PROFIT SHARING AND RETIREMENT PLAN

Pursuant to section 10-044 of the Arizona Revised Statutes, US Dental
adopted a 401(k) beginning in 1992. The amount of $3,000, $6,000 and $6,000 was
expensed in 1992, 1993 and 1994, respectively.

US Dental adopted a Defined Contribution plan (Profit Sharing). The basis
for determining contribution amounts are under the discretionary contribution
plan of the IRS 401L disparity rules. The groups covered under the plan are the
shareholders and employees of U.S. Dental Plan of New Mexico, Inc. and U.S.
Dental Management, Inc. hired prior to July 1, 1989. There were no contributions
expenses for the year ended December 31, 1994.

9. BANK LINE-OF-CREDIT

US Dental has a bank line-of-credit for $300,000 which renewed April 15,
1995. There was an outstanding balance as of December 31, 1994 of $275,000.
Borrowings thereunder bear interest of 1.25% above the bank's prime rate. The
line is collateralized by US Dental's accounts receivable and is personally
guaranteed by US Dental's shareholders.

10. NOTES PAYABLE OFFICERS

Notes payable to officers consist of amounts due to shareholders, bearing
interest ranging from 7% to 9.5% and due upon demand.

11. INCOME TAXES

Deferred taxes result primarily from utilization of accelerated
depreciation for income tax reporting purposes. A reconciliation of the
difference between the federal income tax rate and US Dental's effective tax
rate is as follows:

<TABLE>
<CAPTION>
1992 1993 1994
----- ------ ------
<S> <C> <C> <C>
Federal Income Tax Rate (Benefit)........................ 34.0% (34.0%) 34.0%
Other, net............................................... .9% (.9%) (1.3%)
----- ------ ------
Effective Tax Rate............................. 34.9% (34.9%) 32.7%
===== ====== ======
</TABLE>

US Dental generally pays premium taxes in lieu of state income taxes.

F-51
<PAGE> 103

U.S. DENTAL MANAGEMENT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

12. ACQUISITION OF MINORITY INTEREST IN SUBSIDIARY

On April 1, 1995, US Dental redeemed the stock of a minority shareholder
for an aggregate redemption price of $640,000. The agreement provides for
payment of interest at 6.5% per month, with principal payments of approximately
$7,700 commencing in February 1996. The agreement provides for forgiveness of
dividends due to the minority shareholder approximating $92,000. The net cost of
acquiring the minority interest, $548,000, has been recorded as goodwill.

13. SUBSEQUENT EVENT

On July 19, 1995, the stockholders of US Dental entered into a definitive
agreement to sell all the outstanding capital stock of US Dental. US Dental is a
managed dental benefits company that operates pre-paid dental plans.

F-52
<PAGE> 104

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors of
Associated Health Plans, Inc. and
Associated Companies, Inc.

In our opinion, the accompanying combined balance sheet and the related
statement of operations and retained earnings and of cash flows present fairly,
in all material respects, the combined financial position of Associated Health
Plans, Inc. and Associated Companies, Inc., as described in the basis of
financial statement presentation in Note 1 to the financial statements, at
December 31, 1995 and the results of its operations and its cash flows for the
year then ended, in conformity with generally accepted accounting principles.
These financial statements are the responsibility of the Associated Health
Plans, Inc. and Associated Companies, Inc. management; our responsibility is to
express an opinion on these statements based on our audit. We conducted our
audit of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for the opinion expressed above.

PRICE WATERHOUSE LLP

Dallas, Texas
February 26, 1996

F-53
<PAGE> 105

ASSOCIATED HEALTH PLANS, INC.
AND
ASSOCIATED COMPANIES, INC.

COMBINED BALANCE SHEET
DECEMBER 31, 1995

ASSETS

<TABLE>
<S> <C>
Current assets:
Cash and cash equivalents...................................................... $ 358,179
Certificates of deposit........................................................ 386,559
Premiums receivable, net of allowance for doubtful accounts of $86,669......... 500,154
Deferred income taxes.......................................................... 155,782
Other assets................................................................... 137,474
----------
Total current assets................................................... 1,538,148
Fixed assets, net of accumulated depreciation of $134,217........................ 160,078
Intangible assets, net of accumulated amortization of $524,928................... 1,507,913
State deposits................................................................... 200,000
----------
Total assets........................................................... $3,406,139
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Payable to providers........................................................... $ 400,807
Unearned premiums.............................................................. 63,294
Premium taxes payable.......................................................... 52,067
Accounts payable and accrued liabilities....................................... 12,511
Accrued federal income tax..................................................... 100,000
State income tax payable....................................................... 5,000
Notes payable -- noncompete agreements......................................... 2,008,122
----------
Total current liabilities.............................................. 2,641,801
Commitments and Contingencies
Stockholders' equity:
Common stock................................................................... 4,250
Additional paid-in capital..................................................... 57,789
Retained earnings.............................................................. 702,299
----------
Total stockholders' equity.................................................. 764,338
----------
$3,406,139
==========
</TABLE>

See accompanying notes to financial statements.

F-54
<PAGE> 106

ASSOCIATED HEALTH PLANS, INC.
AND
ASSOCIATED COMPANIES, INC.

COMBINED STATEMENT OF OPERATIONS AND CHANGES IN RETAINED EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 1995

<TABLE>
<S> <C>
Revenue:
Premiums earned............................................................... $14,200,112
Interest income............................................................... 28,758
-----------
Total revenue......................................................... $14,228,870
-----------
Operating expenses:
Dental provider services...................................................... 10,966,885
Sales and marketing........................................................... 922,213
General and administrative.................................................... 1,963,172
Premium taxes................................................................. 273,879
-----------
Total operating expenses.............................................. 14,126,149
-----------
Income before provision for federal income tax.................................. 102,721
Provision for federal income tax................................................ 37,000
-----------
Net income...................................................................... 65,721
Retained earnings, beginning of year............................................ 636,578
-----------
Retained earnings, end of year.................................................. $ 702,299
===========
</TABLE>

See accompanying notes to financial statements.

F-55
<PAGE> 107

ASSOCIATED HEALTH PLANS, INC.
AND
ASSOCIATED COMPANIES, INC.

COMBINED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1995

<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income..................................................................... $ 65,721
Adjustments to reconcile net income to net cash provided by (used in)
operating activities:
Depreciation and amortization............................................... 177,843
Changes in operating assets and liabilities:
Increase in accounts receivable........................................... (176,372)
Increase in other assets.................................................. (13,401)
Increase in accounts payable and accrued expenses......................... 114,655
Decrease in deferred income taxes, accrued federal income tax and
state tax payable...................................................... (38,100)
---------
Net cash provided by operating activities.............................. 130,346
---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of furniture and equipment........................................... (55,404)
---------
Net cash used in investing activities.................................. (55,404)
---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of indebtedness...................................................... (146,873)
---------
Net cash used in financing activities.................................. (146,873)
---------
NET DECREASE IN CASH AND CASH EQUIVALENTS........................................ (71,931)
CASH AND CASH EQUIVALENTS:
Beginning of period............................................................ 430,110
---------
End of period.................................................................. $ 358,179
=========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest.................................................................... $ 110,127
=========
Income taxes................................................................ $ 6,600
=========
</TABLE>

See accompanying notes to financial statements.

F-56
<PAGE> 108

ASSOCIATED HEALTH PLANS, INC.
AND
ASSOCIATED COMPANIES, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS

1. AHP AND ITS OPERATIONS

At December 31, 1995, four individuals owned 100% of the common stock of
both Associated Health Plans, Inc. (Associated) and Associated Companies, Inc.
(ACI). Associated and ACI are referred to collectively as "AHP."

Associated operates as a prepaid dental plan in the state of Arizona.
Associated is licensed by the state of Arizona to operate as a prepaid dental
plan organization as defined under Article Seven of the Arizona Revised
Insurance Statutes.

Associated sells group prepaid dental coverage on a monthly term basis to
contract holders consisting of business, governmental and nonprofit groups. AHP
has joint venture marketing agreements with a medical health maintenance
organization and dental indemnity insurance company. Under these agreements, the
joint venture partners sell group prepaid dental coverage for AHP. They collect
the premiums directly and remit to AHP. They also sell prepaid dental coverage
to individual contract holders on an annual basis.

ACI is organized to provide management services for Associated. Under the
terms of a management agreement, ACI provides equipment and operating facilities
as well as administrative and marketing services. ACI also provides management
services for an affiliate, Associated Dental Care Providers, P.C. (ADCP) which
employs dentists and support staff who provide services primarily to individuals
under Associated's dental coverage. (See Note 5). At the date of the sale of the
common stock of Associated and ACI, all management services agreements between
ACI and ADCP were terminated.

Two stockholders, who are also licensed dentists, own 100% of the common
stock in ADCP. ADCP is a major provider of dental services to members enrolled
with AHP's contract holders. During 1995, payments to ADCP amounted to
$2,789,931.

BASIS OF FINANCIAL STATEMENT PRESENTATION

The accompanying combined financial statements include the financial
statements of ACI and Associated for the year ended December 31, 1995. Based
upon the subsequent stock sale of ACI and Associated in January 1996 (Note 5),
the accompanying combined financial statements exclude the assets and
liabilities related to servicing ADCP as well as the operational results of
servicing ADCP for the year ended December 31, 1995. All significant
intercompany transactions have been eliminated in combination.

As noted above, ACI's revenues and expenses related to the management of
ADCP were excluded. The allocation of revenues and expenses can be separately
identified in the companies' general ledgers. Only those revenues and expenses
identified as relating to the management of Associated or ACI were included in
the combination.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PREMIUM EARNED AND PROVIDER CAPITATION

Premiums billed to individual and group subscribers are recognized as
revenue in the month in which subscribers are entitled to receive dental care.
Unearned premiums consist of amounts collected during the current period for
services to be rendered in a subsequent period. Allowance for doubtful accounts
for uncollectible premiums under 90 days past due are recorded as an expense
when established.

AHP contracts with dentists (providers) for dental services to be provided
to its subscribers. Provider capitation consists of monthly fees paid to
providers and is expensed in the month in which the provider is

F-57
<PAGE> 109

ASSOCIATED HEALTH PLANS, INC.
AND
ASSOCIATED COMPANIES, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS -- CONTINUED

obligated to render dental services. AHP is not obligated to providers for
services exceeding the basic benefit coverage. Emergency services to members
while temporarily out of their provider's area, as well as specialty services
not covered by capitation fees, are recorded as incurred.

CASH AND CASH EQUIVALENTS

For purpose of reporting cash flows, cash and cash equivalents include cash
on hand, amounts due from banks, money market investment accounts held by
brokers which are readily convertible to cash, and certificates of deposit with
maturities at the date of purchase of less than 90 days.

FURNITURE AND EQUIPMENT

Furniture and equipment are recorded at cost. Depreciation is calculated
using the straight-line method over a period of three to five years based on the
estimated useful life of the related asset. Depreciation expense was $43,278 in
1995.

INCOME TAXES

Income taxes are accounted for in accordance with Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS 109), which
requires the asset and liability method of accounting for deferred income taxes.
The asset and liability method requires recognition of deferred tax assets and
liabilities for the estimated future tax consequences attributable to
differences between the financial statement bases and the tax bases of assets
and liabilities. (Note 6)

USE OF ESTIMATES

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

3. INTANGIBLE ASSETS

Intangible assets consist of the net present value of certain noncompete
agreements entered into in connection with the purchase of AHP from its former
stockholders in January 1992. The noncompete agreements were originally recorded
at their net present value with imputed interest rates of 11.2% and 8.5% for the
two former stockholders, respectively, and are being amortized over the ten year
term of the agreement. Under these agreements, accumulated amortization at
December 31, 1995 was $524,928.

4. STATE DEPOSITS

AHP is required by statute to post a surety bond in the amount of $200,000
with the Arizona state treasurer. In lieu of purchasing a surety bond to
guarantee services under this plan, AHP has elected to deposit $200,000 of bank
certificates of deposit with the treasurer's office. AHP continues to receive
all interest income from the certificate of deposit held by these certificates.

5. SUBSEQUENT STOCK SALE OF AHP

On January 22, 1996, the common stock of ACI and Associated was purchased
by United Dental Care, Inc. for $14.4 million. In connection with the purchase,
$3,548,867 of the proceeds to the sellers were used to

F-58
<PAGE> 110

ASSOCIATED HEALTH PLANS, INC.
AND
ASSOCIATED COMPANIES, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS -- CONTINUED

repay the notes payable on behalf of Associated and ACI under the noncompete
agreements existing at December 31, 1995. (Note 7).

6. INCOME TAXES

The provision (benefit) for income taxes consisted of the following
components (dollars in thousands):

<TABLE>
<CAPTION>
1995
--------
<S> <C>
Current
Federal................................................................. $100,000
State................................................................... 5,000
--------
Total current............................................................. 105,000
Deferred (benefit)........................................................ (68,000)
--------
Provision for income taxes................................................ $ 37,000
========
</TABLE>

Associated files its corporate income tax return on a calendar year end and
ACI files its corporate income tax return on a fiscal year ended June 30.

As a licensed pre-paid dental plan organization, Associated pays premium
taxes in lieu of state income taxes.

A reconciliation of the difference between the Federal income tax rate and
AHP's effective tax rate is as follows:

<TABLE>
<S> <C>
Federal income tax rate........................................................ 34%
Officers life insurance........................................................ 5
Meals and entertainment........................................................ 4
State tax (net of federal benefit)............................................. 3
Change in assumption in the expected federal tax rate.......................... (10)
---
Effective tax rate............................................................. 36%
===
</TABLE>

Deferred tax assets/(liabilities) were comprised of the following at
December 31:

<TABLE>
<CAPTION>
1995
--------
<S> <C>
Premium reserve......................................................... $ 29,500
Noncompete agreement.................................................... 136,400
Unearned premium........................................................ 6,282
--------
Gross deferred tax assets............................................... 172,182
--------
Depreciation............................................................ (16,400)
--------
Gross deferred tax liability............................................ (16,400)
Valuation reserve....................................................... 0
--------
Net deferred tax asset.................................................. $155,782
========
</TABLE>

F-59
<PAGE> 111

ASSOCIATED HEALTH PLANS, INC.
AND
ASSOCIATED COMPANIES, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS -- CONTINUED

7. NOTES PAYABLE

Debt consists of notes payable to two former stockholders for the
noncompete agreement entered into with them in connection with the stock sale of
ACI to its current stockholders in 1992. Interest expense in 1995 was $285,017.
At December 31, 1995, notes payable consisted of the following:

<TABLE>
<S> <C>
11.2% note payable due in semimonthly payments of $9,083.33, including
interest through December 2001....................................... $ 912,915
8.5% note payable due in semimonthly payments of $6,805.55, from
January 1996 to December 2005........................................ 1,095,207
----------
Total........................................................ $2,008,122
==========
</TABLE>

In January 1996, the common stock of AHP was purchased by United Dental
Care, Inc. (UDC) and these obligations were repaid by UDC as part of the
purchase price. (Note 5)

8. COMMON STOCK

At December 31, 1995, Associated had 900,000 of $.10 par value shares
authorized and 22,500 shares outstanding. At December 31, 1995, ACI had 20,000
shares of $.10 par value stock authorized, issued and outstanding. During 1995,
there were no changes in the numbers of shares of common stock and the amount of
common stock or in additional paid-in capital.

9. COMMITMENTS AND CONTINGENCIES

AHP leases its facilities under noncancelable operating lease agreements
expiring at various dates through 1999. Rental expense under these agreements,
which is included in general and administrative expenses, was $117,088 in 1995.
Future minimum lease payments under these agreements are as follows:

As a result of the purchase by United Dental Care (Note 5), management
believes that the determination of the ultimate liability of these obligations,
after considering subleasing alternatives and a negotiated termination price,
cannot be determined at this time. Accordingly, no adjustments has been made to
the recorded lease liability.

AHP is involved in certain claims. In the opinion of management, the
disposition of these matters will not have a material adverse effect on AHP's
financial condition.

F-60
<PAGE> 112

UNITED DENTAL CARE, INC.

INTRODUCTION TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS

The accompanying unaudited pro forma condensed consolidated statement of
operations for the year ended December 31, 1995 has been prepared as if both the
US Dental and AHP acquisitions and the Company's initial public offering that
occurred in September 1995 had occurred on January 1, 1995. The accompanying
unaudited pro forma condensed consolidated statement of operations for the six
months ended June 30, 1996 has been prepared as if the AHP acquisition and the
offering of the Common Stock pursuant to this Prospectus had occurred on January
1, 1995. See "Pending and Recent Acquisitions." The unaudited pro forma
condensed consolidated statement of operations for the year ended December 31,
1995 includes: (i) the historical results of operations of the Company for the
year ended December 31, 1995; (ii) the historical results of operations of AHP
for the year ended December 31, 1995; (iii) the historical results of US Dental
for the ten months ended October 31, 1995, and gives effect to the US Dental and
AHP acquisitions under the purchase method of accounting; and (iv) the Company's
initial public offering. The unaudited pro forma condensed consolidated
statement of operations for the six months ended June 30, 1996 includes: (i) the
historical results of operations of the Company for the six months ended June
30, 1996; and (ii) the historical results of operations of AHP for the month
ended January 31, 1996, and gives effect to the AHP acquisition under the
purchase method of accounting; and (iii) the offering of the Common Stock
pursuant to this Prospectus. Such unaudited pro forma condensed consolidated
statements of operations incorporate the pro forma and offering adjustments
described in the accompanying Notes to Unaudited Pro Forma Condensed
Consolidated Financial Statements.

The unaudited pro forma condensed consolidated balance sheet as of June 30,
1996 includes the historical financial position of the Company as of June 30,
1996 and gives effect to the offering as if it had occurred at June 30, 1996.

The pro forma information does not purport to be indicative of actual
results that would have been achieved if the US Dental and AHP acquisitions, the
Company's initial public offering that occurred in September 1995 or the
issuance of the Common Stock offered hereby actually had been effective as of
the dates indicated or the results that may be obtained in the future. The pro
forma condensed consolidated financial statements should be read in conjunction
with "Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the respective historical consolidated financial statements of
the Company, US Dental and AHP and the related notes thereto included elsewhere
in this Prospectus.

F-61
<PAGE> 113

UNITED DENTAL CARE, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>
U.S. DENTAL UNITED
ASSOCIATED MANAGEMENT, INC. INITIAL DENTAL
UNITED HEALTH TEN MONTHS PUBLIC CARE, INC.
DENTAL PLANS ENDED PRO FORMA OFFERING PRO FORMA
CARE, INC.(A) COMBINED(B) OCTOBER 31, 1995(C) ADJUSTMENTS PRO FORMA ADJUSTMENTS AS ADJUSTED
------------- ----------- ------------------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Premiums earned
and other
revenues.... $ 78,626 $14,200 $11,208 $ 104,034 $ 104,034
Interest
income...... 603 29 24 656 656
----------- ------- ------- ---------- -----------
79,229 14,229 11,232 104,690 104,690
----------- ------- ------- ---------- -----------
Costs and
expenses:
Dental services
and claims
expense..... 46,750 10,967 7,332 65,049 65,049
Sales and
marketing &
general and
administrative... 24,422 2,696 3,019 $(1,018)(d) 29,119 29,119
Depreciation
and
amortization... 1,190 178 52 711 (e) 2,131 2,131
Interest
expense..... 1,005 285 53 -- 1,343 $(1,343)(f) --
----------- ------- ------- ------- ---------- ------- -----------
73,367 14,126 10,456 (307) 97,642 (1,343) 96,299
----------- ------- ------- ------- ---------- ------- -----------
Income before
Federal income
taxes and
extraordinary
charge......... 5,862 103 776 307 7,048 1,343 8,391
Provision for
Federal income
taxes.......... 2,131 37 320 309 (g) 2,797 457(h) 3,254
----------- ------- ------- ------- ---------- ------- -----------
Net income
applicable to
common stock
before
extraordinary
charge......... $ 3,731 $ 66 $ 456 $ (2) $ 4,251 $ 886 $ 5,137
=========== ======= ======= ======= ========== ======= ===========
Net income per
common share
before
extraordinary
charge......... $ 0.68 $ 0.78 $ 0.94(i)
=========== ========== ===========
Weighted average
number of
common shares
outstanding.... 5,448,892 5,448,892 5,448,892(j)
</TABLE>

See accompanying notes.

F-62
<PAGE> 114

UNITED DENTAL CARE, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1996
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>
ASSOCIATED UNITED
UNITED HEALTH PLANS DENTAL
DENTAL COMBINED CARE, INC.
CARE, JANUARY 31, PRO FORMA OFFERING PRO FORMA
INC.(K) 1996(L) ADJUSTMENTS PRO FORMA ADJUSTMENTS AS ADJUSTED
--------- ------------ ----------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Premiums earned and other
revenues......................... $ 50,728 $1,176 $51,904 $ 51,904
Interest income..................... 397 2 399 399
---------- ------ ------- ----------
51,125 1,178 52,303 52,303
---------- ------ ------- ----------
Costs and expenses:
Dental services and claims
expense.......................... 30,674 881 31,555 31,555
Sales and marketing & general and
administrative................... 14,411 309 $ (57)(m) 14,663 14,663
Depreciation and amortization....... 1,003 10 46 (n) 1,059 1,059
Interest expense.................... 209 4 213 $(213)(o) --
---------- ------ ----- ------- ----- ----------
46,297 1,204 (11) 47,490 (213) 47,277
---------- ------ ----- ------- ----- ----------
Income before Federal income taxes.... 4,828 (26) 11 4,813 213 5,026
Provision for Federal income taxes.... 1,772 (9) 15 (p) 1,778 72 (q) 1,850
---------- ------ ----- ------- ----- ----------
Net income applicable to common
stock............................... $ 3,056 $ (17) $ (4) $ 3,035 $ 141 $ 3,176
========== ====== ===== ======= ===== ==========
Net income per common share........... $ 0.42 $ 0.34(i)
========== ==========
Weighted average number of common
shares outstanding.................. $7,222,149 $9,222,149(r)
</TABLE>

See accompanying notes.

F-63
<PAGE> 115

UNITED DENTAL CARE, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 1996
(IN THOUSANDS)

ASSETS

<TABLE>
<CAPTION>
UNITED DENTAL
CARE, INC.
UNITED DENTAL OFFERING PRO FORMA
CARE, INC. ADJUSTMENTS AS ADJUSTED
------------- ----------- -------------
<S> <C> <C> <C>
Current assets
Cash and cash equivalents........................... $20,345 $65,749 (s) $ 86,094
Premiums receivable................................. 4,387 -- 4,387
Accrued interest and other current assets........... 861 -- 861
Deferred taxes, current............................. 729 -- 729
------- ------- ---------
Total current assets........................ 26,322 65,749 92,071
------- ------- ---------
Regulatory deposits................................... 3,437 -- 3,437
Furniture and equipment, net.......................... 4,498 -- 4,498
Intangible assets, net................................ 41,667 -- 41,667
Other assets, net..................................... 109 -- 109
Deferred taxes, noncurrent............................ 109 -- 109
------- ------- ---------
Total noncurrent assets..................... 49,820 -- 49,820
------- ------- ---------
Total assets................................ $76,142 $65,749 $ 141,891
======= ======= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable, accrued expenses and claims
reserve.......................................... $ 4,123 $ 4,123
Unearned premiums................................... 2,614 2,614
Current portion of debt............................. 978 $ (978)(t) --
Other current liabilities........................... 158 -- 158
------- ------- ---------
Total current liabilities................... 7,873 (978) 6,895
Long-term debt, net of current portion................ 3,598 (3,598)(t) --
------- ------- ---------
Total liabilities........................... 11,471 (4,576) 6,895
------- ------- ---------
Stockholders' equity
Common stock, $.10 par value........................ 691 200 (u) 891
Additional paid-in capital.......................... 52,100 70,125 (u) 122,225
Retained earnings................................... 11,880 -- 11,880
------- ------- ---------
Total stockholders' equity.................. 64,671 70,325 134,996
------- ------- ---------
Total liabilities and stockholders'
equity.................................... $76,142 $65,749 $ 141,891
======= ======= =========
</TABLE>

See accompanying notes.

F-64
<PAGE> 116

UNITED DENTAL CARE, INC.

NOTES TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(a) The Company's statement of operations for the year ended December 31, 1995
includes the results of operations of US Dental after October 31, 1995. The
US Dental acquisition was effective November 1, 1995.

(b) Represents the historical results of operations of AHP for the year ended
December 31, 1995. The AHP acquisition was effective February 1, 1996.

(c) Represents the historical results of operations of US Dental for the ten
months ended October 31, 1995. See note (a) above.

(d) Sales and marketing & general and administrative expenses have been reduced
to eliminate salaries and benefits of certain senior officers of AHP and US
Dental, including officers who were former stockholders of AHP and US
Dental, since such officers did not continue with the Company subsequent to
the AHP and US Dental acquisitions and were not replaced.

(e) Reflects the increase in amortization expense ($602) of goodwill related to
the AHP and US Dental acquisitions as amortized over 40 years, and the
increase in amortization ($93) of the value of the non-competition
agreements related to the AHP and US Dental acquisitions as amortized over
three years. Also reflected is the increase in amortization expense ($16)
for the consulting agreements related to the US Dental acquisition as
amortized over four years.

(f) Reflects the elimination of the interest expense, assuming the initial
public offering occurred on January 1, 1995 resulting in the elimination of
debt.

(g) Reflects the income tax effect (assuming a marginal tax rate of 34.0%) of
the pro forma adjustments described in notes (d) and (e) herein.

(h) Reflects the income tax effect (assuming a marginal tax rate of 34.0%) of
the offering adjustment described in note (f) above.

(i) Net income per common share is calculated by dividing pro forma as adjusted
net income by the weighted average number of common shares outstanding.
Such pro forma as adjusted net income reflects the impact of the pro forma
adjustments and offering adjustments.

(j) Weighted average number of common shares outstanding is calculated based
upon the relevant weighted average common shares outstanding and the
options and warrants outstanding (using the treasury stock method) for each
calculation presented.

(k) The Company's statement of operations for the six months ended June 30,
1996 includes the results of operations of AHP for the five months ended
June 30, 1996. The AHP acquisition was effective February 1, 1996.

(l) Represents the historical results of operations of AHP for the month ended
January 31, 1996.

(m) Sales and marketing & general and administrative expenses have been reduced
to eliminate salaries and benefits of certain senior officers of AHP,
including former significant stockholders of AHP, since such officers did
not continue with the Company subsequent to the AHP acquisition and were
not replaced.

(n) Reflects the increase in amortization expense of goodwill and
non-competition agreements related to the AHP acquisition.

(o) Reflects the elimination of the interest expense, assuming the offering of
Common Stock pursuant to this Prospectus occurred on January 1, 1995
resulting in the elimination of debt.

(p) Reflects the income tax effect (assuming a marginal tax rate of 34.0%) of
the pro forma adjustments described in notes (m) and (n) herein.

F-65
<PAGE> 117

UNITED DENTAL CARE, INC.

NOTES TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

(q) Reflects the income tax effect (assuming a marginal tax rate of 34.0%) of
the offering adjustment described in note (o) above.

(r) Weighted average number of common shares outstanding is calculated based
upon the relevant weighted average common shares outstanding and the
options and warrants outstanding (using the treasury stock method),
including the offering of Common Stock pursuant to this Prospectus, for
each calculation presented.

(s) Reflects the net cash proceeds to the Company from the offering after the
payment of underwriting and offering expenses of $4,675 and outstanding
indebtedness of $4,576.

(t) Reflects the payment of outstanding indebtedness related to the US Dental
and AHP consulting and non-compete agreements ($4,576 at June 30, 1996).

(u) Reflects the increase in stockholders' equity resulting from the offering
of 2,000,000 shares of Common Stock pursuant to this Prospectus.

F-66
<PAGE> 118

UNITED DENTAL CARE, INC.

INTRODUCTION TO UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL STATEMENTS

The accompanying unaudited pro forma condensed combined financial
statements reflect the consolidated financial position of the Company at June
30, 1996 and the results of its consolidated operations for the year ended
December 31, 1995 and the six months ended June 30, 1996, after giving pro forma
effect to: (i) the US Dental and AHP acquisitions; (ii) the offering of Common
Stock pursuant to this Prospectus; and (iii) the proposed Pending Acquisitions.
The unaudited pro forma condensed combined statement of operations for the year
ended December 31, 1995 includes: (i) the historical results of operations of
the Company for the year ended December 31, 1995; (ii) the historical results of
operations of US Dental for the ten months ended October 31, 1995; (iii) the
historical results of operations of AHP and the Pending Acquisitions, except
Independent, for the year ended December 31, 1995; and (iv) the offering of
Common Stock pursuant to this Prospectus. The unaudited pro forma condensed
combined statement of operations for the six months ended June 30, 1996
includes: (i) the historical results of operations of the Company for the six
months ended June 30, 1996; (ii) the historical results of operations of AHP for
the month ended January 31, 1996; (iii) the historical results of operations of
the Pending Acquisitions, except Independent, for the six months ended June 30,
1996; and (iv) the offering of Common Stock pursuant to this Prospectus. The
unaudited pro forma condensed combined balance sheet as of June 30, 1996
includes: (i) the historical financial position of the Company as of June 30,
1996; (ii) the historical financial position of the Pending Acquisitions, except
Independent, as of June 30, 1996; and (iii) the offering of Common Stock
pursuant to this Prospectus as of June 30, 1996.

The unaudited pro forma condensed combined statements of operations have
been prepared as if the US Dental and AHP acquisitions, the Pending Acquisitions
and the offering of Common Stock contemplated hereby had occurred on January 1,
1995. The unaudited pro forma condensed combined balance sheet gives effect to
the Pending Acquisitions and this offering as if such transactions had occurred
at June 30, 1996. See "Pending and Recent Acquisitions."

The pro forma condensed combined information gives effect to the US Dental
and AHP acquisitions and the Pending Acquisitions using the purchase method of
accounting. The assumptions and adjustments are described in the Notes to the
Unaudited Pro Forma Condensed Combined Financial Statements.

The pro forma condensed combined information does not purport to be
indicative of actual results that would have been achieved if the US Dental and
AHP acquisitions or the Pending Acquisitions or the issuance of the Common Stock
offered hereby had been effective as of the dates indicated or of the results
that may be obtained in the future. The pro forma condensed combined financial
statements should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the respective
historical consolidated financial statements of the Company, US Dental, AHP and
the Pending Acquisitions and the related notes thereto included elsewhere in
this Prospectus.

F-67
<PAGE> 119

UNITED DENTAL CARE, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>
UNITED
DENTAL CARE,
INC.(A) UICI PRO FORMA
PRO FORMA ORACARE KANSAS CITY DENTAL OFFERING COMBINED
AS ADJUSTED COMBINED DENTAL CARE COMPANIES ADJUSTMENTS AS ADJUSTED
------------ -------- ----------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Premiums earned and other revenues...... $ 104,034 $9,156 $ 8,478 $16,442 $ 138,110
Interest income......................... 656 -- 6 168 830
------- ------ ------ ------ --------
104,690 9,156 8,484 16,610 138,940
------- ------ ------ ------ --------
Costs and expenses:
Dental services and claims expense...... 65,049 5,367 5,694 8,116 84,226
Sales and marketing & general and
administrative....................... 29,119 1,923 2,747 7,508 $ (575)(b) 40,722
Depreciation and amortization........... 2,131 108 25 82 1,655(c) 4,001
Interest expense........................ -- 242 10 72 (224)(g) 100
------- ------ ------ ------ ----- --------
96,299 7,640 8,476 15,778 856 129,049
------- ------ ------ ------ ----- --------
Income before Federal income taxes and
extraordinary charge.................... 8,391 1,516 8 832 (856) 9,891
Provision for Federal income taxes........ 3,254 578 2 213 155(d) 4,202
------- ------ ------ ------ ----- --------
Net income applicable to common stock
before extraordinary charge............. $ 5,137 $ 938 $ 6 $ 619 $(1,011) $ 5,689
======= ====== ====== ====== ===== ========
Net income per common share before
extraordinary charge.................... $ 0.94 $ 0.76(e)
======= ========
Weighted average number of common shares
outstanding............................. 5,448,892 7,448,892(f)
</TABLE>

See accompanying notes.

F-68
<PAGE> 120

UNITED DENTAL CARE, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1996
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>
UNITED
DENTAL CARE,
INC.(A) UICI PRO FORMA
PRO FORMA ORACARE KANSAS CITY DENTAL OFFERING COMBINED
AS ADJUSTED COMBINED DENTAL CARE COMPANIES ADJUSTMENTS AS ADJUSTED
------------ -------- ----------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Premiums earned and other revenues... $ 51,904 $6,711 $ 4,780 $ 8,757 $ 72,152
Interest income...................... 399 -- 2 73 474
--------- ------ ------ ------ ---------
52,303 6,711 4,782 8,830 72,626
--------- ------ ------ ------ ---------
Costs and expenses:
Dental services and claims expense... 31,555 4,254 2,758 4,195 42,762
Sales and marketing & general and
administrative.................. 14,663 1,074 1,692 4,137 $(288)(b) 21,278
Depreciation and amortization........ 1,059 62 12 28 827(c) 1,988
Interest expense..................... -- 129 4 43 (168)(g) 8
--------- ------ ------ ------ ----- ---------
47,277 5,519 4,466 8,403 371 66,036
--------- ------ ------ ------ ----- ---------
Income before Federal income taxes..... 5,026 1,192 316 427 (371) 6,590
Provision for Federal income taxes..... 1,850 484 104 133 97(d) 2,668
--------- ------ ------ ------ ----- ---------
Net income applicable to common
stock................................ $ 3,176 $ 708 $ 212 $ 294 $(468) $ 3,922
========= ====== ====== ====== ===== =========
Net income per common share............ $ 0.34 $ 0.43(e)
========= =========
Weighted average number of common
shares outstanding................... 9,222,149 9,222,149(f)
</TABLE>

See accompanying notes.

F-69
<PAGE> 121

UNITED DENTAL CARE, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
JUNE 30, 1996
(IN THOUSANDS)

ASSETS

<TABLE>
<CAPTION>
UNITED
DENTAL CARE, OFFERING
INC.(A) UICI AND PRO FORMA
PRO FORMA ORACARE KANSAS CITY DENTAL PURCHASE COMBINED
AS ADJUSTED COMBINED DENTAL CARE COMPANIES ADJUSTMENTS AS ADJUSTED
------------ -------- ----------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Current assets
Cash and cash equivalents............ $ 86,094 $ 121 $ 650 $ 3,585 $ (57,325)(h) $ 33,125
Premiums receivable.................. 4,387 1,245 50 184 -- 5,866
Accrued interest and other current
assets............................ 861 56 13 405 -- 1,335
Deferred taxes, current.............. 729 -- -- -- -- 729
-------- ------- ----- ------- --------- ---------
Total current assets......... 92,071 1,422 713 4,174 (57,325) 41,055
-------- ------- ----- ------- --------- ---------
Regulatory deposits.................... 3,437 -- -- 350 -- 3,787
Furniture and equipment, net........... 4,498 914 244 357 (909)(i) 5,104
Intangible assets, net................. 41,667 -- -- -- 54,024 (m) 95,691
Other assets, net...................... 109 23 -- 66 -- 198
Deferred taxes, noncurrent............. 109 -- -- -- -- 109
-------- ------- ----- ------- --------- ---------
Total noncurrent assets...... 49,820 937 244 773 53,115 104,889
-------- ------- ----- ------- --------- ---------
Total assets........................... $141,891 $ 2,359 $ 957 $ 4,947 $ (4,210) $ 145,944
======== ======= ===== ======= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable, accrued expenses
and claims reserve................ $ 4,123 $ 592 $ 23 $ 886 $ 136 (j) $ 5,760
Unearned premiums.................... 2,614 190 257 840 -- 3,901
Current portion of debt.............. -- 556 -- 720 (1,276)(k) --
Other current liabilities............ 158 892 108 129 -- 1,287
-------- ------- ----- ------- --------- ---------
Total current liabilities.... 6,895 2,230 388 2,575 (1,140) 10,948
Long-term debt, net of current
portion.............................. -- 1,507 86 24 (1,617)(k) --
-------- ------- ----- ------- --------- ---------
Total liabilities............ 6,895 3,737 474 2,599 (2,757) 10,948
-------- ------- ----- ------- --------- ---------
Stockholders' equity
Common stock, $.10 par value......... 891 3 50 19 (72)(l) 891
Additional paid-in capital........... 122,225 1,954 44 400 (2,398)(l) 122,225
Retained earnings.................... 11,880 (3,335) 389 1,929 1,017 (l) 11,880
-------- ------- ----- ------- --------- ---------
Total stockholders' equity... 134,996 (1,378) 483 2,348 (1,453) 134,996
-------- ------- ----- ------- --------- ---------
Total liabilities and stockholders'
equity............................... $141,891 $ 2,359 $ 957 $ 4,947 $ (4,210) $ 145,944
======== ======= ===== ======= ========= =========
</TABLE>

See accompanying notes.

F-70
<PAGE> 122

UNITED DENTAL CARE, INC.

NOTES TO UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL STATEMENTS

(a) See the Introduction to Unaudited Pro Forma Condensed Consolidated
Financial Statements.

(b) Sales and marketing & general and administrative expenses have been reduced
to eliminate salaries and benefits of certain senior officers of OraCare,
KCDC and UICI Dental Companies, since it is anticipated that certain
officers will not continue with the Company once the acquisitions are
complete.

(c) Reflects: (i) the amortization of goodwill related to the acquisitions of
OraCare, KCDC and UICI ($1,313 in the year ended December 31, 1995 and $656
in the six months ended June 30, 1996) as amortized over 40 years; and (ii)
the amortization of the value of the non-competition agreements entered
into in connection with the acquisitions ($342 in the year ended December
31, 1995 and $171 in the six months ended June 30, 1996) as amortized over
36 months. The Company intends to apply the same purchase price allocation
concepts as used in previous acquisitions as described in Note 2 to the
Company's Consolidated Financial Statements.

(d) Reflects the income tax effect (assuming a marginal tax rate of 34.0%) of
the business combination adjustments described in notes (b), (c) and (g)
herein.

(e) Net income per common share is calculated by dividing pro forma as adjusted
combined net income by the weighted average number of common shares
outstanding. Such pro forma as adjusted combined net income reflects: (i)
with respect to the year ended December 31, 1995, the impact of the pro
forma adjustments and offering adjustments described in the Unaudited Pro
Forma Condensed Consolidated Financial Statements and the Notes thereto and
(ii) with respect to the six months ended June 30, 1996, the pro forma
adjustments and offering adjustments.

(f) Weighted average number of common shares outstanding is calculated based
upon the relevant weighted average common shares outstanding and the
options and warrants outstanding (using the treasury stock method),
including the Common Stock to be issued pursuant to this offering, for each
calculation presented.

(g) Reflects the elimination of the interest expense on the indebtedness
related to the OraCare, KCDC and UICI acquisitions as a result of the
repayment in full of the indebtedness with the Company's net proceeds
from this offering.

(h) Reflects the payment of the purchase price for the acquisitions of OraCare
of $30,500, KCDC of $12,500 and UICI Dental Companies of $12,750 plus the
costs of the acquisitions.

(i) Reflects estimated purchase price adjustments for obsolete fixed assets.

(j) Reflects purchase price adjustment for estimated unrecorded liabilities.

(k) Reflects the payment of outstanding indebtedness of OraCare, KCDC and UICI
Dental Companies with the net proceeds from the offering.

(l) Reflects assumed adjustments based upon a preliminary purchase price
allocation for the OraCare, KCDC and UICI acquisitions including the use of
a portion of cash remaining from the public offering of Common Stock
pursuant to this Prospectus to purchase OraCare, KCDC and UICI Dental
Companies, the allocation of the purchase price over the fair value of the
net tangible assets acquired, the increase in UDC's indebtedness for the
consulting and non-competition agreements related to the OraCare, KCDC and
UICI Dental Companies acquisitions ($1,025), payment of their outstanding
indebtedness ($1,276 of current and $1,617 of long term debt) and the
elimination of the acquisitions stockholders' equity. The Company intends
to apply the same purchase price allocation concepts as used in past
acquisitions as described in Note 2 to the Company's Consolidated Financial
Statements.

(m) Reflects the allocation to intangible assets, including goodwill, of the
excess of the purchase price over the fair value of the net assets acquired
for the acquisitions of OraCare, KCDC and UICI Dental Companies.

F-71
<PAGE> 123

===============================================================================

NO PERSON HAS BEEN AUTHORIZED IN CON-
NECTION WITH THE OFFERING MADE HEREBY TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTA-
TION NOT CONTAINED IN THIS PROSPECTUS AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESEN-
TATION MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY OR ANY UN-
DERWRITER. THIS PROSPECTUS DOES NOT CONSTI-
TUTE AN OFFER TO SELL OR A SOLICITATION OF ANY
OFFER TO BUY ANY OF THE SECURITIES OFFERED
HEREBY TO ANY PERSON OR BY ANYONE IN ANY
JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE
SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY
OF THIS PROSPECTUS NOR ANY SALE MADE HEREUN-
DER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THE INFORMATION CON-
TAINED HEREIN IS CORRECT AS OF ANY DATE SUBSE-
QUENT TO THE DATE HEREOF.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................... 2
Disclosure Regarding Forward-Looking
Statements............................ 2
Prospectus Summary...................... 3
Risk Factors............................ 6
Use of Proceeds......................... 10
Price Range of Common Stock............. 11
Dividend Policy......................... 11
Capitalization.......................... 12
Selected Financial Data................. 13
Selected Unaudited Pro Forma Condensed
Financial Information................. 14
Management's Discussion and Analysis of
Financial Condition and Results of
Operations............................ 16
Business................................ 24
Pending and Recent Acquisitions......... 35
Management.............................. 39
Certain Transactions.................... 45
Principal Stockholders.................. 46
Description of Capital Stock............ 47
Underwriting............................ 49
Legal Matters........................... 50
Experts................................. 50
Index to Financial Statements........... F-1
</TABLE>

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

================================================================================

2,000,000 SHARES

[UNITED DENTAL CARE LOGO]

COMMON STOCK

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

ALEX. BROWN & SONS
INCORPORATED

COWEN & COMPANY

VOLPE, WELTY & COMPANY

, 1996

================================================================================
<PAGE> 124

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The estimated expenses payable by the registrant in connection with the
registration, issuance and distribution of the Common Stock offered hereby,
other than underwriting discounts and commissions, are as follows:

<TABLE>
<CAPTION>
ITEM
--------------------------------------------------------------------------
<S> <C>
SEC registration fee...................................................... $ 29,841
NASD filing fee........................................................... 9,154
Nasdaq National Market listing fee........................................ 17,500
"Blue Sky" fees and expenses.............................................. *
Printing and engraving expenses........................................... *
Legal fees and expenses................................................... *
Accounting fees and expenses.............................................. *
Fees and expenses of Transfer Agent and Registrar......................... *
Miscellaneous............................................................. *
--------
Total........................................................... $550,000
========
</TABLE>

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

* To be filed by amendment.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Under Section 145 of the Delaware General Corporation Law ("Delaware Law"),
the Company has broad powers to indemnify its directors and officers against
liabilities they may incur in such capacities, including liabilities under the
Securities Act. The Company's Bylaws (the "Bylaws") filed as Exhibit 3.02 hereto
provide that the Company shall indemnify its directors and officers to the full
extent permitted by Delaware Law. The Bylaws also provide that rights conferred
under such Bylaws shall not be deemed to be exclusive of any other right such
persons may have or acquire under any statute, agreement, vote of stockholders
or disinterested directors, or under the Certificate of Incorporation, the
Bylaws or otherwise.

The Certificate of Incorporation provides that, pursuant to Delaware Law,
the directors of the Company shall not be liable for monetary damages for breach
of the directors' fiduciary duty of care to the Company and its stockholders.
This provision in the Certificate of Incorporation does not eliminate the duty
of care, and in appropriate circumstances equitable remedies such as injunctive
or other forms of non-monetary relief will remain available under Delaware Law.
In addition, each director will continue to be subject to liability for breach
of the director's duty of loyalty to the Company for acts or omissions not in
good faith or involving intentional misconduct, for knowing violations of law,
for actions leading to improper personal benefit to the director, and for
payment of dividends or approval of stock repurchases or redemptions that are
unlawful under Delaware Law. The provision also does not affect a director's
responsibilities under any other law, such as the Federal securities laws or
state or federal environmental laws.

The form of Underwriting Agreement filed as Exhibit 1.01 hereto provides
for indemnification by the Underwriters of the Company and its officers and
directors, and by the Company of the Underwriters, for certain liabilities
arising under the Securities Act or otherwise.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

The following is a summary of transactions by the Company during the last
three years preceding the date hereof involving sales of the Company's
securities that were not registered under the Securities Act.

(1) From time to time during the three years preceding the date hereof, the
Company granted stock options to purchase Common Stock pursuant to the Company's
1989 Stock Option Plan, as amended, and the

II-1
<PAGE> 125

Company's 1995 Stock Option Plan, as amended, and an incentive stock option plan
previously maintained by the Company to certain directors, officers and
employees of the Company. During the three year period referred to above, the
Company issued an aggregate of 472,000 shares of Common Stock to directors,
officers and employees upon the exercise of options issued under the Stock
Option Plans of the Company at exercise prices ranging from $1.25 to $4.00 per
share (as adjusted for the stock split described in Note (4) below).

(2) In December 1993 and April 1995, the Company issued 463,976 shares and
two shares of Common Stock respectively, upon the conversion of shares of 6%
Cumulative Convertible Preferred Stock at a conversion price of $1.37 per share
(as adjusted for the stock split described in Note (4) below).

(3) In January 1995, the Company sold to Mark E. Pape, Senior Vice
President, Chief Financial Officer, Secretary and Treasurer of the Company,
40,000 warrants to purchase an aggregate of 40,000 shares of Common Stock at a
purchase price of $6.00 per share (as adjusted for the stock split described in
Note (4) below). The purchase price for the warrants was $2.00 per warrant (as
adjusted for the stock split described in Note (4) below).

(4) On July 17, 1995, the Company declared a two-for-one stock split that
was effected as a stock dividend pursuant to which each stockholder was issued
one additional share of Common Stock for each outstanding share of Common Stock
owned by such stockholder.

The sales and issuances of securities in the above transactions were deemed
to be exempt from registration under the Securities Act either because they do
not involve a "sale" of securities or by virtue of Section 4(2) thereof as
transactions not involving a public offering. Appropriate legends are affixed to
the stock certificates, stock options or warrants issued in such transactions.
All recipients either received adequate information about the Company or had
access, through employment or other relationships, to such information.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) Exhibits.

II-2
<PAGE> 126

<TABLE>
<CAPTION>
NUMBER EXHIBIT
- ---------- ----------------------------------------------------------------------------------
<C> <S>
10.04 -- Non-Competition Agreement dated as of September 16, 1994 among United Dental
Care, Inc., Omega Marine Development, Inc. and Paul C. Nettinga (filed as
Exhibit 10.08 to the Prior Registration Statement and incorporated herein by
reference).
10.05 -- Agreement for Consulting Services dated as of September 16, 1994 between United
Dental Care, Inc. and Omega Marine Development, Inc (filed as Exhibit 10.09 to
the Prior Registration Statement and incorporated herein by reference).
10.06 -- Stockholders Agreement dated as of September 16, 1994 among United Dental Care,
Inc., certain stockholders of United Dental Care, Inc. named therein and Robert
J. Nettinga (filed as Exhibit 10.10 to the Prior Registration Statement and
incorporated herein by reference).
10.07 -- Irrevocable Letter of Credit dated September 16, 1994 in the amount of
$4,023,500 in favor of The Adaven Group Limited Partnership (filed as Exhibit
10.11 to the Prior Registration Statement and incorporated herein by
reference).
10.08 -- Irrevocable Letter of Credit dated September 16, 1994 in the amount of $756,242
in favor of Omega Marine Development, Inc (filed as Exhibit 10.12 to the Prior
Registration Statement and incorporated herein by reference).
**10.09 -- Amended and Restated Application and Agreement for $4,023,500 Standby Letter of
Credit in favor of The Adaven Group Limited Partnership dated September 16,
1994 by United Dental Care, Inc. to NationsBank of Texas, N.A.
**10.10 -- Amended and Restated Application and Agreement for $756,242 Standby Letter of
Credit in favor of Omega Marine Development, Inc. dated September 16, 1994 by
United Dental Care, Inc. to NationsBank of Texas, N.A.
10.11 -- Stock Purchase Agreement dated as of July 19, 1995 among United Dental Care,
Inc., Christopher A. Jehle, Dolores A. Kordek and U.S. Dental Management, Inc.
(filed as Exhibit 10.21 to the Prior Registration Statement and incorporated
herein by reference).
10.12 -- First Amendment to Stock Purchase Agreement dated as of November 27, 1995,
among United Dental Care, Inc., Christopher A. Jehle, Dolores A. Kordek and
U.S. Dental Management, Inc. (filed as Exhibit 10.4 to the Company's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1995, File No. 0-26688
(the "1995 Form 10-Q"), and incorporated herein by reference).
10.13 -- Non-Competition Agreement, dated September 27, 1995, between United Dental
Care, Inc. and Dolores A. Kordek (filed as Exhibit 10.7 to the 1995 Form 10-Q
and incorporated herein by reference).
10.14 -- Non-Competition Agreement, dated September 27,1995, between United Dental Care,
Inc. and Christopher A. Jehle (filed as Exhibit 10.8 to the 1995 Form 10-Q and
incorporated herein by reference).
10.15 -- Consulting Agreement dated September 27, 1995, between United Dental Care, Inc.
and Dolores A. Kordek (filed as Exhibit 10.9 to the 1995 Form 10-Q and
incorporated herein by reference).
10.16 -- Consulting Agreement dated September 27, 1995, between United Dental Care, Inc.
and Christopher A. Jehle (filed as Exhibit 10.10 to the 1995 Form 10-Q and
incorporated herein by reference).
10.17 -- Release dated September 27, 1995, between United Dental Care, Inc., U.S. Dental
Management, Inc., Dolores A. Kordek and Christopher A. Jehle (filed as Exhibit
10.11 to the 1995 Form 10-Q and incorporated herein by reference).
</TABLE>

II-3
<PAGE> 127

<TABLE>
<CAPTION>
NUMBER EXHIBIT
- ---------- ----------------------------------------------------------------------------------
<C> <S>
10.18 -- Stock Purchase Agreement dated as of December 14, 1995 among United Dental
Care, Inc., R. Bruce Buchanan, Joseph V. Errante, D.D.S., Margaret R. Errante,
D.D.S., The Francesca Irena Errante Irrevocable Trust U/A 10/1/95, The
Alexandra Nicole Errante Irrevocable Trust U/A 10/1/95, Timothy J. Moncher,
Associated Health Plans, Inc. and Associated Companies, Inc. (filed as Exhibit
10.1 to the Company's Current Report on Form 8-K filed January 22, 1996, File
No. 0-26688 (the "Form 8-K"), and incorporated herein by reference).
10.19 -- First Amendment to Stock Purchase Agreement dated as of January 17, 1996 among
United Dental Care, Inc., R. Bruce Buchanan, Joseph V. Errante, D.D.S.,
Margaret R. Errante, D.D.S., The Francesca Irena Errante Irrevocable Trust U/A
10/1/95, The Alexandra Nicole Errante Irrevocable Trust U/A 10/1/95, Timothy J.
Moncher, Associated Health Plans, Inc. and Associated Companies, Inc. (filed as
Exhibit 10.2 to the Form 8-K, and incorporated herein by reference).
10.20 -- Non-Competition Agreement, dated January 22, 1995, between United Dental Care,
Inc. and R. Bruce Buchanan (filed as Exhibit 10.3 to the Form 8-K, and
incorporated herein by reference). The three other Non- Competition Agreements
between United Dental Care, Inc. and Joseph V. Errante, D.D.S., Margaret R.
Errante, D.D.S. and Timothy J. Moncher, respectively, are identical in form
except as to the parties thereto and are therefore omitted from this filing.
10.21 -- Post-Closing Escrow Agreement dated as of January 22, 1996, among United Dental
Care, Inc., R. Bruce Buchanan, Joseph V. Errante, D.D.S., Margaret R. Errante,
D.D.S., The Francesca Irena Errante Irrevocable Trust U/A 10/1/95, The
Alexandra Nicole Errante Irrevocable Trust U/A 10/1/95, Timothy J. Moncher and
Lawyers Title of Arizona, Inc. (filed as Exhibit 10.4 to the Form 8-K, and
incorporated herein by reference).
10.22 -- Release Agreement dated January 22, 1996, executed by R. Bruce Buchanan, Joseph
V. Errante D.D.S., Margaret R. Errante D.D.S., The Francesca Irena Errante
Irrevocable Trust U/A 10/1/95, The Alexandra Nicole Errante Irrevocable Trust
U/A 10/1/95 and Timothy J. Moncher (filed as Exhibit 10.5 to the Form 8-K, and
incorporated herein by reference).
10.23 -- Office Lease dated January 9, 1992 between The Mutual Life Insurance Company of
New York and United Dental Care of Texas, Inc., and amendments thereto dated
May 31, 1994, November 7, 1994 and January 9, 1995, respectively (filed as
Exhibit 10.25 to the Prior Registration Statement and incorporated herein by
reference).
10.24 -- Standard Office Lease dated December 21, 1994 between Highland Court LLC and
United Dental Care, Inc. (filed as Exhibit 10.26 to the Prior Registration
Statement and incorporated herein by reference).
10.25 -- Lease dated October 11, 1988 between Centerside I and National Dental Health,
Inc., a Washington corporation, and amendments thereto dated April 16, 1990,
March 1, 1991, June 5, 1991, May 27, 1992, as of June 16, 1993, as of October
19, 1993 and as of January 28, 1994, and notice of partial termination with
respect thereto dated March 21, 1995 (filed as Exhibit 10.27 to the Prior
Registration Statement and incorporated herein by reference).
10.26 -- Administrative Services Agreement dated as of January 1, 1995 between United
Dental Care, Inc. and R.E. Harrington, Inc., and Memorandum of Understanding in
connection therewith dated as of January 1, 1995 (filed as Exhibit 10.28 to the
Prior Registration Statement and incorporated herein by reference).
**10.27 -- Stock Purchase Agreement among United Dental Care, Inc., as Purchaser, Gilbert
G. Finger, Patricia L. Schubring, Edward K. Halstead, Birchtree Enterprises and
Binkley & Stewart, P.C., as Sellers, and Independent Dental Plan, Inc. dated as
of June 28, 1996.
**10.28 -- Stock Purchase Agreement between United Dental Care, Inc., as Purchaser, and
UICI, as Seller, dated as of September 10, 1996, for all the issued and
outstanding shares of capital stock of Association Dental Plan, Inc, a District
of Columbia corporation.
</TABLE>

II-4
<PAGE> 128

<TABLE>
<CAPTION>
NUMBER EXHIBIT
- ---------- ----------------------------------------------------------------------------------
<C> <S>
**10.29 -- Earnest Money Escrow Agreement among United Dental Care, Inc., UICI, and Texas
Commerce Bank National Association, dated as of September 10, 1996, regarding
the purchase of all the issued and outstanding shares of capital stock of
Association Dental Plan, Inc., a District of Columbia corporation.
**10.30 -- Stock Purchase Agreement between United Dental Care, Inc., as Purchaser, and
UICI, as Seller, dated as of September 10, 1996, for all the issued and
outstanding shares of capital stock of International Dental Plan, Inc., a
Florida corporation.
**10.31 -- Earnest Money Escrow Agreement among United Dental Care, Inc., UICI, and Texas
Commerce Bank National Association, dated as of September 10, 1996, regarding
the purchase of all the issued and outstanding shares of capital stock of
International Dental Plan, Inc., a Florida corporation.
**10.32 -- Stock Purchase Agreement among United Dental Care, Inc., as Purchaser, and
UICI, United Management & Consulting, Inc., United Management & Consulting
Retirement Plan, and Marie C. Montgomery Revocable Trust U/T/A March 23, 1992,
as Seller, dated as of September 10, 1996, for the purchase of 90% of the
issued and outstanding shares of capital stock of United Dental Care, Inc., an
Oklahoma corporation.
**10.33 -- Earnest Money Escrow Agreement among United Dental Care, Inc., UICI, United
Management & Consulting, Inc., United Management & Consulting Retirement Plan,
Marie C. Montgomery Revocable Trust U/T/A March 23, 1992, and Texas Commerce
Bank National Association, as Escrow Agent, dated as of September 10, 1996,
regarding the purchase of 90% of the issued and outstanding shares of capital
stock of United Dental Care, Inc., an Oklahoma corporation.
**10.34 -- Stock Purchase Agreement among United Dental Care, Inc., as Purchaser, and John
E. Carlin, Ph.D., Frank J. Schloegel, III, J. Dennis Dlabal, D.D.S., The John
E. Carlin Charitable Remainder Unitrust, UID June 28, 1996, The Frank J.
Schloegel Charitable Remainder Unitrust I, UID July 12, 1996, The Frank J.
Schloegel Charitable Remainder Unitrust II, UID July 12, 1996, The J. Dennis
Dlabal Charitable Remainder Trust, UID September 5, 1996, as Sellers, and
Kansas City Dental Care, Inc., dated as of September 11, 1996.
**10.35 -- Earnest Money Escrow Agreement among United Dental Care, Inc., John E. Carlin,
Ph.D., Frank J. Schloegel, III, J. Dennis Dlabal, D.D.S., The John E. Carlin
Charitable Remainder Unitrust, UID June 28, 1996, The Frank J. Schloegel
Charitable Remainder Unitrust I, UID July 12, 1996, The Frank J. Schloegel
Charitable Remainder Unitrust II, UID July 12, 1996, The J. Dennis Dlabal
Charitable Remainder Trust, UID September 5, 1996, and UMB Bank, N.A., as
Escrow Agent, dated as of September 11, 1996.
**10.36 -- Stock Purchase Agreement among United Dental Care, Inc., as Purchaser, and
Frank A. Pettisani, D.D.S., Lisa M. Mazzone, Frank A. Pettisani, Jr., D.D.S.,
Charles A. Costa, and Donna Costa, as Sellers, and Oracare Consultants, Inc.,
dated as of September 5, 1996.
**10.37 -- Earnest Money Escrow Agreement among United Dental Care, Inc., Frank A.
Pettisani, D.D.S., Lisa M. Mazzone, Frank A. Pettisani, Jr., D.D.S., Charles A.
Costa, and Donna Costa, and Prudential Securities, as Escrow Agent, dated as of
September 5, 1996.
**10.38 -- Stock Purchase Agreement among United Dental Care, Inc., as Purchaser, and
Frank A. Pettisani, D.D.S., as Seller, and Oracare Dental Associates, P.A.,
dated as of September 5, 1996.
**10.39 -- Stock Purchase Agreement among United Dental Care, Inc., as Purchaser, and
Frank A. Pettisani, D.D.S., Frank A. Pettisani, Jr., D.D.S., Charles A. Costa,
and Donna Costa, as Sellers, and Oracare DPO, Inc., dated as of September 5,
1996.
**10.40 -- Employment Agreement dated as of May 13, 1996, between United Dental Care,
Inc., and William H. Wilcox.
</TABLE>

II-5
<PAGE> 129

<TABLE>
<CAPTION>
NUMBER EXHIBIT
- ---------- ----------------------------------------------------------------------------------
<C> <S>
**10.41 -- Employment Agreement dated as of June 1, 1996, between United Dental Care,
Inc., and Mark E. Pape.
**10.42 -- Employment Agreement dated as of June 1, 1996, between United Dental Care,
Inc., and Peter R. Barnett, D.M.D.
10.43 -- Master Software License and Services Agreement dated as of June 20, 1995
between Software Technologies Corporation and United Dental Care, Inc. (filed
as Exhibit 10.29 to the Prior Registration Statement and incorporated herein by
reference).
10.44 -- United Dental Care, Inc. Amended and Restated 1989 Incentive Stock Option Plan
(filed as Exhibit 10.30 to the Prior Registration Statement and incorporated
herein by reference).
10.45 -- United Dental Care, Inc. Amended and Restated 1989 Key Employee Stock Option
Plan (filed as Exhibit 10.31 to the Prior Registration Statement and
incorporated herein by reference).
10.46 -- United Dental Care, Inc. 1995 Stock Option Plan (filed as Exhibit 10.32 to the
Prior Registration Statement and incorporated herein by reference).
**10.47 -- United Dental Care, Inc. Executive Incentive Plans for 1996 for Messrs. Wilcox,
Pape and Barnett.
**21.01 -- List of Subsidiaries of Registrant.
**23.01 -- Consent of Price Waterhouse LLP.
**23.02 -- Consent of Andrew C. Sarager, C.P.A., P.C.
**23.03 -- Consent of James L. Gordon, C.P.A.
**23.04 -- Consent of Ernst & Young LLP
**23.05 -- Consent of Strasburger & Price, L.L.P. (included in Exhibit 5.01 to this
Registration Statement).
**24.01 -- Power of Attorney (contained on the signature page of this Registration
Statement).
</TABLE>

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

* To be filed by amendment.

** Filed herewith.

(B) FINANCIAL STATEMENT SCHEDULES.

All schedules have been omitted since the required information is not
present in amounts sufficient to require submission of the schedule, or because
the information required is included in the Consolidated Financial Statements or
Notes thereto.

ITEM 17. UNDERTAKINGS.

The undersigned Registrant hereby undertakes that:

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

(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.

II-6
<PAGE> 130

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers, or controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person of the Company in
the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.

II-7
<PAGE> 131

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
Company has duly caused this registration statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Dallas, State of
Texas, on September 20, 1996.

UNITED DENTAL CARE, INC.

By: /s/ WILLIAM H. WILCOX
--------------------------------
William H. Wilcox
President and Chief Executive
Officer

POWER OF ATTORNEY

Each individual whose signature appears below constitutes and appoints
William H. Wilcox and Mark E. Pape, and each of them, such person's true and
lawful attorneys-in-fact and agents with full power of substitution and
resubstitution, for such person and in such person's name, place and stead, in
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this registration statement, requests to accelerate the
effectiveness of this registration statement, and any registration statement for
the same offering that is to be effective upon filing pursuant to Rule 462(b)
under the Securities Act, and to file the same with all exhibits thereto, and
all documents in connection therewith, with the Securities and Exchange
Commission, granting unto such attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as such person might or could do in person, hereby
ratifying and confirming all that such attorneys-in-fact and agents, or any of
them, or their substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
- --------------------------------------------- --------------------------- -------------------
<C> <S> <C>
/s/ WILLIAM H. WILCOX President, Chief Executive September 20, 1996
------------------------------ Officer and Director
William H. Wilcox (Principal Executive
Officer)

/s/ MARK E. PAPE Senior Vice President and September 20, 1996
------------------------------ Chief Financial Officer
Mark E. Pape (Principal Financial and
Accounting Officer)

/s/ JACK R. ANDERSON Director September 20, 1996
------------------------------
Jack R. Anderson

/s/ JAMES B. KINGSTON Director September 20, 1996
------------------------------
James B. Kingston

/s/ JAMES K. NEWMAN Director September 20, 1996
------------------------------
James K. Newman

/s/ WILLIAM H. LONGFIELD Director September 20, 1996
------------------------------
William H. Longfield

/s/ GEORGE E. BELLO Director September 20, 1996
------------------------------
George E. Bello

/s/ JAMES E. BUNCHER Director September 20, 1996
------------------------------
James E. Buncher

/s/ DONALD E. STEEN Director September 20, 1996
------------------------------
Donald E. Steen

/s/ ROBERT J. NETTINGA Director September 20, 1996
------------------------------
Robert J. Nettinga
</TABLE>

II-8
<PAGE> 132

EXHIBIT INDEX

<TABLE>
<CAPTION>
NUMBER EXHIBIT
- -------------------- ------------------------------------------------------------------------
<C> <S>
*1.01 -- Form of Underwriting Agreement.
3.01 -- Restated Certificate of Incorporation of the Company (filed as
Exhibit 3.01 to the Company's Registration Statement on Form S-1,
Registration Number 33-94356 (the "Prior Registration Statement"),
and incorporated herein by reference).
3.02 -- Amended and Restated Bylaws of the Company (filed as Exhibit 3.02 to
the Prior Registration Statement and incorporated herein by
reference).
4.01 -- Specimen Common Stock Certificate (filed as Exhibit 4.01 to the Prior
Registration Statement and incorporated herein by reference).
**5.01 -- Opinion of Strasburger & Price, L.L.P. regarding legality.
10.01 -- Stock Purchase Agreement dated as of April 11, 1994 among United
Dental Care, Inc., the Stockholders of International Dental Health,
Inc., Robert J. Nettinga and Paul C. Nettinga (filed as Exhibit 10.05
to the Prior Registration Statement and incorporated herein by
reference).
10.02 -- Non-Competition Agreement dated as of September 16, 1994 among United
Dental Care, Inc., The Adaven Group Limited Partnership and Robert J.
Nettinga (filed as Exhibit 10.06 to the Prior Registration Statement
and incorporated herein by reference).
10.03 -- Agreement for Consulting Services dated as of September 16, 1994
between United Dental Care, Inc. and The Adaven Group Limited
Partnership (filed as Exhibit 10.07 to the Prior Registration
Statement and incorporated herein by reference).
10.04 -- Non-Competition Agreement dated as of September 16, 1994 among United
Dental Care, Inc., Omega Marine Development, Inc. and Paul C.
Nettinga (filed as Exhibit 10.08 to the Prior Registration Statement
and incorporated herein by reference).
10.05 -- Agreement for Consulting Services dated as of September 16, 1994
between United Dental Care, Inc. and Omega Marine Development, Inc
(filed as Exhibit 10.09 to the Prior Registration Statement and
incorporated herein by reference).
10.06 -- Stockholders Agreement dated as of September 16, 1994 among United
Dental Care, Inc., certain stockholders of United Dental Care, Inc.
named therein and Robert J. Nettinga (filed as Exhibit 10.10 to the
Prior Registration Statement and incorporated herein by reference).
10.07 -- Irrevocable Letter of Credit dated September 16, 1994 in the amount
of $4,023,500 in favor of The Adaven Group Limited Partnership (filed
as Exhibit 10.11 to the Prior Registration Statement and incorporated
herein by reference).
10.08 -- Irrevocable Letter of Credit dated September 16, 1994 in the amount
of $756,242 in favor of Omega Marine Development, Inc (filed as
Exhibit 10.12 to the Prior Registration Statement and incorporated
herein by reference).
**10.09 -- Amended and Restated Application and Agreement for $4,023,500 Standby
Letter of Credit in favor of The Adaven Group Limited Partnership
dated September 16, 1994 by United Dental Care, Inc. to NationsBank
of Texas, N.A.
**10.10 -- Amended and Restated Application and Agreement for $756,242 Standby
Letter of Credit in favor of Omega Marine Development, Inc. dated
September 16, 1994 by United Dental Care, Inc. to NationsBank of
Texas, N.A.
</TABLE>
<PAGE> 133

<TABLE>
<CAPTION>
NUMBER EXHIBIT
- -------------------- ------------------------------------------------------------------------
<C> <S>
10.11 -- Stock Purchase Agreement dated as of July 19, 1995 among United
Dental Care, Inc., Christopher A. Jehle, Dolores A. Kordek and U.S.
Dental Management, Inc. (filed as Exhibit 10.21 to the Prior
Registration Statement and incorporated herein by reference).
10.12 -- First Amendment to Stock Purchase Agreement dated as of November 27,
1995, among United Dental Care, Inc., Christopher A. Jehle, Dolores
A. Kordek and U.S. Dental Management, Inc. (filed as Exhibit 10.4 to
the Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1995, File No. 0-26688 (the "1995 Form 10-Q"), and
incorporated herein by reference).
10.13 -- Non-Competition Agreement, dated September 27, 1995, between United
Dental Care, Inc. and Dolores A. Kordek (filed as Exhibit 10.7 to the
1995 Form 10-Q and incorporated herein by reference).
10.14 -- Non-Competition Agreement, dated September 27,1995, between United
Dental Care, Inc. and Christopher A. Jehle (filed as Exhibit 10.8 to
the 1995 Form 10-Q and incorporated herein by reference).
10.15 -- Consulting Agreement dated September 27, 1995, between United Dental
Care, Inc. and Dolores A. Kordek (filed as Exhibit 10.9 to the 1995
Form 10-Q and incorporated herein by reference).
10.16 -- Consulting Agreement dated September 27, 1995, between United Dental
Care, Inc. and Christopher A. Jehle (filed as Exhibit 10.10 to the
1995 Form 10-Q and incorporated herein by reference).
10.17 -- Release dated September 27, 1995, between United Dental Care, Inc.,
U.S. Dental Management, Inc., Dolores A. Kordek and Christopher A.
Jehle (filed as Exhibit 10.11 to the 1995 Form 10-Q and incorporated
herein by reference).
10.18 -- Stock Purchase Agreement dated as of December 14, 1995 among United
Dental Care, Inc., R. Bruce Buchanan, Joseph V. Errante, D.D.S.,
Margaret R. Errante, D.D.S., The Francesca Irena Errante Irrevocable
Trust U/A 10/1/95, The Alexandra Nicole Errante Irrevocable Trust U/A
10/1/95, Timothy J. Moncher, Associated Health Plans, Inc. and
Associated Companies, Inc. (filed as Exhibit 10.1 to the Company's
Current Report on Form 8-K filed January 22, 1996, File No. 0-26688
(the "Form 8-K"), and incorporated herein by reference).
10.19 -- First Amendment to Stock Purchase Agreement dated as of January 17,
1996 among United Dental Care, Inc., R. Bruce Buchanan, Joseph V.
Errante, D.D.S., Margaret R. Errante, D.D.S., The Francesca Irena
Errante Irrevocable Trust U/A 10/1/95, The Alexandra Nicole Errante
Irrevocable Trust U/A 10/1/95, Timothy J. Moncher, Associated Health
Plans, Inc. and Associated Companies, Inc. (filed as Exhibit 10.2 to
the Form 8-K, and incorporated herein by reference).
10.20 -- Non-Competition Agreement, dated January 22, 1995, between United
Dental Care, Inc. and R. Bruce Buchanan (filed as Exhibit 10.3 to the
Form 8-K, and incorporated herein by reference). The three other Non-
Competition Agreements between United Dental Care, Inc. and Joseph V.
Errante, D.D.S., Margaret R. Errante, D.D.S. and Timothy J. Moncher,
respectively, are identical in form except as to the parties thereto
and are therefore omitted from this filing.
10.21 -- Post-Closing Escrow Agreement dated as of January 22, 1996, among
United Dental Care, Inc., R. Bruce Buchanan, Joseph V. Errante,
D.D.S., Margaret R. Errante, D.D.S., The Francesca Irena Errante
Irrevocable Trust U/A 10/1/95, The Alexandra Nicole Errante
Irrevocable Trust U/A 10/1/95, Timothy J. Moncher and Lawyers Title
of Arizona, Inc. (filed as Exhibit 10.4 to the Form 8-K, and
incorporated herein by reference).
</TABLE>
<PAGE> 134

<TABLE>
<CAPTION>
NUMBER EXHIBIT
- -------------------- ------------------------------------------------------------------------
<C> <S>
10.22 -- Release Agreement dated January 22, 1996, executed by R. Bruce
Buchanan, Joseph V. Errante D.D.S., Margaret R. Errante D.D.S., The
Francesca Irena Errante Irrevocable Trust U/A 10/1/95, The Alexandra
Nicole Errante Irrevocable Trust U/A 10/1/95 and Timothy J. Moncher
(filed as Exhibit 10.5 to the Form 8-K, and incorporated herein by
reference).
10.23 -- Office Lease dated January 9, 1992 between The Mutual Life Insurance
Company of New York and United Dental Care of Texas, Inc., and
amendments thereto dated May 31, 1994, November 7, 1994 and January
9, 1995, respectively (filed as Exhibit 10.25 to the Prior
Registration Statement and incorporated herein by reference).
10.24 -- Standard Office Lease dated December 21, 1994 between Highland Court
LLC and United Dental Care, Inc. (filed as Exhibit 10.26 to the Prior
Registration Statement and incorporated herein by reference).
10.25 -- Lease dated October 11, 1988 between Centerside I and National Dental
Health, Inc., a Washington corporation, and amendments thereto dated
April 16, 1990, March 1, 1991, June 5, 1991, May 27, 1992, as of June
16, 1993, as of October 19, 1993 and as of January 28, 1994, and
notice of partial termination with respect thereto dated March 21,
1995 (filed as Exhibit 10.27 to the Prior Registration Statement and
incorporated herein by reference).
10.26 -- Administrative Services Agreement dated as of January 1, 1995 between
United Dental Care, Inc. and R.E. Harrington, Inc., and Memorandum of
Understanding in connection therewith dated as of January 1, 1995
(filed as Exhibit 10.28 to the Prior Registration Statement and
incorporated herein by reference).
**10.27 -- Stock Purchase Agreement among United Dental Care, Inc., as
Purchaser, Gilbert G. Finger, Patricia L. Schubring, Edward K.
Halstead, Birchtree Enterprises and Binkley & Stewart, P.C., as
Sellers, and Independent Dental Plan, Inc. dated as of June 28, 1996.
**10.28 -- Stock Purchase Agreement between United Dental Care, Inc., as
Purchaser, and UICI, as Seller, dated as of September 10, 1996, for
all the issued and outstanding shares of capital stock of Association
Dental Plan, Inc, a District of Columbia corporation.
**10.29 -- Earnest Money Escrow Agreement among United Dental Care, Inc., UICI,
and Texas Commerce Bank National Association, dated as of September
10, 1996, regarding the purchase of all the issued and outstanding
shares of capital stock of Association Dental Plan, Inc., a District
of Columbia corporation.
**10.30 -- Stock Purchase Agreement between United Dental Care, Inc., as
Purchaser, and UICI, as Seller, dated as of September 10, 1996, for
all the issued and outstanding shares of capital stock of
International Dental Plan, Inc., a Florida corporation.
**10.31 -- Earnest Money Escrow Agreement among United Dental Care, Inc., UICI,
and Texas Commerce Bank National Association, dated as of September
10, 1996, regarding the purchase of all the issued and outstanding
shares of capital stock of International Dental Plan, Inc., a Florida
corporation.
**10.32 -- Stock Purchase Agreement among United Dental Care, Inc., as
Purchaser, and UICI, United Management & Consulting, Inc., United
Management & Consulting Retirement Plan, and Marie C. Montgomery
Revocable Trust U/T/A March 23, 1992, as Seller, dated as of
September 10, 1996, for the purchase of 90% of the issued and
outstanding shares of capital stock of United Dental Care, Inc., an
Oklahoma corporation.
</TABLE>
<PAGE> 135

<TABLE>
<CAPTION>
NUMBER EXHIBIT
- -------------------- ------------------------------------------------------------------------
<C> <S>
**10.33 -- Earnest Money Escrow Agreement among United Dental Care, Inc., UICI,
United Management & Consulting, Inc., United Management & Consulting
Retirement Plan, Marie C. Montgomery Revocable Trust U/T/A March 23,
1992, and Texas Commerce Bank National Association, as Escrow Agent,
dated as of September 10, 1996, regarding the purchase of 90% of the
issued and outstanding shares of capital stock of United Dental Care,
Inc., an Oklahoma corporation.
**10.34 -- Stock Purchase Agreement among United Dental Care, Inc., as
Purchaser, and John E. Carlin, Ph.D., Frank J. Schloegel, III, J.
Dennis Dlabal, D.D.S., The John E. Carlin Charitable Remainder
Unitrust, UID June 28, 1996, The Frank J. Schloegel Charitable
Remainder Unitrust I, UID July 12, 1996, The Frank J. Schloegel
Charitable Remainder Unitrust II, UID July 12, 1996, The J. Dennis
Dlabal Charitable Remainder Trust, UID September 5, 1996, as Sellers,
and Kansas City Dental Care, Inc., dated as of September 11, 1996.
**10.35 -- Earnest Money Escrow Agreement among United Dental Care, Inc., John
E. Carlin, Ph.D., Frank J. Schloegel, III, J. Dennis Dlabal, D.D.S.,
The John E. Carlin Charitable Remainder Unitrust, UID June 28, 1996,
The Frank J. Schloegel Charitable Remainder Unitrust I, UID July 12,
1996, The Frank J. Schloegel Charitable Remainder Unitrust II, UID
July 12, 1996, The J. Dennis Dlabal Charitable Remainder Trust, UID
September 5, 1996, and UMB Bank, N.A., as Escrow Agent, dated as of
September 11, 1996.
**10.36 -- Stock Purchase Agreement among United Dental Care, Inc., as
Purchaser, and Frank A. Pettisani, D.D.S., Lisa M. Mazzone, Frank A.
Pettisani, Jr., D.D.S., Charles A. Costa, and Donna Costa, as
Sellers, and Oracare Consultants, Inc., dated as of September 5,
1996.
**10.37 -- Earnest Money Escrow Agreement among United Dental Care, Inc., Frank
A. Pettisani, D.D.S., Lisa M. Mazzone, Frank A. Pettisani, Jr.,
D.D.S., Charles A. Costa, and Donna Costa, and Prudential Securities,
as Escrow Agent, dated as of September 5, 1996.
**10.38 -- Stock Purchase Agreement among United Dental Care, Inc., as
Purchaser, and Frank A. Pettisani, D.D.S., as Seller, and Oracare
Dental Associates, P.A., dated as of September 5, 1996.
**10.39 -- Stock Purchase Agreement among United Dental Care, Inc., as
Purchaser, and Frank A. Pettisani, D.D.S., Frank A. Pettisani, Jr.,
D.D.S., Charles A. Costa, and Donna Costa, as Sellers, and Oracare
DPO, Inc., dated as of September 5, 1996.
**10.40 -- Employment Agreement dated as of May 13, 1996, between United Dental
Care, Inc., and William H. Wilcox.
**10.41 -- Employment Agreement dated as of June 1, 1996, between United Dental
Care, Inc., and Mark E. Pape.
**10.42 -- Employment Agreement dated as of June 1, 1996, between United Dental
Care, Inc., and Peter R. Barnett, D.M.D.
10.43 -- Master Software License and Services Agreement dated as of June 20,
1995 between Software Technologies Corporation and United Dental
Care, Inc. (filed as Exhibit 10.29 to the Prior Registration
Statement and incorporated herein by reference).
10.44 -- United Dental Care, Inc. Amended and Restated 1989 Incentive Stock
Option Plan (filed as Exhibit 10.30 to the Prior Registration
Statement and incorporated herein by reference).
</TABLE>
<PAGE> 136

<TABLE>
<CAPTION>
NUMBER EXHIBIT
- -------------------- ------------------------------------------------------------------------
<C> <S>
10.45 -- United Dental Care, Inc. Amended and Restated 1989 Key Employee Stock
Option Plan (filed as Exhibit 10.31 to the Prior Registration
Statement and incorporated herein by reference).
10.46 -- United Dental Care, Inc. 1995 Stock Option Plan (filed as Exhibit
10.32 to the Prior Registration Statement and incorporated herein by
reference).
**10.47 -- United Dental Care, Inc. Executive Incentive Plans for 1996 for
Messrs. Wilcox, Pape and Barnett.
**21.01 -- List of Subsidiaries of Registrant.
**23.01 -- Consent of Price Waterhouse LLP.
**23.02 -- Consent of Andrew C. Sarager, C.P.A., P.C.
**23.03 -- Consent of James L. Gordon, C.P.A.
**23.04 -- Consent of Ernst & Young LLP
**23.05 -- Consent of Strasburger & Price, L.L.P. (included in Exhibit 5.01 to
this Registration Statement).
**24.01 -- Power of Attorney (contained on the signature page of this
Registration Statement).
</TABLE>

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

* To be filed by amendment.

** Filed herewith.

<PAGE> 1
Exhibit 5.01

September 20, 1996

UNITED DENTAL CARE, INC.
14755 PRESTON ROAD
SUITE 300
DALLAS, TEXAS 75240

LADIES AND GENTLEMEN:

As set forth in the Registration Statement on Form S-1 (the
"Registration Statement"), filed by United Dental Care, Inc., a Delaware
corporation (the "Company"), under the Securities Act of 1933, as amended (the
"Act"), on September 20, 1996, relating to the sale of up to 2,300,000 shares
(the "Shares") of Common Stock, $.10 par value per share, of the Company
("Common Stock"), certain legal matters in connection with the Shares are being
passed upon for the Company by this Firm. At your request, this opinion is
being furnished to the Company for filing as Exhibit 5.01 to the Registration
Statement.

We have acted as counsel to the Company in connection with the
registration by the Company of the proposed sale of the Shares by the Company
and a selling stockholder as set forth in the Registration Statement. In such
capacity, we have examined the Certificate of Incorporation and Bylaws of the
Company, each as amended to the date hereof, and the originals, or copies,
certified or otherwise identified to our satisfaction, of corporate records of
the Company, certificates of public officials, certificates of representatives
of the Company, statutes and other relevant records, instruments and documents
as a basis for the opinions hereinafter expressed. In giving such opinions, we
have relied upon certificates of officers of the Company with respect to the
accuracy of the material factual matters contained in such documents examined
by us.

Based upon our examination as aforesaid, we are of the opinion that:

1. The Company is a corporation incorporated, existing and in
good standing under the laws of the State of Delaware.

2. The Shares, when paid for and issued or transferred in the
offering pursuant to the Registration Statement,

<PAGE> 2
UNITED DENTAL CARE, INC.
SEPTEMBER 20, 1996
PAGE 2

after it has been declared effective by the Securities and
Exchange Commission, will be legally issued, fully paid and
non-assessable shares of Common Stock of the Company.

The opinions set forth above are limited to the General Corporation
Law of the State of Delaware and applicable federal law as in effect on the
date hereof.

We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name in the Registration Statement
under the caption "Legal Matters."

Very truly yours,

/s/ Strasburger & Price, L.L.P.

Strasburger & Price, L.L.P.

<PAGE> 1
EXHIBIT 10.09

Amended and Restated
APPLICATION AND AGREEMENT
NATIONSBANK FOR STANDBY LETTER OF CREDIT
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LETTER OF CREDIT DEPARTMENT Letter of Credit Number Date
Please issue an Irrevocable Letter of Credit (For NationsBank use only)
in favor of the Beneficiary substantially as
shown below and deliver the Credit by 142715 SEPTEMBER 16, 1994
[ ] Regular Mail [ ] Airmail [ ] Courier [ ] Teletransmission
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Applicant (full name and mailing address) BENEFICIARY (full name and mailing address; if courier
delivery requested full street address
UNITED DENTAL CARE, INC. must be provided)
14755 PRESTON ROAD, SUITE 300
DALLAS, TEXAS 75240 THE ADAVEN GROUP LIMITED PARTNERSHIP
C/O ROBERT J. NETTINGA
For Account of (if different from Applicant) 960 APOLLO WAY, P.O. BOX 5656
INCLINE VILLAGE, NEVADA 89450
- ------------------------------------------------------------------------------------------------------------------------------------
Advising Bank (if left blank, NationsBank will choose as Amount (in figures and words)
appropriate)
FOUR MILLION TWENTY-THREE THOUSAND FIVE HUNDRED AND
00/100 DOLLARS ($4,023,500.00)

Currency (if left blank, U.S. dollars will apply)
------------------------------------------------------------
Expiry Date (draft must be presented to drawee or for
negotiation [when negotiable] on or before)

SEPTEMBER 16, 1998
- ------------------------------------------------------------------------------------------------------------------------------------
Available by draft(s) at SIGHT drawn at NationsBank's option, on NationsBank or NationsBank's correspondent when accompanied by
the following document(s): (Please check the documents and fill in the blanks below as applicable)
[ ] A written statement purportedly signed by (if left blank the Beneficiary) with the following wording:
--------------------------
Quote SEE EXHIBIT A ATTACHED HERETO AND MADE A PART HEREOF.

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

- ------------------------------------------------------------------------------------------------------------------------ Close Quote

[ ] Other
- ------------------------------------------------------------------------------------------------------------------------------------

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

[ ] Issue as per attached exhibit marked exhibit (exhibit must be signed by the Applicant and becomes an
integral part of this Application). ---------------------

</TABLE>

<PAGE> 2
NOTE: If the Credit provides for automatic renewal without amendment, Applicant
agrees that it will notify NationsBank in writing at least sixty (60) days
prior to the last day specified in the Credit by which NationsBank must give
notice of nonrenewal as to whether or not it wishes the Credit to be renewed.
Any decision to renew or not renew the Credit shall be in NationsBank's sole
discretion. Applicant hereby acknowledges that in the event NationsBank
notifies the Beneficiary of the Credit that it has elected not to renew the
Credit, the Credit may be drawn on if permitted by the terms of the Credit and
further acknowledges and agrees that Applicant shall have no claim or cause of
action against NationsBank or defense against payment under the Agreement for
NationsBank's renewal or non-renewal of the Credit in the exercise of
NationsBank's discretion as set forth above.

Multiple Drawings [ ] PROHIBITED (permitted if left blank)

- --------------------------------------------------------------------------------
Special Instructions to NationsBank NOT TO BE INCLUDED IN THE CREDIT (if any):

- --------------------------------------------------------------------------------
The terms and conditions set out above and below, and any attached exhibits,
supplements or schedules referred to in this Application, have been reviewed by
Applicant, and by Applicant's signature below and for good and valuable
consideration, Applicant agrees to the same and to be obligated and liable
under the Agreement. In the event this Application requests an Account Party
different from Applicant, then such party will sign below as Co-Applicant.
COMPLETION AND SUBMITTAL OF THIS APPLICATION BY APPLICANT DOES NOT OBLIGATE
NATIONSBANK TO ENTER INTO THE AGREEMENT OR ISSUE THE REQUESTED CREDIT.

<TABLE>
<CAPTION>
<S> <C>
UNITED DENTAL CARE, INC.
- ------------------------------------------------------------- -------------------------------------------------------------------
Name of Company, or signature if Applicant is an individual Name of Company, or signature if Co-Applicant is an individual

By /s/ MARK E. PAPE By
---------------------------------------------------------- ----------------------------------------------------------------
Authorized Signature/Title Authorized Signature/Title

14755 PRESTON ROAD, SUITE 300
- ------------------------------------------------------------- -------------------------------------------------------------------
Address Address

DALLAS, TEXAS 75240
- ------------------------------------------------------------- -------------------------------------------------------------------

- ------------------------------------------------------------- -------------------------------------------------------------------
(214) 458-7913
- ------------------------------------------------------------- -------------------------------------------------------------------
Telephone Fax Telephone Fax

SEPTEMBER 16, 1994
- ------------------------------------------------------------- -------------------------------------------------------------------
Date Date

====================================================================================================================================
</TABLE>
BANK USE ONLY
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Approving NationsBank Officer - Signature Approving NationsBank Officer - Printed Officer Number

/s/ BRIAN SCHNEIDER BRIAN SCHNEIDER
- ------------------------------------------------------------------------------------------------------------------------------------
Officer - Title Officer - Interoffice Address Cost Center Number

VICE PRESIDENT
- ------------------------------------------------------------------------------------------------------------------------------------
Buyer Telephone Number (area code and number) Purpose Code Officer Fax (area code and number)

====================================================================================================================================

</TABLE>
Standard Letter 1: by: (Swift telex mail/fax)
---------------------------
Standard Letter 2: by: (Swift telex mail/fax)
---------------------------
Standard Letter 3: by: (Swift telex mail/fax)
---------------------------
Page 2
<PAGE> 3
1. DEFINITIONS.
In the Agreement:
(1) "Agreement" means the Application, the terms and conditions set out above
and below, and the Credit, together with any and all modifications, amendments
and extensions of any thereof.

(2) "Applicable Interest Rate" means, unless otherwise defined in and governed
by a separate agreement between NationsBank and Applicant, the lesser of the
maximum lawful rate permitted by applicable law or a per annum rate (calculated
on the basis of a 360 day year) equal to the sum of the prime rate of interest
established by NationsBank from time to time (which is not necessarily the
lowest or best rate of interest charged by NationsBank to any of its customers)
plus three percent.

(3) "Applicant" means, singularly or collectively, and, if more than one,
jointly and severally, each person or entity who has executed the Application
as Applicant or Co-Applicant.

(4) "Application" means the foregoing application of Applicant relating to the
Credit as such application may be amended or modified from time to time in
accordance herewith.

(5) "Credit" or "Letter of Credit" means the letter of credit issued pursuant
to the Application as it may be amended or modified from time to time in
accordance herewith.

(6) "Instrument" means the Credit or any draft, receipt, acceptance or written
demand (to include teletransmissions) for payment under the Credit.

(7) "NationsBank" means the banking subsidiary of NationsBank Corporation that
issues the Credit in the sole discretion of NationsBank.

(8) "Property" means goods and any and all documents related thereto,
securities, funds, choses in action, and any and all other forms of property,
whether real, personal or mixed and any right or interest therein.

(9) "Addendum" means the Addendum attached hereto which is incorporated herein
in its entirety.

2. PROMISE TO PAY.

(a) As to instruments drawn under or purporting to be drawn under the Credit,
which are payable in United States currency: (i) in the case of each sight
instrument, Applicant will reimburse NationsBank, at the address specified by
NationsBank to Applicant, on demand, in United States currency, the amount paid
thereon, or, if so demanded by NationsBank, upon the occurrence of an Event of
Default (defined below) will pay to NationsBank in advance the amount required
to pay the same; and (ii) in the case of each time instrument, Applicant will
pay to NationsBank, at the address specified by NationsBank to Applicant, in
United States currency, the amount thereof, on demand but in any event not
later than one business day prior to maturity of such time instrument at the
place specified by the Credit for payment.

(b) As to instruments drawn under or purporting to be drawn under the Credit,
which are payable in currency other than United States currency: (i) in the
case of each sight instrument, Applicant will reimburse NationsBank, at the
address specified by NationsBank to Applicant, on demand, in United States
currency, the equivalent of the amount paid under the instrument at
NationsBank's then current selling rate of exchange for teletransmission to
the place of payment in the currency in which such instrument is payable, or,
if so demanded by NationsBank, will pay to NationsBank, in advance, in United
States currency, the equivalent of the amount required to pay the same: and
(ii) in the case of each time instrument, Applicant will pay to NationsBank,
at the address specified by NationsBank to Applicant, on demand but in any
event sufficiently in advance of maturity of such time instrument to enable
NationsBank to arrange for cover to reach the place of payment not later than
three business days prior to maturity, the equivalent of the time instrument
in United States currency at NationsBank's then current selling rate of exchange
for teletransmission to the place of payment in the currency in which such
instrument is payable. If for any cause whatsoever there exists at the time in
question no rate of exchange generally current for effecting transfers as above
described, or such currency is not available for purchase by NationsBank,
Applicant agrees to pay NationsBank on demand, at NationsBank's election, (i) an
amount in United States currency equivalent to the actual cost to NationsBank of
settlement of NationsBank's obligation to the holder of the instrument or other
person, however and whenever such settlement shall be made by NationsBank, or
(ii) an amount in United States currency equivalent to the estimated cost to
NationsBank, as projected by NationsBank, of the future settlement of
NationsBank's obligation to the holder of the instrument or other person,
provided that upon the actual settlement of NationsBank's obligation, however
and whenever occurring, NationsBank shall reimburse Applicant or Applicant shall
pay to NationsBank, as the case may be, an amount in United States currency
equal to the difference between the initial estimated payment by Applicant to
NationsBank and the actual settlement amount paid by NationsBank.

(c) NationsBank may accept or pay any instrument presented to it, regardless of
when drawn and whether or not negotiated, if such instrument, the other
required documents and any transmittal advice are dated on or before the
expiration date of the Credit, and NationsBank may honor, as complying with the
terms of the Credit and of the Agreement, any instruments or other documents
otherwise in order signed or issued by any person who is, or is in good faith
believed by NationsBank to be, an administrator, executor, trustee in
bankruptcy, debtor in possession, conservator, assignee for the benefit of
creditors, liquidator, receiver or other legal representative or successor by
operation of law of the party authorized under the Credit to draw or issue such
instruments or other documents.

3. PROMISE TO PAY INTEREST AND FEES.

(a) Applicant will pay NationsBank, on demand: (i) NationsBank's fees set forth
in the Addendum, (ii) unless expressly provided otherwise in the Application,
all charges and expenses paid or incurred by NationsBank in connection with the
Credit, including, without limitation, reasonable attorney's fees for the
enforcement of any rights hereunder, and (iii) interest on any amounts due by
Applicant to NationsBank hereunder from the date due to the date of payment at
the Applicable Interest Rate.

(b) No provision of the Agreement shall require the payment or permit the
collection of interest in excess of the maximum rate permitted by applicable
law.

4. CLEAN ADVANCES.

If the Application requests inclusion in the Credit of any provision for clean
advances to the Beneficiary. NationsBank may place in the Credit such a
provision in that respect as NationsBank may deem appropriate, under which any
bank entitled to negotiate drafts under the Credit, acting in its discretion in
each instance and upon the request and receipt in writing from the Beneficiary,
may make one or more clean advances at any time on or prior to the date by
which drafts are to be negotiated under the Credit. The aggregate of such
advances shall in no event be more than the amount specified in the Application
for clean advances, and whether or not specified therein in no event shall any
such advance exceed the amount remaining available under the Credit at the time
of the advance. While it is expected by Applicant that each such advance will
be repaid by the Beneficiary to the bank that made the advance from the
proceeds of any drafts drawn under the Credit, should any such advance not be
thus repaid. Applicant will on demand pay NationsBank the amounts thereof as if
such advances were evidenced by drafts drawn under the Credit. It is understood
that neither NationsBank nor any bank which may make such advances shall be
obligated to inquire into the use that may be made thereof by the Beneficiary
and that NationsBank and each such bank shall be without liability for any
wrongful use that may be made by the Beneficiary of any funds so advanced.

5. UNIFORM CUSTOMS AND PRACTICE.

The Uniform Customs and Practice for Documentary Credits, as published as of
the date of issue of the Credit by the International Chamber of Commerce (the
"UCP"), shall in all respects be deemed a part hereof as fully as if
incorporated herein and shall apply to the Credit. Unless expressly provided
otherwise in the Credit, in the event any provision of the UCP is or is
construed to vary from or be in conflict with the laws of the United States of
America or any state thereof, as from time to time amended and in force, the
UCP shall prevail to the extent permitted by applicable law.

<PAGE> 4
6. LICENSES AND COMPLIANCE.

Applicant will procure promptly any necessary licenses for the services
performed or the import, export or shipping of property shipped under or
pursuant to or in connection with the Credit, and will comply with all foreign
and domestic laws, rules and regulations now or hereafter applicable to the
transaction related to the Credit or applicable to the execution, delivery and
performance by Applicant of the Agreement. Applicant further agrees to furnish
to NationsBank such evidence in respect of the above as NationsBank may at any
time require.

7. INSURANCE.

Applicant shall keep such property as may be the subject of the Credit
adequately covered by insurance in amounts, against risks and with companies
satisfactory to NationsBank. Applicant hereby irrevocably grants its power of
attorney to NationsBank and any of its officers, with the power of substitution,
to endorse any check in the name of Applicant received in payment of any loss
or adjustment.

8. DEFAULT.

a) In the event of the happening of any one or more of the following events (any
such event being hereinafter called an "Event of Default"), namely: (i) the
nonpayment of any obligations of Applicant to NationsBank (under the Agreement
or otherwise), or to any other person or entity, now or hereinafter existing,
when due, or (ii) the failure of Applicant to perform or observe any other term
or covenant of the Agreement, or (iii) the dissolution or termination of
existence of Applicant, or (iv) the institution by or against Applicant of any
proceeding seeking to adjudicate Applicant a bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment, protection,
relief, or composition of Applicant or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors, or seeking the
entry of an order for relief or the appointment of a receiver, trustee,
custodian, or other similar official for Applicant or for any substantial part
of its property, or (v) any seizure, vesting or intervention by or under
authority of a government by which the management of Applicant is displaced or
its authority in the control of its business is curtailed, or (vi) the
attachment of or restraint as to any funds or other property which may be in, or
come into, the possession or control of NationsBank, or of any third party
acting on NationsBank's behalf, for the account or benefit of Applicant, or the
issuance of any order of court or other legal process against the same, or (vii)
the occurrence of any of the above events with respect to any person or entity
which has guaranteed any obligations of Applicant to NationsBank (under the
Agreement or otherwise); then, or at any time after the happening of such
event, the amount of the Credit, as well as any and all other obligations of
Applicant under the Agreement, shall, at NationsBank's option, and whether or
not otherwise then due and payable, become due and payable immediately without
demand upon or notice to Applicant.

b) Upon the occurrence and during the continuance of any Event of Default,
NationsBank is hereby authorized to set off and apply any and all deposits
general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by NationsBank or any subsidiary or
affiliate of NationsBank to or for the credit or the account of Applicant
against any and all of Applicant's obligations to NationsBank under the
Agreement, irrespective of whether or not NationsBank shall have made any
demand under the Agreement and although such deposits, indebtedness or
obligations may be unmatured or contingent. NationsBank's rights under this
Section 8(b) are in addition to other rights and remedies (including, without
limitation, other rights of set-off) which NationsBank may have.

9. SECURITY.

a) As collateral for the payment of any and all obligations of Applicant to
NationsBank under the Agreement, Applicant hereby grants to NationsBank a
security interest in (i) any and all documents of title, policies or
certificates of insurance and other documents accompanying or related to
instruments drawn under the Credit, and any and all other property shipped
under or in connection with the Credit or in any way related thereto or to any
of the instruments drawn thereunder (whether or not such documents or property
are released to or upon the order of Applicant in trust or otherwise) and (ii)
any and all proceeds and products of the foregoing. Also to secure the payment
of any and all obligations of Applicant under the Agreement, NationsBank shall
be subrogated to the rights (but shall have none of the obligations) of
Applicant in respect of any transaction to which the Credit relates. Insofar
as any property which may be held by NationsBank, or for NationsBank's account,
as collateral hereunder may be released to or upon the order of Applicant,
Applicant hereby acknowledges that such delivery of property is in trust
pending satisfaction of Applicant's payment obligations to NationsBank, and
hereby agrees to execute and/or file such receipts, agreements, forms or other
documents as NationsBank may request to further evidence NationsBank's
interests in such property, it being understood that NationsBank's rights as
specified therein shall be in furtherance of and in addition to (but not in
limitation of) NationsBank's rights hereunder. NationsBank is hereby
authorized, at its option at any time and with or without notice to Applicant,
to transfer to or register in its name or the name of any NationsBank's
nominees all or any part of the property subject to any of the security
interests granted under or contemplated by the Agreement. NationsBank is also
authorized, at its option, to file financing statements without the signature
of Applicant with respect to all or any part of such property. Applicant will
pay the cost of any such filing and, upon NationsBank's request, sign such
instruments, documents or other papers, and take such other action, as
NationsBank may reasonably require to perfect such security interests.

b) If any Event of Default shall have occurred and be continuing, NationsBank
may exercise in respect of the property subject to any of the security
interests granted under or contemplated by the Agreement all the rights and
remedies of a secured party on default under the applicable Uniform Commercial
Code or any other applicable law, and also may, without notice except as
specified below, sell such property or any part thereof in one or more parcels
at public or private sale, at any NationsBank office or elsewhere, for cash,
on credit or for future delivery, and upon such other terms as NationsBank may
deem commercially reasonable. To the extent notice of sale of such property
shall be required by law, reasonable notification shall be satisfied by written
notice mailed or delivered to Applicant at the address specified above at least
ten business days prior to the date of public sale or prior to the date after
which private sale is to be made. Applicant will pay to NationsBank on demand
all costs and expenses (including, without limitation, reasonable attorney's
fees and legal expenses) related or incidental to the custody, preservation or
sale of, or collection from, or other realization upon, any of such property
or related or incidental to the establishment, preservation or enforcement of
NationsBank's rights in respect of any such property. In the event of sale
of, collection from, or other realization upon all or any part of such
property, NationsBank may, in its discretion, hold the proceeds thereof as
additional collateral hereunder or then or at any time thereafter apply the
proceeds thereof to the payment of such of the costs and expenses referred to
above and such of the obligations of Applicant under the Agreement, whether or
not then due, as NationsBank may determine in its discretion, any surplus to be
paid over to Applicant or to whomever may be lawfully entitled to receive such
surplus.

10. INDEMNITY.

Applicant will indemnify and hold NationsBank (such term to include for purposes
of this paragraph NationsBank's affiliates and its and its affiliates'
officers, directors, employees and agents) harmless from and against (i) all
loss or damage arising out of NationsBank's issuance of, or any other action
taken by NationsBank in connection with, the Credit other than loss or damage
resulting from the gross negligence or willful misconduct of the party seeking
indemnification, and (ii) all costs and expenses (including reasonable
attorney's fees and legal expenses) of all claims or legal proceedings arising
out of NationsBank's issuance of the Credit or incident to the collection of
amounts owed by Applicant hereunder or the enforcement of NationsBank's rights
hereunder, including, without limitation, legal proceedings related to any
court order, injunction, or other process or decree restraining or seeking to
restrain NationsBank from paying any amount under the Credit. Additionally,
Applicant will indemnify and hold NationsBank harmless from and against all
claims, losses, damages, suits, costs or expenses arising out of Applicant's
failure to timely procure licenses or comply with applicable laws, regulations
or rules, or any other conduct or failure of Applicant relating to or affecting
the Credit.

<PAGE> 5
11. EFFECT OF WAIVERS.

No delay, extension of time, renewal, compromise or other indulgence which may
occur or be granted by NationsBank shall impair NationsBank's rights or powers
hereunder. NationsBank shall not be deemed to have waived any of its rights
hereunder, unless NationsBank or its authorized agent shall have signed such
waiver in writing.

12. FINANCIAL INSTITUTION APPLICANT

If Applicant or Co-Applicant is a financial institution (the "Financial
Institution") the Financial Institution hereby requests the issuance of the
Credit for its customer (the "Customer"), who has also executed the Application
as Applicant or Co-Applicant. In consideration of such issuance and as a
direct and primary obligation, the Financial Institution agrees to pay to
NationsBank all amounts owed by the Customer under the Agreement when due, and
to pay to NationsBank its fees and expenses according to its fee schedule from
time to time in effect. The Financial Institution hereby grants to NationsBank
a security interest in all of the property in which the Customer has heretofore
granted or may hereafter grant to the Financial Institution a security interest
to secure the obligations of the Customer to the Financial Institution arising
out of the execution of the Application by the Financial Institution.

13. MISCELLANEOUS.

(a) Any notice from NationsBank to Applicant shall be deemed given when given
in accordance with the Addendum.

(b) Each provision of the Agreement shall be interpreted in such manner as to
be effective and valid under applicable law but if any provision of the
Agreement shall be prohibited by or invalid under applicable law, such
provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of the Agreement.

(c) If any law, treaty, regulation or the interpretation thereof by any court
or administrative or governmental authority shall impose, modify or deem
applicable any capital, reserve, insurance premium or similar requirement
against letters of credit issued by NationsBank and the result thereof shall be
to increase the cost to NationsBank of making any payment under or issuing or
maintaining the Credit or to reduce the yield to NationsBank in connection with
the Credit or the Agreement, then, on demand, Applicant will pay to
NationsBank, from time to time, such additional amounts as NationsBank may in
good faith determine to be necessary to compensate NationsBank for such
increased cost or reduced yield.

(d) Any and all payments made to NationsBank hereunder shall be made free and
clear of and without deduction for any present or future taxes, levies,
imposts, deductions, charges, or withholdings, and all liabilities with respect
thereto, excluding taxes imposed on net income and all income and franchise
taxes of the United States and any political subdivisions thereof (such
nonexcluded taxes being herein called "Taxes"). If Applicant shall be required
by law to deduct any Taxes from or in respect of any sum payable hereunder, (i)
the sum payable shall be increased as may be necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section 13(d)), NationsBank shall receive an amount equal to the sum
NationsBank would have received had no such deductions been made, (ii)
Applicant shall make such deductions, and (iii) Applicant shall pay the full
amount deducted to the relevant authority in accordance with applicable law.
Applicant will indemnify NationsBank for the full amount of Taxes (including,
without limitation, any Taxes imposed by any jurisdiction on amounts payable
under this Section 13(d)) paid by NationsBank and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto,
whether or not such Taxes were correctly or legally asserted. This
indemnification shall be made within 30 days from the date NationsBank makes
written demand therefor. Within 30 days after the date of any payment of
Taxes, Applicant will furnish to NationsBank the original or a certified copy
of a receipt evidencing payment thereof.

(e) The Agreement shall be binding upon Applicant, its successors and assigns,
and shall inure to the benefit of NationsBank, its successors, transferees and
assigns; provided that any assignment by Applicant of any of its rights or
obligations under the Agreement without the prior written consent of
NationsBank shall be void.

(g) Any action, inaction, waiver or omission taken or suffered by NationsBank
or by any of NationsBank's correspondents under or in connection with the
Credit or any related instruments, services or property, if in good faith and
in conformity with foreign or domestic laws, regulations or customs applicable
thereto, shall be binding upon Applicant and shall not place NationsBank or any
of NationsBank's correspondents under any resulting liability to Applicant.
Without limiting the generality of the foregoing, NationsBank and
NationsBank's correspondents may act in reliance upon any written, oral,
telephonic, telegraphic, facsimile or other request or notice, believed in good
faith to have been authorized, whether or not given or signed by an authorized
person and any such written, oral, telephonic, telegraphic, facsimile or other
request or notice, shall be binding on Applicant.

(h) Except as provided in Section 13(g), no term or provision of the Agreement
can be changed orally, and no executory agreement shall be effective to modify
or to discharge the Agreement unless such executory agreement is in writing and
signed by NationsBank. Applicant's payment and indemnity obligations under the
Agreement shall survive payment under or expiration of the Credit or
termination of this Agreement.

14. JURISDICTION AND WAIVER.

Applicant hereby irrevocably submits to the non-exclusive jurisdiction of any
State or Federal court sitting in the city, county, or district in Dallas
County Texas over any action or proceeding arising out of or relating to the
Agreement, and Applicant hereby irrevocably agrees that all claims in respect
to such action or proceeding may be heard and determined in such State or
Federal court. APPLICANT HEREBY IRREVOCABLY WAIVES TO THE FULLEST EXTENT IT MAY
EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF
SUCH ACTION OR PROCEEDING AND THE LACK OF PERSONAL JURISDICTION. TO THE FULLEST
EXTENT IT MAY LAWFULLY AND EFFECTIVELY DO SO, EACH OF APPLICANT AND NATIONSBANK
WAIVES THE RIGHT TO TRIAL BY JURY. Applicant irrevocably consents to the
service of any and all process in any such action or proceeding by the mailing
of copies of such process to Applicant at the last business address furnished
by Applicant to NationsBank. Applicant agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing, however, in this Section 14, shall affect the right of NationsBank to
serve legal process in any other manner permitted by law or affect the right of
NationsBank to bring any action or proceeding against Applicant or its property
in the courts of any other jurisdiction. Moreover, to the extent that Applicant
has or hereafter may acquire any immunity from jurisdiction of any court or
from any legal process (whether through service or notice, attachment prior to
judgment, attachment in aid of execution or otherwise) with respect to itself
or its property. Applicant hereby irrevocably waives such immunity in respect
of its obligations under the Agreement.

15. FINAL AGREEMENT.

EXCEPT AS PROVIDED IN SECTION 13(g), THIS WRITTEN AGREEMENT REPRESENTS THE
FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

<PAGE> 6
ADDENDUM
TO
AMENDED AND RESTATED
APPLICATION AND AGREEMENT
FOR STANDBY LETTER OF CREDIT

1. Amendment and Restatement. This Agreement is in amendment and
restatement of that certain Application and Agreement for Standby
Letter of Credit dated September 16, 1994, executed by Applicant in favor
of NationsBank.

2. Letter of Credit Fees. Applicant shall pay to NationsBank a fee
determined at the rate per annum which shall be equal to one percent (1%)
(computed on the basis of actual number of days elapsed in a year
consisting of 365 or 366 days, as applicable) on the face amount remaining
to be drawn on the Letter of Credit as of the beginning of each quarter
during the term of such Letter of Credit. Such letter of credit fee shall
be payable quarterly in advance commencing on the date hereof, and
thereafter, on the fifteenth (15th) day of each December, March, June and
September until termination or cancellation of this Letter of Credit.

Notwithstanding the foregoing, for each day on which there shall exist
and be continuing an Event of Default, the rate per annum at which the
letter of credit fee referred to in (b) above shall accrue shall be one
and one-half percent (1.5%), instead of one percent (1%), per annum.

Applicant acknowledges and agrees that the letter of credit fees are
intended as reasonable compensation to NationsBank for issuing the
Letter of Credit and for making available amounts for draw(s) thereunder
as described herein and therein and for no other purpose. All fees
referred to in this Section shall be payable to NationsBank in federal or
other immediately available funds at NationsBank's address set forth
herein.

3. Notwithstanding anything contained to the contrary herein:

(a) Applicant shall reimburse NationsBank for each draw
(whether partial or full) under the Letter of Credit immediately after
the payment of such draw by NationsBank; and

(b) such reimbursement obligations shall bear interest at a
rate per annum which shall from day to day be equal to (i) from (and
including) the date of the payment of such draw by NationsBank until the
third (3rd) day following the date on which NationsBank shall notify
Applicant of such drawing, the lesser of the (A) maximum rate allowed by
applicable law and (B) the variable rate of interest established from
time to time by NationsBank as its general reference rate of interest
(which rate of interest may not be the lowest rate charged by NationsBank
on similar loans) plus one percent (1%), and (ii) from (and including)
such third (3rd) day until (but excluding) the date such reimbursement
obligations are paid, the maximum lawful rate.

4. Payment of Reimbursement Obligations. Applicant agrees to pay to
NationsBank all reimbursement obligations, interest and other amounts
payable to NationsBank under or in connection with the Letter of Credit
immediately when due, irrespective of any claim, setoff, defense or
other right which Applicant may have at any time against NationsBank or
any other person. Each such payment shall be made to NationsBank in
Federal or other immediately available funds at the NationsBank's address
set forth below.

<PAGE> 7

5. INDEMNIFICATION; EXONERATION.

(a) INDEMNIFICATION. In addition to amounts payable as
elsewhere provided herein, APPLICANT HEREBY AGREES TO PROTECT,
INDEMNIFY, PAY AND SAVE NATIONSBANK AND ITS DIRECTORS, OFFICERS, AGENTS,
ATTORNEYS AND EMPLOYEES HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS,
DEMANDS, LIABILITIES, DAMAGES, LOSSES, COSTS, CHARGES AND EXPENSES
(INCLUDING REASONABLE ATTORNEYS' FEES) WHICH NATIONSBANK MAY INCUR OR BE
SUBJECT TO as a consequence, direct or indirect, of (i) Applicant's
failure to make payments to NationsBank as required hereunder, (ii) the
issuance of any Letter of Credit other than as a result of the gross
negligence or willful misconduct of NationsBank, as determined by an
arbitrator or arbitrators, or a court of competent jurisdiction, as
appropriate, (BUT INCLUDING AS A RESULT OF THE ORDINARY NEGLIGENCE OF
NATIONSBANK); or (iii) the failure of NationsBank to honor a drawing
under a Letter of Credit as a result of any act or omission, whether
rightful or wrongful, of any present or future de jure or de facto
governmental authority.

(b) Assumption of Risk by Applicant. As between

Applicant and NationsBank, Applicant assumes all risks of the acts and
omissions of, or misuse of the Letter of Credit by, the beneficiary of
the Letter of Credit. In furtherance and not in limitation of the
foregoing, NationsBank shall not be responsible:

(i) for the form, validity, sufficiency,
accuracy, genuineness or legal effect of any document submitted by any
party in connection with the application for and issuance of the Letter
of Credit, even if it should in fact prove to be in any or all respects
invalid, insufficient, inaccurate, fraudulent or forged; and

(ii) for the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer or assign
the Letter of Credit or the rights or benefits thereunder or
proceeds thereof; in whole or in part, which may prove to be invalid or
ineffective for any reason; and

(iii) so long as the documentation delivered to
NationsBank conforms on its face to the requirements of the applicable
Letter of Credit, for failure to the beneficiary of the Letter of
Credit to comply duly with conditions required in order to draw upon
such Letter of Credit; and

(iv) for errors, omissions, interruptions or
delays in transmission or delivery of any messages, by mail, cable,
telegraph, telex or otherwise, whether or not they be in cipher, except
for errors caused by the gross negligence or willful misconduct of
NationsBank; and

(v) for errors in interpretation of technical
terms, except for errors caused by the gross negligence or willful
misconduct of NationsBank; and

(vi) for any loss or delay in the transmission or
otherwise of any document required in order to make a drawing under the
Letter of Credit or of the proceeds thereof, except for loss or delay
caused by the gross negligence or willful misconduct of NationsBank; and

(vii) for the misapplication by the beneficiary of
the Letter of Credit of the proceeds of any drawing under such Letter of
Credit; and

<PAGE> 8
(viii) for any consequences arising from causes beyond the
control of NationsBank.

None of the above shall affect, impair, or prevent the vesting of
any of NationsBank's rights or powers under this Section.

(c) Exoneration. In furtherance and extension, and not in
limitation, of the specific provisions hereinabove set forth, any
action taken omitted by NationsBank under or in connection with the
Letter of Credit, if taken or omitted in good faith, shall not put
NationsBank under any resulting liability to Applicant or relieve
Applicant of any of its obligations hereunder to any Person.

6. Financial Reports. Applicant shall promptly deliver to NationsBank such
information concerning the business, properties or financial condition
of Applicant as NationsBank shall reasonably request including
financial statements or other reports or notices provided to
shareholders of Applicant or filed with the Securities and Exchange
Commission, all press releases and any other statements made
available generally by Applicant to the public concerning material
developments in the business of Applicant.

7. Notices. Any communications required or permitted to be given by this
Agreement must be (i) in writing and personally delivered or mailed by
prepaid certified or registered mail, or (ii) made by facsimile
transmission delivered or transmitted, to the party to whom such notice
of communication is directed, to the address of such party shown below:

If to Applicant:

UNITED DENTAL CARE, INC.
14755 Preston Road
Suite 300
Dallas, Texas 75240
Attn: Mark E. Pape
Telecopy No.: (214) 458-7963

If to NationsBank:

NATIONSBANK OF TEXAS, N.A.
901 Main Street, 7th Floor
P.O. Box 831000
Dallas, Texas 75283-1000
Attn: Brian Schneider
Telecopy No.: (214) 508-3139

Any such communication shall be deemed to have been given (whether
actually received or not) on the day it is personally delivered or, if
transmitted by facsimile transmission, on the day that such
communication is transmitted as aforesaid subject to telephone
confirmation of receipt. Any party may change its address for
purposes of this Agreement by giving notice of such change to the other
parties pursuant to this Section.
<PAGE> 9
IRREVOCABLE LETTER OF CREDIT

Beneficiary:

The Adaven Group Limited Partnership
c/o Robert J. Nettinga
960 Apollo Way
P.O. Box 5656
Incline Village, Nevada 89450

Issue Date: September 16, 1994
Amount: $4,023,500.00
Irrevocable Letter of Credit No. 142715
Effective Date: September 16, 1994
Expiry Date: September 16, 1998

Gentlemen/Ladies:

For the account of our client, United Dental Care, Inc. (the "Account
Party"), we hereby open our irrevocable Letter of Credit (the "Credit") in your
favor for an amount not to exceed in the aggregate FOUR MILLION TWENTY-THREE
THOUSAND FIVE HUNDRED AND 00/100 DOLLARS ($4,023,500.00) effective September
16, 1994 and expiring on September 16, 1998, at 5:00 p.m. Dallas, Texas time
(the "Expiry Date"). The Maximum Amount Available (herein so called) under this
Credit shall be the following amounts during the following periods (less the
amount of any prior draws hereunder): $4,023,500.00 until but excluding October
16, 1995; $3,431,975.00 on October 16, 1995 and thereafter, until but excluding
October 16, 1996; $2,810,875.00 on October 16,1996 and thereafter, until but
excluding October 16, 1997; and $2,158,718.00 on October 16, 1997 and
thereafter, until and including the Expiry Date. The amount available under
this Credit shall be available by your draft in the form of Exhibit A hereto
drawn on us at sight bearing the clause "Drawn under NationsBank of Texas, N.A.
Irrevocable Letter of Credit No. 142715," and accompanied by an executed
certificate in the form of Exhibit B hereto (with blanks completed), each
executed by the Beneficiary, which exhibits are incorporated herein by
reference as though set forth in full herein. The original of this Credit must
accompany any drawing presented to us hereunder.

This Credit is transferrable in its entirety (but not in part) to any
transferee; the transferee shall succeed to all of the rights of the transferor
hereunder; and such Credit may be successively transferred. Upon any such
transfer, the transferee shall be deemed to be the beneficiary hereunder.
Transfer of this Credit to such transferee shall be effective upon the
presentation to us of the Credit, accompanied by the transfer form attached
hereto as Exhibit C, with blanks appropriately completed and signed by the
transferor, and upon such presentation, we shall issue a substitute Credit on
the same terms as the Credit, designating the transferee as the beneficiary
hereunder.

<PAGE> 10

such certificates or drafts. It is agreed by all parties hereto that the
references to any non-competition agreement or consulting agreement in Exhibit
B are for identification purposes only, and the references shall not be
construed in any manner to require us to inquire into their terms and
conditions or as to whether any or all parties thereto have adequately
performed.

Except to the extent inconsistent with the terms hereof, this Credit
is subject to the Uniform Customs and Practice for Documentary Credits (1993
Revision), International Chamber of Commerce Publication No. 500 (the "Uniform
Customs"). This Credit is a contract made under the laws of the State of
Texas and shall, as to matters not governed by the Uniform Customs, be governed
by the laws of the State of Texas, including the Uniform Commercial Code as
adopted in the State of Texas.

We hereby agree with you that a draft drawn and presented in
conformity with the terms of this Credit will be duly honored in accordance
with its payment instructions if presented to us at our principal banking
office, 901 Main Street, 9th Floor, Letter of Credit Department, Dallas, Texas
75202, on or before the Expiry Date. If a demand for payment made by you
hereunder does not in any instance conform to the terms and conditions of this
Credit, we shall give you prompt notice that the demand for payment was not
effected in accordance with the terms and conditions of this Credit, shall
state the reasons therefor, and will, upon your instructions, hold any
documents at your disposal or return same to you. Upon being notified that the
demand for payment was not effected in conformity with this Credit, you may,
prior to the Expiry Date, attempt to correct any such nonconforming demand for
payment to the extent that you are entitled to do so.

Sincerely,

NATIONSBANK OF TEXAS, N.A.

By:
--------------------------------
Name:
---------------------------
Title:
--------------------------

<PAGE> 11
EXHIBIT A

_____________________, _______
city state

_______________, 199__

DRAFT DRAWN UNDER NATIONSBANK OF TEXAS, N.A., DALLAS, TEXAS
IRREVOCABLE LETTER OF CREDIT NO. 142715

at sight:

PAY TO _________________________________________________________________________

U.S $___________________________________________________________________________

FOR VALUE RECEIVED AND CHARGE TO ACCOUNT OF THE ABOVE-REFERENCED LETTER OF
CREDIT.

_____________________________
Beneficiary

*BY FEDERAL FUNDS WIRE TRANSFER
TO CREDIT ACCOUNT NO. ________________
AT____________________________________
IN THE NAME OF _______________________

<PAGE> 12
EXHIBIT B

CERTIFICATE OF DRAW REQUEST

_____________, 199_

NationsBank of Texas, N.A.
901 Main Street, 9th Floor
Letter of Credit Department
Dallas, Texas 75202

I, _______________________________________, do hereby certify:

1. _________________________________ is Beneficiary ("Beneficiary")
under NationsBank of Texas, N.A. Irrevocable Letter of Credit No. 142715 dated
September 16, 1994 (the "Credit") for the account of United Dental Care, Inc.
or its successors and assigns (the "Account Party"). Beneficiary is,
contemporaneously herewith, drawing under the Credit. All terms used herein
which are defined in the Credit have the respective meanings set forth therein.

2. Beneficiary is a party to that certain Non-Competition Agreement
and that certain Consulting Agreement each dated as of September 16, 1994 and
entered into by Beneficiary and the Account Party (the "Agreements"). The
Account Party has defaulted on its obligation to pay Beneficiary pursuant to
the terms of at least one of the Agreements.

3. The total amount which is due and payable under the Agreements is
$___________, as of __________, 199__, and the amount of draft accompanying
this Certificate does not exceed such amount.

4. The amount of the draft accompanying this Certificate does not
exceed the Maximum Amount Available to be drawn under the Credit.

5. On _______________, 199__, Beneficiary duly gave written notice
of default by the Account Party under at least one of the Agreements and of
Beneficiary's intention to draw upon the Credit by depositing such notice in
the U.S. mail, postage prepaid, first class certified mail, return receipt
requested. Such written notice indicated that the Account Party had ten (10)
days from the deposit of the notice in the U.S. mail to cure its default. At
least ten (10) days have passed since the notice was so deposited and the
Account Party has not cured its default.

Very truly yours,

--------------------------------
Beneficiary

<PAGE> 13
EXHIBIT C

INSTRUCTIONS TO TRANSFER

NationsBank of Texas, N.A. _______________, 199__
901 Main Street, 7th Floor
Letter of Credit Department
Dallas, Texas 75202

Re: NationsBank of Texas, N.A. Irrevocable Letter of Credit No.
142715

Gentlemen:

All terms used herein which are defined in the above-captioned
Letter of Credit used by you (the "Credit") have the respective meanings set
forth therein.

Beneficiary under the Credit hereby irrevocably instructs you
to transfer the Credit to:

------------------------------------
(Name of Transferee)

------------------------------------
(Address)

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

By this transfer, all rights of Beneficiary in the Credit are
transferred to the transferee and the transferee shall hereafter have the sole
rights as Beneficiary thereof; provided, however, that no rights shall be
deemed to have been transferred to the transferee until such transfer complies
with the requirements of the Credit pertaining to transfer.

The Credit is returned herewith and, in accordance herewith, we
ask that this transfer be effected.

The individual signing below hereby represents that he or she
is the Beneficiary under the Credit.

Very truly yours,

--------------------------------
Beneficiary

<PAGE> 1
EXHIBIT 10.10

Amended and Restated
APPLICATION AND AGREEMENT
NATIONSBANK FOR STANDBY LETTER OF CREDIT
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LETTER OF CREDIT DEPARTMENT Letter of Credit Number Date
Please issue an Irrevocable Letter of Credit (For NationsBank use only)
in favor of the Beneficiary substantially as
shown below and deliver the Credit by 142716 SEPTEMBER 16, 1994
[ ] Regular Mail [ ] Airmail [ ] Courier [ ] Teletransmission
- ------------------------------------------------------------------------------------------------------------------------------------
Applicant (full name and mailing address) BENEFICIARY (full name and mailing address; if courier
delivery requested full street address
UNITED DENTAL CARE, INC. must be provided)
14755 PRESTON ROAD, SUITE 300
DALLAS, TEXAS 75240 OMEGA MARINE DEVELOPMENT, INC.
C/O PAUL C. NETTINGA
For Account of (if different from Applicant) 470 CAMINO ELEVADO
BONITA, CALIFORNIA 92002
- ------------------------------------------------------------------------------------------------------------------------------------
Advising Bank (if left blank, NationsBank will choose as Amount (in figures and words)
appropriate)
SEVEN HUNDRED FIFTY-SIX THOUSAND TWO HUNDRED
FORTY-TWO AND OO/100 DOLLARS ($756,242.00)

SEPTEMBER 16, 1998
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Available by draft(s) at SIGHT drawn at NationsBank's option, on NationsBank or
NationsBank's correspondent when accompanied by the following document(s):
(Please check the documents and fill in the blanks below as applicable)

[ ] A written statement purportedly signed by (if left blank the Beneficiary)
____________________________ with the following wording:

Quote SEE EXHIBIT A ATTACHED HERETO AND MADE A PART HEREOF.
------------------------------------------------------------------------

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

- -------------------------------------------------------------------------------
Close Quote
- -------------------------------------------------------------------

[ ] Other
- -------------------------------------------------------------------------------

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

[ ] Issue as per attached exhibit marked exhibit ____________________(exhibit
must be signed by the Applicant and becomes an integral part of this
Application).

Multiple Drawings [ ] PROHIBITED (permitted if left blank)
===============================================================================
Special Instructions to NationsBank NOT TO BE INCLUDED IN THE CREDIT (if any):

===============================================================================
The terms and conditions set out above and below, and any attached exhibits,
supplements or schedules referred to in this Application, have been reviewed by
Applicant, and by Applicant's signature below and for good and valuable
consideration, Applicant agrees to the same and to be obligated and liable
under the Agreement. In the event this Application requests an Account Party
different from Applicant, then such party will sign below as Co-Applicant.
COMPLETION AND SUBMITTAL OF THIS APPLICATION BY APPLICANT DOES NOT OBLIGATE
NATIONSBANK TO ENTER INTO THE AGREEMENT OR ISSUE THE REQUESTED CREDIT.

14755 Preston Road, Suite 300
- ------------------------------------------------------------- -------------------------------------------------------------------
Address Address

Dallas, Texas 75240
- ------------------------------------------------------------- -------------------------------------------------------------------

September 16, 1994
- ------------------------------------------------------------- -------------------------------------------------------------------
Date Date

/s/ BRIAN SCHNEIDER Brian Schneider
- ------------------------------------------------------------------------------------------------------------------------------------
Officer - Title Officer - Interoffice Address Cost Center Number

Vice President
- ------------------------------------------------------------------------------------------------------------------------------------
Buyer Telephone Number (area code and number) Purpose Code Officer Fax (area code and number)

====================================================================================================================================

</TABLE>
Standard Letter 1: by: (Swift-telex-mail/fax)
---------------------------
Standard Letter 2: by: (Swift-telex-mail/fax)
---------------------------
Standard Letter 3: by: (Swift-telex-mail/fax)
---------------------------
Page 2
<PAGE> 3
1. DEFINITIONS.
In the Agreement:
(1) "Agreement" means the Application, the terms and conditions set out above
and below, and the Credit, together with any and all modifications, amendments
and extensions of any thereof.

(3) "Applicant" means, singularly or collectively, and, if more than one,
jointly and severally, each person or entity who has executed the Application
as Applicant or Co-Applicant.

(4) "Application" means the foregoing application of Applicant relating to the
Credit as such application may be amended or modified from time to time in
accordance herewith.

(5) "Credit" or "Letter of Credit" means the letter of credit issued pursuant
to the Application as it may be amended or modified from time to time in
accordance herewith.

(6) "instrument" means the Credit or any draft, receipt, acceptance or written
demand (to include teletransmissions) for payment under the Credit.

(7) "NationsBank" means the banking subsidiary of NationsBank Corporation that
issues the Credit in the sole discretion of NationsBank.

(8) "property" means goods and any and all documents related thereto,
securities, funds, choses in action, and any and all other forms of property,
whether real, personal or mixed and any right or interest therein.

(9) "Addendum" means the Addendum attached hereto which is incorporated herein
in its entirety.

2. PROMISE TO PAY.

(a) As to instruments drawn under or purporting to be drawn under the Credit,
which are payable in United States currency: (i) in the case of each sight
instrument, Applicant will reimburse NationsBank, at the address specified by
NationsBank to Applicant, on demand, in United States currency, the amount paid
thereon, or, if so demanded by NationsBank, upon the occurrence of an Event of
Default (defined below) will pay to NationsBank in advance the amount required
to pay the same; and (ii) in the case of each time instrument, Applicant will
pay to NationsBank, at the address specified by NationsBank to Applicant, in
United States currency, the amount thereof; on demand but in any event not
later than one business day prior to maturity of such time instrument at the
place specified by the Credit for payment.

(b) As to instruments drawn under or purporting to be drawn under the Credit,
which are payable in currency other than United States currency: (i) in the case
of each sight instrument, Applicant will reimburse NationsBank, at the address
specified by NationsBank to Applicant, on demand, in United States currency, the
equivalent of the amount paid under the instrument at NationsBank's then current
selling rate of exchange for teletransmission to the place of payment in the
currency in which such instrument is payable, or, if so demanded by NationsBank,
will pay to NationsBank, in advance, in United States currency, the equivalent
of the amount required to pay the same; and (ii) in the case of each time
instrument. Applicant will pay to NationsBank, at the address specified by
NationsBank to Applicant, on demand but in any event sufficiently in advance of
maturity of such time instrument to enable NationsBank to arrange for cover to
reach the place of payment not later than three business days prior to maturity,
the equivalent of the time instrument in United States currency at NationsBank's
then current selling rate of exchange for teletransmission to the place of
payment in the currency in which such instrument is payable. If for any cause
whatsoever there exists at the time in question no rate of exchange generally
current for effecting transfers as above described, or such currency is not
available for purchase by NationsBank, Applicant agrees to pay NationsBank on
demand, at NationsBank's election, (i) an amount in United States currency
equivalent to the actual cost to NationsBank of settlement of NationsBank's
obligation to the holder of the instrument or other person, however and whenever
such settlement shall be made by NationsBank, or (ii) an amount in United States
currency equivalent to the estimated cost to NationsBank, as projected by
NationsBank, of the future settlement of NationsBank's obligation to the holder
of the instrument or other person, provided that upon the actual settlement of
NationsBank's obligation, however and whenever occurring, NationsBank shall
reimburse Applicant or Applicant shall pay to NationsBank, as the case may be,
an amount in United States currency equal to the difference between the initial
estimated payment by Applicant to NationsBank and the actual settlement amount
paid by NationsBank.

3. PROMISE TO PAY INTEREST AND FEES.

(a) Applicant will pay NationsBank, on demand: (i) NationsBank's fees set forth
in the Addendum, (ii) unless expressly provided otherwise in the Application,
all charges and expenses paid or incurred by NationsBank in connection with the
Credit, including, without limitation, reasonable attorneys' fees for the
enforcement of any rights hereunder, and (iii) interest on any amounts due by
Applicant to NationsBank hereunder from the date due to the date of payment at
the Applicable Interest Rate.

(b) No provision of the Agreement shall require the payment or permit the
collection of interest in excess of the maximum rate permitted by applicable
law.

4. CLEAN ADVANCES.

5. UNIFORM CUSTOMS AND PRACTICE.

<PAGE> 4

6. LICENSES AND COMPLIANCE.

7. INSURANCE.

8. DEFAULT.

(a) In the event of the happening of any one or more of the following events
(any such event being hereinafter called an "Event of Default"), namely: (i)
the nonpayment of any obligations of Applicant to NationsBank (under the
Agreement or otherwise), or to any other person or entity, now or hereinafter
existing, when due, or (ii) the failure of Applicant to perform or observe any
other term or covenant of the Agreement, or (iii) the dissolution or termination
of existence of Applicant, or (iv) the institution by or against Applicant or
any proceeding seeking to adjudicate Applicant a bankrupt or insolvent, or
seeking liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of Applicant or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a receiver,
trustee, custodian, or other similar official for Applicant or for any
substantial part of its property, or (v) any seizure, vesting or intervention by
or under authority of a government by which the management of Applicant is
displaced or its authority in the control of its business is curtailed, or (vi)
the attachment of or restraint as to any funds or other property which may be
in, or come into, the possession or control of NationsBank, or of any third
party acting on NationsBank's behalf, for the account or benefit of Applicant,
or the issuance of any order of court or other legal process against the same,
or (vii) the occurrence of any of the above events with respect to any person or
entity which has guaranteed any obligations of Applicant to NationsBank (under
the Agreement or otherwise); then, or at any time after the happening of such
event, the amount of the Credit, as well as any and all other obligations of
Applicant under the Agreement, shall, at NationsBank's option, and whether or
not otherwise then due and payable, become due and payable immediately without
demand upon or notice to Applicant.

(b) Upon the occurrence and during the continuance of any Event of Default,
NationsBank is hereby authorized to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by NationsBank or any subsidiary or
affiliate of NationsBank to or for the credit or the account of Applicant
against any and all of Applicant's obligations to NationsBank under the
Agreement, irrespective of whether or not NationsBank shall have made any
demand under the Agreement and although such deposits, indebtedness or
obligations may be unmatured or contingent. NationsBank's rights under this
Section 8(b) are in addition to other rights and remedies (including, without
limitation, other rights of set-off) which NationsBank may have.

9. SECURITY.

(a) As collateral for the payment of any and all obligations of Applicant to
NationsBank under the Agreement, Applicant hereby grants to NationsBank a
security interest in (i) any and all documents of title, policies or
certificates of insurance and other documents accompanying or related to
instruments drawn under the Credit, and any and all other property shipped
under or in connection with the Credit or in any way related thereto or to any
of the instruments drawn thereunder (whether or not such documents or property
are released to or upon the order of Applicant in trust or otherwise) and (ii)
any and all proceeds and products of the foregoing. Also to secure the payment
of any and all obligations of Applicant under the Agreement, NationsBank shall
be subrogated to the rights (but shall have none of the obligations) of
Applicant in respect of any transaction to which the Credit relates. Insofar
as any property which may be held by NationsBank, or for NationsBank's account,
as collateral hereunder may be released to or upon the order of Applicant.
Applicant hereby acknowledges that such delivery of property is in trust
pending satisfaction of Applicant's payment obligations to NationsBank, and
hereby agrees to execute and/or file such receipts, agreements, forms or other
documents as NationsBank may request to further evidence NationsBank's
interests in such property, it being understood that NationsBank's rights as
specified therein shall be in furtherance of and in addition to (but not in
limitation of) NationsBank's rights hereunder. NationsBank is hereby
authorized, at its option at any time and with or without notice to Applicant,
to transfer to or register in its name or the name of any NationsBank's
nominees all or any part of the property subject to any of the security
interests granted under or contemplated by the Agreement. NationsBank is also
authorized, at its option, to file financing statements without the signature
of Applicant with respect to all or any part of such property. Applicant will
pay the cost of any such filing and, upon NationsBank's request, sign such
instruments, documents or other papers, and take such other action, as
NationsBank may reasonably require to perfect such security interests.

(b) If any Event of Default shall have occurred and be continuing, NationsBank
may exercise in respect of the property subject to any of the security
interests granted under or contemplated by the Agreement all the rights and
remedies of a secured party on default under the applicable Uniform Commercial
Code or any other applicable law, and also may, without notice except as
specified below, sell such property or any part thereof in one or more parcels
at public or private sale, at any NationsBank office or elsewhere, for cash,
on credit or for future delivery, and upon such other terms as NationsBank may
deem commercially reasonable. To the extent notice of sale of such property
shall be required by law, reasonable notification shall be satisfied by written
notice mailed or delivered to Applicant at the address specified about at least
ten business days prior to the date of public sale or prior to the date after
which private sale is to be made. Applicant will pay to NationsBank on demand
all costs and expenses (including, without limitation, reasonable attorney's
fees and legal expenses) related or incidental to the custody, preservation or
sale of, or collection from, or other realization upon, any of such property
or related or incidental to the establishment, preservation or enforcement of
NationsBank's rights in respect of any such property. In the event of sale
of, collection from, or other realization upon all or any part of such
property. NationsBank may, in its discretion, hold the proceeds thereof as
additional collateral hereunder or when or at any time thereafter apply the
proceeds thereof to the payment of such of the costs and expenses referred to
above and such of the obligations of Applicant under the Agreement, whether or
not then due, as NationsBank may determine in its discretion, any surplus to be
paid over to Applicant or to whomever may be lawfully entitled to receive such
surplus.

10. INDEMNITY.

Applicant will indemnify and hold NationsBank (such term to include for purposes
of this paragraph NationsBank's affiliates and its and its affiliates'
officers, directors, employees and agents) harmless from and against (i) all
loss or damage arising out of NationsBank's issuance of, or any other action
taken by NationsBank in connection with, the Credit other than loss or damage
resulting from the gross negligence or willful misconduct of the party seeking
and modification, and (ii) all costs and expenses (including reasonable
attorney's fees and legal expenses) of all claims or legal proceedings arising
out of NationsBank's issuance of the Credit or incident to the collection of
amounts owed by Applicant hereunder or the enforcement of NationsBank's rights
hereunder, including, without limitation, legal proceedings related to any
court order, injunction, or other process or decree restraining or seeking to
restrain NationsBank from paying any amount under the Credit. Additionally,
Applicant will indemnify and hold NationsBank harmless from and against all
claims, losses, damages, suits, costs or expenses arising out of Applicant's
failure to timely procure licenses or comply with applicable laws, regulations
or rules, or any other conduct or failure of Applicant relating to or affecting
the Credit.

<PAGE> 5
11. EFFECT OF WAIVERS

12. FINANCIAL INSTITUTION APPLICANT

13. MISCELLANEOUS.

(a) Any notice from NationsBank to Applicant shall be deemed given when given
in accordance with the Addendum.

(d) Any and all payments made to NationsBank hereunder shall be made free and
clear of and without deduction for any present or future taxes, levies,
imposts, deductions, charges, or withholdings, and all liabilities with respect
thereto, excluding taxes imposed on net income and all income and franchise
taxes of the United States and any political subdivisions thereof (such
nonexcluded taxes being herein called "Taxes). If Applicant shall be required
by law to deduct any Taxes from or in respect of any sum payable hereunder, (i)
the sum payable shall be increased as may be necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section 13(d)), NationsBank shall receive an amount equal to the sum
NationsBank would have received had no such deductions been made, (ii)
Applicant shall make such deductions, and (iii) Applicant shall pay the full
amount deducted to the relevant authority in accordance with applicable law.
Applicant will indemnify NationsBank for the full amount of Taxes (including,
without limitation, any Taxes imposed by any jurisdiction on amounts payable
under this Section 13(d)) paid by NationsBank and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto,
whether or not such Taxes were correctly or legally asserted. The
indemnification shall be made within 30 days from the date NationsBank makes
written demand therefor. Within 30 days after the date of any payment of Taxes,
Applicant will furnish to NationsBank the original or a certified copy of a
receipt evidencing payment thereof.

14. JURISDICTION AND WAIVER.

Applicant hereby irrevocably submits to the non-exclusive jurisdiction of any
State or Federal court sitting in the city, county, or district in Dallas
County Texas over any action or proceeding arising out of or relating to the
Agreement, and Applicant hereby irrevocably agrees that all claims in respect
to such action or proceeding may be heard and determined in such State or
Federal court. APPLICANT HEREBY IRREVOCABLY WAIVES TO THE FULLEST EXTENT IT MAY
EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF
SUCH ACTION OR PROCEEDING AND THE LACK OF PERSONAL JURISDICTION. TO THE FULLEST
EXTENT IT MAY LAWFULLY AND EFFECTIVELY DO SO, EACH OF APPLICANT AND NATIONSBANK
WAIVES THE RIGHT TO TRIAL BY JURY. Applicant irrevocably consents to the
service of any and all process in any such action or proceeding by the mailing
of copies of such process to Applicant at the last business address furnished
by Applicant to NationsBank. Applicant agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing, however, in this Section 14, shall affect the right of NationsBank to
serve legal process in any other manner permitted by law or affect the right of
NationsBank to bring any action or proceeding against Applicant or its property
in the courts of any other jurisdiction. Moreover, to the extent that Applicant
has or hereafter may acquire any immunity from jurisdiction of any court or
from any legal process (whether through service or notice, attachment prior to
judgment, attachment in aid of execution or otherwise) with respect to itself
or its property, Applicant hereby irrevocably waives such immunity in respect
of its obligations under the Agreement.

15. FINAL AGREEMENT.

<PAGE> 6
ADDENDUM
TO
AMENDED AND RESTATED
APPLICATION AND AGREEMENT
FOR STANDBY LETTER OF CREDIT

3. Notwithstanding anything contained to the contrary herein:

(a) Applicant shall reimburse NationsBank for each draw
(whether partial or full) under the Letter of Credit immediately after
the payment of such draw by NationsBank; and

<PAGE> 7

5. INDEMNIFICATION; EXONERATION.

(b) Assumption of Risk by Applicant. As between Applicant
and NationsBank, Applicant assumes all risks of the acts and omissions
of, or misuse of the Letter of Credit by, the beneficiary of the Letter
of Credit. In furtherance and not in limitation of the foregoing,
NationsBank shall not be responsible:

(i) for the form, validity, sufficiency, accuracy,
genuineness or legal effect of any document submitted by any party in
connection with the application for and issuance of the Letter of
Credit, even if it should in fact prove to be in any or all respects
invalid, insufficient, inaccurate, fraudulent or forged; and

(ii) for the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer or
assign the Letter of Credit or the rights or benefits thereunder or
proceeds thereof, in whole or in part, which may prove to be invalid or
ineffective for any reason; and

(iii) so long as the documentation delivered to
NationsBank conforms on its face to the requirements of the applicable
Letter of Credit, for failure to the beneficiary of the Letter of Credit
to comply duly with conditions required in order to draw upon such
Letter of Credit; and

(iv) for errors, omissions, interruptions or delays
in transmission or delivery of any messages, by mail, cable, telegraph,
telex or otherwise, whether or not they be in cipher, except for errors
caused by the gross negligence or willful misconduct of NationsBank; and

(v) for errors in interpretation of technical
terms, except for errors caused by the gross negligence or willful
misconduct of NationsBank; and

(vii) for the misapplication by the beneficiary of
the Letter of Credit of the proceeds of any drawing under such Letter of
Credit; and
<PAGE> 8
(viii) for any consequences arising from causes beyond the
control of NationsBank.

None of the above shall affect, impair, or prevent the vesting of
any of NationsBank's rights or powers under this Section.

If to Applicant:

UNITED DENTAL CARE, INC.
14755 Preston Road
Suite 300
Dallas, Texas 75240
Attn: Mark E. Pape
Telecopy No.: (214) 458-7963

If to NationsBank:

NATIONSBANK OF TEXAS, N.A.
901 Main Street, 7th Floor
P.O. Box 831000
Dallas, Texas 75283-1000
Attn: Brian Schneider
Telecopy No.: (214) 508-3139

IRREVOCABLE LETTER OF CREDIT
----------------------------

Beneficiary:

Omega Marine Development, Inc.
c/o Paul C. Nettinga
470 Camino Elevado
Bonita, California 92002

Issue Date: September 16, 1994
Amount: $756,242.00
Irrevocable Letter of Credit No. 142716
Effective Date: September 16, 1994
Expiry Date: September 16, 1998

Gentlemen/Ladies:

For the account of our client, United Dental Care, Inc. (the "Account
Party"), we hereby open our irrevocable Letter of Credit (the "Credit") in
your favor for an amount not to exceed in the aggregate SEVEN HUNDRED FIFTY-SIX
THOUSAND TWO HUNDRED FORTY-TWO AND 00/100 DOLLARS ($756,242.00) effective
September 16, 1994 and expiring on September 16, 1998, at 5:00 p.m. Dallas,
Texas time (the "Expiry Date"). The Maximum Amount Available (herein so
called) under this Credit shall be the following amounts during the following
periods (less the amount of any prior draws hereunder): $756,242.00 until but
excluding January 31, 1995; $645,061.00 on January 31, 1995 and thereafter,
until but excluding January 31, 1996; $528,321.00 on January 31, 1996 and
thereafter, until but excluding January 31, 1997; $405,775.00 on January 31,
1997 and thereafter, until but excluding January 31, 1998; and $277,038.00 on
January 31, 1998 and thereafter, until and including the Expiry Date. The
amount available under this Credit shall be available by your draft in the
form of Exhibit A hereto drawn on us at sight bearing the clause "Drawn under
NationsBank of Texas, N.A. Irrevocable Letter of Credit No. 142716, "and
accompanied by an executed certificate in the form of Exhibit B hereto (with
blanks completed), each executed by the Beneficiary, which exhibits are
incorporated herein by reference as though set forth in full herein. The
original of this Credit must accompany any drawing presented to us hereunder.

<PAGE> 10

This Credit sets forth in full our undertaking to you. This Credit
and the exhibits hereto shall not be in any way modified, amended, amplified or
limited by reference to any documents, instruments, or agreements referred to
herein, except only any certificates and drafts referred to herein; and any
such reference to any such documents, instruments or agreements shall not be
deemed to incorporate herein by reference any document, instrument or
agreement, except for any such certificates or drafts. It is agreed by all
parties hereto that the references to any non-competition agreement or
consulting agreement in Exhibit B are for identification purposes only, and the
references shall not be construed in any manner to require us to inquire into
their terms and conditions or as to whether any or all parties thereto have
adequately performed.

Sincerely,

NATIONSBANK OF TEXAS, N.A.

By:
--------------------------------
Name:
---------------------------
Title:
--------------------------

<PAGE> 11
EXHIBIT A

_____________________, _______
city state

_______________, 199__

DRAFT DRAWN UNDER NATIONSBANK OF TEXAS, N.A., DALLAS, TEXAS
IRREVOCABLE LETTER OF CREDIT NO. 142716

at sight:

PAY TO _________________________________________________________________________

U.S $___________________________________________________________________________

FOR VALUE RECEIVED AND CHARGE TO ACCOUNT OF THE ABOVE-REFERENCED LETTER OF
CREDIT.

_____________________________
Beneficiary

*BY FEDERAL FUNDS WIRE TRANSFER
TO CREDIT ACCOUNT NO. ________________
AT____________________________________
IN THE NAME OF _______________________

<PAGE> 12
EXHIBIT B

CERTIFICATE OF DRAW REQUEST

_____________, 199_

NationsBank of Texas, N.A.
901 Main Street, 9th Floor
Letter of Credit Department
Dallas, Texas 75202

I, _______________________________________, do hereby certify:

1. _________________________________ is Beneficiary ("Beneficiary")
under NationsBank of Texas, N.A. Irrevocable Letter of Credit No. 142716 dated
September 16, 1994 (the "Credit") for the account of United Dental Care, Inc.
or its successors and assigns (the "Account Party"). Beneficiary is,
contemporaneously herewith, drawing under the Credit. All terms used herein
which are defined in the Credit have the respective meanings set forth therein.

3. The total amount which is due and payable under the Agreements is
$___________, as of __________, 199__, and the amount of draft accompanying
this Certificate does not exceed such amount.

4. The amount of the draft accompanying this Certificate does not
exceed the Maximum Amount Available to be drawn under the Credit.

Very truly yours,

--------------------------------
Beneficiary

<PAGE> 13
EXHIBIT C

INSTRUCTIONS TO TRANSFER

NationsBank of Texas, N.A.
901 Main Street, 7th Floor
Letter of Credit Department
Dallas, Texas 75202

Re: NationsBank of Texas, N.A. Irrevocable Letter of Credit
No. 142716

Gentlemen:

All terms used herein which are defined in the above-captioned
Letter of Credit used by you (the "Credit") have the respective meanings set
forth therein.

Beneficiary under the Credit hereby irrevocably instructs you
to transfer the Credit to:

------------------------------------
(Name of Transferee)

------------------------------------
(Address)

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

The Credit is returned herewith and, in accordance herewith, we
ask that this transfer be effected.

The individual signing below hereby represents that he or she
is the Beneficiary under the Credit.

Very truly yours,

--------------------------------
Beneficiary

<PAGE> 1
EXHIBIT 10.27

STOCK PURCHASE AGREEMENT

AMONG

UNITED DENTAL CARE, INC.,

AS PURCHASER,

GILBERT G. FINGER,

PATRICIA L. SCHUBRING,

EDWARD K. HALSTEAD,

BIRCHTREE ENTERPRISES

AND

BINKLEY & STEWART, P.C.

AS SELLERS

AND

INDEPENDENT DENTAL PLANS, INC.

AS OF
JUNE 28, 1996
<PAGE> 2
TABLE OF CONTENTS

<TABLE>
<S> <C> <C>
ARTICLE 1 DEFINED TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

1.1 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

ARTICLE 2 PURCHASE AND SALE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

2.1 Agreement to Sell and Purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.3 Allocation of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF EACH SELLER . . . . . . . . . . . . . . . . . . . . . . . . 2

3.1 Authority Relative to This Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3.2 Title to Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.3 Absence of Breach; No Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.4 Stock Redemption Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF SELLERS . . . . . . . . . . . . . . . . . . . . . . . . . . 3

4.1 Due Organization of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4.2 Subsidiaries/Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.3 Due Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.4 Capitalization of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.5 Licenses/Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.6 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.7 No Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.8 No Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.9 Title to and Condition of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.10 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.11 Real Property Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.12 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.13 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(a) Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(b) Dentists' Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(c) Other Provider Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(d) Employer Group Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(e) Management Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(f) Copies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.14 Employees, Et Cetera . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.15 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.16 Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
</TABLE>

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4.17 Accounts Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.18 Broker's and Finder's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.19 Labor Practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.20 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.21 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.22 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.23 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.24 Transactions With Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.25 Improper Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.26 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF PURCHASER . . . . . . . . . . . . . . . . . . . . . . . . . 15

5.1 Due Incorporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.2 Corporate Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.3 Absence of Breach; No Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.4 Investment Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.5 Broker's or Finder's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

ARTICLE 6 COVENANTS OF THE SELLERS AND THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

6.1 Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.2 Access and Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.3 No Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.4 Conduct of Business Prior to Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.5 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.6 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.7 Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.8 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.9 Breach of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.10 No Transfer of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.11 Updating of Exhibits and Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

ARTICLE 7 COVENANTS OF PURCHASER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

7.1 Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.2 Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.3 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.4 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.5 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.6 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

ARTICLE 8 CONDITIONS TO OBLIGATIONS OF SELLERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

8.1 Conditions to Obligations of Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
</TABLE>

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ARTICLE 9 CONDITIONS TO OBLIGATIONS OF PURCHASER . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

9.1 Conditions To Obligations of Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

ARTICLE 10 CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

10.1 Date of Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
10.2 Actions by Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(a) Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(b) Consulting/Employment Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(c) Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(d) Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
10.3 Actions by Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(a) Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(b) Consulting/Employment Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(c) Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

ARTICLE 11 SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNITY; POST-CLOSING MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

11.1 Representations and Warranties to Survive . . . . . . . . . . . . . . . . . . . . . . . . . . 27
11.2 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(a) Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(b) Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
11.3 Indemnity Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
11.4 Limitations on Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(a) General Threshold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(b) Time Limits for Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(c) Certain Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
11.5 Remedies; Default; Notice and Cure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
11.6 Severance Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
11.7 Change of Control Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

ARTICLE 12 TERMINATION; WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

12.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(a) Mutual Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(b) By Purchaser or Sellers: Condition Precedent . . . . . . . . . . . . . . . . . . . . . 31
(c) By Purchaser or Sellers: Representations, Warranties and Covenants . . . . . . . . . . 31
12.2 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
</TABLE>

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ARTICLE 13 CERTAIN DEFINED TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

13.1 Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
13.2 Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
13.3 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
13.4 Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
13.5 Closing Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
13.6 Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
13.7 Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
13.8 Counsel to Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
13.9 Counsel to Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
13.10 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
13.11 GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
13.12 Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
13.13 Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
13.14 Multiemployer Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
13.15 Payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
13.16 PBGC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
13.17 Pension Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
13.18 Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
13.19 Welfare Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

ARTICLE 14 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

14.1 Further Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
14.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
14.3 Entire Agreement; Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
14.4 Binding Effect/Assignability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
14.5 Exhibits/Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
14.6 Invalid Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
14.7 Headings/Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
14.8 Waiver; Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
14.9 Consent to Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
14.10 Time. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
14.11 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
14.12 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
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LIST OF EXHIBITS

Exhibit A - Share Ownership of Sellers
Exhibit B-1 - Schubring Consulting Agreement
Exhibit B-2 - Halstead Consulting Agreement
Exhibit C-1 - Schubring Employment Agreement
Exhibit C-2 - Halstead Employment Agreement
Exhibit D - Form of Opinion of Counsel for Sellers
Exhibit E - Release

LIST OF SCHEDULES

Schedule 4.1 - States Where Company Qualified
Schedule 4.5 - Licenses, Etc.
Schedule 4.6 - Financial Statements
Schedule 4.7 - Adverse Changes
Schedule 4.8 - Undisclosed Liabilities
Schedule 4.9 - Title Encumbrances
Schedule 4.10 - Litigation
Schedule 4.11 - Real Property Leases
Schedule 4.12 - Intellectual Property
Schedule 4.13A - Material Contracts
Schedule 4.13B - Dental Provider Contracts
Schedule 4.13D - Employer Group Contracts
Schedule 4.13E - Management Contracts
Schedule 4.14 - Employees, Etc.
Schedule 4.15 - Employee Benefit Plans
Schedule 4.16 - Receivables
Schedule 4.17 - Payables
Schedule 4.20 - Insurance
Schedule 4.21 - Consents
Schedule 4.22 - Environmental Matters
Schedule 4.23 - Taxes
Schedule 4.24 - Transactions with Affiliates

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STOCK PURCHASE AGREEMENT

This Stock Purchase Agreement (this "Agreement") is made as of the
28th day of June, 1996 (the "Effective Date") by and among United Dental Care,
Inc., a Delaware corporation ("Purchaser"), Gilbert G. Finger ("Finger"),
Patricia L. Schubring ("Schubring"), Edward K. Halstead ("Halstead"), Birchtree
Enterprises, a Michigan corporation ("Birchtree"), and Binkley & Stewart, P.C.,
a Michigan professional corporation ("Binkley"), (Finger, Schubring, Halstead,
Birchtree and Binkley are collectively referred to herein as the "Sellers" and
individually as a "Seller") and Independent Dental Plans, Inc., a Michigan
corporation ("IDP") (IDP being sometimes also referred to herein as the
"Company").

WHEREAS, the Sellers each own the respective number of shares of
Common Stock of IDP set forth in Exhibit A (all of such shares being
collectively referred to herein as the "Shares"); and

WHEREAS, the Shares represent all of the issued and outstanding shares
of capital stock of IDP; and

WHEREAS, the Sellers represent all the stockholders of IDP; and

WHEREAS, subject to the terms and conditions hereinafter set forth,
the Sellers desire to sell to the Purchaser, and the Purchaser desires to
purchase from the Sellers, the Shares;

NOW, THEREFORE, in consideration of the premises and the mutual terms
and conditions herein contained, the parties hereby agree as follows:

ARTICLE 1
DEFINED TERMS/SCHEDULES

1.1 Defined Terms. As used in this Agreement, capitalized terms
shall have the meanings expressly set forth herein for such terms, and variants
and derivatives of such defined terms shall have correlative meanings. To the
extent that certain of the defined terms set forth herein express agreements
between or among parties to this Agreement, the parties agree to the same by
execution of this Agreement.

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correct copies of the originals of all such agreements and documents. Each
Schedule and the agreements and documents expressly listed in each Schedule
shall be considered a part hereof as if set forth herein in full; provided,
however, that the representations and warranties of Sellers set forth in this
Agreement shall not be affected or deemed modified, waived or limited in any
respect by the information provided in the Schedules or contained in any
agreement or document listed or referenced in the Schedules unless and only to
the extent that any qualification, modification, exception or limitation to any
representation and warranty of the Sellers is expressly set forth on the face
of a Schedule.

ARTICLE 2
PURCHASE AND SALE

2.1 Agreement to Sell and Purchase. Subject to the terms and
conditions of this Agreement and in reliance on the representations, warranties
and covenants herein set forth, at the Closing the Sellers shall sell to
Purchaser, and Purchaser shall purchase from the Sellers, the Shares, free and
clear of any and all liens, claims, options, charges, pledges, security
interests, voting agreements or trusts, encumbrances or other restrictions or
interests of any kind or nature whatsoever (collectively, "Claims").

2.2 Purchase Price. Subject to the terms and conditions of this
Agreement and in reliance on the representations, warranties and covenants
herein set forth, the Purchaser shall pay at the Closing, by certified or
cashier's check (or by wire transfer in accordance with Sellers' directions
given to Purchaser not less than two (2) business days prior to the Closing
Date), as consideration for the Shares, an aggregate purchase price in an
amount equal to One Million Two Hundred Thousand Dollars ($1,200,000) (the
"Purchase Price").

2.3 Allocation of Purchase Price. The Purchase Price shall be
allocated and payable to each Seller in accordance with the respective
percentage of the Shares owned by each Seller as shown on Exhibit A.

ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF EACH SELLER

Each Seller, severally and not jointly, represents and warrants to
Purchaser that, as of the Effective Date and as of the Closing Date:

3.1 Authority Relative to This Agreement. This Agreement has been
duly and validly executed and delivered by the Seller and constitutes a valid
and binding agreement of the Seller enforceable in accordance with its terms.
The other agreements to be executed and delivered by the Seller pursuant to
this Agreement will be valid and binding agreements of the Seller enforceable
in accordance with their respective terms when so executed and delivered by the
Seller. The Seller has all requisite power and authority to enter into this
Agreement and the

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execution, delivery and performance of this Agreement by the Seller has been
duly authorized by all requisite action on the part of the Seller.

3.2 Title to Stock. Each Seller is the unconditional sole legal,
beneficial, record and equitable owner of the Shares, free and clear of any and
all Claims. At the Closing, each Seller will convey to Purchaser valid and
marketable title to the Shares owned by each Seller as set forth on Exhibit A
free and clear of any and all Claims.

3.3 Absence of Breach; No Consent. The execution, delivery, and
performance of this Agreement and the other agreements to be executed and
delivered pursuant to this Agreement by the Seller does not and will not: (i)
contravene any order, writ, judgment, injunction, decree, determination, or
award of any court or other authority which affects or binds the Seller or the
Shares owned by such Seller, (ii) conflict with or result in a breach of or
default under any indenture, loan or credit agreement or any other agreement or
instrument to which the Seller is a party or by which the Seller or the Shares
are bound, or (iii) except for the consents reflected in Schedule 4.21, require
the authorization, consent, approval or license of any third party or entity.

3.4 Stock Redemption Agreement. Each Seller hereby consents to
the transfer of the Shares by the Sellers to the Purchaser pursuant to this
Agreement and represents, warrants and agrees that (i) the provisions of that
certain Stock Redemption Agreement executed in 1992 by and between IDP and the
Sellers shall not apply to the transfer of the Shares pursuant to this
Agreement which shall not be in violation of such Stock Redemption Agreement,
(ii) that neither IDP nor any Seller shall have any options or rights under
such Stock Redemption Agreement with respect to or arising because of the
transfer of the Shares pursuant to his Agreement and (iii) the Stock Redemption
Agreement shall terminate in all respects simultaneously with the Closing and
shall be of no force or effect with respect to the transfer of the Shares at
the Closing pursuant to this Agreement or thereafter.

ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLERS

In addition to the representations and warranties made in Article 3, the
Sellers, jointly and severally, represent and warrant to Purchaser that, as of
the Effective Date and as of the Closing Date:

4.1 Due Organization of the Company. IDP is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Michigan with all requisite corporate power and authority to conduct its
business as now being conducted. The Company is duly qualified and in good
standing as a foreign corporation authorized to do business in each
jurisdiction where the failure to be so authorized would have a material
adverse effect on the business or operations of the Company. Schedule 4.1 is a
complete and accurate list of all jurisdictions in which the Company is so
authorized. Sellers have delivered to Purchaser complete and correct copies of
the articles of incorporation and bylaws of the Company as

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amended to and in effect on the Effective Date. The Company is not in
violation of any term or provision of its articles of incorporation or bylaws.

4.2 Subsidiaries/Investments. The Company has no subsidiaries,
whether direct or indirect. The Company has no equity interest or investment
in, and does not possesses any other right or obligation to purchase any equity
or other investment in, and is not a partner of or joint venturer with, any
other person or entity.

4.3 Due Authorization. Except for the consents reflected on
Schedule 4.21, the execution and delivery of this Agreement and the performance
of the transactions contemplated by this Agreement and all other instruments,
agreements, certificates and documents contemplated hereby to which either the
Sellers and the Company are or will be a party does not, on the date hereof,
and will not, on the Closing Date, (i) violate any decree or judgment of any
court or governmental authority which may be applicable to the Company or any
Subsidiary; (ii) to the knowledge of the Sellers, violate any law, rule or
regulation, or any decree or judgment of any court or governmental authority
binding on the Company; (iii) violate or conflict with, or result in a breach
of, or constitute a default (or an event which, with or without notice or lapse
of time or both, would constitute a default) under, or permit cancellation of,
or result in the creation of any encumbrance upon, any of the Shares or any of
the assets of the Company under any of the terms, conditions, or provisions of
any contract, lease, sales order, purchase order, indenture, mortgage, note,
bond, instrument, license or other agreement to which the Company is a party,
or by which the Company or its assets is bound; (iv) permit the acceleration of
the maturity of any indebtedness of the Company; (v) violate or conflict with
any provision of the articles of incorporation or bylaws of the Company and
(vi) has been duly authorized by all requisite corporate action of the Company.

4.4 Capitalization of the Company. The authorized capital stock
of IDP consists of fifty thousand (50,000) shares of common stock, $1.00 par
value per share, of which 4,445 shares are validly issued and outstanding,
fully paid and nonassessable. All of the outstanding shares of capital stock
of IDP are owned beneficially and of record by the Sellers. The Company has
provided to the Purchaser a correct and complete copy of the stock register of
the Company listing all stockholders of the Company, the outstanding share
certificates and the total number of shares issued to each stockholder of the
Company. The Company has no other capital stock authorized for issuance and
has no treasury shares. There are no outstanding options, warrants,
convertible instruments, or other rights, agreements, or commitments to issue
or acquire any shares of common stock or any other security constituting, or
convertible or exchangeable into, capital stock of the Company. Since the date
of the Company Balance Sheet (as defined in Section 4.6 below), no shares of
the Company's capital stock, no options, warrants, or other rights, agreements,
or commitments (contingent or otherwise) obligating the Company to issue shares
of capital stock, and no other securities or instruments convertible or
exchangeable into shares of capital stock, have been executed or issued by the
Company. The Company has not granted and is not a party to any agreement
granting preemptive rights, rights of first refusal, or registration rights
with respect to its outstanding capital stock or any capital stock of the
Company to be issued in the future. The Company is not bound by any exclusive

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<PAGE> 11
agency or indemnity agreement applicable to the issuance of shares of its
capital stock after the Effective Date.

4.5 Licenses/Compliance with Law. The Company has the lawful
authority and all federal, state or local governmental authorizations,
certificates of authority, licenses or permits necessary for or required to
conduct its respective business operations as such are presently being
conducted. Schedule 4.5 contains a list and description of all authorizations,
certificates of authority, licenses and permits, including those granted or
derived from governmental sources, issued or granted to the Company. The
Company is licensed to own and operate prepaid dental plans in the state of
Michigan and the states listed in Schedule 4.5. For the proper conduct of its
business, the Company is not required to obtain any additional certificates of
authority, permits, licenses or similar authorizations from any governmental
authority other than has already obtained as listed on Schedule 4.5. There are
no pending or, to the knowledge of the Sellers, threatened legal,
administrative, arbitration or other actions, notices, or proceedings nor any
pending or, to the knowledge of the Sellers, threatened governmental
investigations by any federal, state or local government or any subdivision
thereof or by any public or private group which assert or allege any violation
of or non- compliance with any governmental requirements or which would have
the effect of limiting, prohibiting or changing the business operations of the
Company as authorized by the authorizations, certificates of authority,
licenses and permits set forth on Schedule 4.5 and as presently conducted by
the Company. The Company maintains statutory reserves that satisfy the
requirements of all applicable governmental laws, rules and regulations. The
Company has made all filings with governmental agencies required for the
conduct of its respective business including, without limitation, all annual
reports and, all holding company statements required to be filed with insurance
or similar regulatory agencies and all filings required to sell the prepaid
dental benefit plans and coverage offered by the Company on the Effective Date.
There are no judgments against the Company, and no orders, rules, consent
decrees or injunctions of any court, governmental department, commission,
agency or instrumentality by which the Company is bound or to which the Company
is subject. The Company has not entered into or is subject to any judgment,
consent decree, compliance order or administrative order with respect to any
insurance or other similar law or received any request for information, notice,
demand letter, administrative inquiry or formal or informal complaint or claim
with respect to any insurance or other similar law or the enforcement of any
such law. Neither the Company's operations nor any of the assets owned,
leased, occupied or used by the Company in the operation of its business
materially violates or fails to comply in any material respect with any
applicable federal, state or local insurance, health maintenance organization,
or prepaid dental plan codes, laws, rules or regulations or, to the knowledge
of Sellers, federal, state or local health, fire, environmental, safety,
zoning, building or other codes, laws, rules or regulations, and the Company
has not received any notice of alleged violations thereof.

4.6 Financial Statements. The Company has delivered to Purchaser
a copy of (i) the audited financial statements of IDP as of December 31, 1995
consisting of a balance sheet at such date, and the related statements of
income, changes in stockholders' equity and cash flow for the applicable twelve
(12) month period then ended and (ii) unaudited financial statements of IDP as
of May 31, 1996 (the "Balance Sheet Date") consisting of a balance sheet of IDP
at

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<PAGE> 12
such date (the "Company Balance Sheet") and the related statements of income,
changes in stockholders' equity and cash flow for the applicable month and
year-to-date period then ended. Complete and accurate copies of such financial
statements are attached hereto as Schedule 4.6 (the "Financial Statements").
The Financial Statements present fairly in all material respects the financial
position of the Company, and the results of the operations, changes in
stockholders' equity and cash flows of the Company, as of the respective dates
thereof and for the respective periods covered thereby, in conformity with
generally accepted accounting principles ("GAAP"). Except as set forth in the
Company Balance Sheet included in the Financial Statements, as of the Balance
Sheet Date there were no liabilities, debts, claims or obligations, whether
accrued, absolute, contingent or otherwise, whether due or to become due, which
are required by GAAP to be set forth in a balance sheet of the Company which
have not been so set forth in the Company Balance Sheet. The Financial
Statements were prepared from the books and records of the Company. There are
no assets shown on the Company Balance Sheet which are valued thereon at an
amount materially in excess of their fair value as of the Balance Sheet Date.
At the Balance Sheet Date, the Company owned each of the assets included in the
Company Balance Sheet. From the date hereof through the Closing Date, the
Company will continue to prepare monthly and year-to-date unaudited financial
statements on the same basis and will promptly deliver the same to Purchaser.
The foregoing representations will be applicable to all such monthly unaudited
financial statements so prepared and delivered; provided, however, that such
unaudited financial statements shall be subject to normal year-end adjustments,
none of which will be material.

4.7 No Adverse Change. Except as set forth on Schedule 4.7, since
the Balance Sheet Date, the business of the Company has been conducted only in
the ordinary course and there has not been (i) any material adverse change in
the financial condition, business, properties, assets, or results of operations
of the Company (financial or otherwise) exclusive of any general economic
factors affecting the prepaid dental plan industry in general; (ii) any
material loss or damage (whether or not covered by insurance) to any of the
assets of the Company which materially affects or impairs the ability of the
Company to conduct its business as previously conducted or any other event or
condition of any character which has materially and adversely affected the
business or operations of the Company; (iii) the attaching, placing or granting
of, or the agreement to attach, place or grant, any encumbrance on any of the
assets of the Company; (iv) any sale or transfer of any material portion of the
assets of the Company; (v) any material changes in the terms of any contract of
the Company; (vi) any material change in the accounting systems, policies or
practices of the Company; (vii) any waiver by or on behalf of the Company of
any rights which have any material value; (viii) no taking under condemnation
or right of eminent domain of any of the assets of the Company; (ix) any entry
into or termination of any material commitment, contract, agreement, or
transaction (including, without limitation, any material borrowing or capital
expenditure or sale or other disposition of any material assets) by the
Company; (x) any redemption, repurchase, or other acquisition of any of its
capital stock by the Company, or any issuance of capital stock of the Company
or of securities convertible into or rights to acquire any such capital stock;
(xi) any dividend or distribution declared, set aside or paid on capital stock
of the Company; (xii) any transfer or right granted by the Company of or under
any material lease, license, agreement, patent, trademark, trade name, service
mark or copyright; (xiii) any sale or other disposition of any

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<PAGE> 13
material asset of the Company, or any mortgage, pledge, or imposition of any
lien or other encumbrance on any material asset of the Company, or any
agreement relating to or contemplating any of the foregoing not in the ordinary
and usual course of business; (xiv) any default or breach by the Company in any
material respect under any contract, license, or permit; or (xv) any material
increase in the statutory reserves required to be maintained by the Company.
Since the Balance Sheet Date, the Company has conducted its business only in
the ordinary and usual course of business and, without limiting the foregoing,
no changes have been made in (i) employee compensation levels, (ii) the manner
in which employees of the Company are compensated, (iii) supplemental benefits
provided to any employees, or (iv) the employment of any employees of the
Company.

4.8 No Undisclosed Liabilities. True and correct copies of all
notes, agreements or other documents evidencing the outstanding debt of the
Company, as amended to and in effect on the Effective Date, have been delivered
to Purchaser by the Company. The Company has no liabilities which are not
adequately reflected or reserved against on the face of the Company Balance
Sheet, except liabilities incurred since the Balance Sheet Date in the ordinary
course of business consistent with past practice which, in the aggregate, would
not have a material adverse effect on the condition (financial or otherwise),
assets or business of the Company. Schedule 4.8 hereto sets forth each
liability of the Company in an amount in excess of $10,000 and each person to
whom the aggregate amount of liabilities owed to such person by the Company
exceeds $10,000.

4.9 Title to and Condition of Properties. Except as disclosed in
Schedule 4.09 hereto, the Company has good, marketable, and insurable title, or
valid, effective and continuing leasehold rights in the case of leased
property, to all of the assets reflected on the Company Balance Sheet and all
personal property owned or leased by it or used by it in the conduct of its
business in such a manner as to create the appearance or reasonable expectation
that the same is owned or leased by it, free and clear of all liens, security
interests, restrictions, claims, encumbrances, and charges except as disclosed
in Schedule 4.9. The Sellers do not know of any potential action or assertion
of rights, including condemnation, by any party, governmental or other, and no
proceedings with respect thereto have been instituted of which any Seller or
the Company has notice, that would materially affect the ability of the Company
to utilize each of such assets in its business. The Company has not received
any notices of default or other violations from any mortgagee regarding any
properties leased by the Company. Schedule 4.9 hereto contains a detailed
listing of all material assets of the Company. The assets now owned by the
Company constitute all assets reasonably necessary to enable Purchaser to
conduct the business and operations of the Company on substantially the same
terms as such business has been conducted historically. Except as disclosed in
Schedule 4.9, all such assets are well maintained and in good operating
condition, except for normal wear and tear.

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<PAGE> 14
or grievances or union recognition) pending or, to the knowledge of the
Sellers, threatened against or affecting the Company to which the Company is a
party, at law or in equity, before any federal, state, or municipal court or
other governmental department, commission, board, bureau, agency, or
instrumentality. The Company is not now, and has not been, a party to any
injunction, order or decree restricting the method of the conduct of its
business or the marketing of any of its products or services.

4.11 Real Property Leases . Schedule 4.11 lists all leases of real
property to which the Company is a party (the "Real Property Leases").
Accurate and complete copies of the Real Property Leases, as amended to the
Effective Date, have been delivered to Purchaser. Except as disclosed on
Schedule 4.11, to the knowledge of the Sellers, all land, buildings, facilities
and other structures and improvements subject to the Real Property Leases are
in compliance with any applicable zoning, environmental or health laws and
regulations or any other similar law, statute, regulation or ordinance. The
Company is the lessee and in peaceful and undisturbed possession of the
property subject to the Real Property Leases. To the knowledge of the Sellers,
all covenants or other restrictions (if any) to which any of the property
leased to the Company pursuant to the Real Property Leases are being properly
performed and observed in all material respects by the Company, and the Company
has not received any notice of violation (or claimed violation) thereof which
has not been resolved. The Company has delivered to Purchaser true, correct
and complete copies of all reports or audits of any engineers, environmental
consultants or other consultants in its possession relating to any of the Real
Property Leases. There is no pending or, to the knowledge of the Sellers, any
threatened proceeding or governmental action to condemn or take by the power of
eminent domain (or to purchase in lieu thereof) all or any part of the property
subject to the Real Property Leases which is material to the operations of the
Company as presently conducted. The Company does not own any real property.

4.12 Intellectual Property. Schedule 4.12 is an accurate and
complete list of all tradenames that the Company uses in its business
operations. The Company has no United States and foreign patents, patent
applications, patent licenses, trademarks, and service mark registrations (and
applications therefor), and has no copyrights and copyright registrations (and
applications therefor), trade secrets, inventions, processes, designs, know-how
and formula which are owned or licensed for use by the Company and utilized by
the Company in the business or operations of the Company as presently
conducted. There is no adverse claim against the Company, or to the knowledge
of the Sellers, any threatened litigation or claim of infringement. To the
knowledge of the Sellers, the Company does not utilize any intellectual or
proprietary trade secret information which infringes any trademark, tradename,
service mark, copyright or patent of another, and the Company has not received
any notice contesting its right to use any trade name now used by it in
connection with its business or the operation thereof. The Company has not
granted any license to a third party in respect of any intellectual property.

4.13 Contracts.

(a) Material Contracts. Schedule 4.13A lists all
material contracts or agreements of the following types to which the Company is
a party or by which the Company is bound:

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<PAGE> 15
(i) any contract or agreement with a dentist or other
health provider or any partnership or professional association or
corporation owned by dentists or other health providers other than the
contracts described in subparagraphs (b) and (c) below;

(ii) any contract or agreement which is not terminable
upon thirty (30) days or less notice or which obligates the Company to
the payment of more than $10,000 including, without limitation, loan
agreements;

(iii) any contract or agreement for the maintenance,
purchase or sale of equipment or capital assets having a value in excess
of $10,000;

(iv) any power of attorney (other than routine powers
given to governmental officials authorizing service of process);

(v) any lease of personal property;

(vi) any guaranty, suretyship agreement or other agreement
relating to any contingent liability.

(vii) any contract with an independent agent or broker who
sells the prepaid dental plans of the Company;

(viii) any contract or agreement with independent
consultants;

(ix) any contract or agreement restricting the method by
which the Company conducts its business or the marketing of any of its
products or services; and

(x) any contract or agreement between the Company and any
stockholder of the Company, or any other affiliate of the Company or a
stockholder of the Company.

(b) Dentists' Contracts. Schedule 4.13B (i) includes
copies of representative forms of all dentist and other dental provider
agreements to which the Company is a party and (ii) lists all dentist and other
dental provider agreements executed by the Company. Except for any agreement
as to which a copy thereof is specifically included as a part of Schedule
4.13B, the agreements listed in Schedule 4.13B are in all material respects in
the same form as one of the representative forms of such agreements provided as
a part of Schedule 4.13B.

(c) Other Provider Contracts. Except as set forth in
Schedule 4.13B the Company is not a party to an agreement with any other health
care provider.

(d) Employer Group Contracts. Schedule 4.13D (i)
includes copies of representative forms of all employer group agreements to
which the Company is a party and (ii) lists all employer group agreements to
which the Company is a party and the number of participants for each such
employer. Except for any agreement as to which a copy thereof is specifically
included as a part of Schedule 4.13D, all of the agreements listed in Schedule
4.13D

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<PAGE> 16
are in all material respects in the same form as one of the representative
forms and such agreements provided as a part of Schedule 4.13D. Schedule 4.13D
also sets forth the premium rates for the largest twenty (20) in revenues of
the employer group agreements in each state in which the Company conduct
business operations and the monthly premium revenues of each employer group
agreement listed in Schedule 4.13D.

(e) Management Contracts. Schedule 4.13E sets forth all
management, marketing, administrative services and third party administration
contracts to which the Company is a party.

(f) Copies. True and correct copies of all such
contracts referred to in Schedules 4.13A, 4.13B, 4.13D and 4.13E have been made
available for inspection by Purchaser and, except to the extent disclosed on
Schedules 4.13A, 4.13B, 4.13D and 4.13E, as of the date of this Agreement, (i)
all of the contracts listed on such Schedules are in full force and effect,
(ii) the Company has not received any notice of cancellation with respect to
any such contract or been advised that the other party thereto intends to
cancel any such agreement, (iii) there are no material outstanding disputes
under such contracts, (iv) each such contract is with an unrelated third party
entered into on an arms-length basis in the ordinary course of business, (v)
there are no material defaults under any of such contracts, and (vi), to the
knowledge of the Sellers, to the extent required by any law or regulation have
been filed with and approved by all governmental regulatory agencies.

4.14 Employees, Et Cetera. Schedule 4.14 hereto lists in accurate
and complete detail all employees of the Company as of the Effective Date,
their job titles, annual rates of compensation, accrued vacation, holiday and
sick leave as of such date, other fringe benefits, if any, a description of any
severance pay arrangements, if any, and the amounts payable with respect to
such accrued vacation, holiday and sick leave as of the Effective Date and the
rate at which such vacation, holiday and sick leave will accrue after the
Effective Date. Except as shown on Schedule 4.14, the Company is not bound by
any written contract of employment with any of its employees and all oral
employment contracts are terminable at will, subject to applicable law, or by
any consulting or similar agreements. The Company is not a party to any
employment or other agreement, whether written or oral, pursuant to which the
Company has agreed to make a loan to, or guarantee any loan of, any employee or
relating to any bonus, deferred compensation, severance pay or similar plan,
agreement, arrangement or understanding except as reflected in Schedule 4.14.
Except as listed on Schedule 4.14 or Schedule 4.15 hereof, the Company has no
Welfare Plan, any Pension Plan, or any other type of pension, profit sharing,
deferred compensation, retirement, stock option, bonus, severance, medical,
dental, life insurance, accident, or other employee benefit or compensation
plan, agreement, arrangement, practice or policy with respect to employees.
The Company has complied with all requirements of Sections 6001 through 6008 of
the ERISA and Section 4980B of the Code with respect to themselves and their
employees. The Company is not bound, and following the Closing will not be
bound, by any express or implied contract or agreement to employ, directly or
as a consultant or otherwise, any person for any specific period of time or
until any specific age except as specified in the written agreements identified
in Schedule 4.15.

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4.15 Employee Benefit Plans. Except as disclosed in Schedule 4.15:

(a) The Company does not maintain or contribute to, and
has not in the past maintained or contributed to, any Pension Plan or Welfare
Plan, except as a described on Schedule 4.15, nor is the Company presently, or
has it ever been, a participating employer in any Multiemployer Plan.

(b) With respect to each Pension Plan and each Welfare
Plan listed on Schedule 4.15, to the knowledge of the Sellers: (i) there is no
fact, including, without limitation, any reportable event, that exists that
would constitute grounds for termination of such plan by the PBGC or for the
appointment by the appropriate United States District Court of a trustee to
administer such plan, in each case as contemplated by ERISA; (ii) neither the
Company nor any Subsidiary nor any fiduciary, trustee, or administrator of any
such Pension Plan or Welfare Plan, has engaged in a prohibited transaction that
would subject the Company to any material tax or any material penalty imposed
by ERISA or the Code; (iii) neither the Company has not incurred any material
liability to the PBGC (other than for payment of premiums); (iv) the Company
has contributed all amounts thereto it is required to contribute under the
terms of the plan in question and applicable law, and there is no accumulated
funding deficiency with respect to any such Pension Plan, whether or not
waived, other than routine, non-contested claims for benefits. There is not
any pending or, to the knowledge of the Sellers, threatened claim by or on
behalf of any Pension Plan or Welfare Plan, by any employee or former employee
covered or previously covered under any Pension Plan or Welfare Plan, or
otherwise involving any Pension Plan or Welfare Plan.

(c) There has been no termination of any Pension Plan or
Welfare Plan by the Company that has occurred during the five-year period
ending on the date hereof.

(d) The Company has no knowledge of any material
liability being incurred under Title IV of ERISA by the Company with respect to
any Pension Plan maintained by a trade or business (whether or not
incorporated) which is under common control with, or part of a controlled group
of corporations with, the Company, within the meaning of Sections 414(b) or (c)
of the Code.

(e) No Welfare Plan listed on Schedule 4.15 is funded
with a trust or other funding vehicle, other than insurance policies.

(f) Each Welfare Plan, Pension Plan, and any other type
of pension, profit sharing, deferred compensation, retirement, stock option,
bonus, severance, medical, dental, life insurance, accident, or other employee
benefit or compensation plan, agreement, arrangement, practice, or policy with
respect to employees maintained by or contributed to by the Company is
maintained, administered, and operated in accordance with all applicable laws,
including but not limited to, ERISA and the Code.

(g) Each Pension Plan listed on Schedule 4.15 which is
intended to be qualified under Section 401(a) of the Code, has received a
favorable determination letter from

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<PAGE> 18
the Internal Revenue Service as to the qualification under the Code of each
such Pension Plan as amended to comply with the Tax Reform Act of 1986 and all
applicable, subsequent legislation, and, to the knowledge of the Sellers, no
event has occurred since the date of such favorable determination letter that
would adversely affect such qualification.

(h) Except as set forth in Schedule 8.1(h), no bonus,
severance pay, or any other employee benefit under any Welfare Plan, Pension
Plan, or any other type of pension, profit sharing, deferred compensation,
retirement, stock option, bonus, severance, or other employee benefit or
compensation plan, agreement, arrangement, practice, or policy with respect to
employees maintained by or contributed to by the Company is payable or
exercisable as a result of the transaction contemplated by this Agreement, and
the payment, exercise, or vesting of any such bonus, severance pay, or employee
benefit will not be accelerated or otherwise enhanced by such transaction.

True, correct and complete copies of each Pension Plan and Welfare Plan listed
on Schedule 4.15 as amended to and in effect on the date hereof; any agreements
entered into in connection with each such Pension Plan and Welfare Plan; the
most recent annual report filed with the Internal Revenue Service for each such
Pension Plan and Welfare Plan; the most recent actuarial report, if any, for
each such Pension Plan and Welfare Plan; the most recent summary plan
description, together with each summary of material modifications; and any
other communication generally disseminated to employees or former employees of
the Company and describing benefits provided under each such Pension Plan and
Welfare Plan, have been delivered to Purchaser by the Company.

4.16 Receivables. To the knowledge of the Sellers, all Receivables
of the Company whether or not reflected in the Company Balance Sheet, represent
transactions in the ordinary course of business, and, except as disclosed on
Schedule 4.16, are current and collectible net of any reserves therefor shown
on the Company Balance Sheet (which reserves are adequate and were calculated
consistent with past practice). Schedule 4.16 consists of an aged accounts
receivable report of the Company as of March 31, 1996.

4.17 Accounts Payable. The accounts payable reflected on the
Company Balance Sheet and those reflected on the books of the Company at the
time of the Closing will reflect all material amounts owed by the Company in
respect of trade accounts due and other Payables as required by GAAP to be
identified on such Company Balance Sheet or in the books of the Company.
Except as set forth on Schedule 4.17, to the knowledge of the Sellers, no
account payable of the Company is past due or otherwise in default by the
Company.

4.18 Broker's and Finder's Fees. No agent, broker, employee,
officer, stockholder or other person or entity acting on behalf of, or under
the authority of, the Sellers, or the Company is or will be entitled to any
commission or broker's or finder's fee from any of the parties hereto in
connection with this Agreement or any of the transactions contemplated hereby.

4.19 Labor Practices. The Company has no collective bargaining or
other labor union agreements. There is no unfair labor practice complaint
against the Company pending before

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the National Labor Relations Board, there is no pending or, to the knowledge of
the Sellers, threatened labor dispute, strike or work stoppage affecting the
Company's business, nor has there been any of the same or any labor union
organizing activity relating to the Company within the last three (3) years.

4.20 Insurance. Schedule 4.20 lists all insurance policies and
coverages maintained by or for the Company including but not limited to real
and personal property insurance, workers' compensation insurance and medical
malpractice and professional liability insurance. Schedule 4.20 lists all
insurance claims submitted in connection with property damage or medical
malpractice involving the Company for the latest three (3) years.

4.21 Consents. Except as set forth in Schedule 4.21 hereto, no
consents, approvals, or authorizations of any person, entity or governmental
agency are required in connection with the sale of the Shares and the
consummation of the transactions contemplated by this Agreement. Unless
Purchaser deems it inadvisable to seek any such consent, approval or
authorization (except with respect to any consent, approval or authorization
lawfully required to consummate this transaction) and so advises the Company in
writing, the Company will apply for or otherwise seek, and use their reasonable
best efforts to obtain, all consents, approvals and authorizations of all
governmental entities (other than applications for approval of a change of
control required to be filed in each state where the Company holds a
certificate of authority to operate a prepaid dental plan which shall be the
responsibility of Purchaser to prepare, file and obtain) and of all parties
with whom the Company has contractual or other relationships whose consent or
approval are necessary for the valid and effective consummation and completion
of the transactions contemplated hereby or are necessary in order that the
Company may validly, lawfully and effectively perform and carry out its
obligations hereunder without becoming in default under any agreement with any
party or subjecting the Company to any claim or penalty due to the failure to
obtain such consent which would have a materially adverse effect on the
business or operations of the Company. With respect to any such consents which
Purchaser requests the Company not to seek as provided above, the Company will
cooperate with Purchaser to provide for Purchaser the benefits under any such
agreement (including enforcement thereof) at the sole cost and for the benefit
of Purchaser, and Purchaser will assume liabilities associated therewith.
Following the Effective Date, the Company will use its reasonable best efforts
to obtain all consents specifically identified by Purchaser as reasonably
necessary to continue the uninterrupted operation of the business of the
Company.

4.22 Environmental Matters. Except as disclosed on Schedule 4.22,
(a) the Company has not received any notice from any governmental authority or
private person or entity advising it that the operation of the Company's
business is in violation of any environmental law or any applicable
environmental permit or that any of them is responsible (or potentially
responsible) for the cleanup of any pollutants, contaminants or hazardous or
toxic wastes, substances or materials at, on or beneath the property subject to
the Real Property Leases; and (b) to the knowledge of the Sellers, the Company
is not the subject of federal, state, local or private litigation or
proceedings involving a demand for damages or other potential liability with
respect to violations of environmental laws.

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4.23 Taxes. All federal, state and other tax returns and reports
of the Company required by law to be filed have been prepared and properly
filed or valid extensions have been obtained, and, except as set forth on
Schedule 4.23, all taxes, charges, fees, duties, levies or other assessments
which are imposed by the United States, or any state, local or foreign
government or subdivision or agency thereof, including any interest, penalties
or additions ("Taxes") imposed upon the Company or any Subsidiary or any of its
properties, assets or income which are due and payable or claimed by any taxing
authority to be due and payable have been paid or reserved for. The liability
for accrued taxes as shown in the Company Balance Sheet (net of amounts
reserved for deferred taxes) is sufficient for the payment of all unpaid Taxes
of the Company accrued for or applicable to the periods prior to the Balance
Sheet Date and all years and periods prior thereto and for which the Company
may at that date have been liable in its own right or by reason of its being a
member of any group of corporations filing consolidated tax returns (including
any such amounts payable as a result of an audit of any tax return for any such
period). The Company utilizes the accrual method of accounting for tax
purposes.

Except as set forth on Schedule 4.23, there are no claims for Taxes
pending against the Company, and the Sellers do not know of any threatened
claim for tax deficiencies or any basis for such claims, and there are not now
in force any waivers or agreements by the Company for the extension of time for
the assessment of any tax, nor has any such waiver or agreement been requested
by the Internal Revenue Service (the "Service") or any other taxing authority.

Except as set forth on Schedule 4.23, the Federal income tax returns of
the Company have not been examined or audited by the Service. Except as set
forth on Schedule 4.23, no material issues have been raised in any examination
by any taxing authority with respect to the businesses and operations of the
Company which, by application of similar principles, could be expected to
result in a proposed adjustment to the liability of the Company for taxes for
any other period not so examined.

The Company has not filed a consent under Section 341(f) of the Internal
Revenue Code of 1986, as amended (the "Code") concerning collapsible
corporations. Except as disclosed in Schedule 4.23, the Company has not made
any payments, is obligated to make any payments, or is a party to any agreement
that under certain circumstances could obligate it to make any payments that
will not be deductible under Section 280G of the Code. The Company has not
been a United States real property holding corporation within the meaning of
Section 897(c)(2) of the Code during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code. The Company has disclosed on their federal
income tax returns all positions taken therein that could give rise to a
substantial understatement of federal income tax within the meaning of Section
6662 of the Code. The Company is not a party to any tax allocation or sharing
agreement. The Company (a) has not been a member of an affiliated group filing
a consolidated federal income tax return and (b) has no liability for the taxes
of any person (other than any of the Company) under Treas. Reg. Section
1.1502-6 (or any similar provision of state, local, or foreign law), as a
transferee or successor, by contract, or otherwise.

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<PAGE> 21
The Company has paid or are withholding and have or will pay when due to
the proper taxing authorities all withholding amounts and taxes required to be
withheld or paid for all income, unemployment, social security, medicare or
other similar Taxes programs or benefits with respect to wages, salary and
other compensation of directors, officers and employees of the Company.

4.24 Transactions With Affiliates. Except as set forth in Schedule
4.24, there are no loans, leases, agreements, contracts or other transactions
between the Company and any present or former stockholder, director or officer
of the Company, or any member of such stockholder's, director's or officer's
immediate family. Except as set forth in Schedule 4.24, no stockholder,
director or officer of the Company nor any of their respective spouses or
family members owns directly or indirectly on an individual or joint basis any
material interest in, or serves as an officer or director of, or in any similar
capacity for, any competitor, customer, provider or supplier of the Company or
any organization which has a material contract or arrangement with the Company.

4.25 Improper Payments. To the knowledge of the Sellers, neither
the Company, nor any director, officer, employee or agent of the Company has
made any improper bribes, kickbacks or other payments on behalf of the Company
to, or received any such payments from, customers, vendors, suppliers or other
persons contracting with the Company.

4.26 Full Disclosure. To the knowledge of the Sellers, this
Agreement and the documents, certificates, and other writings furnished or to
be furnished by or on behalf of Sellers, the Company to Purchaser pursuant to
the provisions of this Agreement do not and will not contain any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements made, in the light of the circumstances under which they
are made, not misleading. To the knowledge of the Sellers, there is no
material liability or obligation which relates to the agreements and documents
identified in the Schedules which is not generic to the identified agreement or
document and readily ascertainable from a review of such agreement or document,
and not otherwise disclosed herein or identified on the face of the Schedules.

ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF PURCHASER

The Purchaser represents and warrants to the Sellers as follows:

5.1 Due Incorporation. Purchaser is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware, with all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as now being conducted.

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<PAGE> 22
by all necessary corporate action on the part of Purchaser. This Agreement has
been duly executed and delivered by Purchaser and constitutes the legal, valid
and binding obligation of Purchaser, enforceable in accordance with its terms.

5.3 Absence of Breach; No Consents. The execution and delivery of
this Agreement by the Purchaser, and the performance by Purchaser of its
obligations hereunder, do not (i) conflict with, and will not result in a
breach of, any of the provisions of the certificate of incorporation or bylaws
of Purchaser; (ii) contravene any law, rule, or regulation of any State or
Commonwealth or of the United States, or of any applicable foreign
jurisdiction, or any order, writ, judgment, injunction, decree, determination,
or award affecting or binding upon Purchaser; (iii) conflict with or result in
a material breach of or default under any material indenture or loan or credit
agreement or any other material agreement or instrument to which Purchaser is a
party or by which it or any of its material properties may be affected or
bound; or (iv) except as reflected on Schedule 4.22, require the authorization,
consent, approval, or license of any third party.

5.4 Investment Representations. Purchaser will acquire the Shares
for its own account for investment and not with a view to the resale or
distribution thereof. Purchaser will not transfer or otherwise dispose of the
Shares, or any interest therein, in such manner as to violate any provisions of
the Securities Act of 1933, as amended, and the rules and regulations
thereunder (collectively, the "Securities Act"), or of any applicable state
securities laws regulating the disposition thereof. Purchaser agrees that the
certificates representing the Shares may bear legends to the effect that such
shares have not been registered under the Securities Act or such other state
securities laws, and that no interest therein may be transferred or otherwise
disposed of in violation of the provisions thereof or of any rules and
regulations issued thereunder.

5.5 Broker's or Finder's Fees. No agent, broker, employee,
officer, stockholder or other person or firm acting on behalf of, or under the
authority of, Purchaser is or will be entitled to any commission or broker's or
finder's fee from any of the parties hereto in connection with any of the
transactions contemplated herein.

ARTICLE 6
COVENANTS OF THE SELLERS AND THE COMPANY

Pending the Closing, Sellers and the Company shall do the following:

6.1 Affirmative Covenants. Subject to the terms and conditions
stated herein, Sellers will take, and cause the Company to take, and the
Company will take, every action reasonably required of the Sellers and the
Company to satisfy the conditions to Closing set forth in this Agreement on or
before the Closing Date and otherwise to ensure the prompt and expedient
consummation of the transactions substantially as contemplated by this
Agreement, and will exert all reasonable efforts to cause the transactions
contemplated by this Agreement to be consummated.

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<PAGE> 23
6.2 Access and Information. Sellers shall cause the Company to
afford, and the Company shall afford, to Purchaser and its representatives
reasonable access during reasonable hours throughout the period prior to the
Closing to all properties, books, contracts, commitments, computer programs and
data, reports, manuals and records (including, but not limited to, tax
returns), and to all personnel of the Company and the Subsidiaries and, during
such period, shall promptly furnish to Purchaser all other information
concerning such business, properties, and personnel as Purchaser may reasonably
request. Purchaser shall maintain the confidentiality of all such information
as required by Section 7.5 hereof.

6.3 No Solicitation. From the date of this Agreement until the
Closing or the termination of this Agreement pursuant to its terms, the Company
and the Sellers, and those acting on behalf of any of them, will not, and the
Company and Sellers will use its and their best efforts to cause its and their
officers, employees, agents, and representatives (including any investment
banker) not, directly or indirectly, to solicit, encourage, or initiate any
discussion with, or negotiate or otherwise deal with, or provide any
information to, any person or entity other than Purchaser and its
representatives concerning any merger, sale of assets, or similar transaction
involving the Company, or sale of any capital stock of the Company, or any
interest therein. Sellers will, or will cause the Company to, notify Purchaser
immediately upon receipt of any offer or proposal relating to any of the
foregoing and such notice shall describe in detail the terms thereof and
identify the party or parties thereto. From the date of this Agreement, until
the Closing or the termination of this Agreement pursuant to its terms, neither
the Company nor any of the Sellers will furnish, without the prior written
consent of Purchaser, to any person or entity (other than Purchaser) any non-
public information concerning the Company or its businesses, financial affairs
or prospects for the purpose of or with the intent of permitting such person or
entity to evaluate a possible acquisition of any capital stock or (other than
in the ordinary course of business) assets of the Company.

6.4 Conduct of Business Prior to Closing. Sellers and the Company
covenant and agree that, prior to the consummation of this Agreement or to the
termination of this Agreement pursuant to its terms, unless Purchaser shall
otherwise consent in writing, and except as otherwise contemplated by this
Agreement, each of the following shall be complied with:

(a) The business of the Company shall be conducted only
in the ordinary and usual course and the Company shall use reasonable efforts
shall use reasonable efforts to keep intact its business organization and good
will, to keep available the services of its and their respective officers and
employees and to maintain a good relationship with suppliers, lenders,
creditors, distributors, employees, customers, and others having business or
financial relationship with them, and the Sellers or the Company shall
immediately notify Purchaser of any event or occurrence or emergency material
to, and not in the ordinary and usual course of business of, the Company.

17
<PAGE> 24
for or redemption of, any of its outstanding securities whether payable in
cash, stock or property;

(c) The Company shall not (i) issue or agree to issue any
additional shares of, or rights of any kind to acquire any shares of, its
capital stock of any class; or (ii) enter into any contract, agreement,
commitment, or arrangement with respect to any of the foregoing;

(d) The Company shall not create, incur, or assume any
long-term or short-term indebtedness for money borrowed or make any capital
expenditures or commitment for capital expenditures in excess of $10,000
individually or $50,000 in the aggregate, without the prior written consent of
Purchaser;

(f) The Company shall not sell, lease, mortgage,
encumber, or otherwise dispose of or grant any interest in any of its assets or
properties except for liens for taxes not yet due or liens or encumbrances that
are not material in amount or effect and do not impair the use of the property,
or as specifically provided for or permitted in this Agreement;

(g) The Company shall not enter into, or terminate, any
material contract, agreement, commitment, or understanding other than
agreements entered into with unaffiliated third parties, on an arms-length
basis and in the ordinary course of business constituting either (i) employer
group agreements at premium rates and for terms comparable to its most recent
employer group agreements, (ii) dental provider agreements on terms comparable
with its existing agreements of such nature and (iii) marketing affiliation and
sales agreements on terms comparable with its existing agreements of such
nature;

(h) The Company shall not incur or modify any contingent
liability as a guarantor or otherwise with respect to the obligations of third
parties except in the ordinary course of business consistent with past practice
or as required by law;

(i) The Company shall not prepay any loans, including,
without limitation, loans from its stockholders, officers, directors or
employees, and shall not make any principal payments on the outstanding loans
from the Sellers or, except in the ordinary course of business consistent with
past practice, make any change in its borrowing arrangements or modify or amend
or terminate any material contract or release or assign any material rights or
claims;

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<PAGE> 25
(j) In connection with any filings to be made by the
Purchaser under the Securities Act of 1933, as amended, the Company shall (i)
provide for inclusion therein the financial and other information and documents
pertaining to the Company required by applicable SEC rules and regulations to
be included therein, (ii) use commercially reasonable efforts to cause the
accountants for the Company to deliver such consents, reports and comfort
letters in connection therewith as the Purchaser may reasonably request and
(iii) generally cooperate with the Purchaser in connection therewith; provided,
however, that all expenses relating to such consents, reports, comfort letters
and cooperation shall be paid directly and promptly by the Purchaser (except
for expenses that the Company and its Subsidiaries would have incurred in any
event, such as the expense of an annual audit);

(k) The Company will continue properly and promptly to
file when due all federal, state and local, foreign, and other tax returns,
reports, and declarations required to be filed by it, and will pay, or make
full and adequate provision for the payment of, all taxes and governmental
charges due from or payable by it;

(l) The Company will comply with all laws and regulations
applicable to it and its operations;

(m) The Company will maintain in full force and effect
insurance coverage of a type and amount customary in its business, but not less
than that presently in effect;

(n) The Company will not knowingly take any action (or
omit to take any action) which would cause any representation or warranty
contained in Article 3 or Article 4 of this Agreement to be untrue at any time
prior to Closing as if such representation or warranty were made at and as of
such time;

(o) The Company will not make any change in any method of
reporting income or expenses for federal income tax purposes; and

(p) The Company shall not knowingly take any action which
would prevent compliance with any of the conditions in Articles 8 or 9 of this
Agreement.

6.5 Consents and Approvals. The Company shall use commercially
reasonable efforts to obtain all necessary consents and approvals required for
its performance of this Agreement and the transactions contemplated hereby,
including, without limitation, the consents listed on Schedule 4.21 other than
the regulatory change of control approvals to be obtained by Purchaser. The
Company shall make all filings, applications, statements and reports to all
governmental authorities which are required to be made prior to the Closing
Date by or on behalf of it pursuant to any applicable statute, rule or
regulation in connection with this Agreement and the transactions contemplated
hereby. As required in connection with the performance of this Agreement by
the Company, the Company will promptly provide such other information and
communications to governmental and regulatory authorities, including, without
limitation, insurance regulatory authorities in any jurisdiction in which the
Company conducts business, as such regulatory authorities or Purchaser may
reasonably request. Between the date hereof and

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<PAGE> 26
the Closing Date, the Company shall promptly provide Purchaser with copies of
all correspondence and filings to or from all governmental and regulatory
bodies and officials relating to the Company.

6.6 Publicity. Prior to the Closing, any public statement or
announcement by the Sellers or Company, including but not limited to any
written news releases, pertaining to this Agreement or the transactions
contemplated thereby shall be submitted to Purchaser for review and approval
prior to the release by the Company, and shall be released only in a form
approved by Purchaser, provided, however, that (i) such approval shall not be
unreasonably withheld and (ii) such review and approval shall not be required
of statements and announcements if prior review and approval would prevent the
timely and accurate dissemination of such statements and announcements as
required to comply, in the judgement of counsel, with any applicable law, rule
or policy. Sellers and Purchaser shall issue a press release regarding the
execution of this Agreement within one day of the date hereof or at such other
time as Sellers and Purchaser may mutually agree.

6.7 Financial Information. Sellers will cause the Company to, and
the Company will, deliver as soon as reasonably practicable to Purchaser
unaudited financial statements of the Company for each month from and after the
date hereof as and when such financial statements become available in the usual
course of business.

6.8 Expenses. Except solely for fees and expenses in the amount
of $13,500 to be paid to Counsel to Sellers incurred in connection with this
Agreement and the consummation of the transactions contemplated hereby, all
costs and expenses incurred by Sellers in connection with this Agreement shall
be paid by Sellers and none of such costs and expenses shall be paid by the
Company. Sellers agree to pay the amount by which such fees and expenses
exceed the limit applicable Company as described above in this Section 6.8.

6.9 Breach of Representations and Warranties. Promptly upon any
Seller or the Company becoming aware of any breach of any of the
representations and warranties of the Sellers contained in this Agreement, or
any event which would cause the Sellers to be unable to deliver the
certificates contemplated by Section 9.1(e) hereof, the Sellers shall give
detailed written notice thereof to the Purchaser and shall use all commercially
reasonable efforts to prevent or promptly remedy the same.

6.10 No Transfer of Shares. Unless and until this Agreement is
terminated, each Seller shall not, directly or indirectly, exchange, transfer,
assign, pledge or encumber any of the Shares owned by the Seller, nor shall a
Seller grant, directly or indirectly, any right to acquire, dispose of, vote or
otherwise control in any manner such Shares.

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<PAGE> 27
breach of any representation or warranty resulting from such change or addition
unless Purchaser specifically agrees thereto in writing, nor shall any such
notification be considered to constitute or give rise to a waiver by Purchaser
of any condition set forth in this Agreement. Nothing contained herein shall
be deemed to create or impose on Purchaser any duty to examine or investigate
any matter or thing for the purposes of verifying the representations and
warranties made by Sellers herein. Purchaser shall not be deemed to have
waived any misrepresentation or breach of warranty unless and except Purchaser
has actual knowledge of such misrepresentation or breach of warranty and
executes such waiver in writing.

ARTICLE 7
COVENANTS OF PURCHASER

Purchaser agrees that from the date hereof through the Closing Date:

7.1 Affirmative Covenants. Subject to the terms and conditions
stated herein, Purchaser will take every action reasonably required of it in
order to satisfy the conditions to Closing set forth in this Agreement and
otherwise to ensure the prompt and expedient consummation of the transactions
substantially as contemplated hereby, and will exert all reasonable efforts to
cause the Agreement promptly to be consummated.

7.2 Cooperation. Purchaser shall cooperate with Sellers and
Counsel to Sellers, their accountants and agents in carrying out the
transaction, and in delivering all documents and instruments deemed reasonably
necessary or useful by Counsel to Sellers.

7.3 Expenses. Except as otherwise expressly provided herein,
whether or not this Agreement is consummated, all costs and expenses incurred
by Purchaser in connection with this Agreement and the transactions
contemplated hereby shall be paid by Purchaser.

7.4 Consents and Approvals. Purchaser shall use commercially
reasonable efforts to obtain all necessary consents and approvals required for
its performance of this Agreement and the transactions contemplated hereby,
including, without limitation, the regulatory change of control approvals
listed on Schedule 4.21; provided, however, that Purchaser shall not be
required or obligated to pay any amounts necessary to satisfy conditions to or
in order to obtain such governmental regulatory consents other than normal and
customary filing fees and out-of-pocket costs and expenses of the Company
incurred in providing its assistance with respect thereto. Purchaser shall
diligently and promptly proceed immediately after the date of this Agreement to
make all filings, applications, statements and reports to all governmental
authorities which are required to be made prior to the Closing Date by or on
behalf of it pursuant to any applicable statute, rule or regulation in
connection with this Agreement and the transactions contemplated hereby and
shall diligently and in good faith pursue the taking of all action necessary to
obtain approval of the transactions contemplated herein by the insurance
regulatory authorities of any jurisdiction in which the Company conduct
business. As required in connection with the performance of this Agreement,
Purchaser will promptly provide such information and communications to
governmental and regulatory bodies and authorities,

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<PAGE> 28
including, without limitation, insurance regulatory authorities in any
jurisdiction in which the Company conducts business, as such regulatory
authorities may reasonably request. Purchaser shall not be required to cure
any existing regulatory compliance requirements in order to obtain such
consents and approvals. Within five (5) business days after the written
request of the Sellers, the Purchaser shall provide to the Sellers a status
report as to all such filings and approvals.

7.5 Confidentiality. Prior to Closing, unless otherwise required
by law, Purchaser will hold in confidence all confidential information that has
been disclosed by the Sellers and the Company and will not use any such
confidential information except in connection with the transaction, until such
time as such information is otherwise publicly available; provided, however,
that this sentence will not apply to any information that becomes generally
available to the public, was available on a non-confidential basis to Purchaser
prior to its disclosure pursuant hereto, or becomes available on a
non-confidential basis from a third party who is not bound to keep such
information confidential. In the event of the termination of this Agreement,
Purchaser will, and will cause its representatives to, deliver to the Company
all documents and other written materials, and all copies thereof, obtained by
Purchaser or on its behalf from the Sellers or the Company as a result of this
Agreement or in connection herewith, whether so obtained before or after the
execution hereof. Purchaser agrees that the Company shall have standing and
may avail itself of any remedy at law or in equity, including an action for
injunctive relief, in the event of a breach or threatened breach by Purchaser
of any of the provisions of this Section 7.5. The obligations of Purchaser
under this Section 7.5 shall survive termination of this Agreement for any
reason whatsoever and shall remain in effect until two (2) years from the
Effective Date of this Agreement.

7.6 Publicity. Prior to the Closing, any public statement or
announcement by the Purchaser, including but not limited to any written news
releases by the Purchaser, pertaining to this Agreement or the transactions
contemplated hereby shall be submitted to the Company for review and approval
prior to the release by the Purchaser, and shall be released only in a form
reasonably approved by the Company provided however, that (i) such approval
shall not be unreasonably withheld and (ii) such review and approval shall not
be required of statements and announcements by the Purchaser if prior review
and approval would prevent the timely and accurate dissemination of such
statements and announcements as requested to comply, in the judgment of
counsel, with any applicable law, rule or policy. Sellers and Purchasers shall
issue a press release regarding the execution and delivery of this Agreement
within one day after the date hereof or at such other time as Sellers and
Purchaser may mutually agree.

ARTICLE 8
CONDITIONS TO OBLIGATIONS OF SELLERS

8.1 Conditions to Obligations of Sellers. The obligations of
Sellers to effect the transactions contemplated by this Agreement shall be
subject to the fulfillment at or prior to the Closing of the following
conditions, unless Sellers shall waive such fulfillment in whole or in part in
writing:

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<PAGE> 29
(a) This Agreement and the transactions contemplated
hereby shall have received all approvals, consents, authorizations, and waivers
from governmental and other regulatory agencies and other third parties
(including lenders, holders of debt securities, and lessors) required by law or
contract to consummate this Agreement and required to keep all certificates of
authority and licenses held by the Company and Subsidiaries in full force and
effect after the Closing;

(b) There shall not be in effect a restraining order, a
preliminary or permanent injunction or other order by any federal or state
authority which prohibits the consummation of this Agreement and no action or
proceeding shall have been instituted and remain pending before any court
seeking such relief or seeking damages in respect to this Agreement or the
consummation of the transactions contemplated by this Agreement;

(c) Purchaser shall have performed in all material
respects its agreements, covenants and obligations contained in this Agreement
required to be performed at or prior to the Closing;

(d) The representations and warranties of Purchaser set
forth in this Agreement shall be true in all material respects as of the
Effective Date and as of the Closing Date as if made as of such time;

(e) Sellers shall have received from Purchaser an
officers' certificate, executed by an authorized officer of Purchaser (in his
capacity as such), dated the Closing Date, as to the satisfaction of the
conditions stated in Sections 8.1(c) and (d) above (to the best of his
knowledge where appropriate) and further certifying that Purchaser has received
the Schedules and received copies of, or had the opportunity to review, the
agreements and documents listed in the Schedules to this Agreement.

(f) Sellers shall have received, on and as of the Closing
Date, an opinion of Counsel to Purchaser, substantially as to the matters set
forth in Sections 5.1, 5.2 and 5.3 hereof, subject to customary limitations,
reasonably satisfactory in form and substance to Counsel to Sellers, and such
other closing documents and instruments as Sellers shall reasonably require, in
each case reasonably satisfactory in form and substance to Counsel to Sellers.

(g) At or prior to the Closing, Purchaser shall enter
into separate Consulting Agreements, each in the form of Exhibits B-1 and B-2,
attached hereto, between Purchaser and Schubring and Halstead, respectively.

(h) At or prior to the Closing, IDP shall enter into
separate Employment Agreements, each in the form of Exhibits C-1 and C-2
attached hereto, between IDP and Schubring and Halstead, respectively.

(i) At or prior to the Closing, Purchaser shall perform
the respective obligations of and the actions to be taken by Purchaser at the
Closing as described in Section 10.3 of this Agreement.

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<PAGE> 30

ARTICLE 9
CONDITIONS TO OBLIGATIONS OF PURCHASER

9.1 Conditions To Obligations of Purchaser. The obligations of
Purchaser to effect the transactions contemplated by this Agreement shall be
subject to the fulfillment at or prior to the Closing of the following
conditions, unless Purchaser shall waive such fulfillment in whole or in part
in writing:

(a) This Agreement and the transactions contemplated by
this Agreement shall have received all approvals, consents, authorizations, and
waivers from governmental and other regulatory agencies and other third parties
(including lenders, holders of debt securities, and lessors) required by law or
contract to consummate this Agreement and required to keep all certificates of
authority and licenses held by the Company and the Subsidiaries in full force
and effect after the Closing; and no material adverse change in the business,
operations and condition, financial or otherwise, to the Company or a
Subsidiary shall have occurred or will occur in the future as a result of any
regulatory requirement or condition to such approvals, consents, authorizations
and waivers.

(b) There shall not be in effect a restraining order, a
preliminary or permanent injunction or other order by any federal or state
authority which prohibits the consummation of this Agreement and no action or
proceeding shall have been instituted or remain pending seeking such relief or
seeking damages in respect of this Agreement or the consummation of the
transactions contemplated by the Agreement;

(c) Sellers shall have performed in all material respects
each of their agreements, covenants and obligations contained in this Agreement
and required to be performed on or prior to the Closing and shall have complied
with all material requirements, rules, and regulations of all regulatory
authorities having jurisdiction relating to the transactions contemplated
herein;

(d) The representations and warranties of Sellers set
forth in this Agreement shall be true in all material respects as of the date
of this Agreement and, except in such respects as do not materially and
adversely affect the business, condition (financial or otherwise), operations,
or prospects of the Company and the Subsidiaries, as of the Closing Time as if
made as of such time;

(e) Purchaser shall have received from Sellers a
certificate, dated the Closing Date, executed by Sellers, and an officer's
certificate, executed by a duly authorized officer of the Company (in his
capacity as such), dated the Closing Date, as to the satisfaction of the
conditions in subsections (c) and (d) of this Section 9.1;

(f) Purchaser shall have received, on and as of the
Closing Date, an opinion of Counsel to Sellers materially in the form attached
as Exhibit D; and such other closing

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<PAGE> 31
documents and instruments as Purchaser shall reasonably request, in each case
reasonably satisfactory in form and substance to Purchaser and Counsel to
Purchaser;

(g) Since the date of this Agreement, there shall not
have been any material adverse change in, or other event or condition of any
character which in any one case or in the aggregate has materially adversely
affected, or can be reasonably expected in any one case or in the aggregate to
materially adversely affect in the future, the condition (financial or
otherwise), assets, liability, results of operations, business or prospects of
the Company or the Subsidiaries; including, without limitation, the following
which shall be considered a material adverse change, to- wit:

(i) a reduction in total monthly premium revenue of the
Company on an aggregate basis to an amount less than $1,300,000;

(ii) a reduction in the total number of members of the
prepaid dental plans of the Company to less than 15,500;

(iii) a reduction in the total number of general dentist
(primary care) providers which have contracts with the Company to be a
provider to members of its prepaid dental plan to an amount less than 80
determined on a net basis taking into account all new dental provider
agreements entered into after the date of this Agreement (as used herein
"general dental providers" refers to dental providers who are treating
as patients members of the prepaid dental plans of the Company);

(iv) a casualty loss which is not covered by insurance in
excess of $100,000;

(v) litigation or the assertion of a claim against the
Company which is reasonably expected not to have potential liability to
the Company, including costs and expenses of defense, in an amount more
than $100,000.00 (including attorneys' fees for defending such claim) in
excess of insurance coverage maintained by the Company which would be
applicable to such claim; provided, however, that, in the event that the
parties cannot mutually agree as to whether any such litigation or claim
is reasonably expected to have such potential liability to the Company,
then the parties shall seek the opinion of a mutually selected third
party qualified to make such assessment and the opinion of such third
party as to such potential liability shall be binding upon the parties
for the purposes hereof; and

(h) At or prior to Closing, the Company shall have
received (and delivered copies thereof to Purchaser) duly executed resignation
letters from all directors and officers of the Company designated by Purchaser
pursuant to which such individuals resign as directors and officers of the
Company. Each such resignation shall be effective on or prior to the Closing
Date and shall acknowledge that there are no obligations, liabilities or
amounts due from the Company to such respective individuals except as expressly
set forth in this Agreement.

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<PAGE> 32
(i) At the Closing, each of the Sellers shall execute a
release in favor of Purchaser, the Company and the Subsidiaries in the form of
Exhibit E attached hereto; provided, however, that it is understood that the
Sellers shall be paid at Closing all salary due to the date of Closing and
reimbursed for expenses consistent with past practice of the Company to the
date of Closing.

(j) None of the certificates of authority or licenses of
the Company listed on Schedule 4.5 shall have been cancelled, revoked or
suspended and no governmental regulatory agency shall have instituted any
proceeding, or given notice to the Company or a Subsidiary that it intends to
institute any proceeding to take such action or to place the Company or a
Subsidiary in a conservatorship or receivership due to its financial condition
or failure to comply or satisfy any governmental law, rule or regulation.

(k) At the Closing, all the Sellers shall perform his or
her or its respective obligations of and actions to be taken by all the Sellers
at the Closing as described in Section 10.2 of this Agreement.

ARTICLE 10
CLOSING

10.1 Date of Closing. The Closing shall take place at the offices
of Counsel to Sellers or at such other location as Purchaser and Sellers may
mutually agree, within ten (10) business days after the date on which all
governmental and third party consents necessary for the consummation of the
transactions contemplated by this Agreement are obtained and all other
conditions to Closing are satisfied but in no event later than two hundred ten
(210) days after the Effective Date unless extended by the mutual agreement of
the Purchasers and the Sellers, subject to earlier termination pursuant to the
provisions of Article 12 hereof. In the event that the Closing does not timely
occur as stated above, then a party not in default may immediately terminate
this Agreement upon written notice to the other parties in accordance with
Section 12.1 below; provided, however, that this Agreement shall terminate
automatically and without further notice if the Closing has not occurred within
two hundred ten (210) days of the Effective Date.

10.2 Actions by Seller. At the Closing, each Seller shall:

(b) Consulting/Employment Agreements. Schubring and
Halstead shall execute and deliver the respective Consulting Agreement and
Employment Agreement contemplated by this Agreement.

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<PAGE> 33
(d) Other Agreements. Perform or shall have performed
all of the covenants and agreements contained in this Agreement to be performed
or complied with by such Seller at or prior to the Closing hereunder.

10.3 Actions by Purchaser. At the Closing, Purchaser shall:

(a) Payment. Pay the Purchase Price to the Sellers in
accordance with payment instructions of each Seller submitted in writing to the
Purchaser or, otherwise, by check mailed to the Seller at such Seller's
respective address.

(b) Consulting/Employment Agreements. Execute and
deliver the Consulting Agreements and Employment Agreements with Schubring and
Halstead, respectively.

(c) Other Agreements. Perform or shall have performed
all of the covenants and agreements contained in this Agreement to be performed
or complied with by Purchaser at or prior to the Closing hereunder.

ARTICLE 11
SURVIVAL OF REPRESENTATIONS
AND WARRANTIES; INDEMNITY; POST-CLOSING MATTERS

11.1 Representations and Warranties to Survive. All statements
contained in any agreement, certificate, instrument, schedule, or document
delivered by or on behalf of any of the parties pursuant to this Agreement and
the transactions contemplated hereby shall be deemed representations and
warranties by the delivering party hereunder. All representations, warranties,
covenants and agreements made by the parties each to the other in this
Agreement shall be true at the Closing and shall survive the consummation of
this Agreement and the Closing hereunder for a period of two years, ending at
midnight on the second anniversary of the Closing Date; provided, however, that
if, prior to the expiration of such two year period, a state of facts shall
have become known which threatens to give rise to a liability against which any
party hereto would be entitled to indemnification hereunder and the indemnified
party shall have given notice of such facts to the indemnifying party, then the
rights of the indemnified party to indemnification with respect to such
liability shall continue until such liability shall have been finally
determined and disposed of (including and subject to disposition by the
expiration of the applicable statute of limitations with respect to such
liability); provided further, however, that if a claim for indemnification is
made pursuant to this Article 11, then such claim for indemnification or any
claim arising out of the wrongful failure to comply with the provisions of this
Article 11 shall survive until the expiration of the applicable period of
limitations with respect to such claim for indemnification; and provided
further, however, that such two year limitation specified above shall not apply
to the extent provided otherwise in Section 11.4(c) below. With respect to the
representations and warranties of the parties, such representations and
warranties shall be true as of and at the date of the Closing but nothing
contained herein shall be deemed to require or imply that the accuracy of such
representations and warranties shall apply on a continuing basis as to facts
existing after the date of the Closing. Except to the

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<PAGE> 34
extent set forth herein, no investigation or examination made by any party
hereto shall constitute a waiver of any representation or warranty and no
representation or warranty shall be merged into the Closing hereunder.
However, to the extent information is apparent on the face of the Schedules or
is otherwise expressly set forth herein, such information shall be deemed to
amend, limit and/or restate any representation and warranties contained herein
to the extent such information is inconsistent with such representation or
warranty.

11.2 Indemnity. Subject to the provisions of Section 11.4 below,

(a) Sellers. Each Seller, jointly and severally (except
as to the representations and warranties contained in Article 3 which shall be
several and not joint), agrees to indemnify and hold harmless the Company, each
Subsidiary, and Purchaser, and their respective shareholders, partners,
directors, officers, employees and agents, from, against, and in respect of,
any loss, liability, claim, demand, or expense, including but not limited to
attorney, investigation and consultant fees and costs, and of any other kind
whatsoever arising out of or resulting from any of the following:

(i) Any misrepresentation, breach of warranty, or failure
to fulfill any agreement or covenant of the Sellers and the Company
under this Agreement or under any other agreement or document delivered
by the Sellers at Closing hereunder; and

(ii) Any and all actions, suits, proceedings, demands,
assessments, judgments, costs and legal and other expenses incident to
any of the foregoing.

(b) Purchaser. Purchaser shall indemnify and hold each
Seller harmless from, against, and in respect of, any loss, liability, claim,
demand, or expense, including but not limited to attorney's fees and costs, of
any kind whatsoever, arising out of or resulting from any of the following:

(i) Any misrepresentation, breach of warranty, or failure
to fulfill any agreement or covenant of Purchaser under this Agreement
or under any other agreement or document delivered by Purchaser to
Sellers at Closing hereunder;

(ii) Any obligation or liability of the Company, whether
arising out of any set of facts in existence before, on or after the
Closing Date; excluding, however, any obligation or liability with
respect to which the Sellers are obligated to indemnify and hold the
Purchaser harmless pursuant to Section 11.2(a) above; and

(iii) Any and all actions, suits, proceedings, demands,
assessments, judgments, costs, and legal and other expenses incident to
any of the foregoing.

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<PAGE> 35
writing and the indemnifying party or parties shall assume the defense thereof,
including the employment of counsel. In addition, in case a party hereto shall
become aware of any facts which might result in any such claim, demand or
action, such party shall promptly notify the other party or parties who would
be obligated to provide indemnity hereunder with respect to such claim, demand
or action, and such other party or parties shall have the right to take such
action as it or they may deem appropriate to resolve such matter. The
indemnified party or parties shall have the right to employ separate counsel in
any such action and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such indemnified party or
parties, unless the employment of such counsel has been specifically authorized
by the indemnifying party or parties. Any settlement of any action subject to
indemnity hereunder shall require the consent of the indemnified and the
indemnifying party which consent shall not be unreasonably withheld and shall
be given within five (5) days following the giving of notice thereof; provided,
however, that with respect to the Roberts claim described in Schedule 4.10, the
Sellers shall have the sole authority to approve any settlement of such claim.
The indemnifying party or parties shall not be liable for any settlement of any
action effected without its or their consent, but if settled with the consent
of the indemnifying party or parties or if there be a final judgment for the
plaintiff in any such action, the indemnifying party or parties shall indemnify
and hold harmless the indemnified party from and against any loss or liability
by reason of such settlement or judgment. If requested by the indemnifying
party, the indemnified party shall cooperate with the indemnifying party and
its counsel and use its best efforts in contesting any such claim or, if
appropriate, in making any counter-claim or cross-complaint against the party
asserting the claim, provided that the indemnifying party will reimburse the
indemnified party for reasonable expenses incurred in so cooperating upon
presentation of receipts or other evidence of such expense. The indemnifying
party and its representatives shall have full and complete access during
reasonable hours to all books, records and files of the indemnified party
expressly related to the defense of any claim for indemnification undertaken by
the indemnifying party pursuant to this Article 11, or for any other purpose in
connection therewith; provided that the indemnifying party shall safeguard and
maintain the confidentiality of all such books, records and files.

11.4 Limitations on Indemnification.

(a) General Threshold. Except as to indemnification
obligations of the Sellers under Section 11.2(a)(ii) above as to which the
following limitation shall not apply, neither the Sellers nor the Purchaser
shall be obligated to indemnify the other party except to the extent that the
cumulative amount of all indemnifiable losses exceeds Five Thousand Dollars
($5,000.00) (the "Threshold"), which excess amount shall be recoverable in
accordance with the terms hereof; provided, however, that such limitation set
forth in this Section 11.4(a) shall not apply to the matters described in
Section 11.4(c). With respect to any indemnifiable loss payable by the
Sellers, the funds in the Post-Closing Escrow Account shall be used for such
purpose first before any recovery is sought directly from a Seller; provided,
however, that to the extent the indemnification loss or losses exceed the funds
in the Post-Closing Escrow Account, then the Purchaser may seek recovery of
the amount of such indemnifiable loss in excess of such funds contemporaneously
with the recovery of any funds in the Post-Closing Escrow Account.

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<PAGE> 36
(b) Time Limits for Claims. No claim for indemnification
may be made by any indemnified party in respect of indemnifiable losses unless
written notice thereof shall have been received by the indemnifying party on or
prior to two years after the date hereof; provided, however, that the two-year
limitation set forth in Section 11.1 and this Section 11.4(b) shall not apply
to the matters described in Section 11.4(c) as to which the indemnification
obligations hereunder shall expire six (6) months after the termination of the
applicable statute of limitations relating to the subject matter covered by
such provisions; and provided further, however, that in each case if, prior to
the applicable date of expiration, a specific state of facts shall have become
known which is reasonably likely to constitute or give rise to any
indemnifiable loss as to which indemnity may be payable and the indemnified
party shall have given notice of such facts to the indemnifying party and made
a claim for indemnification within such two-year period, then the right to
indemnification with respect thereto shall remain in effect until such matter
shall have been finally determined and disposed of and any indemnification due
in respect thereof shall have been paid.

(i) Losses arising from fraud or an intentional
misrepresentation on the part of any Seller; and

(ii) Losses arising from the intentional breach of any
covenant or agreement by a Seller contained in this Agreement.

11.5 Remedies; Default; Notice and Cure. In the event of a breach
of this Agreement prior to the Closing, the non-breaching party shall have all
rights and remedies available at law, in equity or under the terms of the
Agreement. If the Closing occurs, indemnification pursuant to this Article 11
is the sole and exclusive remedy of the parties after the Closing for matters
arising out of the representations, warranties, covenants and agreements of the
Sellers and the Purchaser set forth in this Agreement (without limiting the
rights of the parties under any other agreement), except as otherwise expressly
provided in this Agreement. No party shall be deemed in breach of its
obligations hereunder unless it has received written notice from the other
party of noncompliance with a term or provision of this Agreement and has
failed to cure such noncompliance within ten (10) days after receipt of such
notice.

11.6 Severance Benefits. The Purchaser shall not be obligated to,
or obligated to cause the Company to, extend any severance benefits to
employees of the Company who may be terminated after the Closing. In the event
that the Purchaser shall elect to pay or cause the Company to pay any severance
benefits to employees of the Company who may be terminated at or after the
Closing, it is expressly understood that the Sellers shall not be entitled to
receive such severance benefits.

11.7 Change of Control Application. Purchaser hereby agrees to
file the applications for governmental approval of a change of control
described in Schedule 4.21 with the

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appropriate governmental or regulatory agencies within ten (10) business days
of the Effective Date.

ARTICLE 12
TERMINATION; WAIVER

12.1 Termination. This Agreement may be terminated, and the
transaction may be abandoned, at any time prior to the Closing, as follows and
in no other manner:

(a) Mutual Consent. By the mutual consent of Purchaser
and the Sellers;

(b) By Purchaser or Sellers: Condition Precedent. By
Purchaser or Sellers, upon written notice to the other, if the conditions to
the obligations of such cancelling party or parties to consummate the
transaction, in the case of the Sellers, as provided in Article 8 or, in the
case of Purchaser, as provided in Article 9, were not, or cannot reasonably be,
satisfied on or before one hundred twenty (120) days after the date of this
Agreement unless the failure of the condition is the result of the material
breach of this Agreement by the party seeking to terminate; provided, however,
that, in the event all such conditions have been satisfied except solely the
condition with respect to obtaining all required consents, authorizations, and
approvals of governmental and regulatory agencies set forth in Sections 8.1(a)
and 9.1(a), respectively, and such failure is not due to a breach of this
Agreement by the non-terminating party, such date shall be automatically
extended for three (3) successive thirty (30) day periods so long as such
remains to be the case at the end of each respective thirty (30) day and
provided, further, that in no event shall such date be extended beyond an
aggregate of two hundred ten (210) days after the date of this Agreement unless
extended by the mutual agreement of the Purchaser and the Sellers;

(c) By Purchaser or Sellers: Representations, Warranties
and Covenants. By Purchaser, on the one hand, or Sellers, on the other, if (i)
any representation or warranty of the other hereunder shall not have been true
and correct in all material respects at the time at which made, or (ii) default
shall be made by the other in the due and timely observance or performance of
any of its covenants and agreements herein contained, but in such event only if
such representation or warranty cannot be made true and correct or such default
cannot be cured on or prior to the earlier of (x) sixty (60) days after the
non-defaulting or non-breaching party notifies the other in writing of such
default or breach, specifying the nature thereof or (y) two hundred ten (210)
days after the date of this Agreement, unless such date is extended by mutual
agreement of Purchaser and Sellers.

No termination of this Agreement shall affect the liability of any party hereto
for any breach hereof arising at, prior to or out of such termination. Any
public announcement of the termination of this Agreement shall be made only by
means of a press release issued jointly by Purchaser and the Company.

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12.2 Waiver. At any time at or prior to the Closing, Purchaser, on
the one hand, or Sellers, on the other, may (i) extend the time for the
performance of any of the obligations or other acts of the other party hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto, or (iii) waive compliance
with any of the agreements or conditions contained herein. Any agreement on
the part of a party hereto to any such extension or waiver shall be valid only
if set forth in an instrument in writing signed on behalf of such party.

ARTICLE 13
CERTAIN DEFINED TERMS

13.1 Affiliate. When used with respect to a person, an "Affiliate"
of such person is a person controlling, controlled by, or under common control
with such person.

13.2 Agreement. This Stock Purchase Agreement, including all
Schedules and Exhibits hereto, and all other documents specifically referred to
in this Agreement that have been or, are to be delivered by a party to this
Agreement to another such party in connection with this Agreement, and
including all duly adopted amendments, modifications, and supplements to or of
this Agreement and such Schedules, Exhibits, and other documents.

13.3 Closing. The completion of the transaction to take place as
described in Article 10.

13.4 Closing Date. The date on which the Closing actually occurs.

13.5 Closing Time. The time at which the Closing actually occurs.
All events that are to occur at the Closing Time shall, for all purposes, be
deemed to occur simultaneously, except to the extent, if at all, that a
specific order of occurrence is otherwise described.

13.6 Code. The Internal Revenue Code of 1986, as amended and in
effect on the date of this Agreement.

13.7 Control. Generally, the power to direct the management or
affairs of an entity.

13.8 Counsel to Sellers. Binkley & Stewart, P.C., 1500 Woodward,
Bloomfield Hills, Michigan 48304, telephone number (810) 540-2299, facsimile
number (810) 540-9522.

13.9 Counsel to Purchaser. Strasburger & Price, L.L.P., 901 Main
Street, Suite 4300, Dallas, Texas 75202, telephone number (214) 651-4300,
facsimile number (214) 651-4330.

13.10 ERISA. The Employee Retirement Income Security Act of 1974,
as amended and in effect on the date of this Agreement.

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13.11 GAAP. Generally accepted accounting principles, as in effect
on the date of any statement, report, or determination that purports to be, or
is required to be, prepared or made in accordance with GAAP. All references
herein to financial statements prepared in accordance with GAAP shall mean in
accordance with GAAP consistently applied throughout the periods to which
reference is made.

13.12 Knowledge. As used in this Agreement, the term "knowledge" or
the phrase "to the knowledge of" or "known to" shall mean the existence of
actual or constructive knowledge by such party; provided, however, that no
party shall be deemed to have been performed, or be obligated to perform, an
independent investigation or inquiry with respect to the matter to which such
knowledge pertains.

13.13 Liabilities. At any point in time (the "Determination Time"),
the obligations of a person or entity, whether known or unknown, accrued,
absolute or contingent, or recorded on its books or not, arising or resulting
in any way from facts, events agreement, obligations, or occurrences that
existed or transpired at a prior time, or resulted from the passage of time to
the Determination Time, but not including obligations accruing or payable after
the Determination Time to the extent (but only to the extent) that such
obligations (i) arise under previously existing agreements for services,
benefits, or other considerations, and (ii) accrue or become payable with
respect to services, benefits or other considerations received by the person or
entity after the Determination Time.

13.14 Multiemployer Plan. A "multiemployer plan," as defined in
ERISA Section 3(37) or Section 414(f) of the Code, or, in either case,
successor provisions to such provisions adopted by amendments to ERISA or the
Code, as the case may be, and including, in each case, other provisions of
ERISA, of the Code, or of other law, and regulations adopted under ERISA or the
Code or such other law, modifying, amending, interpreting, or otherwise
affecting the application of such provisions, either in general or as applied
to the nature or circumstances of a particular entity that is a party to, or is
affected by or is involved in, the Agreement and with respect to which entity
the use of the term in this Agreement, or in particular location in this
Agreement, is relevant.

13.15 Payables. Liabilities of a party arising from the borrowing
of money or the incurring of obligations for merchandise, goods or services
purchased appearing as liabilities on the books of the Company or any
Subsidiary, or customarily required to be reflected as liabilities in the
balance sheets of the Company or any Subsidiary prepared in accordance with
GAAP, indicating monies owed by the Company or such Subsidiary.

13.16 PBGC. The Pension Benefit Guaranty Corporation.

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<PAGE> 40
a particular entity that is a party to, or is affected by or is involved in,
the Agreement and with respect to which entity the use of the term in this
Agreement, or in the particular location in this Agreement, is relevant. A
reference to a Pension Plan shall include the trust, if any, forming a part
thereof.

13.18 Receivables. Accounts receivable, notes receivable, and other
obligations appearing as assets on the books of the Company or any Subsidiary,
or customarily required to be reflected as assets in balance sheets of the
Company or any Subsidiary prepared in accordance with GAAP, indicating moneys
owed to the Company or such Subsidiary.

13.19 Welfare Plan. A "welfare plan" or an "employee welfare
benefit plan," as defined in Section 3(1) of ERISA or successor provisions to
such provision adopted by amendments to ERISA and including other provisions of
ERISA or of other law, and regulations adopted under ERISA or such other law,
modifying, amending, interpreting or otherwise affecting the application of
such provision, either in general or as applied to the nature or circumstances
of a particular entity that is a party to, or is affected by or is involved in,
the Agreement and with respect to which entity the use of the term in this
Agreement, or in the particular location in this Agreement, is relevant.

ARTICLE 14
MISCELLANEOUS

14.1 Further Instruments. The parties hereto agree to execute and
deliver such instruments and take such other action as shall be reasonably
necessary, or as shall be reasonably requested by any other party, in order to
carry out the transactions, agreements and covenants contemplated in this
Agreement at or prior to the Closing Date.

14.2 Notices. Any notices, claims or demands which any party is
required or may desire to give to another under or in conjunction with this
Agreement shall be in writing, and shall be given by addressing the same to
such other party(ies) at the address set forth below, and by (i) depositing the
same so addressed, postage prepaid, first class, certified or registered, in
the United States mail (herein referred to as "Mailing"), (ii) overnight
delivery by a nationally recognized overnight courier service (e.g. UPS,
Federal Express), (iii) delivering the same personally to such other
party(ies), or (iv) transmitting by facsimile and Mailing the original. Any
notice shall be deemed to have been given five (5) U.S. Post Office delivery
days following the date of Mailing; one day after timely delivery to an
overnight courier; if by personal delivery, upon such delivery; or if by
facsimile, the day of transmission if made within customary business hours, or
if not transmitted within customary business hours, the following business day.

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(a) If to the Company or the Sellers:

To the respective address of the Company or such
Seller set forth on the signature page hereto
executed by such Seller

With a copy to Counsel to Sellers:

Binkley & Stewart, P.C.
1500 Woodward, Suite 239
Bloomfield Hills, Michigan 48304
Attn: David Binkley
Facsimile: (810) 540-9522

(b) If to Purchaser:

United Dental Care, Inc.
14755 Preston Road
Suite 300
Dallas, Texas 75240
Attn: William H. Wilcox
Facsimile: (214) 458-7963

With a copy to Counsel to Purchaser:

Strasburger & Price, L.L.P.
901 Main Street, Suite 4300
Dallas, Texas 75202
Attn: David K. Meyercord, Esq.
Facsimile: (214) 651-4330

Any party may change the address or facsimile telephone number for notices to
be sent to it by written notice delivered pursuant to the terms of this Section
14.2.

14.3 Entire Agreement; Amendments. This Agreement and the
documents to be delivered at Closing hereunder set forth the entire
understanding of the parties and supersede all prior agreements or
understandings, whether written or oral, with respect to the subject matter
hereof. This Agreement may be amended, modified or supplemented only by a
written agreement executed by Purchaser and Sellers.

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and that, in addition to Purchaser remaining liable, any such assignee shall
assume and become liable for any and all of Purchaser's obligations under this
Agreement. None of the Sellers shall be entitled to assign any of their
respective rights or obligations under this Agreement; provided, however, that
the rights and obligations of a Seller may be assigned by operation of law or
may be assigned to an individual retirement account, pension plan, trust or
other entity under the control of such Seller but any such assignment shall not
relieve or release such Seller of any obligations hereunder as a result of such
assignment and that, in addition to such Seller remaining liable, any such
assignee shall assume and become liable for any and all of such Seller's
obligations under this Agreement. In connection with any such assignment, a
Seller may transfer all or any portion of the Shares owned by the Seller and
thereby effect an assignment on the basis specified above.

14.5 Exhibits/Schedules. All Exhibits and Schedules referenced in
this Agreement are incorporated herein by reference and shall constitute a part
of this Agreement.

14.6 Invalid Provisions. If any provision of this Agreement is
held to be illegal, invalid or unenforceable under present or future laws
effective during the term hereof, such provisions shall be fully severable and
this Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part hereof with the remaining
provisions remaining in full force and effect and not affected by the illegal,
invalid or unenforceable provision or by severance herefrom. Furthermore, in
lieu of such illegal, invalid or unenforceable provision there shall be added
automatically as part of this Agreement a provision similar in terms to such
illegal, invalid, or unenforceable provision as may be possible and still be
legal, valid and enforceable.

14.7 Headings/Captions. The captions to sections and subsections
of this Agreement have been inserted solely for convenience and reference, and
shall not control or affect the meaning or construction of any of the
provisions of this Agreement.

14.8 Waiver; Remedies. Waiver by any party hereto of any breach of
or exercise of any rights under this Agreement shall not be deemed to be a
waiver of similar or other breaches or rights or a future breach of the same
duty. The failure of a party to take any action by reason of any such breach
or to exercise any such right shall not deprive any party of the right to take
any action at any time while such breach or condition giving rise to such right
continues. Except as expressly limited by this Agreement, the parties shall
have all remedies permitted to them by this Agreement or law, and all such
remedies shall be cumulative.

14.9 Consent to Jurisdiction. Each party hereto hereby irrevocably
consents to the jurisdiction of a state or federal court setting in either
Oakland County, Michigan or Dallas County, Texas in any action or proceeding
arising out of or relating to this Agreement or any agreement executed and
delivered pursuant to this Agreement and agrees that all claims in respect of
such action or proceeding may be heard and determined in either of such state
or federal courts.

14.10 Time. Time is of the essence under this Agreement.

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14.11 Governing Law. This Agreement shall be construed under and
governed by the internal laws, and not the law of conflicts, of the State of
Arizona.

14.12 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but which together
shall constitute one and the same agreement.

IN WITNESS WHEREOF, the parties have executed this Agreement on the
date set forth above.

PURCHASER: SELLERS:

UNITED DENTAL CARE, INC.
/s/ GILBERT G. FINGER
--------------------------------------
Gilbert G. Finger
By:/s/ MARK E. PAPE Address:
---------------------------
Mark E. Pape, 759 Barrington
Senior Vice President Gross Pointe Park, MI 48230

COMPANY: /s/ PATRICIA L. SCHUBRING
--------------------------------------
Patricia L. Schubring
Independent Dental Plans, Inc. Address:
28212 Newland
Warren, MI 48093

By:/s/ EDWARD K. HALSTEAD /s/ EDWARD K. HALSTEAD
--------------------------- --------------------------------------
Its: President Edward K. Halstead
--------------------------
Address: Address:
575 E. Big Beaver, Suite 270 6346 Eastbrooke
Troy, MI 48083 West Bloomfield, MI 48322

Birchtree Enterprises

By: /s/ RICHARD MARTELLA
-----------------------------------
Richard Martella
Address:

38959 Cherry Hill
-----------------------------------

-----------------------------------
Westland, MI 48186

Binkley & Stewart, P.C.

By:/s/ DAVID BINKLEY
-----------------------------------
David Binkley
Address:
1500 Woodward, Suite 239
Bloomfield Hills, MI 48304

37
<PAGE> 44
EXHIBIT A

SHARE OF OWNERSHIP OF SELLERS

Independent Dental Plan Ownership:

<TABLE>
<CAPTION>
Number of
Shares Percentage
--------- ----------
<S> <C> <C>
Finger 1,333.333 30.00%
Schubring 1,333.333 30.00%
Halstead 886.333 20.00%
Birchtree 445.00 10.00%
Binkley 445.00 10.00%
--------- ------

TOTAL: 4,445.00 100.00%
</TABLE>
<PAGE> 45
EXHIBIT B-1

CONSULTING AGREEMENT

This Consulting Agreement ("Agreement") is made as of the ____ day of
______________, 1996, by and between Patricia L. Schubring ("Schubring") and
United Dental Care, Inc., a Delaware corporation (the "Company").

WHEREAS, the Company, Independent Dental Plans, Inc., a Michigan
corporation ("IDP") and other subsidiaries of the Company are engaged in
providing several products and services relating to the dental health industry,
including, without limitation, prepaid dental plans and the provision of
management, administrative and related services to such entities and prepaid
dental plans; and

WHEREAS, Schubring has been actively engaged in the development and
management of the business operations conducted by IDP and its subsidiaries;
and

WHEREAS, Schubring is a principal stockholder of IDP stock; and

WHEREAS, simultaneously with the execution of this Agreement, the
Company is acquiring all the issued and outstanding Common Stock of IDP
pursuant to a Stock Purchase Agreement dated June 28, 1996 by and among
Schubring and the other stockholders of IDP, the Company and IDP (the "Stock
Purchase Agreement"); and

WHEREAS, the Company desires in connection with such acquisition to
enter into this Agreement with Schubring and Schubring is willing to enter into
this Agreement with the Company, in each case on and subject to the terms and
conditions hereinafter set forth;

NOW, THEREFORE, in consideration of the premises and the mutual terms
and conditions herein contained, Schubring and the Company hereby agree as
follows:

1. Services. Subject to the terms and conditions hereinafter set
forth, and for a period from the date of this Agreement until December 31,
1999, the Company hereby retains Schubring for, and Schubring hereby agrees to
provide to the Company, her services as an independent consultant and advisor
(and not as an employee) with respect to such business and financial matters of
the Company and its subsidiaries, as may be reasonably requested by the Company
from time to time; provided, however, that Schubring shall not be required to
render such services in person or at any particular location, shall not be
required to render such services at any time that such would interfere with her
other business obligations, and may render such services by telephonic means.

2. Covenant Not to Compete; Non-Solicitation. Schubring acknowledges
and agrees that:

1
<PAGE> 46

(a) the Company and its subsidiaries including, without
limitation, IDP and its subsidiaries (collectively referred to
hereinafter as the "Company") engage in (i) the operation of a dental
health indemnity insurance company, (ii) the operation of prepaid
dental plans, and (iii) the provision of management, administrative
and related services to dental health providers, dental health
indemnity insurance carriers and prepaid dental plans (collectively
the "Dental Services Business"); and

(b) the Company engages in the Dental Services Business in
numerous states and plans to expand the Dental Services Business
operated by the Company to all the states in the continental United
States; and

(c) the Dental Services Business of the Company would be
materially adversely impacted if Schubring competed with the Company
because of her knowledge, expertise and experience in the Dental
Services Business conducted by the Company and its subsidiaries.

For and in consideration of the foregoing facts and the payments
payable by the Company pursuant to this Agreement, Schubring covenants and
agrees that she shall not, directly or indirectly, as an employee, employer,
consultant, creditor, investor, owner, agent, principal, partner, shareholder,
corporate officer, director or through any other kind of ownership (other than
ownership of securities of any publicly held entity in which Schubring,
directly or indirectly, in the aggregate owns less than eight percent (8%) of
any class of outstanding securities), or in any other representative or
individual capacity, do any of the following:

1. for the period from the date of this Agreement to December
31, 1999, engage in any Dental Services Business in the States of
Michigan, Ohio, Indiana and Pennsylvania (the "Restricted Area") that
is in competition in any manner whatsoever with the Dental Services
Business conducted by the Company, including, without limitation, the
business of a dental health indemnity insurance company, a prepaid
dental plan, or the provision of management, administrative, or
related services to any of the foregoing anywhere in the Restricted
Area; provided, however, that Schubring may engage in the ownership,
operation and management of a dental "preferred provider organization"
(as such term is generally understood in the health care industry
which does not include ownership and operation of a prepaid dental
plan);

2. for the period from the date of this Agreement to December
31, 1999, engage in any business which calls upon, solicits, diverts
or takes away any customer or customers of the Company in the
Restricted Area for the purpose of selling or attempting to sell to
any of said customers any products or services similar to any products
or services sold or provided to any of such customers by the Company;
provided, however, that Schubring may call on such customers in
connection with the operation of a dental preferred provider
organization; and

3. for the period from the date of this Agreement to December
31, 1999, engage in any business which solicits any present or future
employee of the Company or

2
<PAGE> 47

initiates discussions with any such employee regarding his or her
termination or resignation from employment with the Company, so that
such employee may accept employment with, or engagement as a partner,
investor, shareholder, employee, agent or consultant with Schubring,
directly or indirectly, as specified above.

It is expressly agreed and understood that nothing contained herein
shall be deemed or construed to prohibit Schubring on an individual basis from
engaging in public speeches or publishing written articles or providing
services for public agencies concerning the Dental Services Business so long as
such activities are not related to or in connection with the conduct of any
business or activity by Schubring which is prohibited above.

3. Non-Disclosure. Schubring covenants and agrees that all information
concerning the Company, including without limitation (i) information regarding
prices or premiums charged for products and services, (ii) information
regarding the assets, liabilities and financial condition of the Company and
its subsidiaries, (iii) the names and identities of customers and analyses of
the amount and types of products and services purchased by each such customer,
(iv) the dental health providers utilized by the Company and its subsidiaries
and the financial arrangements with such providers, and (v) the amount of
compensation to employees, constitute trade secrets and confidential,
proprietary business information which is the property of the Company and that,
unless otherwise required by law, from and after the date of this Agreement:

(a) Schubring shall use her best efforts and exercise utmost
diligence to protect and safeguard all of such trade secrets and
confidential, proprietary information;

(b) Schubring shall not, directly or indirectly, use, sell,
license, publish, disclose or otherwise transfer or make available to
others any of such trade secrets or confidential, proprietary
information;

(c) without the prior written consent of the Company,
Schubring shall not, directly or indirectly, disclose any of such
trade secrets or confidential, proprietary information; and

(d) Schubring shall not, directly or indirectly, use for her
own benefit or for the benefit of another, any of such trade secrets
or confidential, proprietary information.

It is expressly understood, however, that the foregoing shall not apply to any
information that was generally available to the public on a non-confidential
basis prior to the date of this Agreement or was or becomes generally available
to the public on a non-confidential basis from a third party who is not bound
to keep such information confidential.

4. Nondisparagement. From and after the date of this Agreement,
Schubring further agrees that she shall not make or publish any statement,
written or oral, disparaging the reputation of the Company or its subsidiaries,
its executive officers or any of its business services or products.

3
<PAGE> 48

5. Consideration.

(a) As consideration for the agreements of Schubring
contained herein, the Company shall pay to Schubring the following
payments (the "Performance Payments"), to-wit:

(1) With respect to each of the calendar years
ending December 31, 1997, 1998 and 1999, a Performance Payment shall
be paid in an amount equal to two and one-half (2.5) times the amount
by which Adjusted Operating Profit (defined below) for such respective
calendar year exceeds the Adjusted Operating Profit for the
Performance Payment Base Year; provided, however, that the Performance
Payment with respect to any one calendar year shall be limited to a
maximum amount of One Hundred Thousand Dollars ($100,000.00).

(2) As used herein, the term "Adjusted Operating
Profit" shall mean an amount equal to the total premium revenues less
total dental services expenses and total sales and marketing expenses
attributable to the Dental Services Business of the Company conducted
in the State of Michigan and less also all employment compensation
paid to Schubring and Edward K. Halstead by IDP or the Company for
such calendar year; provided, however, that Adjusted Operating Profit
shall not be reduced by any Performance Payments paid to Schubring
hereunder or to Edward K. Halstead under that certain Consulting
Agreement between the Company and Halstead of even date herewith and
provided further that the term "dental services expenses" and "sales
and marketing expenses" shall have the same meaning as such terms have
been and are used in the preparation of the financial statements of
the Company and shall be determined in a manner consistent with the
past practices of the Company.

(3) As used herein, the term "Performance Payment
Base Year" shall mean the calendar year preceding the calendar year
with respect to which the Performance Payment is being determined,
i.e, 1996 for the 1997 Performance Payment; 1997 for the 1998
Performance Payment and 1998 for the 1999 Performance Payment.

(4) In the event that the Company, directly or
indirectly, acquires any other entity engaged in the Dental Services
Business in the State of Michigan (or the assets thereof), it is
agreed and understood that the Adjusted Operating Profit of such
entity determined for a twelve month period ending as of the end of
the month preceding the month in which such acquisition occurs shall
be added to the Adjusted Operating Profit of the Company for the
Performance Payment Base Year (such amount to be prorated, however,
for the purposes of determining the Performance Payment to take into
account only a percentage thereof equal to the percentage of the
calendar year prior to the date on which such acquisition occurs) and
that the results of operations of each such entity from and after the
effective date of the acquisition for accounting purposes shall be
included in determining the Adjusted Operating Profit for the year in
which the acquisition occurs, and each year thereafter with respect to
which a Performance Payment is payable. Notwithstanding the foregoing,
in the event the Company acquires

4
<PAGE> 49

any entity or the assets thereof, which had a Negative Adjusted
Operating Profit for the twelve month period prior to the date of the
acquisition, then no adjustment shall be made for the purposes of
determining the Adjusted Operating Profit for the Performance Payment
Base Year and the results of operations of such entity shall not be
included in determining Adjusted Operating Profit until and including
the first calendar month that such entity (or assets) have positive
Adjusted Operating Income.

(5) Each Performance Payment under this Agreement
shall be due and payable on or before March 31 of the following year.
The Company shall submit with each Performance Payment, or in lieu
thereof if no Performance Payment is due, a schedule reflecting the
calculation of the Performance Payment due with respect to the
calendar year then ended. Schubring, at her expense, shall have access
to and the right to examine and audit the books, records and financial
statements of the Company for the purposes of verifying the
calculation of such Performance Payment.

(b) As additional consideration for the agreements of
Schubring contained herein, the Company shall also pay to Schubring
the additional amount of $50,000 in the event that IDP successfully
renews its group agreement with Great Lakes Steel Company for the 1997
calendar year on contract terms no less favorable than the group
agreement with Great Lakes Steel Company in effect for the 1996
calendar year. In the event such renewal occurs prior to the date of
this Agreement, such amount shall be payable on the date of this
Agreement. Otherwise such amount shall be payable within three (3)
business days after the date that such renewal occurs.

(c) It is expressly agreed and understood that the payments
set forth under paragraphs (a) and (b) above constitutes the entire
and complete consideration payable to Schubring for her agreements
contained herein.

6. Employment. Nothing contained in this Agreement shall be deemed to
constitute an employment agreement or any type of partnership or joint venture
between the Company and Schubring. However, it is understood that the Company
may by separate agreement employ Schubring and, in such event, the performance
by Schubring of her employment responsibilities shall not constitute a
violation or breach of the provisions of this Agreement.

7. Reasonableness; Reformation. Schubring acknowledges and agrees that
(i) this Agreement is ancillary to the Stock Purchase Agreement pursuant to
which the Company acquired all the issued and outstanding capital stock of IDP,
(ii) the provisions of this Agreement contain reasonable limitations as to
time, geographical area and scope of activities to be restrained and do not
impose a greater restraint than is necessary to protect goodwill and other
business interests of the Company and its subsidiaries, (iii) if any portion of
the covenants and agreements set forth in this Agreement are held to be
invalid, unreasonable, arbitrary or against public policy, then such portion of
such covenants shall be considered divisible as to time, scope of activities
covered, and geographical area, (iv) if any court of competent jurisdiction
determines the specified time period, scope of activities covered, or the
specified geographical area applicable to any provision of this Agreement to be
invalid, unreasonable, arbitrary or against

5
<PAGE> 50

public policy, a lesser time period, scope of activities covered, and/or
geographical area which is determined to be reasonable, non-arbitrary and not
against public policy may be enforced against Schubring.

8. Remedies for Breach. Any one or more of the following remedies, as
selected by the Company in its sole discretion, shall be available to the
Company in the event of a breach of this Agreement by Schubring hereunder:

(a) Specific Performance. In the event of a breach or
threatened breach of any covenant or agreement of Schubring in this
Agreement, remedies at law will not adequately compensate the Company
for its injuries incurred as a result thereof. Accordingly, injunctive
and/or equitable relief shall be available to the Company to
specifically enforce this Agreement and prevent such breach and any
continued breach of any covenant and agreement herein. Schubring
agrees that a bond of no more than $10,000 in the aggregate will
provide adequate protection to Schubring and therefore no more than
$10,000 in bond or other security shall be required to be posted by
the Company by any court in any proceeding to obtain such injunctive
or equitable relief.

(b) Suit for Damages. In addition to the remedies stated in
Section 7(a) above, in the event of any breach of any covenant or
agreement of Schubring herein, the Company may sue for damages arising
out of such breach and otherwise enforce this Agreement and obtain all
other remedies available to the Company under applicable law.

9. Waivers Applicable to Covenants Not to Compete. In its sole
discretion, the Company shall have the right at any time and from time to time,
evidenced solely by the written approval of the Board of Directors of the
Company, to waive all or any portion of the rights of the Company under this
Agreement as applicable to Schubring, including, without limitation, reducing
the scope of covenant not to compete applicable to Schubring or reducing the
time period or the geographical area of the covenant not to compete applicable
to Schubring; provided that as so amended by waiver such covenant not to
compete shall remain fully in effect. In order to be effective, any such waiver
must be in writing, approved by the Board of Directors of the Company as
provided above, and executed by an authorized officer of the Company.

10. Death or Disability of Schubring. In consideration of the business
opportunities that Schubring will forego as a result of the performance of this
Agreement by Schubring, it is expressly understood that the death or disability
of Schubring shall not relieve or release the Company from its obligations
under this Agreement. In the event of the death of Schubring, payment under
this Agreement shall continue to be made as specified in this Agreement and the
estate or designated beneficiary of Schubring shall be entitled to exercise all
rights and remedies of such member of Schubring under this Agreement.

11. Miscellaneous.

(a) Notices. Any notices, claims or demands which any party
is required or may desire to give to another under or in conjunction
with this Agreement shall be in

6
<PAGE> 51

writing, and shall be given by addressing the same to such other
party(ies) at the address set forth below, and by (i) depositing the
same so addressed, postage prepaid, first class, certified or
registered, in the United States mail (herein referred to as
"Mailing"), (ii) overnight delivery by a nationally recognized
overnight courier service (e.g. UPS, Federal Express), (iii) delivery
the same personally to such other party(ies), or (iv) transmitting by
facsimile and Mailing the original. Any notice shall be deemed to have
been given five (5) U.S. Post Office delivery days following the date
of Mailing; one day after timely delivery to an overnight courier; if
by personal delivery, upon such delivery; or if by facsimile, the day
of transmission if made within customary business hours, or if not
transmitted within customary business hours, the following business
day.

(a) If to Schubring:

Patricia L. Schubring
28212 Newland
Warren Michigan 48093

(b) If to Company:

United Dental Care, Inc.
14755 Preston Road, Suite 300
Dallas, Texas 75240
Attn: William H. Wilcox, President
Facsimile: (214) 458-7963

With a copy to:

Strasburger & Price, L.L.P.8
901 Main Street, Suite 4300
Dallas, Texas 75202
Attn: David K. Meyercord, Esq.
Facsimile: (214) 651-4330

Any party may change the address or facsimile telephone number for
notices to be sent to it by written notice delivered pursuant to the
terms of this Section 11.

(b) Entire Agreement; Amendments. This Agreement, together
with the Stock Purchase Agreement and such other documents provided
for in the Stock Purchase Agreement, sets forth the entire
understanding of the parties and supersedes all prior agreements or
understandings, whether written or oral, with respect to the subject
matter hereof. No terms, conditions, or warranties, other than those
contained herein, and no amendments or modifications hereto, shall be
valid unless made in writing and signed by the parties intended to be
bound thereby.

7
<PAGE> 52

(c) Binding Effect/Assignability. This Agreement shall extend
to and be binding upon and inure to the benefit of the parties hereto,
their respective heirs, legal representatives, successors and assigns.
Schubring shall not have any right at any time to assign this
Agreement to any person or entity without the prior written consent of
all other parties hereto; provided, however, that Schubring may assign
the right to receive all payments hereunder to a corporation, limited
liability company, or limited or general partnership of which he or it
is the controlling shareholder, member or partner but no such
assignment shall relieve Schubring of her obligations hereunder.

(d) Headings/Captions. The captions to sections and
subsections of this Agreement have been inserted solely for
convenience and reference, and shall not control or effect the meaning
or construction of any of the provisions of this Agreement.

(e) Waiver; Remedies. Waiver by either party hereto of any
breach of or exercise of any rights under this Agreement shall not be
deemed to be a waiver of similar or other breaches or rights or a
future breach of the same duty. The failure of a party to take any
action by reason of any such breach or to exercise any such right
shall not deprive any party of the right to take any action at any
time while such breach or condition giving rise to such right
continues. The parties shall have all remedies permitted to them by
this Agreement or law, and all such remedies shall be cumulative.

(f) Consent of Jurisdiction. Each party hereto hereby
irrevocably consents to the jurisdiction of a state or federal court
setting in either Oakland County, Michigan or Dallas County, Texas in
any action or proceeding arising out of or relating to this Agreement
or any agreement executed and delivered pursuant to this Agreement and
agrees that all claims in respect of such action or proceeding may be
heard and determined in either of such state or federal courts.

(g) Time. Time is of the essence under this Agreement.

(h) Governing Law. This Agreement shall be construed under
and governed by the internal laws, and not the law of conflicts, of
the State of Michigan.

(i) Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but
which together shall constitute one and the same agreement.

8
<PAGE> 53

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first written above.

COMPANY:

UNITED DENTAL CARE, INC.

By:
-----------------------------------
Mark E. Pape
Senior Vice President

SCHUBRING:

--------------------------------------
Patricia L. Schubring

9
<PAGE> 54
EXHIBIT B-2

CONSULTING AGREEMENT

This Non-Competition Agreement ("Agreement") is made as of the ____
day of ______________, 1996, by and between Edward K. Halstead ("Halstead") and
United Dental Care, Inc., a Delaware corporation (the "Company").

WHEREAS, Halstead has been actively engaged in the development and
management of the business operations conducted by IDP and its subsidiaries;
and

WHEREAS, Halstead is a principal stockholder of IDP stock; and

WHEREAS, simultaneously with the execution of this Agreement, the
Company is acquiring all the issued and outstanding Common Stock of IDP
pursuant to a Stock Purchase Agreement dated June 28, 1996 by and among
Halstead and the other stockholders of IDP, the Company and IDP (the "Stock
Purchase Agreement"); and

WHEREAS, the Company desires in connection with such acquisition to
enter into this Agreement with Halstead and Halstead is willing to enter into
this Agreement with the Company, in each case on and subject to the terms and
conditions hereinafter set forth;

NOW, THEREFORE, in consideration of the premises and the mutual terms
and conditions herein contained, Halstead and the Company hereby agree as
follows:

1. Services. Subject to the terms and conditions hereinafter set
forth, and for a period from the date of this Agreement until December 31,
1999, the Company hereby retains Halstead for, and Halstead hereby agrees to
provide to the Company, his services as an independent consultant and advisor
(and not as an employee) with respect to such business and financial matters of
the Company and its subsidiaries, as may be reasonably requested by the Company
from time to time; provided, however, that Halstead shall not be required to
render such services in person or at any particular location, shall not be
required to render such services at any time that such would interfere with his
other business obligations, and may render such services by telephonic means.

2. Covenant Not to Compete; Non-Solicitation. Halstead acknowledges
and agrees that:

1
<PAGE> 55

(c) the Dental Services Business of the Company would be
materially adversely impacted if Halstead competed with the Company
because of his knowledge, expertise and experience in the Dental
Services Business conducted by the Company and its subsidiaries.

For and in consideration of the foregoing facts and the payments
payable by the Company pursuant to this Agreement, Halstead covenants and
agrees that he shall not, directly or indirectly, as an employee, employer,
consultant, creditor, investor, owner, agent, principal, partner, shareholder,
corporate officer, director or through any other kind of ownership (other than
ownership of securities of any publicly held entity in which Halstead, directly
or indirectly, in the aggregate owns less than eight percent (8%) of any class
of outstanding securities), or in any other representative or individual
capacity, do any of the following:

1. for the period from the date of this Agreement to December
31, 1999, engage in any Dental Services Business in the States of
Michigan, Ohio, Indiana and Pennsylvania (the "Restricted Area") that
is in competition in any manner whatsoever with the Dental Services
Business conducted by the Company, including, without limitation, the
business of a dental health indemnity insurance company, a prepaid
dental plan, or the provision of management, administrative, or
related services to any of the foregoing anywhere in the Restricted
Area; provided, however, that Halstead may engage in the ownership,
operation and management of a dental "preferred provider organization"
(as such term is generally understood in the health care industry
which does not include ownership and operation of a prepaid dental
plan);

2. for the period from the date of this Agreement to December
31, 1999, engage in any business which calls upon, solicits, diverts
or takes away any customer or customers of the Company in the
Restricted Area for the purpose of selling or attempting to sell to
any of said customers any products or services similar to any products
or services sold or provided to any of such customers by the Company;
provided, however, that Halstead may call on such customers in
connection with the operation of a dental preferred provider
organization; and

3. for the period from the date of this Agreement to December
31, 1999, engage in any business which solicits any present or future
employee of the Company or

2
<PAGE> 56

initiates discussions with any such employee regarding his or her
termination or resignation from employment with the Company, so that
such employee may accept employment with, or engagement as a partner,
investor, shareholder, employee, agent or consultant with Halstead,
directly or indirectly, as specified above.

It is expressly agreed and understood that nothing contained herein
shall be deemed or construed to prohibit Halstead on an individual basis from
engaging in public speeches or publishing written articles or providing
services for public agencies concerning the Dental Services Business so long as
such activities are not related to or in connection with the conduct of any
business or activity by Halstead which is prohibited above.

3. Non-Disclosure. Halstead covenants and agrees that all information
concerning the Company, including without limitation (i) information regarding
prices or premiums charged for products and services, (ii) information
regarding the assets, liabilities and financial condition of the Company and
its subsidiaries, (iii) the names and identities of customers and analyses of
the amount and types of products and services purchased by each such customer,
(iv) the dental health providers utilized by the Company and its subsidiaries
and the financial arrangements with such providers, and (v) the amount of
compensation to employees, constitute trade secrets and confidential,
proprietary business information which is the property of the Company and that,
unless otherwise required by law, from and after the date of this Agreement:

(a) Halstead shall use his best efforts and exercise utmost
diligence to protect and safeguard all of such trade secrets and
confidential, proprietary information;

(b) Halstead shall not, directly or indirectly, use, sell,
license, publish, disclose or otherwise transfer or make available to
others any of such trade secrets or confidential, proprietary
information;

(c) without the prior written consent of the Company,
Halstead shall not, directly or indirectly, disclose any of such trade
secrets or confidential, proprietary information; and

(d) Halstead shall not, directly or indirectly, use for his
own benefit or for the benefit of another, any of such trade secrets
or confidential, proprietary information.

4. Nondisparagement. From and after the date of this Agreement,
Halstead further agrees that he shall not make or publish any statement,
written or oral, disparaging the reputation of the Company or its subsidiaries,
its executive officers or any of its business services or products.

3
<PAGE> 57

5. Consideration.

(a) As consideration for the agreements of Halstead contained
herein, the Company shall pay Halstead the following payments (the
"Performance Payments"), to- wit:

(2) As used herein, the term "Adjusted Operating
Profit" shall mean an amount equal to the total premium revenues less
total dental services expenses and total sales and marketing expenses
attributable to the Dental Services Business of the Company conducted
in the State of Michigan and less also all employment compensation
paid to Halstead and Patricia L. Schubring by IDP or the Company for
such calendar year; provided, however, that Adjusted Operating Profit
shall not be reduced by any Performance Payments paid to Halstead
hereunder or to Patricia L. Schubring under that certain Consulting
Agreement between the Company and Schubring of even date herewith and
provided further that the term "dental services expenses" and "sales
and marketing expenses" shall have the same meaning as such terms have
been and are used in the preparation of the financial statements of
the Company and shall be determined in a manner consistent with the
past practices of the Company.

(4) In the event that the Company, directly or
indirectly, acquires any other entity engaged in the Dental Services
Business in the State of Michigan (or the assets thereof), it is
agreed and understood that the Adjusted Operating Profit of such
entity determined for a twelve month period ending as of the end of
the month preceding the month in which such acquisition occurs shall
be added to the Adjusted Operating Profit of the Company for the
Performance Payment Base Year (such amount to be prorated, however,
for the purposes of determining the Performance Payment to take into
account only a percentage thereof equal to the percentage of the
calendar year prior to the date on which such acquisition occurs) and
that the results of operation of each such entity from and after the
effective date of the acquisition for accounting purposes shall be
included in determining the Adjusted Operating Profit for the year in
which the acquisition occurs, and each year thereafter with respect to
which a Performance Payment is payable. Notwithstanding the foregoing,
in the event the Company acquires

4
<PAGE> 58

(5) Each Performance Payment under this Agreement
shall be due and payable on or before March 31 of the following year.
The Company shall submit with each Performance Payment, or in lieu
thereof if no Performance Payment is due, a schedule reflecting the
calculation of the Performance Payment due with respect to the
calendar year then ended. Halstead, at his expense, shall have access
to and the right to examine and audit the books, records and financial
statements of the Company for the purposes of verifying the
calculation of such Performance Payment.

(b) As additional consideration for the agreements of
Halstead contained herein, the Company shall also pay to Halstead the
additional amount of $50,000 in the event that IDP successfully renews
its group agreement with Great Lakes Steel Company for the 1997
calendar year on contract terms no less favorable than the group
agreement with Great Lakes Steel Company in effect for the 1996
calendar year. In the event such renewal occurs prior to the date of
this Agreement, such amount shall be payable on the date of this
Agreement. Otherwise such amount shall be payable within three (3)
business days after the date that such renewal occurs.

(c) It is expressly agreed and understood that the payments
set forth under paragraphs (a) and (b) above constitutes the entire
and complete consideration payable to Halstead for his agreements
contained herein.

6. Employment. Nothing contained in this Agreement shall be deemed to
constitute an employment agreement or any type of partnership or joint venture
between the Company and Halstead. However, it is understood that the Company
may by separate agreement employ Halstead and, in such event, the performance
by Halstead of his employment responsibilities shall not constitute a violation
or breach of the provisions of this Agreement.

7. Reasonableness; Reformation. Halstead acknowledges and agrees that
(i) this Agreement is ancillary to the Stock Purchase Agreement pursuant to
which the Company acquired all the issued and outstanding capital stock of IDP,
(ii) the provisions of this Agreement contain reasonable limitations as to
time, geographical area and scope of activities to be restrained and do not
impose a greater restraint than is necessary to protect goodwill and other
business interests of the Company and its subsidiaries, (iii) if any portion of
the covenants and agreements set forth in this Agreement are held to be
invalid, unreasonable, arbitrary or against public policy, then such portion of
such covenants shall be considered divisible as to time, scope of activities
covered, and geographical area, (iv) if any court of competent jurisdiction
determines the specified time period, scope of activities covered, or the
specified geographical area applicable to any provision of this Agreement to be
invalid, unreasonable, arbitrary or against

5
<PAGE> 59

(a) Specific Performance. In the event of a breach or
threatened breach of any covenant or agreement of Halstead in this
Agreement, remedies at law will not adequately compensate the Company
for its injuries incurred as a result thereof. Accordingly, injunctive
and/or equitable relief shall be available to the Company to
specifically enforce this Agreement and prevent such breach and any
continued breach of any covenant and agreement herein. Halstead agrees
that a bond of no more than $10,000 in the aggregate will provide
adequate protection to Halstead and therefore no more than $10,000 in
bond or other security shall be required to be posted by the Company
by any court in any proceeding to obtain such injunctive or equitable
relief.

(b) Suit for Damages. In addition to the remedies stated in
Section 7(a) above, in the event of any breach of any covenant or
agreement of Halstead herein, the Company may sue for damages arising
out of such breach and otherwise enforce this Agreement and obtain all
other remedies available to the Company under applicable law.

9. Waivers Applicable to Covenants Not to Compete. In its sole
discretion, the Company shall have the right at any time and from time to time,
evidenced solely by the written approval of the Board of Directors of the
Company, to waive all or any portion of the rights of the Company under this
Agreement as applicable to Halstead, including, without limitation, reducing
the scope of covenant not to compete applicable to Halstead or reducing the
time period or the geographical area of the covenant not to compete applicable
to Halstead; provided that as so amended by waiver such covenant not to compete
shall remain fully in effect. In order to be effective, any such waiver must be
in writing, approved by the Board of Directors of the Company as provided
above, and executed by an authorized officer of the Company.

10. Death or Disability of Halstead. In consideration of the business
opportunities that Halstead will forego as a result of the performance of this
Agreement by Halstead it is expressly understood that the death or disability
of Halstead shall not relieve or release the Company from its obligations under
this Agreement. In the event of the death of Halstead, payment under this
Agreement shall continue to be made as specified in this Agreement and the
estate or designated beneficiary of Halstead shall be entitled to exercise all
rights and remedies of such member of Halstead under this Agreement.

11. Miscellaneous.

(a) Notices. Any notices, claims or demands which any party
is required or may desire to give to another under or in conjunction
with this Agreement shall be in

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<PAGE> 60

(a) If to Halstead:

Edward K. Halstead
6346 Eastbrooke
West Bloomfield, Michigan 48322

(b) If to Company:

United Dental Care, Inc.
14755 Preston Road, Suite 300
Dallas, Texas 75240
Attn: William H. Wilcox, President
Facsimile: (214) 458-7963

With a copy to:

Strasburger & Price, L.L.P.8
901 Main Street, Suite 4300
Dallas, Texas 75202
Attn: David K. Meyercord, Esq.
Facsimile: (214) 651-4330

Any party may change the address or facsimile telephone number for
notices to be sent to it by written notice delivered pursuant to the
terms of this Section 11.

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<PAGE> 61

(c) Binding Effect/Assignability. This Agreement shall extend
to and be binding upon and inure to the benefit of the parties hereto,
their respective heirs, legal representatives, successors and assigns.
Halstead shall not have any right at any time to assign this Agreement
to any person or entity without the prior written consent of all other
parties hereto; provided, however, that Halstead may assign the right
to receive all payments hereunder to a corporation, limited liability
company, or limited or general partnership of which he or it is the
controlling shareholder, member or partner but no such assignment
shall relieve Halstead of his obligations hereunder.

(g) Time. Time is of the essence under this Agreement.

(h) Governing Law. This Agreement shall be construed under
and governed by the internal laws, and not the law of conflicts, of
the State of Michigan.

(i) Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but
which together shall constitute one and the same agreement.

8
<PAGE> 62

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first written above.

COMPANY:

UNITED DENTAL CARE, INC.

By:
-----------------------------------
Mark E. Pape
Senior Vice President

HALSTEAD:

--------------------------------------
Edward K. Halstead

9
<PAGE> 63
EXHIBIT C-1

EMPLOYMENT AGREEMENT

This Employment Agreement is made as of __________, 1996, by and
between Independent Dental Plans, Inc., a Michigan corporation acting by and
through its hereunto duly authorized officer (the "Company"), and Patricia L.
Schubring (the "Executive").

WHEREAS, THE Company desires to employ the Executive and the Executive
is willing to render her services to the Company on the terms and conditions
with respect to such employment hereinafter set forth;

NOW, THEREFORE, in consideration of premises and the mutual terms and
conditions hereof, the Company and the Executive hereby agree as follows:

1. Employment. The Company hereby employs the Executive and the
Executive hereby accepts employment with the Company upon the terms and
conditions hereinafter set forth.

2. Exclusive Services. The Executive shall devote not less than ninety
percent (90%) of her working time, ability and attention exclusively to the
business of the Company during the term of this Agreement but shall be entitled
to devote up to ten percent (10%) of her working time to her own independent
business activities.

3. Duties. The Executive is hereby employed by the Company and shall
render her services at the principal business offices of the Company located in
the State of Michigan, as such may be located from time to time, unless
otherwise agreed between the Board of Directors of the Company (the "Board")
and the Executive. The Executive shall have such authority and shall perform
such duties as are specified by the President of the Company; subject, however,
to such limitations, instructions, directions, and control as the Board may
specify from time to time in its sole discretion.

4. Term. This Agreement shall have a term of three (3) years
commencing as of _______________, 1996, subject to earlier termination as
hereinafter provided.

5. Compensation. As compensation for her services rendered under this
Agreement, the Executive shall be entitled to receive the following:

(a) Basic Salary. The Executive shall initially be paid a
basic annual salary of Fifty-Three Thousand and No/100 Dollars
($53,000) per year, payable in semi-monthly installments on the
regular payroll dates of each month for the Company during the term of
this Agreement, prorated for any partial employment month. Such basic
annual salary shall be subject to increase from time to time as
authorized by the Board in its sole discretion.

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<PAGE> 64

(b) Additional Compensation. The Executive shall be paid such
additional compensation and bonuses, if any, as may be determined in
the sole discretion of the Board.

7. Reimbursement of Expenses. Subject to such rules and procedures as
from time to time are specified by the Company and/or the Board, the Company
shall reimburse the Executive on a monthly basis for reasonable business
expenses necessarily incurred in the performance of her duties under this
Agreement.

8. Confidentiality/Trade Secrets. The Executive acknowledges that her
position with the Company is one of the highest trust and confidence both by
reason of her position and by reason of her access to and contact with the
trade secrets and confidential and proprietary business information of the
Company. Both during the term of this Agreement and thereafter, the Executive
covenants and agrees as follows:

(a) that she shall use her best efforts and exercise utmost
diligence to protect and safeguard the trade secrets and confidential
and proprietary information of the Company including but not limited
to the identity of its customers and suppliers, its arrangements with
customers and suppliers, and its technical data, records, compilations
of information, processes, and specifications relating to its
customers, suppliers, products and services;

(b) that she shall not disclose any of such trade secrets and
confidential and proprietary information, except as may be required in
the course of her employment; and

(c) that she shall not use, directly or indirectly, for her
own benefit or for the benefit of another, any of such trade secrets
and confidential and proprietary information.

All files, records, documents, drawings, specifications, memoranda,
notes, or other documents relating to the business of the Company, whether
prepared by the Executive or otherwise coming into her possession, shall be the
exclusive property of the Company and shall be delivered to the Company and not
retained by the Executive upon termination of her employment for any reason
whatsoever or at any other time upon request of the Board.

9. Intellectual Property. The Executive covenants and agrees that she
will fully inform and disclose to the Company all inventions, designs,
improvements, discoveries and

2
<PAGE> 65

processes ("Inventions") which she has now or may hereafter have during her
employment with the Company and which pertain or relate to the business of the
Company or to any experimental work, products, services or processes of the
Company in progress or planned for the future, whether conceived by the
Executive alone or with others and whether or not conceived during regular
working hours. All such Inventions shall be the exclusive property of the
Company. The Executive shall assist the Company, at any time during or after
her employment, in perfecting its rights in all Inventions and shall execute
all documents and do all things necessary to vest the Company with full and
exclusive title thereto and to protect the same against infringement by others.
If such assistance takes place after her employment is terminated the Executive
shall be paid by the Company at a reasonable rate for any time actually spent
in rendering such assistance at the request of the Company.

10. Non-Competition. The Executive covenants and agrees that, during
the period of her employment, she shall not, without the prior written consent
of the Board, directly or indirectly, as an employee, employer, consultant,
agent, principal, partner, shareholder, corporate officer, director, or through
any other kind of ownership (other than ownership of securities of publicly
held corporations of which the Executive owns less than eight percent (8%) of
any class of outstanding securities) or in any other representative or
individual capacity, engage in any business or render any services to any
business that is in competition in any manner whatsoever with the business of
the Company.

11. Remedies for Breach of Covenants of the Executive. The covenants
set forth in Paragraphs 8 and 9 of this Agreement shall continue to be binding
upon the Executive, notwithstanding the termination of her employment with the
Company for any reason whatsoever. Such covenants shall be deemed and construed
as separate agreements independent of any other provisions of this Agreement
and any other agreement between the Company and the Executive. The existence of
any claim or cause of action by the Executive against the Company, whether
predicated on this Agreement or otherwise, shall not constitute a defense to
the enforcement by the Company of any or all of such covenants. It is expressly
agreed that the remedy at law for the breach of any such covenant is inadequate
and the injunctive relief shall be available to prevent to the breach or any
threatened breach thereof.

12. Termination. This Agreement may be terminated upon the occurrence
of any one of the following events:

(a) Voluntary. The Executive may terminate this Agreement and
her employment at any time during the term of this Agreement by giving
thirty (30) days prior written notice of termination to the Board.

(b) Involuntary Without Cause. The Board, without cause, may
terminate this Agreement at any time during the term of this Agreement
upon thirty (30) days prior written notice to the Executive.

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<PAGE> 66

(c) Involuntary with Cause. The Board may, upon written
notice effective immediately, terminate this Agreement at any time
during the term of this Agreement if any one of the following
conditions exist:

(1) If the Executive becomes disabled for a period
of more than thirty (30) consecutive days;

(2) If the Executive for reasons other than illness
or injury absents herself from her duties without the consent
of the Board for more than ten (10) consecutive days;

(3) If the Executive should die (effective on the
date of death);

(4) If the Executive should be convicted of a crime
punishable by imprisonment; and

(5) If the Executive should willfully breach or
habitually neglect her duties which she is required to
perform under this Agreement or otherwise fail to comply with
the terms and conditions of this Agreement specifically
including, but not limited to, the covenants set forth in
Paragraphs 8, 9 and 10 hereof.

In the event of the termination of this Agreement by either party
prior to the expiration of the term of this Agreement, the Executive shall be
entitled to compensation earned by her prior to the date of termination as
provided herein computed on a pro rata basis to and including such date of
termination. In the event the Company terminates this Agreement without cause
pursuant to Paragraph 12(b) above, the Executive shall be entitled to receive a
severance payment as liquidated damages for, and in lieu of, any and all
damages which she may incur as a result of such termination in an amount equal
to her basic salary as specified in Paragraph 5(a) as then in effect on the
date of termination that otherwise would have been payable over the remaining
term of this Agreement. Such severance payment shall be payable in installments
on the same dates that such payments would have been made during the term of
this Agreement. The Executive shall be entitled to no further compensation as
of the date of termination of this Agreement specifically including but not
limited to any unearned bonuses under this Agreement. Any termination of this
Agreement shall be without prejudice to any right or remedy to which the
terminating party may be entitled either at law, in equity, or under this
Agreement.

13. Notices. Any notices, claims or demands which any party is
required or may desire to give to another under or in conjunction with this
Agreement shall be in writing, and shall be given by addressing the same to
such other party(ies) at the address set forth below, and by (i) depositing the
same so addressed, postage prepaid, first class, certified or registered, in
the United States mail (herein referred to as "Mailing"), (ii) overnight
delivery by a nationally recognized overnight courier service (e.g. UPS,
Federal Express), (iii) delivery the same personally to such other party(ies),
or (iv) transmitting by facsimile and Mailing the original. Any notice shall be
deemed to have been given five (5) U.S. Post Office delivery days following the
date of Mailing; one day after timely delivery to an overnight courier; if by
personal

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<PAGE> 67

delivery, upon such delivery; or if by facsimile, the day of transmission if
made within customary business hours, or if not transmitted within customary
business hours, the following business day.

(a) If to the Company:

Independent Dental Plans, Inc.
14755 Preston Road
Suite 300
Dallas, Texas 75240
Attention: President
Facsimile: (214) 458-7963

(b) If to the Executive:

Patricia L. Schubring
28212 Newland
Warren, Michigan 48093

Either party may change its address for notice by giving notice in accordance
with the terms of this Paragraph 13.

14. General Provisions.

(a) Law Governing. This Agreement shall be governed by and
construed in accordance with the laws of the State of Michigan.

(b) Invalid Provisions. If any provision of this Agreement is
held to be illegal, invalid, or unenforceable under present or future
laws effective during the term hereof, such provision shall be fully
severable and this Agreement shall be construed and enforced as if
such illegal, invalid, or unenforceable provision had never comprised
a part hereof; and the remaining provisions hereof shall remain in
full force and effect and shall not be affected by the illegal,
invalid, or unenforceable provision or by its severance hereof.
Furthermore, in lieu of such illegal, invalid, or unenforceable
provision there shall be added automatically as a part of this
Agreement a provision as similar in terms to such illegal, invalid, or
unenforceable provision as may be possible and still be legal, valid
or enforceable.

(c) Entire Agreement. This Agreement sets forth the entire
understanding of the parties and supersedes all prior agreements or
understandings, whether written or oral, with respect to the subject
matter hereof. No terms, conditions, warranties, other than those
contained herein, and no amendments or modifications hereto shall be
binding unless made in writing and signed by the parties hereto.

5
<PAGE> 68

(d) Binding Effect. This Agreement shall extend to and be
binding upon and inure to the benefit to the parties hereto, their
respective heirs, representatives, successors and assigns. This
Agreement may not be assigned by the Executive.

(e) Waiver. The waiver by either party hereto of a breach of
any term or provision of this Agreement shall not operate or be
construed as a waiver of a subsequent breach of the same provision by
any party or of the breach of any other term or provision of this
Agreement.

(f) Titles. Titles of the paragraphs herein are used solely
for convenience and shall not be used for interpretation or construing
any work, clause, paragraph, or provision of this Agreement.

(g) Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but
which together shall constitute one and the same instrument.

IN WITNESS WHEREOF, the Company and the Executive have executed this
Agreement as of the date and year first written above.

COMPANY: EXECUTIVE:

Independent Dental Plans, Inc.

By:
------------------------------ ------------------------------
Its President Patricia L. Schubring

GUARANTEE OF PERFORMANCE

United Dental Care, Inc., a Delaware corporation and the parent
corporation of the Company, hereby absolutely and unconditionally guarantees
the performance by the Company of all its obligations and responsibilities
under the foregoing Employment Agreement.

UNITED DENTAL CARE, INC.

By:
-----------------------------------
Mark E. Pape
Senior Vice President

6
<PAGE> 69
EXHIBIT C-2

EMPLOYMENT AGREEMENT

WHEREAS, THE Company desires to employ the Executive and the Executive
is willing to render his services to the Company on the terms and conditions
with respect to such employment hereinafter set forth;

NOW, THEREFORE, in consideration of premises and the mutual terms and
conditions hereof, the Company and the Executive hereby agree as follows:

1. Employment. The Company hereby employs the Executive and the
Executive hereby accepts employment with the Company upon the terms and
conditions hereinafter set forth.

2. Exclusive Services. The Executive shall devote not less than ninety
percent (90%) of his working time, ability and attention exclusively to the
business of the Company during the term of this Agreement but shall be entitled
to devote up to ten percent (10%) of his working time to his own independent
business activities.

3. Duties. The Executive is hereby employed by the Company and shall
render his services at the principal business offices of the Company located in
the State of Michigan, as such may be located from time to time, unless
otherwise agreed between the Board of Directors of the Company (the "Board")
and the Executive. The Executive shall have such authority and shall perform
such duties as are specified by the President of the Company; subject, however,
to such limitations, instructions, directions, and control as the Board may
specify from time to time in its sole discretion.

4. Term. This Agreement shall have a term of three (3) years
commencing as of _______________, 1996, subject to earlier termination as
hereinafter provided.

5. Compensation. As compensation for his services rendered under this
Agreement, the Executive shall be entitled to receive the following:

(a) Basic Salary. The Executive shall initially be paid a
basic annual salary of Sixty-Five Thousand and No/100 Dollars
($65,000.00) per year, payable in semi-monthly installments on the
regular payroll dates of each month for the Company during the term of
this Agreement, prorated for any partial

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<PAGE> 70

employment month. Such basic annual salary shall be subject to
increase from time to time as authorized by the Board in its sole
discretion.

(b) Additional Compensation. The Executive shall be paid such
additional compensation and bonuses, if any, as may be determined in
the sole discretion of the Board.

8. Confidentiality/Trade Secrets. The Executive acknowledges that his
position with the Company is one of the highest trust and confidence both by
reason of his position and by reason of his access to and contact with the
trade secrets and confidential and proprietary business information of the
Company. Both during the term of this Agreement and thereafter, the Executive
covenants and agrees as follows:

(a) that he shall use his best efforts and exercise utmost
diligence to protect and safeguard the trade secrets and confidential
and proprietary information of the Company including but not limited
to the identity of its customers and suppliers, its arrangements with
customers and suppliers, and its technical data, records, compilations
of information, processes, and specifications relating to its
customers, suppliers, products and services;

(b) that he shall not disclose any of such trade secrets and
confidential and proprietary information, except as may be required in
the course of his employment; and

(c) that he shall not use, directly or indirectly, for his
own benefit or for the benefit of another, any of such trade secrets
and confidential and proprietary information.

All files, records, documents, drawings, specifications, memoranda,
notes, or other documents relating to the business of the Company, whether
prepared by the Executive or otherwise coming into his possession, shall be the
exclusive property of the Company and shall be delivered to the Company and not
retained by the Executive upon termination of his employment for any reason
whatsoever or at any other time upon request of the Board.

9. Intellectual Property. The Executive covenants and agrees that he
will fully inform and disclose to the Company all inventions, designs,
improvements, discoveries and

2
<PAGE> 71

processes ("Inventions") which he has now or may hereafter have during his
employment with the Company and which pertain or relate to the business of the
Company or to any experimental work, products, services or processes of the
Company in progress or planned for the future, whether conceived by the
Executive alone or with others and whether or not conceived during regular
working hours. All such Inventions shall be the exclusive property of the
Company. The Executive shall assist the Company, at any time during or after
his employment, in perfecting its rights in all Inventions and shall execute
all documents and do all things necessary to vest the Company with full and
exclusive title thereto and to protect the same against infringement by others.
If such assistance takes place after his employment is terminated the Executive
shall be paid by the Company at a reasonable rate for any time actually spent
in rendering such assistance at the request of the Company.

Notwithstanding the foregoing, it is expressly agreed and understood
that Halstead has developed and is the owner of the proprietary software
package and rating system currently utilized by the Company. The Company
disclaims any ownership interest in and to such proprietary software package
and rating system and agrees that Halstead owns such proprietary software
package and rating system. However, Halstead hereby grants to the Company and
the Company hereby retains a non-exclusive, perpetual license to use for its
own use (and not for the benefit of an unaffiliated third party) such
proprietary software package and rating system. Such license shall be
non-assignable but shall have no fees or other costs or expenses payable
therefor by the Company.

10. Non-Competition. The Executive covenants and agrees that, during
the period of his employment, he shall not, without the prior written consent
of the Board, directly or indirectly, as an employee, employer, consultant,
agent, principal, partner, shareholder, corporate officer, director, or through
any other kind of ownership (other than ownership of securities of publicly
held corporations of which the Executive owns less than eight percent (8%) of
any class of outstanding securities) or in any other representative or
individual capacity, engage in any business or render any services to any
business that is in competition in any manner whatsoever with the business of
the Company.

11. Remedies for Breach of Covenants of the Executive. The covenants
set forth in Paragraphs 8 and 9 of this Agreement shall continue to be binding
upon the Executive, notwithstanding the termination of his employment with the
Company for any reason whatsoever. Such covenants shall be deemed and construed
as separate agreements independent of any other provisions of this Agreement
and any other agreement between the Company and the Executive. The existence of
any claim or cause of action by the Executive against the Company, whether
predicated on this Agreement or otherwise, shall not constitute a defense to
the enforcement by the Company of any or all of such covenants. It is expressly
agreed that the remedy at law for the breach of any such covenant is inadequate
and the injunctive relief shall be available to prevent to the breach or any
threatened breach thereof.

12. Termination. This Agreement may be terminated upon the occurrence
of any one of the following events:

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<PAGE> 72

(a) Voluntary. The Executive may terminate this Agreement and
his employment at any time during the term of this Agreement by giving
thirty (30) days prior written notice of termination to the Board.

(b) Involuntary Without Cause. The Board, without cause, may
terminate this Agreement at any time during the term of this Agreement
upon thirty (30) days prior written notice to the Executive.

(1) If the Executive becomes disabled for a period
of more than thirty (30) consecutive days;

(2) If the Executive for reasons other than illness
or injury absents himself from his duties without the consent
of the Board for more than ten (10) consecutive days;

(3) If the Executive should die (effective on the
date of death);

(4) If the Executive should be convicted of a crime
punishable by imprisonment; and

(5) If the Executive should willfully breach or
habitually neglect his duties which he is required to perform
under this Agreement or otherwise fail to comply with the
terms and conditions of this Agreement specifically
including, but not limited to, the covenants set forth in
Paragraphs 8, 9 and 10 hereof.

In the event of the termination of this Agreement by either party
prior to the expiration of the term of this Agreement, the Executive shall be
entitled to compensation earned by his prior to the date of termination as
provided herein computed on a pro rata basis to and including such date of
termination. In the event the Company terminates this Agreement without cause
pursuant to Paragraph 12(b) above, the Executive shall be entitled to receive a
severance payment as liquidated damages for, and in lieu of, any and all
damages which he may incur as a result of such termination in an amount equal
to his basic salary as specified in Paragraph 5(a) as then in effect on the
date of termination that otherwise would have been payable over the remaining
term of this Agreement. Such severance payment shall be payable in installments
on the same dates that such payments would have been made during the term of
this Agreement. The Executive shall be entitled to no further compensation as
of the date of termination of this Agreement specifically including but not
limited to any unearned bonuses under this Agreement. Any termination of this
Agreement shall be without prejudice to any right or remedy to which the
terminating party may be entitled either at law, in equity, or under this
Agreement.

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<PAGE> 73

(a) If to the Company:

Independent Dental Plans, Inc.
14755 Preston Road
Suite 300
Dallas, Texas 75240
Attention: President
Facsimile: (214) 458-7963

(b) If to the Executive:

Edward K. Halstead
6346 Eastbrooke
West Bloomfield, Michigan 48322

Either party may change its address for notice by giving notice in accordance
with the terms of this Paragraph 13.

14. General Provisions.

(a) Law Governing. This Agreement shall be governed by and
construed in accordance with the laws of the State of Michigan.

5
<PAGE> 74

similar in terms to such illegal, invalid, or unenforceable provision
as may be possible and still be legal, valid or enforceable.

(f) Titles. Titles of the paragraphs herein are used solely
for convenience and shall not be used for interpretation or construing
any work, clause, paragraph, or provision of this Agreement.

(g) Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but
which together shall constitute one and the same instrument.

IN WITNESS WHEREOF, the Company and the Executive have executed this
Agreement as of the date and year first written above.

COMPANY: EXECUTIVE:

Independent Dental Plans, Inc.

By:
------------------------------ ------------------------------
Its President Edward K. Halstead

6
<PAGE> 75

GUARANTEE OF PERFORMANCE

UNITED DENTAL CARE, INC.

By:
-----------------------------------
Mark E. Pape
Senior Vice President

7
<PAGE> 76
EXHIBIT D

OPINION OF COUNSEL TO SELLERS

(Letterhead of Binkley & Steward, P.C.)

____________, 1996

United Dental Care, Inc.
14755 Preston Road, Suite 300
Dallas, Texas 75240

Ladies and Gentlemen:

We have acted as counsel to Gilbert G. Finger, Patricia L. Schubring,
Edward K. Halstead, Birchtree Enterprises and Binkley & Stewart, P.C.
(collectively, the "Sellers," and each, individually, a "Seller"), in
connection with the transactions contemplated by that certain Stock Purchase
Agreement (the "Agreement") , dated as of June 28, 1996, among United Dental
Care, Inc. ("Purchaser"), the Sellers, and Independent Dental Plans, Inc., a
Michigan corporation (the "Company"). This opinion is provided to you pursuant
to Section 9.1(f) of the Agreement.

All defined terms used herein have the meanings set forth in the
Agreement, unless otherwise defined herein.

In connection with the opinions rendered herein, we have reviewed
originals or copies of the following documents:

(a) The Agreement and the Disclosure Schedules;

(b) The Consulting Agreements between Schubring and Halstead,
respectively, and the Purchaser dated ____________, 1996 (the "Consulting
Agreements");

(c) The Employment Agreements between Schubring and Halstead,
respectively , and the Company dated _____________________, 1996 (the
"Employment Agreements");

(d) The Articles of Incorporation of the Company, certified by the
Secretary of State of Michigan on _____________, 1996;

(e) Certificate issued by the Secretary of State of Michigan dated
______________, 1996 as to the good standing of the Company in Michigan;

<PAGE> 77

United Dental Care, Inc.
_______________, 1996
Page 2

(f) The Bylaws of the Company, certified as true, correct and complete
by the Secretary of the Company as of the date hereof;

(g) The stock records of the Company; and

(h) The corporate minute book of the Company containing the minutes of
all proceedings of the stockholders and directors of the Company.

In rendering this opinion, with respect to factual matters, with your
permission and without independent investigation, we have relied upon
statements, factual representations, and certificates of officers, directors,
employees and agents of the Sellers and the Company, including, but not limited
to, the Certificate of Sellers and the President of the Company attached hereto
as as well as the representations and warranties of the Sellers contained in
the Agreement, and have assumed the continued accuracy of such factual matters
as of the date hereof. Additionally, we have relied, with your permission, upon
the certificates of public officials with respect, to the accuracy of the
factual matters contained therein and have assumed the continued accuracy of
such factual matters at the date hereof.

In our examination of the foregoing specified documents and other
certificates, records and documents, we have assumed the genuineness of all
signatures, other than the Company and Sellers, the authenticity of all
documents submitted to us as original, the conformity with the original
documents of all documents submitted to us as certified, telecopied,
photostatic, conformed or reproduced copies, and the accuracy and completeness
of all corporate records and documents and of all certificates and statements
of fact, in each case given or made available to us by the Sellers or the
Company and their respective officers, directors, employees and agents. We have
also assumed the due authorization execution, delivery, accuracy, authenticity
and completeness of all certificates and documents provided to us by public
officials and all other persons or entities, other than the Sellers or the
Company.

We have not been asked to express any opinion with respect to the
power and authority of any party to the Agreement, other than the Company and
the Sellers, to enter into, execute, deliver and perform the Agreement or
documents related thereto, or to effect the transactions therein contemplated,
or with respect to the application of any law or regulation to such power and
authority, and, for purposes of the opinions set forth below, we assume that
all parties other than the Sellers have all requisite power and authority under
all applicable laws, regulations and governing documents and have taken all
necessary corporate or other action required to be taken.

<PAGE> 78

United Dental Care, Inc.
_______________, 1996
Page 3

In all instances where the opinions herein expressed are qualified to
the extent of our knowledge or to matters known to us, we have, with your
permission, relied solely upon the representations and warranties of the
Sellers contained in the Agreement and the Certificate of the Sellers and the
President of the Company attached hereto and our review of the documents set
forth in the second paragraph of this Letter. As used herein, "our current
actual knowledge," "our knowledge" and "matters known to us" are limited to
facts or information of which we are consciously aware.

We call your attention to the fact that this firm requires only that
lawyers be qualified to practice law in the State of Michigan, and that we are
admitted to practice law only in the State of Michigan and the United States of
America. Accordingly, in rendering the opinions herein, we express no opinion
with respect to any laws other than the laws of the State of Michigan and the
United States of America, and we express no opinion with respect to federal
securities laws and regulations and state "blue sky" securities laws and
regulations.

This opinion letter and the opinions expressed herein are limited by,
and in accordance with, the Legal Opinion Accord (the "Accord") of the ABA
Section of Business Law (1990).

Subject to the foregoing and having due regard for the legal
considerations that we deem relevant, we are of the opinion that, giving effect
to the consummation of the transactions contemplated by the Agreement:

1. The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Michigan, has all requisite
corporate power and authority to own, lease and operate its properties and
assets and to carry on its business as it is now being conducted.

2. To our knowledge, each Seller has the requisite right, power,
authority and legal capacity to execute and deliver the Agreement and, with
respect to Schubring and Halstead, the Consulting Agreement and the Employment
Agreement, to perform his or her or its obligations thereunder and to
consummate the transactions contemplated thereby.

3. The Agreement and, with respect to Schubring and Halstead, the
Consulting Agreement and the Employment Agreement has been duly executed and
delivered by the Company and each Seller and assuming the due authorization,
execution and delivery by the other parties thereto, constitute legal, valid
and binding obligations of the Company and each Seller enforceable against the
Company and each Seller in accordance with their respective terms and except as
limited by (i) the general qualifications, exceptions and limitations set forth
in the

<PAGE> 79

United Dental Care, Inc.
_______________, 1996
Page 4

Accord, (ii) matters of public policy and constitutional law, and (iii) as
otherwise noted or qualified by other parts of this opinion.

4. The authorized capital stock of the Company consists of 50,000
shares of common stock, par value $1.00 per share (the "Common Stock"). The
stock record books and minute book reflect that 4,445 shares are issued and
outstanding and that each of the Sellers is the registered owner of the number
of shares set forth in Exhibit A to the Agreement. To our knowledge, the issued
and outstanding shares issued to the Sellers are held by them free and clear of
all Claims. All such outstanding shares of the Company are duly authorized,
validly issued and non-assessable. Additionally, there are no preemptive rights
attaching to the issued and outstanding shares which are contained in the
Articles of Incorporation or Bylaws. No shares of Common Stock are held as
treasury shares. To our knowledge, there are no outstanding options, warrants
or other rights (including registration rights), agreements, arrangements or
commitments of any character relating to the issued or unissued capital stock
of, or other equity interests in, the Company or obligating the Sellers or the
Company to grant, issue or sell any shares of the capital stock of, or other
equity interests in the Company, by sale, lease, license or otherwise. To our
knowledge, there are no voting trusts, shareholder agreements, proxies or other
agreements with respect to the voting or transfer of any shares of the capital
stock of, or other equity interests in, the Company.

5. The execution and delivery of the Agreement, and the Consulting
Agreement and the Employment Agreement by Schubring and Halstead, do not and
will not, and the performance of the Agreement and the Consulting Agreement and
the Employment Agreement will not: (i) conflict with or violate the Articles of
Incorporation or Bylaws of the Company; (ii) conflict with or violate any law
or governmental order of the State of Michigan or the United States of America
applicable to any Seller or the Company or by which any of their or its assets,
properties or business is bound or affected; or (iii) result in any breach of
or constitute a default (or any event that, with notice or lapse of time or
both, would become a default) under, or give others any rights of termination,
amendment, acceleration or cancellation of, or result in the creation of any
claims on any of the properties or assets of any Seller or the Company pursuant
to, any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligations which is listed in the
Disclosure Schedules.

6. Assuming Purchaser is a "bona fide purchaser" of the shares
purchased from each Seller upon delivery of the Shares to Purchaser endorsed to
it or in blank by the Sellers, Purchaser will acquire such shares free and
clear of any "adverse claim."
<PAGE> 80

United Dental Care, Inc.
_______________, 1996
Page 5

7. The execution and delivery of the Agreement and the Consulting
Agreement and the Employment Agreement do not and will not, and the performance
of the Agreement and the Consulting Agreement and the Employment Agreement by
the Company and the Sellers shall not, require any consent, approval,
authorization or permit of, or filing with or notification to, any governmental
entity in Michigan, other than as has been already obtained, or to our
knowledge, any other state or any third party under any written material
contract which the Company or such Seller has listed in the Disclosure
Schedules and which is currently in force.

8. To our knowledge, there is no claim, action, suit, litigation,
proceeding, arbitration, investigation or controversy of any kind naming as a
party any Seller or the Company, at law or in equity (including actions or
proceedings seeking injunctive relief), pending or threatened. To our
knowledge, none of the Sellers nor the Company is subject to any continuing
order of, consent decree, settlement agreement or other similar written
agreement with, or (other than routine audits or similar inquiries or
investigations conducted in the ordinary course) continuing investigation by,
any governmental entity, or any judgment, order, writ, injunction, decree or
award of any governmental entity, or arbitrator, including, without limitation,
cease-and-desist or other orders.

Our opinions are based upon the law as currently in effect and
existing interpretations thereof. Insofar as our opinions relate to future
events or circumstances, our opinions expressed herein are based upon our
assumption that such laws and prevailing interpretations thereof will remain
unchanged. We assume no obligation to advise you of any changes in the
foregoing subsequent to the delivery of this opinion. This opinion has been
prepared solely for your use and may not be relied upon by any other person or
entity or governmental agency or quoted in whole or in part or otherwise
referred to or filed with or furnished to any other person or entity or used
for any other purpose without our prior written consent.

BINKLEY & STEWART. P.C.

<PAGE> 81
EXHIBIT E

RELEASE/RESIGNATION AGREEMENT

This Release Agreement (the "Release") is executed as of
_______________, 1996, by Gilbert G. Finger, Patricia L. Schubring, Edward K.
Halstead, Birchtree Enterprises, a Michigan corporation, and Binkley & Stewart,
P.C., a Michigan professional corporation.

RECITALS

WHEREAS, Gilbert G. Finger, Patricia L. Schubring, Edward K. Halstead,
Birchtree Enterprises, a Michigan corporation, and Binkley & Stewart, P.C., a
Michigan professional corporation (collectively, the "Sellers") are parties to
that certain Stock Purchase Agreement dated as of June 28, 1996 (the "Stock
Purchase Agreement"), pursuant to which United Dental Care, Inc., a Delaware
corporation (the "Company"), purchased all of the issued and outstanding shares
of capital stock of Independent Dental Plans, Inc., a Michigan corporation
("IDP"); and

WHEREAS, the Sellers were the owners of all the capital stock of IDP
and are executing this Release pursuant to the Stock Purchase Agreement as a
part of the consideration thereunder;

NOW, THEREFORE, IN CONSIDERATION OF THE PREMISES and the terms and
conditions hereof and other good and valuable consideration, the parties hereto
hereby agree as follows:

1. Release. Subject to the provisions of Paragraph 2 hereof, each
Seller hereby unconditionally and irrevocably releases and forever discharges
the Company, IDP and all the respective direct or indirect subsidiaries of the
Company (the "Subsidiaries"), and their respective stockholders, directors,
officers, employees, successors and assigns of and from any and all rights,
claims, demands, judgments, obligations, liabilities, damages, losses,
attorney's fees, costs, expenses, actions, causes of action, and controversies
of any kind whatsoever, whether at law or in equity, statutory or common law,
accrued or unaccrued, fixed or contingent, asserted or unasserted, known or
unknown, relating to the Company or IDP or the Subsidiaries which ever existed,
now exist or may hereafter exist, by reason of any tort, breach of contract,
violation of law, act or failure to act, or any other matter or thing which
shall have occurred at or prior to the date of this Release including, without
limitation, any contractual or other obligation, loan, debt or liability of any
kind owed to the Seller by the Company or IDP on the date of this Release. The
parties hereto expressly intend that the foregoing release shall be effective
regardless of whether the basis for any claim or right released hereby shall
have been known or anticipated by the parties hereto. Notwithstanding the
foregoing or anything herein to the contrary, however, nothing herein is
intended to release or limit in any manner the rights or obligations of any
party with respect to the exceptions stated in Paragraph 2 hereof.

2. Exceptions. Notwithstanding anything herein to the contrary, the
release stated in Paragraph 1 hereof shall not apply (i) to any rights which a
Seller holds, or to any obligations

1
<PAGE> 82

which the Company or IDP has to a Seller arising under, by reason of, or
incident to the Stock Purchase Agreement and (ii) with respect to Patricia L.
Schubring and Edward K. Halstead, to any obligations or liabilities of the
Company to under those certain Consulting Agreements and Employment Agreements
of even date herewith between IDP and such individuals entered into pursuant to
the Stock Purchase Agreement.

3. Resignations. Each Seller hereby resigns his position as a director
and/or officer of IDP effective immediately as of the date of this Release.

4. Miscellaneous Provisions.

(a) Invalid Provisions. If any provision of this Release is held to
be illegal, invalid or unenforceable under laws now or hereafter in effect,
such provision shall be fully severable; this Release shall be construed and
enforced as if such provision had never comprised a part hereof; and the
remaining provisions of this Release shall remain in full force and effect and
shall not be affected by the illegal, invalid or unenforceable provision or by
its severance from this Release. In lieu of each such illegal, invalid or
unenforceable provision, there shall be added automatically as a part of this
Release a provision as similar in terms to such severed provision as may be
possible and be legal, valid and enforceable.

(b) Survival. The provisions of this Release shall survive the
consummation of the transactions contemplated by the Stock Purchase Agreement,
and shall continue in full force and effect thereafter.

(c) Binding Effect. The provisions of this Release shall apply to
and be binding upon the Sellers and their respective successors, assigns,
heirs, executors and legal representatives.

(d) Number and Gender. Whenever the singular number is used herein,
the same shall include the plural where appropriate, and words of any gender
shall include each other gender where appropriate.

(e) Waivers. No waiver of any provision hereof shall be valid or
enforceable unless such waiver is in writing and signed by the party hereto
giving such waiver.

(f) Intent of the Parties. The purpose and intent of this Release is
the termination and discharge of all disputes, controversies, claims, debts and
causes of action which exist or could exist as of the date hereof between the
Company and/or IDP and/or the Subsidiaries and a Seller, except as otherwise
specifically provided in Paragraph 2 hereof, and this Release shall be
interpreted and construed broadly so as to accomplish such purpose and intent.

(g) Acknowledgment. The Sellers acknowledge that each of them has
read and fully understands all of the provisions of the Release, and recognize
and acknowledge that

2
<PAGE> 83

such Release is a general release by each such party of all claims against the
Company, IDP and the Subsidiaries subject only to the exceptions stated in
Paragraph 2 hereof.

(h) Counterparts. This Release may be executed in two or more
counterparts, each of which shall be an original, but which together shall
constitute one with the same agreement.

Notwithstanding anything herein to the contrary, nothing herein shall
affect, limit, or modify in any way the representations and warranties or other
agreements and covenants of the Sellers or the Company contained in the Stock
Purchase Agreement.

IN WITNESS WHEREOF, the Sellers have executed this Release as of the
day and year first above written.

- ------------------------------
GILBERT G. FINGER PATRICIA L. SCHUBRING

- ------------------------------ BIRCHTREE ENTERPRISES
EDWARD K. HALSTEAD
By:
-----------------------------------
Its:
----------------------------------

BINKLEY & STEWART, P.C.

By:
-----------------------------------
Its:
----------------------------------

<PAGE> 1

EXHIBIT 10.28

STOCK PURCHASE AGREEMENT

BETWEEN

UNITED DENTAL CARE, INC.,

AS PURCHASER

AND

UICI

AS SELLER,

AS OF
SEPTEMBER 10, 1996
<PAGE> 2
TABLE OF CONTENTS

<TABLE>
<S> <C>
ARTICLE 1 DEFINED TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

1.1 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

ARTICLE 2 PURCHASE AND SALE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

2.1 Agreement to Sell and Purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.3 Earnest Money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF SELLER . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

3.1 Authority Relative to This Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3.2 Title to Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.3 Absence of Breach; Consents - Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.4 Due Organization of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.5 Subsidiaries/Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.6 Absence of Breach; Consents - Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.7 Capitalization of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.8 Licenses/Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.9 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.10 No Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.11 No Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.12 Title to and Condition of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.13 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.14 Real Property Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.15 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.16 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(a) Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(b) Dentists' Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(c) Other Provider Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(d) Employer Group Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(e) Management Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(f) Copies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.17 Employees, Et Cetera . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.18 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.19 Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.20 Accounts Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.21 Broker's and Finder's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.22 Labor Practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.23 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
</TABLE>

i
<PAGE> 3
<TABLE>
<S> <C> <C>
3.24 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.25 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.26 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.27 Transactions With Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.28 Improper Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.29 Compliance with Insurance Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.30 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF PURCHASER . . . . . . . . . . . . . . . . . . . . . . . . . . 16

4.1 Due Incorporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.2 Corporate Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.3 Absence of Breach; No Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.4 Investment Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.5 Broker's or Finder's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

ARTICLE 5 COVENANTS OF THE SELLER AND THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

5.1 Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.2 Access and Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.3 No Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.4 Conduct of Business Prior to Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.5 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.6 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.7 Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.8 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.9 Breach of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.10 No Transfer of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.11 Updating of Exhibits and Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

ARTICLE 6 COVENANTS OF PURCHASER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

6.1 Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.2 Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.3 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.4 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.5 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.6 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

ARTICLE 7 CONDITIONS TO OBLIGATIONS OF SELLER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

7.1 Conditions to Obligations of Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
</TABLE>

ii
<PAGE> 4

<TABLE>
<S> <C> <C>
ARTICLE 8 CONDITIONS TO OBLIGATIONS OF PURCHASER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

8.1 Conditions To Obligations of Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

ARTICLE 9 CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

9.1 Date of Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
9.2 Actions by Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(a) Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(b) Marketing Affiliation Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(c) Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
9.3 Actions by Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(a) Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(b) Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

ARTICLE 10 SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNITY; POST-CLOSING MATTERS . . . . . . . . . . 28

10.1 Representations and Warranties to Survive . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
10.2 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(a) Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(b) Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.3 Indemnity Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.4 Limitations on Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(a) General Threshold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(b) Time Limits for Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(c) Certain Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.5 Remedies; Default; Notice and Cure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.6 Severance Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.7 Change of Control Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

ARTICLE 11 NON-COMPETITION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

11.1 Covenant Not to Compete; Non-Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
11.2 Permitted Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
11.3 Non-Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
11.4 Nondisparagement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11.5 Reasonableness; Reformation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11.6 Remedies for Breach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

ARTICLE 12 TERMINATION; WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

12.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(a) Mutual Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(b) By Purchaser or Seller: Condition Precedent . . . . . . . . . . . . . . . . . . . . . 34
</TABLE>

iii
<PAGE> 5
<TABLE>
<S> <C> <C>
(c) By Purchaser or Seller: Representations, Warranties and Covenants . . . . . . . . . . 34
12.2 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

ARTICLE 13 CERTAIN DEFINED TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

13.1 Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
13.2 Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
13.3 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
13.4 Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
13.5 Closing Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
13.6 Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
13.7 Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
13.8 Counsel to Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
13.9 Counsel to Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
13.10 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
13.11 GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
13.12 Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
13.13 Multiemployer Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
13.14 Payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
13.15 PBGC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
13.16 Pension Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
13.17 Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
13.18 Welfare Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

ARTICLE 14 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

14.1 Further Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
14.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
14.3 Entire Agreement; Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
14.4 Binding Effect/Assignability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
14.5 Exhibits/Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
14.6 Invalid Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
14.7 Headings/Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
14.8 Waiver; Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
14.9 Attorney's Fees and Costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
14.10 Time. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
14.11 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
14.12 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
</TABLE>

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<PAGE> 6

LIST OF EXHIBITS

Exhibit A - Earnest Money Escrow Agreement

LIST OF SCHEDULES

<TABLE>
<S> <C> <C>
Schedule 3.4 - States Where Company Qualified
Schedule 3.5 - Subsidiaries/Investments
Schedule 3.8 - Licenses, Etc.
Schedule 3.9 - Financial Statements
Schedule 3.10 - Adverse Changes
Schedule 3.11 - Undisclosed Liabilities
Schedule 3.12 - Title Encumbrances
Schedule 3.13 - Litigation
Schedule 3.14 - Real Property Leases
Schedule 3.15 - Intellectual Property
Schedule 3.16A - Material Contracts
Schedule 3.16B - Dental Provider Contracts
Schedule 3.16C - Other Provider Contracts
Schedule 3.16D - Employer Group Contracts
Schedule 3.16E - Management Contracts
Schedule 3.17 - Employees, Etc.
Schedule 3.18 - Employee Benefit Plans
Schedule 3.19 - Receivables
Schedule 3.20 - Payables
Schedule 3.23 - Insurance
Schedule 3.24 - Consents
Schedule 3.25 - Environmental Matters
Schedule 3.26 - Taxes
Schedule 3.27 - Transactions with Affiliates
</TABLE>

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<PAGE> 7
STOCK PURCHASE AGREEMENT

This Stock Purchase Agreement (this "Agreement") is made as of the
10th day of September, 1996 (the "Effective Date") by and between United Dental
Care, Inc., a Delaware corporation ("Purchaser") and UICI, a Delaware
corporation ("Seller").

WHEREAS, the Seller owns all the issued and outstanding shares of
capital stock (the "Shares") of Association Dental Plan, Inc., a District of
Columbia corporation (the "Company"); and

WHEREAS, subject to the terms and conditions hereinafter set forth,
the Seller desires to sell to the Purchaser, and the Purchaser desires to
purchase from the Seller, the Shares;

NOW, THEREFORE, in consideration of the premises and the mutual terms
and conditions herein contained, the parties hereby agree as follows:

ARTICLE 1
DEFINED TERMS/SCHEDULES

1.2 Schedules. References to a Schedule shall include any
applicable disclosure expressly set forth on the face of any other Schedule
even if not specifically cross-referenced to such other Schedule. It is
specifically acknowledged by the parties hereto that certain agreements and
documents listed on the Schedules are not to be delivered herewith, but were
previously or will be delivered or made available to Purchaser or its
representatives in connection with the due diligence investigation of the
Company conducted by Purchaser and its representatives prior to Closing. All
such agreements and documents made available or delivered to Purchaser by the
Seller shall be originals or true and correct copies of the originals of all
such agreements and documents. Each Schedule shall be considered a part hereof
as if set forth herein in full; provided, however, that the representations and
warranties of Seller set forth in this Agreement shall not be affected or
deemed modified, waived or limited in any respect by information contained in
any agreement or document listed or referenced in the Schedules unless and only
to the extent that any qualification, modification, exception or limitation to
any representation and warranty of the Seller is expressly set forth on the
face of a Schedule.

1
<PAGE> 8
ARTICLE 2
PURCHASE AND SALE

2.1 Agreement to Sell and Purchase. Subject to the terms and
conditions of this Agreement and in reliance on the representations, warranties
and covenants herein set forth, at the Closing the Seller shall sell to
Purchaser, and Purchaser shall purchase from the Seller, the Shares, free and
clear of any and all liens, claims, options, charges, pledges, security
interests, voting agreements or trusts, encumbrances or other restrictions or
interests of any kind or nature whatsoever (collectively, "Claims").

2.2 Purchase Price. Subject to the terms and conditions of this
Agreement and in reliance on the representations, warranties and covenants
herein set forth, the Purchaser shall pay at the Closing, by certified or
cashier's check (or by wire transfer in accordance with directions given to
Purchaser by Seller not less than two (2) business days prior to the Closing
Date), as consideration for the Shares, an aggregate purchase price in an
amount equal to Two Million Five Hundred Thousand Dollars ($2,500,000) (the
"Purchase Price").

2.3 Earnest Money. Simultaneously with the execution and delivery
of this Agreement, Purchaser shall deposit the sum of Two Hundred Thirty
Thousand Dollars ($230,000) as earnest money (the "Earnest Money") with Texas
Commerce Bank National Association (the "Escrow Agent") to be held in trust
pursuant to the terms and conditions of that certain Earnest Money Escrow
Agreement, a copy of which is attached hereto as Exhibit A (the "Escrow
Agreement"). The Escrow Agreement shall be executed and delivered by the
parties thereto simultaneously with the execution and delivery of this
Agreement. It is expressly agreed that the Earnest Money shall be applied
strictly in accordance with the terms of the Escrow Agreement.

ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER

Seller represents and warrants to Purchaser that, as of the Effective
Date and as of the Closing Date:

3.1 Authority Relative to This Agreement. This Agreement has been
duly and validly executed and delivered by the Seller and constitutes a valid
and binding agreement of the Seller enforceable in accordance with its terms.
The other agreements to be executed and delivered by the Seller pursuant to
this Agreement will be valid and binding agreements of the Seller enforceable
in accordance with their respective terms when so executed and delivered by the
Seller. Seller has all requisite power and authority to enter into this
Agreement and the other agreements to be executed and delivered by Seller
pursuant to this Agreement. The execution, delivery and performance of this
Agreement by Seller and the other agreements to be executed and delivered by
Seller pursuant to this Agreement has been duly authorized by all requisite
corporation action.

2
<PAGE> 9
3.2 Title to Stock. Seller is the unconditional sole legal,
beneficial, record and equitable owner of the Shares, free and clear of any and
all Claims. At the Closing, Seller will convey to Purchaser valid and
marketable title to the Shares free and clear of any and all Claims.

3.3 Absence of Breach; Consents - Seller. The execution,
delivery, and performance of this Agreement and the other agreements to be
executed and delivered pursuant to this Agreement by the Seller does not and
will not: (i) contravene any order, writ, judgment, injunction, decree,
determination, or award of any court or other governmental authority which
affects or binds the Seller or the Shares, (ii) conflict with or result in a
breach of or default under any indenture, loan or credit agreement or any other
agreement or instrument to which the Seller is a party or by which the Seller
or the Shares are bound, (iii) violate any law, rule or regulation applicable
to Seller or the Shares, (iv) except for the consents reflected in Schedule
3.24, require the authorization, consent, approval or license of, or a filing
with, any third party or entity (governmental or otherwise).

3.4 Due Organization of the Company. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
District of Columbia with all requisite corporate power and authority to
conduct its respective business operations as now being conducted. The Company
is duly qualified and in good standing as a foreign corporation authorized to
do business in each jurisdiction listed in Schedule 3.4. There are no
jurisdictions where the Company is not so authorized where the failure to be so
authorized would have a material adverse effect on the business or operations
of the Company. Seller has delivered to Purchaser complete and correct copies
of the articles of incorporation and bylaws of the Company as amended to and in
effect on the Effective Date. The Company is not in default under or in
violation of any term or provision of its articles of incorporation or bylaws.

3.5 Subsidiaries/Investments. Except as set forth in Schedule
3.5, the Company has no subsidiaries, whether direct or indirect. The Company
has no equity interest or investment in, and does not possesses any other right
or obligation to purchase any equity or other investment in, and is not a
partner of or joint venturer with, any other person or entity.

3.6 Absence of Breach; Consents - Company. Except for the
consents reflected on Schedule 3.24, the execution and delivery of this
Agreement and the performance of the transactions contemplated by this
Agreement and all other instruments, agreements, certificates and documents
contemplated hereby does not, on the date hereof, and will not on the Closing
Date, (i) violate any decree or judgment of any court or governmental authority
which may be applicable to the Company; (ii) violate any law, rule or
regulation, or any decree or judgment of any court or governmental authority
binding on the Company; (iii) violate or conflict with, or result in a breach
of, or constitute a default (or an event which, with or without notice or lapse
of time or both, would constitute a default) under, or permit cancellation of,
or result in the creation of any encumbrance upon, any of the assets of the
Company under any of the terms, conditions, or provisions of any contract,
lease, sales order, purchase order, indenture, mortgage, note, bond,
instrument, license or other agreement to which the Company is a party, or by
which the Company or its assets is bound; (iv) permit the acceleration of the
maturity of

3
<PAGE> 10
any indebtedness of the Company; and (v) violate or conflict with any provision
of the articles of incorporation or bylaws of the Company and (vi) require the
authorization, consent, approval, license of, or a filing with, any third party
or entity (governmental or otherwise).

3.7 Capitalization of the Company. The authorized capital stock
of the Company consists of One Thousand (1,000) shares of common stock, $0.01
par value per share, of which 500 shares are validly issued and outstanding,
fully paid, and nonassessable. All of the issued and outstanding shares of
common stock of the Company are owned beneficially and of record by the Seller.
The Company has provided to the Purchaser a correct and complete copy of the
stock registry of the Company listing all stockholders of the Company and the
outstanding share certificates and total number of shares issued to each
stockholder of the Company. The Company has no other capital stock authorized
for issuance and has no treasury shares. There are no outstanding options,
warrants, convertible instruments, or other rights, agreements, or commitments
to issue or acquire any shares of common stock or any other security
constituting, or convertible or exchangeable into, capital stock of the
Company. Since the date of the Company Balance Sheet, no shares of the
Company's capital stock, no options, warrants, or other rights, agreements, or
commitments (contingent or otherwise) obligating the Company to issue shares of
capital stock, and no other securities or instruments convertible or
exchangeable into shares of capital stock, have been executed or issued by the
Company. The Company has not granted and is not a party to any agreement
granting preemptive rights, rights of first refusal, or registration rights
with respect to its outstanding capital stock or any capital stock of the
Company to be issued in the future. The Company is not bound by any exclusive
agency or indemnity agreement applicable to the issuance of shares of its
capital stock after the Effective Date.

3.8 Licenses/Compliance with Law. The Company has the lawful
authority and all federal, state or local governmental authorizations,
certificates of authority, licenses or permits necessary for or required to
conduct its respective business as such is presently being conducted. Schedule
3.8 contains a list and description of all authorizations, certificates of
authority, licenses and permits, including those granted or derived from
governmental sources, issued or granted to the Company. For the proper conduct
of its business, the Company is not required to obtain any additional
certificates of authority, permits, licenses or similar authorizations from any
governmental authority other than has already obtained as listed on Schedule
3.8. There are no pending or, to the knowledge of the Seller, threatened
legal, administrative, arbitration or other actions, notices, or proceedings
and no pending or, to the knowledge of the Seller, threatened governmental
investigations by any federal, state or local government or any subdivision
thereof or by any public or private group which assert or allege any violation
of or non-compliance with any governmental requirements or which would have the
effect of limiting, prohibiting or changing the business operations of the
Company as authorized by the authorizations, certificates of authority,
licenses and permits set forth on Schedule 3.8 and as presently conducted by
the Company. The Company maintains statutory reserves that satisfy the
requirements of all applicable governmental laws, rules and regulations
applicable to the Company, if any. The Company has made all filings with
governmental agencies required for the conduct of its respective business
including, without limitation, to the extent applicable all annual reports, all
holding company statements required to be filed with insurance or similar

4
<PAGE> 11
regulatory agencies and all filings required to conduct its business operations
as presently conducted by the Company. There are no judgments against the
Company, and no orders, rules, consent decrees or injunctions of any court,
governmental department, commission, agency or instrumentality by which the
Company is bound or to which the Company is subject. The Company has not
entered into and is not subject to any judgment, consent decree, compliance
order or administrative order with respect to any insurance, health maintenance
organization or other similar law or received any request for information,
notice, demand letter, administrative inquiry or formal or informal complaint
or claim with respect to any insurance or other similar law or the enforcement
of any such law. Neither the Company's operations nor any of the assets owned,
leased, occupied or used by the Company in the operation of its business
materially violates or fails to comply in any material respect with any
applicable federal, state or local insurance, health maintenance organization,
or dental referral plan statutes, laws, rules or regulations or, to the
knowledge of Seller, any applicable federal, state or local health, fire,
environmental, safety, zoning, building or other codes, laws, rules or
regulations, and the Company has not received any notice of any alleged
violations thereof.

3.9 Financial Statements. The Company has delivered to Purchaser
a copy of (i) the unaudited financial statements of the Company as of December
31, 1993, 1994 and 1995 consisting in each case of a balance sheet at each such
respective date, and the related statements of income, changes in stockholders'
equity and cash flows for the applicable twelve (12) month period then ended
and (ii) unaudited financial statements of the Company as of June 30, 1996 (the
"Balance Sheet Date") consisting of a balance sheet of the Company at such date
(the "Company Balance Sheet") and the related statements of income, changes in
stockholders' equity and cash flows for the applicable month and year-to-date
period then ended. Complete and accurate copies of all such financial
statements are attached as a part of Schedule 3.9 (the "Financial Statements").
The Financial Statements present fairly in all material respects the financial
position of the Company, and the results of the operations, changes in
stockholders' equity and cash flows of the Company, as of the respective dates
thereof and for the respective periods covered thereby, in conformity with
generally accepted accounting principles ("GAAP"). Except as set forth in the
Company Balance Sheet included in the Financial Statements, as of the Balance
Sheet Date there were no liabilities, debts, claims or obligations, whether
accrued, absolute, contingent or otherwise, whether due or to become due, which
are required by GAAP to be set forth in a balance sheet of the Company which
have not been so set forth in the Company Balance Sheet. The Financial
Statements were prepared from the books and records of the Company. There are
no assets shown on the Company Balance Sheet which are valued thereon at an
amount materially in excess of their fair value as of the Balance Sheet Date.
At the Balance Sheet Date, the Company owned each of the assets included in the
Company Balance Sheet. From the date hereof through the Closing Date, the
Company will continue to prepare monthly and year-to-date unaudited financial
statements on the same basis and will promptly deliver the same to Purchaser.
The foregoing representations will be applicable to all such monthly unaudited
financial statements so prepared and delivered.

3.10 No Adverse Change. Except as set forth on Schedule 3.10,
since the Balance Sheet Date, the business of the Company has been conducted
only in the ordinary course and there has not been (i) any material adverse
change in the financial condition, business,

5
<PAGE> 12
properties, assets, or results of operations of the Company (financial or
otherwise) exclusive of any general economic factors affecting the prepaid
dental plan industry in general; (ii) any material loss or damage (whether or
not covered by insurance) to any of the assets of the Company which materially
affects or impairs the ability of the Company to conduct its business as
previously conducted or any other event or condition of any character which has
materially and adversely affected the business or operations of the Company;
(iii) the attaching, placing or granting of, or the agreement to attach, place
or grant, any encumbrance on any of the assets of the Company; (iv) any sale or
transfer of any material portion of the assets of the Company; (v) any material
changes in the terms of any material contract of the Company; (vi) any material
change in the accounting systems, policies or practices of the Company; (vii)
any waiver by or on behalf of the Company of any rights which have any material
value; (viii) no taking under condemnation or right of eminent domain of any of
the assets of the Company; (ix) any entry into or termination of any material
commitment, contract, agreement, or transaction (including, without limitation,
any material borrowing or capital expenditure or sale or other disposition of
any material assets) by the Company; (x) any redemption, repurchase, or other
acquisition of any of its capital stock by the Company, or any issuance of
capital stock of the Company or of securities convertible into or rights to
acquire any such capital stock; (xi) any dividend or distribution declared, set
aside or paid on capital stock of the Company; (xii) any transfer or right
granted by the Company of or under any material lease, license, agreement,
patent, trademark, trade name, service mark or copyright; (xiii) any sale or
other disposition of any material asset of the Company, or any mortgage,
pledge, or imposition of any lien or other encumbrance on any material asset of
the Company, or any agreement relating to or contemplating any of the foregoing
not in the ordinary and usual course of business; (xiv) any default or breach
by the Company in any material respect under any contract, license, or permit;
or (xv) any material increase in the statutory reserves required to be
maintained by the Company. Since the Balance Sheet Date, the Company has
conducted its business only in the ordinary and usual course of business and,
without limiting the foregoing, no changes have been made in (i) employee
compensation levels, (ii) the manner in which employees of the Company are
compensated, (iii) supplemental benefits provided to any employees, or (iv) the
employment of any employees of the Company.

3.11 No Undisclosed Liabilities. True and correct copies of all
notes, agreements or other documents evidencing the outstanding indebtedness of
the Company, as amended to and in effect on the Effective Date, have been
delivered to Purchaser by the Company. The Company has no liabilities which
are not adequately reflected or reserved against on the face of the Company
Balance Sheet, except liabilities incurred since the Balance Sheet Date in the
ordinary course of business consistent with past practice which, in the
aggregate, would not have a material adverse effect on the condition (financial
or otherwise), assets or business of the Company. Schedule 3.11 hereto sets
forth each liability of the Company in an amount in excess of $10,000 and each
person to whom the aggregate amount of liabilities owed to such person by the
Company exceeds $10,000.

6
<PAGE> 13
Balance Sheet and all personal property owned or leased by it or used by it in
the conduct of its business in such a manner as to create the appearance or
reasonable expectation that the same is owned or leased by it, free and clear
of all liens, security interests, restrictions, claims, encumbrances, and
charges. The Seller does not know of any potential action or assertion of
rights, including condemnation, by any party, governmental or other, and no
proceedings with respect thereto have been instituted of which the Seller has
notice, that would materially affect the ability of the Company to utilize each
of such assets in its business. The Company has not received any notices of
default or other violations from any mortgagee regarding any properties leased
by the Company. Schedule 3.12 hereto contains a detailed listing of all
material assets of the Company. The assets now owned by the Company constitute
all assets reasonably necessary to enable Purchaser to conduct the business and
operations of the Company on substantially the same terms as such business has
been conducted historically. Except as disclosed in Schedule 3.12, all such
assets are well maintained and in good operating condition, except for normal
wear and tear.

3.13 Litigation. Except as set forth on Schedule 3.12 hereto, (i)
no material investigation or review by any governmental entity with respect to
the Company is pending or, to the knowledge of the Seller, threatened, nor has
any governmental entity indicated to the Company an intention to conduct the
same; and (ii) there is no action, suit, or administrative, condemnation,
arbitration or other proceeding (including proceedings concerning labor
disputes or grievances or union recognition) pending or, to the knowledge of
the Seller, threatened against or affecting the Company to which the Company is
a party, at law or in equity, before any federal, state, or municipal court or
other governmental department, commission, board, bureau, agency, or
instrumentality. The Company is not now, and has not been, a party to any
injunction, order or decree restricting the method of the conduct of its
business or the marketing of any of its products or services.

3.14 Real Property Leases . Schedule 3.14 lists all leases of real
property to which the Company is a party (the "Real Property Leases").
Accurate and complete copies of the Real Property Leases, as amended to the
Effective Date, have been delivered to Purchaser. Except as disclosed on
Schedule 3.14, to the knowledge of the Seller, all land, buildings, facilities
and other structures and improvements subject to the Real Property Leases are
in compliance with any applicable zoning, environmental or health laws and
regulations or any other similar law, statute, regulation or ordinance. The
Company is the lessee and in peaceful and undisturbed possession of the
property subject to the Real Property Leases. To the knowledge of the Seller,
all covenants or other restrictions (if any) to which any of the property
leased to the Company pursuant to the Real Property Leases are being properly
performed and observed in all material respects by the Company, and the Company
has not received any notice of violation (or claimed violation) thereof which
has not been resolved. The Company has delivered to Purchaser true, correct
and complete copies of all reports or audits of any engineers, environmental
consultants or other consultants in its possession relating to any of the Real
Property Leases. There is no pending or, to the knowledge of the Seller, any
threatened proceeding or governmental action to condemn or take by the power of
eminent domain (or to purchase in lieu thereof) all or any part of the property
subject to the Real Property Leases which is material to the operations of the
Company as presently conducted. The Company does not own any real property.

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<PAGE> 14
3.15 Intellectual Property. Schedule 3.15 is an accurate and
complete list of all tradenames that the Company uses in its business
operations. The Company has no United States and foreign patents, patent
applications, patent licenses, trademarks, and service mark registrations (and
applications therefor), and has no copyrights and copyright registrations (and
applications therefor), trade secrets, inventions, processes, designs, know-how
and formula which are owned or licensed for use by the Company and utilized by
the Company in the business or operations of the Company as presently
conducted. There is no adverse claim against the Company, or to the knowledge
of the Seller, any threatened litigation or claim of infringement. To the
knowledge of the Seller, the Company does not utilize any intellectual or
proprietary trade secret information which infringes any trademark, tradename,
service mark, copyright or patent of another, and the Company has not received
any notice contesting its right to use any trade name now used by it in
connection with its business or the operation thereof. The Company has not
granted any license to a third party in respect of any intellectual property.

3.16 Contracts.

(a) Material Contracts. Schedule 3.16A lists all
material contracts or agreements of the following types to which the Company is
a party or by which the Company is bound:

(i) other than the contracts described in subparagraphs
(b) and (c) below any contract or agreement with a dentist or other
health provider or any partnership or professional association or
corporation owned by dentists or other health providers and any contract
or agreement with any indemnity insurers, health maintenance
organizations or other prepaid dental plans;

(iii) any contract or agreement for the maintenance,
purchase or sale of equipment or capital assets having a value in excess
of $25,000;

(iv) any power of attorney (other than routine powers
given to governmental officials authorizing service of process);

(v) any lease of personal property;

(vi) any guaranty, suretyship agreement or other agreement
relating to any contingent liability.

(vii) any contract with an independent agent or broker who
sells the prepaid dental plans of the Company;

(viii) any contract or agreement with independent
consultants;

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<PAGE> 15
(ix) any contract, agreement voting trust or proxy among
or by the stockholders of the Company;

(x) any contract or agreement restricting the method by
which the Company conducts its business or the marketing of any of its
products or services; and

(xi) any contract or agreement between the Company and any
stockholder of the Company or any other affiliate of the Company or a
stockholder of the Company.

(b) Dentists' Contracts. Schedule 3.16B (i) includes
copies of representative forms of all dentist and other dental provider
agreements to which the Company is a party and (ii) lists all dentist and other
dental provider agreements executed by the Company. Except for any agreement
as to which a copy thereof is specifically included as a part of Schedule
3.16B, the agreements listed in Schedule 3.16B are in all material respects in
the same form as one of the representative forms of such agreements provided as
a part of Schedule 3.16B.

(c) Other Provider Contracts. Schedule 3.16C (i)
includes copies of representative forms of all other health provider agreements
to which the Company is a party and (ii) lists all other health provider
agreements executed by the Company. Except for any agreement as to which a
copy thereof is specifically included as a part of Schedule 3.16C, all of the
agreements listed in Schedule 3.16C are in all material respects in the same
form as one of the representative forms of such agreements provided as a part
of Schedule 3.16C.

(d) Employer Group Contracts. Schedule 3.16D (i)
includes copies of representative forms of all employer group agreements to
which the Company is a party and (ii) lists all employer group agreements to
which the Company is a party and the number of participants for each such
employer. Except for any agreement as to which a copy thereof is specifically
included as a part of Schedule 3.16D, all of the agreements listed in Schedule
3.16D are in all material respects in the same form as one of the
representative forms and such agreements provided as a part of Schedule 3.16D.
Schedule 3.16D also sets forth the premium rates for the largest twenty (20) in
revenues of the employer group agreements in each state in which the Company
conduct business operations and the monthly premium revenues of each employer
group agreement listed in Schedule 3.16D.

(e) Management Contracts. Schedule 3.16E sets forth all
management, marketing, administrative services, data processing and third party
administration contracts to which the Company is a party.

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<PAGE> 16
contract is with an unrelated third party entered into on an arms-length basis
in the ordinary course of business, (v) there are no material defaults under
any of such contracts, and (vi), to the knowledge of the Seller, to the extent
required by any law or regulation have been filed with and approved by all
governmental regulatory agencies.

(g) None of the Companies or any of their respective
Subsidiaries (i) has any liability for renegotiation of government contracts or
subcontracts, (ii) has been suspended or debarred from bidding on contracts or
subcontracts with any federal, state or local agency or governmental authority,
(iii) has been audited or investigated by any such agency or authority with
respect to contracts entered into or goods and services provided by any of the
Companies or any of their respective Subsidiaries or (iv) has had a contract
terminated by any such agency or authority for default or failure to perform in
accordance with applicable standards.

3.17 Employees, Et Cetera. Schedule 3.17 hereto lists in accurate
and complete detail all employees of the Company as of the Effective Date,
their job titles, annual rates of compensation, accrued vacation, holiday and
sick leave as of such date, other fringe benefits, if any, a description of any
severance pay arrangements, if any, and the amounts payable with respect to
such accrued vacation, holiday and sick leave as of the Effective Date and the
rate at which such vacation, holiday and sick leave will accrue after the
Effective Date. Except as shown on Schedule 3.17, the Company is not bound by
any written contract of employment with any of its employees and all oral
employment contracts are terminable at will, subject to applicable law, or by
any consulting or similar agreements. The Company is not a party to any
employment or other agreement, whether written or oral, pursuant to which the
Company has agreed to make a loan to, or guarantee any loan of, any employee or
relating to any bonus, deferred compensation, severance pay or similar plan,
agreement, arrangement or understanding except as reflected in Schedule 3.17.
Except as listed on Schedule 3.17 or Schedule 4.15 hereof, the Company has no
Welfare Plan, Pension Plan, or any other type of pension, profit sharing,
deferred compensation, retirement, stock option, bonus, severance, medical,
dental, life insurance, accident, or other employee benefit or compensation
plan, agreement, arrangement, practice or policy with respect to employees.
The Company has complied with all requirements of Sections 6001 through 6008 of
the ERISA and Section 4980B of the Code with respect to itself and its
employees. The Company is not bound, and following the Closing will not be
bound, by any express or implied contract or agreement to employ, directly or
as a consultant or otherwise, any person for any specific period of time or
until any specific age except as specified in the written agreements identified
in Schedule 3.18.

3.18 Employee Benefit Plans. Except as disclosed in Schedule 3.18:

(a) The Company does not maintain or contribute to, and
has not in the past maintained or contributed to, any Pension Plan or Welfare
Plan, except as a described on Schedule 3.18, nor is the Company presently, or
has it ever been, a participating employer in any Multiemployer Plan.

(b) With respect to each Pension Plan and each Welfare
Plan listed on Schedule 3.18, to the knowledge of the Seller: (i) there is no
fact, including, without limitation,

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<PAGE> 17
any reportable event, that exists that would constitute grounds for termination
of such plan by the PBGC or for the appointment by the appropriate United
States District Court of a trustee to administer such plan, in each case as
contemplated by ERISA; (ii) neither the Company nor any Subsidiary nor any
fiduciary, trustee, or administrator of any such Pension Plan or Welfare Plan,
has engaged in a prohibited transaction that would subject the Company to any
material tax or any material penalty imposed by ERISA or the Code; (iii)
neither the Company has not incurred any material liability to the PBGC (other
than for payment of premiums); (iv) the Company has contributed all amounts
thereto it is required to contribute under the terms of the plan in question
and applicable law, and there is no accumulated funding deficiency with respect
to any such Pension Plan, whether or not waived, other than routine, non-
contested claims for benefits. There is not any pending or, to the knowledge
of the Seller, threatened claim by or on behalf of any Pension Plan or Welfare
Plan, by any employee or former employee covered or previously covered under
any Pension Plan or Welfare Plan, or otherwise involving any Pension Plan or
Welfare Plan.

(c) There has been no termination of any Pension Plan or
Welfare Plan by the Company that has occurred during the five-year period
ending on the date hereof.

(e) No Welfare Plan listed on Schedule 3.18 is funded
with a trust or other funding vehicle, other than insurance policies.

(g) Each Pension Plan listed on Schedule 3.18 which is
intended to be qualified under Section 401(a) of the Code, has received a
favorable determination letter from the Internal Revenue Service as to the
qualification under the Code of each such Pension Plan as amended to comply
with the Tax Reform Act of 1986 and all applicable, subsequent legislation,
and, to the knowledge of the Seller, no event has occurred since the date of
such favorable determination letter that would adversely affect such
qualification.

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<PAGE> 18
contributed to by the Company is payable or exercisable as a result of the
transaction contemplated by this Agreement, and the payment, exercise, or
vesting of any such bonus, severance pay, or employee benefit will not be
accelerated or otherwise enhanced by such transaction.

True, correct and complete copies of each Pension Plan and Welfare Plan listed
on Schedule 3.18 as amended to and in effect on the date hereof; any agreements
entered into in connection with each such Pension Plan and Welfare Plan; the
most recent annual report filed with the Internal Revenue Service for each such
Pension Plan and Welfare Plan; the most recent actuarial report, if any, for
each such Pension Plan and Welfare Plan; the most recent summary plan
description, together with each summary of material modifications; and any
other communication generally disseminated to employees or former employees of
the Company and describing benefits provided under each such Pension Plan and
Welfare Plan, have been delivered to Purchaser by the Company.

3.19 Receivables. To the knowledge of the Seller, all Receivables
of the Company whether or not reflected in the Company Balance Sheet, represent
transactions in the ordinary course of business, and, except as disclosed on
Schedule 3.19, are current and collectible net of any reserves therefor shown
on the Company Balance Sheet (which reserves are adequate and were calculated
consistent with past practice). The Company has no receivables more than sixty
days past due.

3.20 Accounts Payable. The accounts payable reflected on the
Company Balance Sheet and those reflected on the books of the Company at the
time of the Closing will reflect all material amounts owed by the Company in
respect of trade accounts due and other Payables as required by GAAP to be
identified on such Company Balance Sheet or in the books of the Company.
Except as set forth on Schedule 3.20, to the knowledge of the Seller, no
account payable of the Company is past due or otherwise in default by the
Company.

3.22 Labor Practices. The Company has no collective bargaining or
other labor union agreements. There is no unfair labor practice complaint
against the Company pending before the National Labor Relations Board, there is
no pending or, to the knowledge of the Seller, threatened labor dispute, strike
or work stoppage affecting the Company's business, nor has there been any of
the same or any labor union organizing activity relating to the Company within
the last three (3) years.

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<PAGE> 19
Schedule 4.20 lists all insurance claims submitted in connection with property
damage or medical malpractice involving the Company for the latest three (3)
years.

3.24 Consents. Except as set forth in Schedule 3.24 hereto, Seller
has no knowledge of any consents, approvals or authorizations of any person,
entity or governmental agency required in connection with the sale of the
Shares and the consummation of the transaction contemplated by this Agreement.
With respect to any such consents, approvals or authorizations contemplated in
Schedule 3.24 herein, Seller covenants and agrees with Purchase that it will
take all reasonable steps necessary and desirable, and will use all
commercially reasonable efforts to cooperate with Purchaser in obtaining, as
promptly as possible, all necessary approvals, authorizations and consents of
governmental, court and regulatory bodies, and officials required to consummate
the transaction contemplated hereby.

3.25 Environmental Matters. Except as disclosed on Schedule 3.25,
(a) the Company has not received any notice from any governmental authority or
private person or entity advising it that the operation of the Company's
business is in violation of any environmental law or any applicable
environmental permit or that any of them is responsible (or potentially
responsible) for the cleanup of any pollutants, contaminants or hazardous or
toxic wastes, substances or materials at, on or beneath the property subject to
the Real Property Leases; and (b) to the knowledge of the Seller, the Company
is not the subject of federal, state, local or private litigation or
proceedings involving a demand for damages or other potential liability with
respect to violations of environmental laws.

3.26 Taxes. All federal, state and other tax returns and reports
of the Company required by law to be filed have been prepared and properly
filed or valid extensions have been obtained, and, except as set forth on
Schedule 3.26, all taxes, charges, fees, duties, levies or other assessments
which are imposed by the United States, or any state, local or foreign
government or subdivision or agency thereof, including any interest, penalties
or additions (collectively "Taxes") upon the Company or any of its properties,
assets or income which are due and payable or claimed by any taxing authority
to be due and payable have been paid. The liability for accrued taxes as shown
in the Company Balance Sheet (net of amounts reserved for deferred taxes) is
sufficient for the payment of all unpaid Taxes of the Company accrued for or
applicable to the periods prior to the Balance Sheet Date and all years and
periods prior thereto and for which the Company may at that date have been
liable in its own right or by reason of its being a member of any group of
corporations filing consolidated tax returns (including any such amounts
payable as a result of an audit of any tax return for any such period). The
Company utilizes the accrual method of accounting for tax purposes.

Except as set forth on Schedule 3.26, there are no claims for Taxes
pending against the Company, and the Seller does not know of any threatened
claim for tax deficiencies or any basis for such claims, and there are not now
in force any waivers or agreements by the Company for the extension of time for
the assessment of any tax, nor has any such waiver or agreement been requested
by the Internal Revenue Service (the "Service") or any other taxing authority.

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<PAGE> 20
Except as set forth on Schedule 3.26, the Federal income tax returns of
the Company have not been examined or audited by the Service. Except as set
forth on Schedule 3.26, no material issues have been raised in any examination
by any taxing authority with respect to the businesses and operations of the
Company which, by application of similar principles, could be expected to
result in a proposed adjustment to the liability of the Company for taxes for
any other period not so examined.

The Company has not filed a consent under Section 341(f) of the Internal
Revenue Code of 1986, as amended (the "Code") concerning collapsible
corporations. Except as disclosed in Schedule 3.26, the Company has not made
any payments, is obligated to make any payments, or is a party to any agreement
that under certain circumstances could obligate it to make any payments that
will not be deductible under Section 280G of the Code. The Company has not
been a United States real property holding corporation within the meaning of
Section 897(c)(2) of the Code during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code. The Company has disclosed on their federal
income tax returns all positions taken therein that could give rise to a
substantial understatement of federal income tax within the meaning of Section
6662 of the Code. The Company is not a party to any tax allocation or sharing
agreement. The Company (a) has not been a member of an affiliated group filing
a consolidated federal income tax return and (b) has no liability for the taxes
of any person (other than any of the Company) under Treas. Reg. Section
1.1502-6 (or any similar provision of state, local, or foreign law), as a
transferee or successor, by contract, or otherwise.

The Company has paid or is withholding and has or will pay when due to
the proper taxing authorities all withholding amounts and taxes required to be
withheld or paid for all income, unemployment, social security, medicare or
other similar Taxes programs or benefits with respect to wages, salary and
other compensation of directors, officers and employees of the Company.

3.27 Transactions With Affiliates. Except as set forth in Schedule
3.27, there are no loans, leases, agreements, contracts or other transactions
between the Company and any present or former stockholder, director or officer
of the Company, or any member of such stockholder's, director's or officer's
immediate family. Except as set forth in Schedule 3.27, no stockholder,
director or officer of the Company nor any of their respective spouses or
family members owns directly or indirectly on an individual or joint basis any
material interest in, or serves as an officer or director of, or in any similar
capacity for, any competitor, customer, provider or supplier of the Company or
any organization which has a material contract or arrangement with the Company.
Except as set forth in Schedule 3.27, neither Seller nor any affiliate of
Seller has any claim or cause of action against the Company and the Company has
not obligation or liability to a Seller or any obligation to Seller.

3.28 Improper Payments. To the knowledge of the Seller, neither
the Company, nor any director, officer, employee or agent of the Company has
made any improper bribes, kickbacks or other payments on behalf of the Company
to, or received any such payments from, customers, vendors, suppliers or other
persons contracting with the Company.

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<PAGE> 21
3.29 Compliance with Insurance Laws. In all jurisdictions where the
failure to do so would result in a material adverse effect, the Company (i) has
made all required filings under applicable insurance or similar statutes or
regulations currently in effect and (ii) is duly licensed or authorized in each
jurisdiction where it is required under applicable insurance or similar
statutes or regulations currently in effect to be so licensed or authorized to
conduct its business as presently conducted. The Company holds licenses and
certificates of authority or is otherwise authorized in accordance with
applicable laws and regulations currently in effect, in each jurisdiction where
the Company is required to be so licensed or authorized to offer, sell or
otherwise provide the dental referral plan and other services offered, sold or
otherwise provided by the Company in the jurisdiction in which they are
currently being offered, sold or otherwise provided and to otherwise conduct
its businesses as presently conducted. In each jurisdiction, the dental
referral plan and other services offered and sold by the Company have been and
are offered and sold in compliance with the requirements of all relevant laws
and regulations currently in effect, in each case, with such exceptions,
individually or in the agreements, as would not have a material adverse effect
on the ability of the Company to conduct its business in any jurisdiction in
which the Company operates; and the Company has not received any notification
from any insurance regulatory or similar governmental authority to the effect
that any additional permit, license, authorization or certificate of authority
from such insurance regulatory or similar governmental authority is needed to
be obtained by the Company in any case in which it could be reasonably expected
that obtaining such permits or the failure to obtain such permits would have a
material adverse effect on the ability of the Company to conduct its business
in any jurisdiction in which the Company operates. The Company has not entered
into or been subject to any judgment, consent decree, compliance order or
administrative order with respect to any insurance or other similar law or,
other than in the ordinary course of business, received any request for
information, notice, demand letter, administrative inquiry or formal or
informal complaint or claim with respect to any insurance or other similar law
or the enforcement of any such law. As of the date hereof there is no, and
since the date of the Balance Sheet, the Seller has no knowledge of any,
legislative or regulatory development or written proposal relating to (i) any
statute, rule or regulation or other law not currently in effect or (ii) the
scope or application of any statute, rule, regulation or other law currently in
effect but not currently applicable so that, if enacted, promulgated or made
applicable to the Company or its business, may have or impose any additional
regulatory obligations or limitations on such Company or such Subsidiary or
their respective products. In any jurisdiction in which the Company is
conducting or has, prior to the date hereof, ever conducted any activities
including without limitation activities relating to the
offer and sale of dental care products, plans or services, the recruitment of
dentists or dental offices in connection with the offer and sale of such
products, plans or services, the marketing of any such products plans or
services to potential purchasers or subscribers thereto, or any joint venture
with any other party relating to the foregoing, the Company has not failed to
comply with any applicable statute, ordinance, order, rule or regulation, or
failed to obtain any certificated authority, license or permit, which failure,
in either case, would subject such Company to any fine, penalty, assessment or
other amount or could be the basis for any judgment, consent decree, compliance
order or administrative order with respect to any insurance or similar law.
Seller shall be liable for any such fine, penalty, assessment or judgment, or
any liabilities incurred or payments required under any such consent decree,
compliance order or administrative order as a result of any

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<PAGE> 22
actions or failures to act by the Company prior to the Closing Date together,
in each case, with all costs and expenses (including reasonable fees,
disbursements and expenses of attorneys) relating thereto, in accordance with
and subject to the limitations set forth in Article 10.

3.30 Full Disclosure. This Agreement and the documents,
certificates, and other writings furnished or to be furnished by or on behalf
of Seller to Purchaser pursuant to the provisions of this Agreement do not and
will not contain any untrue statement of a material fact or omit to state any
material fact necessary to make the statements made, in the light of the
circumstances under which they are made, not misleading. To the knowledge of
the Seller, there is no material liability or obligation which relates to the
agreements and documents identified in the Schedules which is not generic to
the identified agreement or document and readily ascertainable from a review of
such agreement or document, and not otherwise disclosed herein or identified on
the face of the Schedules.

ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PURCHASER

The Purchaser represents and warrants to the Seller as follows:

4.1 Due Incorporation. Purchaser is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware, with all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as now being conducted.

4.2 Corporate Authority. Purchaser has all requisite corporate
power and authority to enter into this Agreement and to carry out its
obligations under this Agreement. The execution, delivery and performance of
this Agreement by Purchaser has been duly authorized by all necessary corporate
action on the part of Purchaser. This Agreement has been duly executed and
delivered by Purchaser and constitutes the legal, valid and binding obligation
of Purchaser, enforceable in accordance with its terms.

4.3 Absence of Breach; No Consents. The execution and delivery of
this Agreement by the Purchaser, and the performance by Purchaser of its
obligations hereunder, do not (i) conflict with, and will not result in a
breach of, any of the provisions of the certificate of incorporation or bylaws
of Purchaser; (ii) contravene any law, rule, or regulation of any State or
Commonwealth or of the United States, or of any applicable foreign
jurisdiction, or any order, writ, judgment, injunction, decree, determination,
or award affecting or binding upon Purchaser; (iii) conflict with or result in
a material breach of or default under any material indenture or loan or credit
agreement or any other material agreement or instrument to which Purchaser is a
party or by which it or any of its material properties may be affected or
bound; or (iv) except as reflected on Schedule 3.24, require the authorization,
consent, approval, or license of any third party.

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<PAGE> 23
4.4 Investment Representations. Purchaser will acquire the Shares
for its own account for investment and not with a view to the resale or
distribution thereof. Purchaser will not transfer or otherwise dispose of the
Shares, or any interest therein, in such manner as to violate any provisions of
the Securities Act of 1933, as amended, and the rules and regulations
thereunder (collectively, the "Securities Act"), or of any applicable state
securities laws regulating the disposition thereof. Purchaser agrees that the
certificates representing the Shares may bear legends to the effect that such
shares have not been registered under the Securities Act or such other state
securities laws, and that no interest therein may be transferred or otherwise
disposed of in violation of the provisions thereof or of any rules and
regulations issued thereunder.

4.5 Broker's or Finder's Fees. No agent, broker, employee,
officer, stockholder or other person or firm acting on behalf of, or under the
authority of, Purchaser is or will be entitled to any commission or broker's or
finder's fee from any of the parties hereto in connection with any of the
transactions contemplated herein.

ARTICLE 5
COVENANTS OF THE SELLER AND THE COMPANY

Pending the Closing, Seller and the Company shall do the following:

5.1 Affirmative Covenants. Subject to the terms and conditions
stated herein, Seller will take, and cause the Company to take, and the Company
will take, every action reasonably required of the Seller to satisfy the
conditions to Closing set forth in this Agreement on or before the Closing Date
and otherwise to ensure the prompt and expedient consummation of the
transactions substantially as contemplated by this Agreement, and will exert
all reasonable efforts to cause the transactions contemplated by this Agreement
to be consummated.

5.2 Access and Information. Seller shall cause the Company to
afford to Purchaser and its representatives reasonable access during reasonable
hours throughout the period prior to the Closing to all properties, books,
contracts, commitments, computer programs and data, reports, manuals and
records (including, but not limited to, tax returns), and to all personnel of
the Company and the Subsidiaries and, during such period, shall promptly
furnish to Purchaser all other information concerning such business,
properties, and personnel as Purchaser may reasonably request. Purchaser shall
maintain the confidentiality of all such information as required by Section 6.5
hereof.

5.3 No Solicitation. From the date of this Agreement until the
Closing or the termination of this Agreement pursuant to its terms, and the
Seller, and those acting on behalf of the Seller, will not, and the Seller will
use its best efforts to cause the Company and both of their officers,
employees, agents, and representatives (including any investment banker) not,
directly or indirectly, to solicit, encourage, or initiate any discussion with,
or negotiate or otherwise deal with, or provide any information to, any person
or entity other than Purchaser and its representatives concerning any merger,
sale of assets, or similar transaction involving

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<PAGE> 24
the Company, or sale of any capital stock of the Company, or any interest
therein. Seller will, or will cause the Company to, notify Purchaser
immediately upon receipt of any offer or proposal relating to any of the
foregoing and such notice shall describe in detail the terms thereof and
identify the party or parties thereto. From the date of this Agreement, until
the Closing or the termination of this Agreement pursuant to its terms, neither
the Company nor the Seller will furnish, without the prior written consent of
Purchaser, to any person or entity (other than Purchaser) any non-public
information concerning the Company or its businesses, financial affairs or
prospects for the purpose of or with the intent of permitting such person or
entity to evaluate a possible acquisition of any capital stock or (other than
in the ordinary course of business) assets of the Company.

5.4 Conduct of Business Prior to Closing. Seller covenants and
agrees that, prior to the consummation of this Agreement or to the termination
of this Agreement pursuant to its terms, unless Purchaser shall otherwise
consent in writing, and, except as otherwise contemplated by this Agreement,
each of the following shall be complied with:

(b) The Company shall not (i) amend its articles of
incorporation or bylaws or (ii) split, combine, or reclassify any of its
outstanding securities, or (iii) declare, set aside, or pay any dividend or
other distribution on, or make, agree or commit to make any exchange for or
redemption of, any of its outstanding securities whether payable in cash, stock
or property; provided, however, that the Company may pay cash dividends to the
Seller in an aggregate amount equal to the net income of the Company during the
period from January 1, 1996 to the date of the closing;

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<PAGE> 25
provided, however, that the Company may (i) make usual and customary employee
salary adjustments; (ii) may pay usual and customary bonuses to employees; and
(iii) may terminate and employ non-management employees as needed to operate
the business of the Company, in each case consistent with past practices;

(i) The Company shall not prepay any loans, including,
without limitation, loans from its stockholders, officers, directors or
employees, and shall not make any principal payments on the outstanding loans
from the Seller or, except in the ordinary course of business consistent with
past practice, make any change in its borrowing arrangements or modify or amend
or terminate any material contract or release or assign any material rights or
claims;

(j) In connection with any filings to be made by the
Purchaser under the Securities Act of 1933, as amended, the Company shall (i)
provide for inclusion therein the financial and other information and documents
pertaining to the Company required by applicable SEC rules and regulations to
be included therein, (ii) use commercially reasonable efforts to cause the
accountants for the Company to deliver such consents, reports and comfort
letters in connection therewith as the Purchaser may reasonably request and
(iii) generally cooperate with the Purchaser in connection therewith; provided,
however, that all expenses relating to such consents, reports, comfort letters
and cooperation shall be paid directly and promptly by the Purchaser (except
for expenses that the Company and its Subsidiaries would have incurred in any
event, such as the expense of an annual audit);

<PAGE> 26

(l) The Company will comply with all laws and regulations
applicable to it and its operations;

(m) The Company will maintain in full force and effect
insurance coverage of a type and amount customary in its business, but not less
than that presently in effect;

(n) The Company will not knowingly take any action (or
omit to take any action) which would cause any representation or warranty
contained in Article 3 of this Agreement to be untrue at any time prior to
Closing as if such representation or warranty were made at and as of such time;

(o) The Company will not make any change in any method of
reporting income or expenses for federal income tax purposes; and

(p) The Company shall not knowingly take any action which
would prevent compliance with any of the conditions in Articles 7 or 8 of this
Agreement.

5.5 Consents and Approvals. The Seller shall use and the Seller
shall cause the Company to use commercially reasonable efforts to cooperate
with Purchaser to obtain all necessary consents and approvals required for its
performance of this Agreement and the transactions contemplated hereby,
including, without limitation, the consents listed on Schedule 3.24 other than
the regulatory change of control approvals to be obtained by Purchaser. As
required in connection with the performance of this Agreement, the Seller shall
cause the Company to promptly provide such other information and communications
to governmental and regulatory authorities, including, without limitation,
insurance regulatory authorities in any jurisdiction in which the Company
conducts business, as such regulatory authorities or Purchaser may reasonably
request. Between the date hereof and the Closing Date, the Seller shall cause
the Company to promptly provide Purchaser with copies of all correspondence and
filings to or from all governmental and regulatory bodies and officials
relating to the Company.

5.6 Publicity. Prior to the Closing, any public statement or
announcement by the Seller or Company, including but not limited to any written
news releases, pertaining to this Agreement or the transactions contemplated
thereby shall be submitted to Purchaser for review and approval prior to the
release by the Company, and shall be released only in a form approved by
Purchaser, provided, however, that (i) such approval shall not be unreasonably
withheld and (ii) such review and approval shall not be required of statements
and announcements if prior review and approval would prevent the timely and
accurate dissemination of such statements and announcements as required to
comply, in the judgment of counsel, with any applicable law, rule or policy.
Seller and Purchaser shall issue a press release regarding the execution of
this Agreement within one day of the date hereof or such other time as Seller
and Purchaser may mutually agree.

5.7 Financial Information. Seller will cause the Company to
deliver as soon as reasonably practicable to Purchaser unaudited financial
statements of the Company for each

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<PAGE> 27
month from and after the date hereof as and when such financial statements
become available in the usual course of business.

5.8 Expenses. All costs and expenses incurred by Seller in
connection with this Agreement shall be paid by Seller and none of such costs
and expenses shall be paid by the Company.

5.9 Breach of Representations and Warranties. Promptly upon
Seller becoming aware of any breach of any of the representations and
warranties of the Seller contained in this Agreement, or any event which would
cause the Seller to be unable to deliver the certificates contemplated by
Section 8.1(e) hereof, the Seller shall give detailed written notice thereof to
the Purchaser and shall use all commercially reasonable efforts to prevent or
promptly remedy the same.

5.10 No Transfer of Shares. Unless and until this Agreement is
terminated, Seller shall not, directly or indirectly, exchange, transfer,
assign, pledge or encumber any of the Shares owned by the Seller, nor shall
Seller grant, directly or indirectly, any right to acquire, dispose of, vote or
otherwise control in any manner such Shares.

5.11 Updating of Exhibits and Schedules. Seller shall notify
Purchaser of any changes, additions, or events which may cause any change in or
addition to the Schedules delivered by them under this Agreement promptly after
the occurrence of the same and again at the Closing by delivery of appropriate
updates to all such Schedules. No notification of a change or addition to a
Schedule made pursuant to this Section shall be deemed to cure any breach of
any representation or warranty resulting from such change or addition unless
Purchaser specifically agrees thereto in writing, nor shall any such
notification be considered to constitute or give rise to a waiver by Purchaser
of any condition set forth in this Agreement. Nothing contained herein shall
be deemed to create or impose on Purchaser any duty to examine or investigate
any matter or thing for the purposes of verifying the representations and
warranties made by Seller herein. Purchaser shall not be deemed to have waived
any misrepresentation or breach of warranty unless and except Purchaser has
actual knowledge of such misrepresentation or breach of warranty and executes
such waiver in writing.

ARTICLE 6
COVENANTS OF PURCHASER

Purchaser agrees that from the date hereof through the Closing Date:

6.1 Affirmative Covenants. Subject to the terms and conditions
stated herein, Purchaser will take every action reasonably required of it in
order to satisfy the conditions to Closing set forth in this Agreement and
otherwise to ensure the prompt and expedient consummation of the transactions
substantially as contemplated hereby, and will exert all reasonable efforts to
cause the Agreement promptly to be consummated.

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6.2 Cooperation. Purchaser shall cooperate with Seller and its
accountants and agents in carrying out the transaction, and in delivering all
documents and instruments deemed reasonably necessary or useful by Seller.

6.3 Expenses. Except as otherwise expressly provided herein,
whether or not this Agreement is consummated, all costs and expenses incurred
by Purchaser in connection with this Agreement and the transactions
contemplated hereby shall be paid by Purchaser.

6.4 Consents and Approvals. Purchaser shall use commercially
reasonable efforts to obtain all necessary consents and approvals required for
its performance of this Agreement and the transactions contemplated hereby,
including, without limitation, the approvals listed on Schedule 3.24; provided,
however, that Purchaser shall not be required or obligated to pay any amounts
necessary to satisfy conditions to or in order to obtain such consents other
than normal and customary filing fees and out-of-pocket costs and expenses of
the Company including attorney's fees incurred in providing its assistance with
respect thereto. Purchaser shall diligently and promptly proceed immediately
after the date of this Agreement to make all filings, applications, statements
and reports to all governmental authorities which are required to be made prior
to the Closing Date by or on behalf of it pursuant to any applicable statute,
rule or regulation in connection with this Agreement and the transactions
contemplated hereby and shall diligently and in good faith pursue the taking of
all action necessary to obtain approval of the transactions contemplated herein
by the insurance regulatory authorities of any jurisdiction in which the
Company conduct business. As required in connection with the performance of
this Agreement, Purchaser will promptly provide such information and
communications to governmental and regulatory bodies and authorities,
including, without limitation, insurance regulatory authorities in any
jurisdiction in which the Company conducts business, as such regulatory
authorities may reasonably request. Purchaser shall not be required to cure
any existing regulatory compliance requirements in order to obtain such
consents and approvals. Within five (5) business days after the written
request of the Seller, the Purchaser shall provide to the Seller a status
report as to all such filings and approvals.

6.5 Confidentiality. Prior to Closing, unless otherwise required
by law, Purchaser will hold in confidence all confidential information that has
been disclosed by the Seller and the Company and will not use any such
confidential information except in connection with the transaction, until such
time as such information is otherwise publicly available; provided, however,
that this sentence will not apply to any information that becomes generally
available to the public, was available on a non-confidential basis to Purchaser
prior to its disclosure pursuant hereto, or becomes available on a
non-confidential basis from a third party who is not bound to keep such
information confidential. In the event of the termination of this Agreement,
Purchaser will, and will cause its representatives to, deliver to the Company
all documents and other written materials, and all copies thereof, obtained by
Purchaser or on its behalf from the Seller or the Company as a result of this
Agreement or in connection herewith, whether so obtained before or after the
execution hereof. Purchaser agrees that the Seller shall have standing and may
avail itself of any remedy at law or in equity, including an action for
injunctive relief, in the event of a breach or threatened breach by Purchaser
of any of the provisions of this Section 6.5. The obligations of Purchaser
under this Section 6.5 shall survive

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<PAGE> 29
termination of this Agreement for any reason whatsoever and shall remain in
effect until two (2) years from the Effective Date of this Agreement.

6.6 Publicity. Prior to the Closing, any public statement or
announcement by the Purchaser, including but not limited to any written news
releases by the Purchaser, pertaining to this Agreement or the transactions
contemplated hereby shall be submitted to the Seller for review and approval
prior to the release by the Purchaser, and shall be released only in a form
reasonably approved by the Company provided however, that (i) such approval
shall not be unreasonably withheld and (ii) such review and approval shall not
be required of statements and announcements by the Purchaser if prior review
and approval would prevent the timely and accurate dissemination of such
statements and announcements as requested to comply, in the judgment of
counsel, with any applicable law, rule or policy. Seller and Purchasers shall
issue a press release regarding the execution and delivery of this Agreement
within one day after the date hereof or such other time as Seller and Purchaser
may mutually agree.

ARTICLE 7
CONDITIONS TO OBLIGATIONS OF SELLER

7.1 Conditions to Obligations of Seller. The obligations of
Seller to effect the transactions contemplated by this Agreement shall be
subject to the fulfillment at or prior to the Closing of the following
conditions, unless Seller shall waive such fulfillment in whole or in part in
writing:

(a) This Agreement and the transactions contemplated
hereby shall have received all approvals, consents, authorizations, and waivers
from governmental and other regulatory agencies and other third parties
(including lenders, holders of debt securities, and lessors) required by law or
contract to consummate this Agreement and required to keep all certificates of
authority and licenses held by the Company and Subsidiaries in full force and
effect after the Closing;

(c) Purchaser shall have performed in all material
respects its agreements, covenants and obligations contained in this Agreement
required to be performed at or prior to the Closing;

(d) The representations and warranties of Purchaser set
forth in this Agreement shall be true in all material respects as of the
Effective Date and as of the Closing Date as if made as of such time;

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<PAGE> 30
(e) Seller shall have received from Purchaser an
officer's certificate, executed by an authorized officer of Purchaser (in his
capacity as such), dated the Closing Date, as to the satisfaction of the
conditions stated in Sections 7.1(c) and (d) above (to the best of his
knowledge where appropriate) and further certifying that Purchaser has received
the Schedules and received copies of, or had the opportunity to review, the
agreements and documents listed in the Schedules to this Agreement.

(f) Seller shall have received, on and as of the Closing
Date, an opinion of Counsel to Purchaser, subject to customary limitations,
reasonably satisfactory in form and substance to Counsel to Seller, and such
other closing documents and instruments as Seller shall reasonably require, in
each case reasonably satisfactory in form and substance to Seller and Counsel
to Seller.

(g) At or prior to Closing, the Purchaser shall pay or
cause the Company to pay that certain promissory note in the outstanding
principal balance of $770,475 payable to Seller.

(h) At or prior to the Closing, Purchaser shall perform
the respective obligations of and the actions to be taken by Purchaser at the
Closing as described in Section 10.3 of this Agreement.

(i) At the Closing, there shall simultaneously occur the
closing and consummation of the transactions contemplated by and under that
certain Stock Purchase Agreement of even date herewith by and between Seller,
Purchaser and certain other parties relating to the acquisition by Purchaser
of ninety and 65/100ths percent (90.65%) of the issued and outstanding capital
stock of United Dental Care, Inc., an Oklahoma corporation (the "UDC
Agreement").

ARTICLE 8
CONDITIONS TO OBLIGATIONS OF PURCHASER

8.1 Conditions To Obligations of Purchaser. The obligations of
Purchaser to effect the transactions contemplated by this Agreement shall be
subject to the fulfillment at or prior to the Closing of the following
conditions, unless Purchaser shall waive such fulfillment in whole or in part
in writing:

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<PAGE> 31
occur in the future as a result of any regulatory requirement or condition to
such approvals, consents, authorizations and waivers.

(b) There shall not be in effect a restraining order, a
preliminary or permanent injunction or other order by any federal or state
authority which prohibits the consummation of this Agreement and no action or
proceeding shall have been instituted or remain pending seeking such relief or
seeking damages in respect of this Agreement or the consummation of the
transactions contemplated by the Agreement;

(c) Seller shall have performed in all material respects
each of their agreements, covenants and obligations contained in this Agreement
and required to be performed on or prior to the Closing and shall have complied
with all material requirements, rules, and regulations of all regulatory
authorities having jurisdiction relating to the transactions contemplated
herein;

(d) The representations and warranties of Seller set
forth in this Agreement shall be true in all material respects as of the date
of this Agreement and, except in such respects as do not materially and
adversely affect the business, condition (financial or otherwise), operations,
or prospects of the Company and the Subsidiaries, as of the Closing Time as if
made as of such time;

(e) Purchaser shall have received from Seller a
certificate, dated the Closing Date, executed by Seller, and an officer's
certificate, executed by a duly authorized officer of the Company (in his
capacity as such), dated the Closing Date, as to the satisfaction of the
conditions in subsections (c) and (d) of this Section 8.1;

(f) Purchaser shall have received, on and as of the
Closing Date, an opinion of Counsel to Seller, subject to customary
limitations, reasonably satisfactory in form and substance to Counsel to
Purchaser, and such other closing documents and instruments as Purchaser shall
reasonably request, in each case reasonably satisfactory in form and substance
to Purchaser and Counsel to Purchaser;

(i) A reduction in total monthly revenue of the Company
to an amount less than one hundred percent (100%) of the average of the
monthly revenue of the Company for the six (6) calendar months
immediately preceding the Effective Date.

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<PAGE> 32
(ii) A reduction in the total number of members of the
dental referral plan of the Company to less than ninety-eight percent
(98%) of the total number of members of the dental referral plans of the
Company immediately preceding the Effective Date.

(iii) a reduction in the total number of general dentist
(primary care) providers which have contracts with the Company to be a
provider under its dental referral plan to an amount less than
ninety-eight percent (98%) of the total number of such providers
immediately prior to the Effective Date determined on a net basis taking
into account all new dental provider agreements entered into after the
Effective Date.

(iv) a casualty loss which is not covered by insurance in
excess of $100,000;

(i) None of the certificates of authority or licenses of
the Company listed on Schedule 3.8, if any, shall have been canceled, revoked
suspended or limited in any respect and no governmental regulatory agency shall
have instituted any proceeding, or given notice to the Company or a Subsidiary
that it intends to institute any proceeding to take such action or to place the
Company or a Subsidiary in a conservatorship or receivership due to its
financial condition or failure to comply or satisfy any governmental law, rule
or regulation.

(j) At the Closing, there shall simultaneously occur the
closing and consummation of the transactions contemplated by and under the UDC
Agreement.

(k) At or prior to the Closing, the Purchaser and both
United Group Association, a Texas corporation, and Cornerstone Marketing
Association, a division of MEGA Life and Health Insurance Company, shall have
executed and delivered Marketing Agreements pursuant to which each such entity
shall have agreed to market through its respective dedicated agents the dental
benefit products (i.e. dental indemnity insurance, prepaid dental plans and

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<PAGE> 33
dental preferred provider organization memberships) of Purchaser and its
affiliates. The terms and conditions, including conversion schedules, must be
mutually satisfactory to both Purchaser and such respective entities. It is
expressly understood that the negotiating, execution and delivery of both such
Marketing Agreements is a material condition precedent to the obligations of
Purchaser under this Agreement and must be satisfied at or prior to the
Closing.

(l) At the Closing, the Seller shall perform the
respective obligations of and actions to be taken by all the Seller at the
Closing as described in Section 9.2 of this Agreement.

ARTICLE 9
CLOSING

9.1 Date of Closing. The Closing shall take place at the offices
of Counsel to Purchaser in Dallas, Texas or at such other location as Purchaser
and Seller may mutually agree, within five (5) business days after the date on
which all governmental and third party consents necessary for the consummation
of the transactions contemplated by this Agreement and the IDP Agreement and
the UDP Agreement are obtained and all other conditions to Closing are
satisfied (specifically including, without limitation, the condition specified
in Section 8.1(k)), but in no event later than one hundred fifty (150) days
after the Effective Date unless extended by the mutual agreement of the
Purchaser and the Seller, subject to earlier termination pursuant to the
provisions of Article 12 hereof. In the event that the Closing does not timely
occur as stated above, then a party not in default may immediately terminate
this Agreement upon written notice to the other party in accordance with
Section 12.1 below; provided, however, that this Agreement shall terminate
automatically and without further notice if the Closing has not occurred within
one hundred fifty (150) days of the Effective Date unless extended by the
mutual agreement of the Purchaser and Seller.

9.2 Actions by Seller. At the Closing, Seller shall:

(a) Stock. Deliver to Purchaser the original
certificates representing the Shares owned by such Seller duly endorsed for
transfer or with appropriate stock powers with respect thereto duly endorsed in
blank by such Seller, with such signature guarantee and such other documents as
may be reasonably required to effect a valid transfer of the Shares to
Purchaser, free and clear of any and all claims.

(b) Other Agreements. Perform or shall have performed
all of the covenants and agreements contained in this Agreement to be performed
or complied with by such Seller at or prior to the Closing hereunder.

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<PAGE> 34
9.3 Actions by Purchaser. At the Closing, Purchaser shall:

(a) Payment. Pay the Purchase Price to the Seller in
accordance with payment instructions of Seller submitted in writing to the
Purchaser less, however, the amount of the Earnest Money paid to the Seller and
credited against the Purchase Price pursuant to the Escrow Agreement.

(b) Other Agreements. Perform or shall have performed
all of the covenants and agreements contained in this Agreement to be performed
or complied with by Purchaser at or prior to the Closing hereunder.

ARTICLE 10
SURVIVAL OF REPRESENTATIONS
AND WARRANTIES; INDEMNITY; POST-CLOSING MATTERS

10.1 Representations and Warranties to Survive. All statements
contained in any agreement, certificate, instrument, schedule, or document
delivered by or on behalf of any of the parties pursuant to this Agreement and
the transactions contemplated hereby shall be deemed representations and
warranties by the delivering party hereunder. All representations, warranties,
covenants and agreements made by the parties each to the other in this Agreement
shall be true at the Closing and shall survive the consummation of this
Agreement and the Closing hereunder for a period of two years, ending at
midnight on the second anniversary of the Closing Date; provided, however, that
indemnification with respect to losses relating to Taxes shall expire six (6)
months after the termination of the applicable statute of limitations and
providing further, however, that if, prior to the expiration of such two year
period, a state of facts shall have become known which threatens to give rise to
a liability against which any party hereto would be entitled to indemnification
hereunder and the indemnified party shall have given notice of such facts to the
indemnifying party, then the rights of the indemnified party to indemnification
with respect to such liability shall continue until such liability shall have
been finally determined and disposed of (including and subject to disposition by
the expiration of the applicable statute of limitations with respect to such
liability); and provided further, however, that, if a claim for indemnification
is made pursuant to this Article 10, then such claim for indemnification or any
claim arising out of the wrongful failure to comply with the provisions of this
Article 10 shall survive until the expiration of the applicable period of
limitations with respect to such claim for indemnification; and provided
further, however, that such two year limitation specified above shall not apply
to the extent provided otherwise in Section 10.4(c) below. With respect to the
representations and warranties of the parties, such representations and
warranties shall be true as of and at the date of the Closing but nothing
contained herein shall be deemed to require or imply that the accuracy of such
representations and warranties shall apply on a continuing basis as to facts
existing after the date of the Closing. Except to the extent set forth herein,
no investigation or examination made by any party hereto shall constitute a
waiver of any representation or warranty and no representation or warranty shall
be merged into the Closing hereunder. However, to the extent information is
apparent on the face of the Schedules or is otherwise expressly set forth
herein, such information shall be deemed to amend,

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<PAGE> 35
limit and/or restate any representation and warranties contained herein to the
extent such information is inconsistent with such representation or warranty.

10.2 Indemnity. Subject to the provisions of Section 10.4 below,

(a) Seller. Seller agrees to indemnify and hold harmless
the Company and Purchaser, and their respective shareholders, partners,
directors, officers, employees and agents, from, against, and in respect of,
any loss, liability, claim, demand, or expense, including but not limited to
attorney, investigation and consultant fees and costs, and of any other kind
whatsoever arising out of or resulting from any of the following:

(i) Any misrepresentation, breach of warranty, or failure
to fulfill any agreement or covenant of the Seller under this Agreement
or under any other agreement or document delivered by the Seller at
Closing hereunder; and

(ii) Any and all actions, suits, proceedings, demands,
assessments, judgments, costs and legal and other expenses incident to
any of the foregoing.

(b) Purchaser. Purchaser shall indemnify and hold Seller
harmless from, against, and in respect of, any loss, liability, claim, demand,
or expense, including but not limited to attorney's fees and costs, of any kind
whatsoever, arising out of or resulting from any of the following:

(ii) Any obligation or liability of the Company, whether
arising out of any set of facts in existence before, on or after the
Closing Date; excluding, however, any obligation or liability with
respect to which the Seller are obligated to indemnify and hold the
Purchaser harmless pursuant to Section 10.2(a) above; and

(iii) Any and all actions, suits, proceedings, demands,
assessments, judgments, costs, and legal and other expenses incident to
any of the foregoing.

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parties shall have the right to employ separate counsel in any such action and
to participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such indemnified party or parties, unless
the employment of such counsel has been specifically authorized by the
indemnifying party or parties. Any settlement of any action subject to
indemnity hereunder shall require the consent of the indemnified and the
indemnifying party which consent shall not be unreasonably withheld and shall
be given within five (5) days following the giving of notice thereof. The
indemnifying party or parties shall not be liable for any settlement of any
action effected without its or their consent, but if settled with the consent
of the indemnifying party or parties or if there be a final judgment for the
plaintiff in any such action, the indemnifying party or parties shall indemnify
and hold harmless the indemnified party from and against any loss or liability
by reason of such settlement or judgment. If requested by the indemnifying
party, the indemnified party shall cooperate with the indemnifying party and
its counsel and use its best efforts in contesting any such claim or, if
appropriate, in making any counter-claim or cross-complaint against the party
asserting the claim, provided that the indemnifying party will reimburse the
indemnified party for reasonable expenses incurred in so cooperating upon
presentation of receipts or other evidence of such expense. The indemnifying
party and its representatives shall have full and complete access during
reasonable business hours to all books, records and files of the indemnified
party expressly related to the defense of any claim for indemnification
undertaken by the indemnifying party pursuant to this Article 10, or for any
other purpose in connection therewith; provided that the indemnifying party
shall safeguard and maintain the confidentiality of all such books, records and
files.

10.4 Limitations on Indemnification.

(b) Time Limits for Claims. No claim for indemnification
may be made by any indemnified party in respect of indemnifiable losses unless
written notice thereof shall have been received by the indemnifying party on or
prior to two years after the date hereof; provided, however, that the two-year
limitation set forth in Section 10.1 and this Section 10.4(b) shall not apply
to the matters described otherwise in Section 10.1 or in Section 10.4(c) as to
which the indemnification obligations hereunder shall expire six (6) months
after the termination of the applicable statute of limitations relating to the
subject matter covered by such provisions; and provided further, however, that
in each case if, prior to the applicable date of expiration, a specific state
of facts shall have become known which is reasonably likely to constitute or
give rise to any indemnifiable loss as to which indemnity may be payable and
the indemnified party shall have given notice of such facts to the indemnifying
party and made a claim for indemnification within such two-year period, then
the right to indemnification with respect thereto shall remain in effect until
such matter shall have been finally determined and disposed of and any
indemnification due in respect thereof shall have been paid.

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(c) Certain Matters. The following are the
matters referred to in Section 10.4(a) and Section 10.4(b):

(i) Losses arising from fraud or an intentional
misrepresentation on the part of the Seller; and

(ii) Losses arising from the intentional breach of any
covenant or agreement by the Seller contained in this Agreement.

10.5 Remedies; Default; Notice and Cure. In the event of a breach
of this Agreement prior to the Closing, the non-breaching party shall have all
rights and remedies available at law, in equity or under the terms of the
Agreement. If the Closing occurs, indemnification pursuant to this Article 10
is the sole and exclusive remedy of the parties after the Closing for matters
arising out of the representations, warranties, covenants and agreements of the
Seller and the Purchaser set forth in this Agreement (without limiting the
rights of the parties under any other agreement), except as otherwise expressly
provided in this Agreement. No party shall be deemed in breach of its
obligations hereunder unless it has received written notice from the other
party of noncompliance with a term or provision of this Agreement and has
failed to cure such noncompliance within ten (10) days after receipt of such
notice.

10.7 Change of Control Application. Purchaser hereby agrees to
file the applications for governmental approval of a change of control
described in Schedule 3.24 with the appropriate governmental or regulatory
agencies within ten (10) business days of the Effective Date.

ARTICLE 11
NON-COMPETITION

11.1 Covenant Not to Compete; Non-Solicitation. For and in
consideration of the purchase by the Purchaser of the Shares pursuant to this
Agreement, and the payments payable by the Purchaser pursuant to this
Agreement, Seller covenants and agrees that it shall not, directly or
indirectly, through its officers, employees, agents or representatives as an
employer, consultant, creditor, investor, owner, agent, principal, partner,
shareholder, or through any other kind of ownership (other than ownership of
securities of any publicly held entity in which the Seller, directly or
indirectly, in the aggregate beneficially owns less than two percent (2%) of
any class of outstanding securities), or in any other representative or
individual capacity, do any of the following:

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(i) for a period of three (3) years from the date of this
Agreement, engage in the solicitation of any of the prepaid dental
customers or dental preferred providers of the Purchaser or its
affiliates for the benefit of any prepaid dental plan or dental
preferred provider organization other than an affiliate of Purchaser in
the continental United States (the "Restricted Area");

(ii) for a period of three (3) years from the date of this
Agreement, engage in any business which calls upon, solicits, diverts or
takes away any customer or customers of the Company in the Restricted
Area for the purpose of selling or attempting to sell to any of said
customers any products or services similar to any products or services
heretofore sold or provided to any of such customers by the Company; and

(iii) for a period of five (5) years from the date of this
Agreement, engage in any business which solicits any present or future
employee of the Company or initiates discussions with any such employee
regarding his or her termination or resignation from employment with the
Company, so that such employee may accept employment with, or engagement
as a partner, investor, shareholder, employee, agent or consultant with
Seller, directly or indirectly, as specified above; provided, however,
that Seller shall not be prohibited by this Agreement from employing or
soliciting the employment of any employee that the Company terminates
after the date of such termination.

It is expressly understood that it shall not be deemed a violation of this
Section 11.1 in the event that, pursuant to an agreement with the Purchaser or
the Company, agents of the Seller solicit business on behalf of the Company or
other affiliates of Purchaser after the Closing Date.

11.2 Permitted Activities. Seller shall have the right,
upon the completion of the sale of the Company to Purchaser, to continue to
market and sell its back-office, claims and other operational applications
involving technology solutions to dental organizations and companies of all
types, whether or not they compete with Purchaser. Additionally, nothing
contained herein shall be construed to limit, excuse or prohibit Seller from
marketing life, health (excluding dental), annuity, vision or drug products to
Purchaser's customers or providing third party administration to self-insured
accounts.

11.3 Non-Disclosure. Seller covenants and agrees that all
information concerning the Company, including without limitation (i)
information regarding prices or premiums charged for products and services,
(ii) the assets, liabilities and financial condition of the Company and its
subsidiaries, (iii) the names and identities of customers and analyses of the
amount and types of products and services purchased by each such customer, (iv)
the dental health providers utilized by the Company and its subsidiaries and
the financial arrangements with such providers, and (v) the amount of
compensation to employees, constitute trade secrets and confidential,
proprietary business information which is the property of the Company and that,
unless otherwise required by law, from and after the date of this Agreement:

(a) Seller shall use its best efforts and exercise utmost
diligence to protect and safeguard all of such trade secrets and
confidential, proprietary information;

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(b) Seller shall not, directly or indirectly, use, sell,
license, publish, disclose or otherwise transfer or make available to
others any of such trade secrets or confidential, proprietary
information;

(c) Without the prior written consent of the Company,
Seller shall not, directly or indirectly, disclose any of such trade
secrets or confidential, proprietary information; and

(d) Seller shall not, directly or indirectly, use for its
own benefit or for the benefit of another, any of such trade secrets or
confidential, proprietary information.

11.4 Nondisparagement. For a period of three (3) years and after
the date of this Agreement, Seller further agrees that it shall not make or
publish any statement, written or oral, disparaging the reputation of the
Company or its subsidiaries, executive officers or any of its business services
or products or solicit or encourage any member of any prepaid dental plan of
the Company or its subsidiaries or any third party having a group agreement
with the Company or its subsidiaries to terminate the membership of such person
in the plan of the Company or its subsidiaries or to terminate such group
agreement.

11.5 Reasonableness; Reformation. Seller acknowledges and agrees
that (i) the provisions of this Article 11 are ancillary to the transaction
pursuant to which the Seller sold and the Purchaser acquired the Shares, (ii)
the provisions of this Agreement contain reasonable limitations as to time,
geographical area and scope of activities to be restrained and do not impose a
greater restraint than is necessary to protect goodwill and other business
interests of the Company and its subsidiaries, (iii) if any portion of the
covenants and agreements set forth in this Agreement are held to be invalid,
unreasonable, arbitrary or against public policy, then such portion of such
covenants shall be considered divisible as to time, scope of activities
covered, and geographical area, and (iv) if any court of competent jurisdiction
determines the specified time period, scope of activities covered, or the
specified geographical area applicable to any provision of this Agreement to be
invalid, unreasonable, arbitrary or against public policy, a lesser time
period, scope of activities covered, and/or geographical area which is
determined to be reasonable, non-arbitrary and not against public policy may be
enforced against Seller.

11.6 Remedies for Breach. If Seller has failed to satisfactorily
cure any breach or threatened breach of any covenant or agreement contained
herein within ten (10) days after written notice of such breach or threatened
breach given by the Purchaser to Seller, any one or more of the following
remedies, as selected by the Purchaser in its sole discretion, shall be
available to the Purchaser in the event of a breach of this Agreement by Seller
hereunder:

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<PAGE> 40
(a) Specific Performance. In the event of a breach or
threatened breach of any covenant or agreement of Seller in this
Agreement, remedies at law will not adequately compensate the
Purchaser for its injuries incurred as a result thereof.
Accordingly, injunctive and/or equitable relief shall be available to
the Purchaser to specifically enforce this Agreement and prevent such
breach and any continued breach of any covenant and agreement herein.
Seller agrees that a bond of no more than $10,000 in the aggregate
will provide adequate protection to Seller and therefore no more than
$10,000 in bond or other security shall be required to be posted by
the Company by any court in any proceeding to obtain such injunctive
or equitable relief.

(b) Suit for Damages. In addition to the remedies stated
in Section 11.5(a) above, in the event of any breach of any covenant
or agreement of Seller herein, Purchaser may sue for damages arising
out of such breach and otherwise enforce this Agreement and obtain all
other remedies available to the Seller under applicable law.

ARTICLE 12
TERMINATION; WAIVER

12.1 Termination. This Agreement may be terminated, and the
transaction may be abandoned, at any time prior to the Closing, as follows and
in no other manner:

(a) Mutual Consent. By the mutual consent of Purchaser
and the Seller;

(b) By Purchaser or Seller: Condition Precedent. By
Purchaser or Seller, upon written notice to the other, if the conditions to the
obligations of such canceling party or parties to consummate the transaction,
in the case of the Seller, as provided in Article 7 or, in the case of
Purchaser, as provided in Article 8, were not, or cannot reasonably be,
satisfied on or before one hundred twenty (120) days after the date of this
Agreement unless the failure of the condition is the result of the material
breach of this Agreement by the party seeking to terminate; provided, however,
that, in the event all such conditions have been satisfied except solely the
condition with respect to obtaining all required consents, authorizations, and
approvals of governmental and regulatory agencies set forth in Sections 7.1(a)
and 8.1(a), respectively, and such failure is not due to a breach of this
Agreement by the non- terminating party, such date shall be automatically
extended for one thirty (30) day period; provided, however, that in no event
shall such date be extended beyond an aggregate of one hundred fifty (150) days
after the date of this Agreement unless extended by the mutual agreement of the
Purchaser and the Seller;

(c) By Purchaser or Seller: Representations, Warranties
and Covenants. By Purchaser, on the one hand, or Seller, on the other, if (i)
any representation or warranty of the other hereunder shall not have been true
and correct in all material respects at the time at which made, or (ii) default
shall be made by the other in the due and timely observance or performance of
any of its covenants and agreements herein contained, but in such event only if
such representation or warranty cannot be made true and correct or such default
cannot be cured on or prior to the earlier of (x) sixty (60) days after the
non-defaulting or non-breaching party

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<PAGE> 41
notifies the other in writing of such default or breach, specifying the nature
thereof or (y) one hundred fifty (150) days after the date of this Agreement,
unless such date is extended by mutual agreement of Purchaser and Seller.

No termination of this Agreement shall affect the liability of any party hereto
for any breach hereof arising at, prior to or out of such termination;
provided, however, that, in the event of a breach hereof by Purchaser, in
addition to any other remedies available at law or in equity to the Seller,
Seller shall be entitled to retain the Earnest Money. Any public announcement
of the termination of this Agreement shall be made only by means of a press
release issued jointly by Purchaser and the Company.

12.2 Waiver. At any time at or prior to the Closing, Purchaser, on
the one hand, or Seller, on the other, may (i) extend the time for the
performance of any of the obligations or other acts of the other party hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto, or (iii) waive compliance
with any of the agreements or conditions contained herein. Any agreement on
the part of a party hereto to any such extension or waiver shall be valid only
if set forth in an instrument in writing signed on behalf of such party.

ARTICLE 13
CERTAIN DEFINED TERMS

13.1 Affiliate. When used with respect to a person, an "Affiliate"
of such person is a person controlling, controlled by, or under common control
with such person.

13.3 Closing. The completion of the transaction to take place as
described in Article 10.

13.4 Closing Date. The date on which the Closing actually occurs.

13.6 Code. The Internal Revenue Code of 1986, as amended and in
effect on the date of this Agreement.

13.7 Control. Generally, the power to direct the management or
affairs of an entity.

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<PAGE> 42
13.8 Counsel to Seller. Robert B. Vlach, Esq., 4001 McEwen Drive,
Ste. 200, Dallas, Texas 75244, telephone number (214) 851-9071; facsimile
number (214) 851-9033.

13.9 Counsel to Purchaser. Strasburger & Price, L.L.P., 901 Main
Street, Suite 4300, Dallas, Texas 75202, telephone number (214) 651-4300,
facsimile number (214) 651-4330.

13.10 ERISA. The Employee Retirement Income Security Act of 1974,
as amended and in effect on the date of this Agreement.

13.11 GAAP. Generally accepted accounting principles, as in effect
on the date of any statement, report, or determination that purports to be, or
is required to be, prepared or made in accordance with GAAP. All references
herein to financial statements prepared in accordance with GAAP shall mean in
accordance with GAAP consistently applied throughout the periods to which
reference is made.

13.13 Multiemployer Plan. A "multiemployer plan," as defined in
ERISA Section 3(37) or Section 414(f) of the Code, or, in either case,
successor provisions to such provisions adopted by amendments to ERISA or the
Code, as the case may be, and including, in each case, other provisions of
ERISA, of the Code, or of other law, and regulations adopted under ERISA or the
Code or such other law, modifying, amending, interpreting, or otherwise
affecting the application of such provisions, either in general or as applied
to the nature or circumstances of a particular entity that is a party to, or is
affected by or is involved in, the Agreement and with respect to which entity
the use of the term in this Agreement, or in particular location in this
Agreement, is relevant.

13.14 Payables. Liabilities of a party arising from the borrowing
of money or the incurring of obligations for merchandise, goods or services
purchased appearing as liabilities on the books of the Company or any
Subsidiary, or customarily required to be reflected as liabilities in the
balance sheets of the Company or any Subsidiary prepared in accordance with
GAAP, indicating monies owed by the Company or such Subsidiary.

13.15 PBGC. The Pension Benefit Guaranty Corporation.

13.16 Pension Plan. A "pension plan" or "employee pension benefit
plan," as defined in Section 3(2) of ERISA or successor provisions to such
provision adopted by amendments to ERISA and including other provisions of
ERISA or of other law, and regulations adopted under ERISA or such other law,
modifying, amending, interpreting or otherwise affecting the application of
such provisions, either in general or as applied to the nature or circumstances
of a particular entity that is a party to, or is affected by or is involved in,
the Agreement and with

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<PAGE> 43
respect to which entity the use of the term in this Agreement, or in the
particular location in this Agreement, is relevant. A reference to a Pension
Plan shall include the trust, if any, forming a part thereof.

13.17 Receivables. Accounts receivable, notes receivable, and other
obligations appearing as assets on the books of the Company or any Subsidiary,
or customarily required to be reflected as assets in balance sheets of the
Company or any Subsidiary prepared in accordance with GAAP, indicating moneys
owed to the Company or such Subsidiary.

13.18 Welfare Plan. A "welfare plan" or an "employee welfare
benefit plan," as defined in Section 3(1) of ERISA or successor provisions to
such provision adopted by amendments to ERISA and including other provisions of
ERISA or of other law, and regulations adopted under ERISA or such other law,
modifying, amending, interpreting or otherwise affecting the application of
such provision, either in general or as applied to the nature or circumstances
of a particular entity that is a party to, or is affected by or is involved in,
the Agreement and with respect to which entity the use of the term in this
Agreement, or in the particular location in this Agreement, is relevant.

ARTICLE 14
MISCELLANEOUS

(a) If to Seller:

UICI
5215 N. O'connor Boulevard, Suite 300
Irving, Texas 75039

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<PAGE> 44
Attn: W. Brian Harrigan, President
Facsimile: (214) 869-3336

With a copy to Counsel to Seller:

UICI
4001 McEwen Drive, Suite 200
Dallas, Texas 75244
Attn: Robert B. Vlach, Esq.
Facsimile: (214) 851-9033

(b) If to Purchaser:

United Dental Care, Inc.
14755 Preston Road
Suite 300
Dallas, Texas 75240
Attn: William H. Wilcox, President
Facsimile: (214) 458-7963

With a copy to Counsel to Purchaser:

Strasburger & Price, L.L.P.
901 Main Street, Suite 4300
Dallas, Texas 75202
Attn: David K. Meyercord, Esq.
Facsimile: (214) 651-4330

Any party may change the address or facsimile telephone number for notices to
be sent to it by written notice delivered pursuant to the terms of this Section
14.2.

14.4 Binding Effect/Assignability. This Agreement shall extend to
and be binding upon and inure to the benefit of the parties hereto, their
respective heirs, legal representatives, successors and assigns. Purchaser
shall have the right at any time to assign this Agreement to any affiliate of
Purchaser without the necessity of seeking the consent of the Seller; provided,
however, that Purchaser shall not be relieved of any obligations as a result of
such assignment and that, in addition to Purchaser remaining liable, any such
assignee shall assume and become liable for any and all of Purchaser's
obligations under this Agreement. The Seller shall not be entitled to assign
any of its respective rights or obligations under this Agreement; provided,

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<PAGE> 45
however, that the rights and obligations of Seller may be assigned by operation
of law or may be assigned to an individual retirement account, pension plan,
trust or other entity under the control of Seller but any such assignment shall
not relieve or release Seller of any obligations hereunder as a result of such
assignment and that, in addition to such Seller remaining liable, any such
assignee shall assume and become liable for any and all of Seller's obligations
under this Agreement. In connection with any such assignment, Seller may
transfer all or any portion of the Shares owned by the Seller and thereby
effect an assignment on the basis specified above.

14.5 Exhibits/Schedules. All Exhibits and Schedules referenced in
this Agreement are incorporated herein by reference and shall constitute a part
of this Agreement.

14.9 Attorney's Fees and Costs. In the event of a breach by any
party to this Agreement and commencement of a subsequent legal action in a
court of law or forum of arbitration, or in the event legal counsel is
consulted in the event of any such breach or in anticipation of any such
prospective legal action, the prevailing party in any such dispute shall be
entitled to reimbursement of reasonable attorney's fees and court costs,
including, but not limited to, the costs of expert witnesses, transportation,
lodging and meal costs of the parties and witnesses, costs of transcript
preparation and other reasonable and necessary direct and incidental costs of
such dispute. "Prevailing party" is the party in whose favor final judgment is
rendered.

14.10 Time. Time is of the essence under this Agreement.

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<PAGE> 46
14.11 Governing Law. This Agreement shall be construed under and
governed by the internal laws, and not the law of conflicts, of the State of
Texas.

14.12 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but which together
shall constitute one and the same agreement.

(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)

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<PAGE> 47
IN WITNESS WHEREOF, the parties have executed this Stock Purchase
Agreement as of the day and year first written above.

PURCHASER: SELLER:

UNITED DENTAL CARE, INC. UICI

By: /s/ WILLIAM H. WILCOX By: /s/ W. BRIAN HARRIGAN
---------------------------------- -----------------------------
William H. Wilcox, President W. Brian Harrigan, President

<PAGE> 1
EXHIBIT 10.29

EXHIBIT A

EARNEST MONEY ESCROW AGREEMENT

This Earnest Money Escrow Agreement (the "Agreement") is made as of
the 10th day of September, 1996 among UICI, a Delaware corporation ("Seller");
United Dental Care, Inc., a Delaware corporation ("Purchaser"); and Texas
Commerce Bank National Association (the "Escrow Agent").

WHEREAS, Seller and Purchaser have entered into that certain Stock
Purchase Agreement dated September 10, 1996 (collectively the "Stock Purchase
Agreement") providing for the purchase of all the issued and outstanding shares
of capital stock (collectively the "Shares") of Association Dental Plan, Inc.,
a District of Columbia corporation ("ADP") (ADP being sometimes collectively
referred to herein as the "Company") from the Seller by Purchaser; and

WHEREAS, in connection with the execution of the Stock Purchase
Agreement, Purchaser has agreed to place the sum of Two Hundred Thirty Thousand
and no/100ths Dollars ($230,000) in escrow and for the purposes hereinafter set
forth. (Such escrow deposit and any interest earned thereon while such funds
are in escrow are referred to herein as the "Escrow Money"); and

WHEREAS, the parties desire to effectuate the provisions of the Stock
Purchase Agreement with respect to the Escrow Money;

NOW, THEREFORE, IN CONSIDERATION OF THE PREMISES and the mutual terms
and conditions hereof, the parties hereby agree as follows:

1. Escrow Money. Simultaneously with the execution of this
Agreement, Purchaser has deposited the sum of $230,000 in immediately available
funds with the Escrow Agent, the receipt of which is hereby acknowledged by the
Escrow Agent by its execution hereof.

2. Escrow Account. The Escrow Money shall be held in escrow by
the Escrow Agent pursuant to the terms and conditions of this Agreement. Upon
receipt of the Escrow Money, the Escrow Agent shall place the Escrow Money
deposit into a non-interest bearing escrow account (the "Escrow Account") under
the following terms and conditions: (i) at the Escrow Agent; (ii) under the
name of Texas Commerce Bank National Association, as Escrow Agent and (iii)
under the federal tax identification (ID) number of the Purchaser
(#75-2309712). All funds in the Escrow Account shall be invested by the Escrow
Agent in the Fidelity
<PAGE> 2
Institutional Cash Portfolio-Treasury Fund Number 695. It is understood and
agreed that the Escrow Agent will be issuing a 1099 INT statement to the
Purchaser and the Internal Revenue Service, even though the interest may be
payable eventually to either the Purchaser or the Seller as the case may be.
In the event the interest is paid to the Purchaser, the Purchaser shall have
the responsibility as to any 1099 INT reporting thereof. The Escrow Money
shall at all times be held in the Escrow Account and shall only be delivered
pursuant to the terms and conditions of this Agreement.

3. Terms of Escrow. The Escrow Money shall only be applied by
the Escrow Agent in accordance with the following terms and directions:

(a) Application upon Closing. In the event that the
Seller has not furnished written notice to Purchaser and the Escrow
Agent of the failure of Purchaser to consummate the Stock Purchase
Agreement in accordance with Section 3(b) below prior to Closing under
the Stock Purchase Agreement, then, upon the Closing, Escrow Agent
shall receive a notice executed by Purchaser and Seller directing
Escrow Agent to either (i) pay the Escrow Money to Seller as the
notice shall direct in which case the Escrow Money shall constitute a
credit against the Purchase Price or (ii) refund the Escrow Money to
the Purchaser in which case it shall not constitute a credit against
the Purchase Price.

(b) Application upon Termination. If Purchaser fails to
consummate the Stock Purchase Agreement for any reason other than (i)
a material breach of the Stock Purchase Agreement or this Agreement by
Seller or (ii) the valid exercise of any right of termination by
Purchaser expressly set forth in the Stock Purchase Agreement, then
the Seller shall furnish written notice to Purchaser and the Escrow
Agent of Purchaser's failure to consummate the Stock Purchase
Agreement and directing that the Escrow Money be paid to the Seller.
Ten (10) days after such notice is received by the Escrow Agent, the
Seller shall be entitled to be paid the Escrow Money and the Escrow
Agent shall release the Escrow Money to the Seller. Otherwise, ten
(10) days after receipt of written notice/demand from the Purchaser to
the Escrow Agent (certifying that such notice/demand has been
furnished to Seller that one of the conditions stated in (i) or (ii)
above has occurred and that the Purchaser is entitled to receive a
refund of the Escrow Money, the Purchaser shall be entitled to be
refunded the Escrow Money and the Escrow Agent shall release the
Escrow Money to the Purchaser.

(c) Automatic Termination. In the event that the Escrow
Agent has not received instructions as to the release of the Escrow
Money before February 15, 1997, then this Escrow Agreement shall
automatically terminate on February 15, 1997 and the Escrow Agent
shall refund the Escrow Money to Purchaser without the necessity of
any further notice or instructions of any kind.

(d) Interest. Interest earned on the Escrow Money shall
be applied together with the Escrow Money and paid to the Seller or to
Purchaser as the case may be as specified above.

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<PAGE> 3
4. Liability of Escrow Agent. Purchaser and Seller hereby agree
that the following provisions shall control with respect to the rights, duties,
liabilities, privileges and amenities of the Escrow Agent:

(a) The Escrow Agent is not a party to, and is not bound
by, or charged with notice of, any agreement out of which this escrow
may arise.

(b) The Escrow Agent acts hereunder as a depository only,
and is not responsible or liable in any manner whatsoever for the
sufficiency, correctness, genuineness or validity of the subject
matter of the escrow, or any part thereof, or for the form or
execution thereof, or for the identity or authority of any person
executing or deposition the escrow or for any loss on any investment
made pursuant to the provisions hereof.

(c) The Escrow Agent shall be protected in acting upon
any written notice, request, waiver, consent, certificate, receipt,
authorization, power of attorney, or other paper or document which the
Escrow Agent in good faith believes to be genuine and what it purports
to be.

(d) Purchaser and Seller, jointly and severally, agree to
indemnify and hold the Escrow Agent harmless against any and all
losses, claims, demands, liabilities and expenses, including
attorney's fees and costs, which may be incurred by the Escrow Agent
in connection with the acceptance and performance or non- performance
of its duties hereunder whether such losses, claims, demands,
liabilities and expenses arise during or subsequent to performance of
this Agreement, directly or indirectly, excluding, however, any such
liability resulting from its gross negligence or willful misconduct.
In the event the Escrow Agent becomes involved in litigation in
connection with this escrow, Purchaser and Seller, jointly and
severally, agree to indemnify and save the Escrow Agent harmless from
any and all losses, claims, damages, liabilities and expenses,
including attorney's fees and costs, interpleader costs and judgments,
which may be incurred or suffered by Escrow Agent as a result thereof,
excluding, however, any such liability resulting from its gross
negligence or willful misconduct. It is the express intent of the
Purchaser and the Seller to indemnify and hold the Escrow Agent
harmless against its own ordinary negligence.

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<PAGE> 4
and all doubt resolved by agreement among all the interested parties
and the Escrow Agent shall have been notified thereof pursuant to
written directions duly executed by all such persons. In the event of
conflicting demands on the Escrow Agent, the Escrow Agent may, at its
option, deposit any and all funds in question with the court that
would have jurisdiction over the matter, and in such event, the Escrow
Agent is relieved of any further responsibility in connection with
this escrow.

(f) Escrow Agent may consult with its counsel or other
counsel satisfactory to it concerning any question relating to its
duties or responsibilities hereunder or otherwise in connection
herewith, and shall not be liable for any action taken, suffered or
omitted by it in good faith upon the advice of such counsel.

(g) Escrow Agent may resign hereunder upon thirty (30)
days' prior notice to the Seller and Purchaser. Upon the effective
date of such resignation, Escrow Agent shall deliver the Escrow Money
to any substitute escrow agent designated by Seller and Purchaser in
writing. If Seller and Purchaser fail to designate a substitute
escrow agent within thirty (30) days after the giving of such notice,
Escrow Agent may institute a petition for the appointment of a
successor escrow agent hereunder. Escrow Agent's sole responsibility
after such 30-day notice period expires shall be to hold the Escrow
Money (without any obligation to reinvest the same) and to deliver the
same to a designated substitute escrow agent, if any, or in accordance
with the directions of a final order or judgment of a court of
competent jurisdiction, at which time of delivery Escrow Agent's
obligations hereunder shall cease and terminate.

6. Non-Waiver. Nothing contained in this Agreement shall be
deemed or construed to release or waive any of the rights or obligations of
Purchaser or Seller under the Stock Purchase Agreement, all rights and remedies
of Purchaser and Seller under this Agreement are cumulative of all other rights
which either of them may have under the Stock Purchase Agreement, by law or
otherwise.

7. Notices. Any notices, claims or demands which any party is
required or may desire to give to another under or in conjunction with this
Agreement shall be in writing, and shall be given by addressing the same to
such other party(ies) at the address set forth below, and by (i) depositing the
same so addressed, postage prepaid, first class, certified or registered, in
the United States mail, return receipt requested (herein referred to as
"Mailing"), (ii) overnight delivery by a nationally recognized overnight
courier service (e.g. UPS, Federal Express), (iii) delivering the same
personally to such other party(ies), or (iv) transmitting by facsimile and
Mailing the original. Any notice shall be deemed to have been given five (5)
U.S. Post Office delivery days following the date of Mailing; one day after
timely delivery to an overnight courier; if by personal delivery, upon such
delivery; or if by facsimile, the day of transmission

4
<PAGE> 5
if made within customary business hours, or if not transmitted within customary
business hours, the following business day.

a. If to Purchaser:

United Dental Care, Inc.
14755 Preston Road
Dallas, Texas 75240
Attention: Mr. William H. Wilcox, President
Facsimile Number: (214) 458-7963

b. If to Seller:

UICI
5215 N. O'Connor Blvd., Suite 300
Irving, Texas 75036
Attention: W. Brian Harrigan, President
Facsimile No.: (214) 869-3336

c. If to Escrow Agent:

Texas Commerce Bank National Association
2200 Ross Avenue, 5th Floor
Dallas, Texas 75201
Attention: Mr. Gary Jones
Facsimile No.: (214) 965-3577

Any of the parties hereto may change the address or facsimile telephone number
for notices to be sent to it by written notice delivered pursuant to the terms
of this section.

8. Entire Agreement. This Agreement sets forth the entire
understanding of the parties and supersedes all prior agreements or
understandings, whether written or oral, with respect to the subject matter
hereof. No terms, conditions or agreements other than those contained herein,
and no amendments or modifications hereto shall be valid unless made in writing
and signed by the parties hereto.

9. Capitalized Terms. Capitalized terms in this Agreement which
are not otherwise defined herein shall have the same meanings as are provided
for such terms in the Stock Purchase Agreement.

10. Binding Effect. This Agreement shall extend to and be binding
upon and inure to the benefit of the parties hereto, their respective
successors and assigns.

11. Termination. This Agreement shall terminate at such time as
all of the Escrow Money shall have been released in accordance with the terms
and conditions of this Agreement;

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<PAGE> 6
provided, however, that the terms and provisions of Sections 4 and 5 shall
survive the termination hereof.

12. Headings/Captions. The captions to sections and subsections
of this Agreement have been inserted solely for convenience and reference, and
shall not control or effect the meaning or construction of any of the
provisions of this Agreement.

13. Waiver; Remedies. Waiver by any party hereto of any breach of
or exercise of any rights under this Agreement shall not be deemed to be a
waiver of similar or other breaches or rights or a future breach of the same
duty. The failure of a party to take any action by reason of any such breach
or to exercise any such right shall not deprive any party of the right to take
any action at any time while such breach or condition giving rise to such right
continues. The parties shall have all remedies permitted to them by this
Agreement or law, and all such remedies shall be cumulative.

14. Attorney's Fees. As between Seller and Purchaser only, in the
event any action or proceeding is commenced by Seller or Purchaser against the
other to (i) determine rights, duties or obligations hereunder, (ii) determine
a breach hereof and obtain damages therefor, or (iii) otherwise enforce this
Agreement, the prevailing party in such action or proceeding shall be entitled
to recover from the other party all costs and expenses thereof, including
reasonable attorney's fees and costs.

15. Governing Law. This Agreement shall be construed under and
governed by the internal laws, and not the law of conflicts, of the State of
Texas.

16. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but which together
shall constitute one and the same agreement.

(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)

6
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have executed this Earnest
Money Escrow Agreement as of the day and year first written above.

PURCHASER: SELLER:

UNITED DENTAL CARE, INC. UICI

By: /s/ WILLIAM H. WILCOX By:/s/ W. BRIAN HARRIGAN
--------------------------------- ---------------------------------
William H. Wilcox, President W. Brian Harrigan, President

ESCROW AGENT:

Texas Commerce Bank, N.A.
- ------------------------------------

By: /s/ JOHN G. JONES
---------------------------------
Its: Vice President
------------------------------

<PAGE> 1

EXHIBIT 10.30

STOCK PURCHASE AGREEMENT

BETWEEN

UNITED DENTAL CARE, INC.,

AS PURCHASER

AND

UICI

AS SELLER,

AS OF
SEPTEMBER 10, 1996
<PAGE> 2
TABLE OF CONTENTS

<TABLE>
<S> <C> <C>
ARTICLE 1 DEFINED TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

ARTICLE 2 PURCHASE AND SALE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF SELLER . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

3.1 Authority Relative to This Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3.2 Title to Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.3 Absence of Breach; Consents - Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.4 Due Organization of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.5 Subsidiaries/Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.6 Absence of Breach; Consents - Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.7 Capitalization of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.8 Licenses/Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.9 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.10 No Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.11 No Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.12 Title to and Condition of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.13 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.14 Real Property Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.15 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.16 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(a) Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(b) Dentists' Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(c) Other Provider Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(d) Employer Group Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(e) Management Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(f) Copies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.17 Employees, Et Cetera . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.18 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.19 Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.20 Accounts Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.21 Broker's and Finder's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.22 Labor Practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.23 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
</TABLE>

ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF PURCHASER . . . . . . . . . . . . . . . . . . . . . . . . . . 16

ARTICLE 5 COVENANTS OF THE SELLER AND THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

5.1 Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.2 Access and Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.3 No Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.4 Conduct of Business Prior to Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.5 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.6 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.7 Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.8 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.9 Breach of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.10 No Transfer of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.11 Updating of Exhibits and Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

ARTICLE 6 COVENANTS OF PURCHASER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

ARTICLE 7 CONDITIONS TO OBLIGATIONS OF SELLER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

7.1 Conditions to Obligations of Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
</TABLE>

ii
<PAGE> 4
<TABLE>
<S> <C> <C>
ARTICLE 8 CONDITIONS TO OBLIGATIONS OF PURCHASER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

8.1 Conditions To Obligations of Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

ARTICLE 9 CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

9.1 Date of Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
9.2 Actions by Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(a) Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(b) Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
9.3 Actions by Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(a) Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(b) Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

ARTICLE 10 SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNITY; POST-CLOSING MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

10.1 Representations and Warranties to Survive . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
10.2 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(a) Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(b) Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.3 Indemnity Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.4 Limitations on Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(a) General Threshold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(b) Time Limits for Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(c) Certain Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.5 Remedies; Default; Notice and Cure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.6 Severance Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.7 Change of Control Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

ARTICLE 11 NON-COMPETITION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

ARTICLE 12 TERMINATION; WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

12.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(a) Mutual Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(b) By Purchaser or Seller: Condition Precedent . . . . . . . . . . . . . . . . . . . . . . 34
</TABLE>

iii
<PAGE> 5
<TABLE>
<S> <C> <C>
(c) By Purchaser or Seller: Representations, Warranties and Covenants . . . . . . . . . . . 34
12.2 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

ARTICLE 13 CERTAIN DEFINED TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

13.1 Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
13.2 Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
13.3 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
13.4 Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
13.5 Closing Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
13.6 Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
13.7 Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
13.8 Counsel to Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
13.9 Counsel to Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
13.10 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
13.11 GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
13.12 Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
13.13 Multiemployer Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
13.14 Payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
13.15 PBGC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
13.16 Pension Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
13.17 Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
13.18 Welfare Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

ARTICLE 14 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

14.1 Further Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
14.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
14.3 Entire Agreement; Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
14.4 Binding Effect/Assignability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
14.5 Exhibits/Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
14.6 Invalid Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
14.7 Headings/Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
14.8 Waiver; Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
14.9 Attorney's Fees and Costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
14.10 Time. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
14.11 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
14.12 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
</TABLE>

iv
<PAGE> 6
LIST OF EXHIBITS

Exhibit A - Earnest Money Escrow Agreement

LIST OF SCHEDULES

Schedule 3.4 - States Where Company Qualified
Schedule 3.5 - Subsidiaries/Investments
Schedule 3.8 - Licenses, Etc.
Schedule 3.9 - Financial Statements
Schedule 3.10 - Adverse Changes
Schedule 3.11 - Undisclosed Liabilities
Schedule 3.12 - Title Encumbrances
Schedule 3.13 - Litigation
Schedule 3.14 - Real Property Leases
Schedule 3.15 - Intellectual Property
Schedule 3.16A - Material Contracts
Schedule 3.16B - Dental Provider Contracts
Schedule 3.16C - Other Provider Contracts
Schedule 3.16D - Employer Group Contracts
Schedule 3.16E - Management Contracts
Schedule 3.17 - Employees, Etc.
Schedule 3.18 - Employee Benefit Plans
Schedule 3.19 - Receivables
Schedule 3.20 - Payables
Schedule 3.23 - Insurance
Schedule 3.24 - Consents
Schedule 3.25 - Environmental Matters
Schedule 3.26 - Taxes
Schedule 3.27 - Transactions with Affiliates

v
<PAGE> 7
STOCK PURCHASE AGREEMENT

WHEREAS, the Seller owns all the issued and outstanding shares of
capital stock (the "Shares") of International Dental Plan, Inc., a Florida
corporation (the "Company"); and

WHEREAS, subject to the terms and conditions hereinafter set forth,
the Seller desire to sell to the Purchaser, and the Purchaser desires to
purchase from the Seller, the Shares;

NOW, THEREFORE, in consideration of the premises and the mutual terms
and conditions herein contained, the parties hereby agree as follows:

ARTICLE 1
DEFINED TERMS/SCHEDULES

1
<PAGE> 8
ARTICLE 2
PURCHASE AND SALE

2.1 Agreement to Sell and Purchase. Subject to the terms and
conditions of this Agreement and in reliance on the representations, warranties
and covenants herein set forth, at the Closing the Seller shall sell to
Purchaser, and Purchaser shall purchase from the Seller, the Shares, free and
clear of any and all liens, claims, options, charges, pledges, security
interests, voting agreements or trusts, encumbrances or other restrictions or
interests of any kind or nature whatsoever (collectively, "Claims").

2.2 Purchase Price. Subject to the terms and conditions of this
Agreement and in reliance on the representations, warranties and covenants
herein set forth, the Purchaser shall pay at the Closing, by certified or
cashier's check (or by wire transfer in accordance with directions given to
Purchaser by Seller not less than two (2) business days prior to the Closing
Date), as consideration for the Shares, an aggregate purchase price in an
amount equal to Four Million Five Hundred Thousand Dollars ($4,500,000) (the
"Purchase Price").

ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER

Seller represents and warrants to Purchaser that, as of the Effective
Date and as of the Closing Date:

3.1 Authority Relative to This Agreement. This Agreement has been
duly and validly executed and delivered by the Seller and constitutes a valid
and binding agreement of the Seller enforceable in accordance with its terms.
The other agreements to be executed and delivered by the Seller pursuant to
this Agreement will be valid and binding agreements of the Seller enforceable
in accordance with their respective terms when so executed and delivered by the
Seller. Seller has all requisite power and authority to enter into this
Agreement and the other agreements to be executed and delivered by Seller
pursuant to this Agreement. The execution, delivery and performance of this
Agreement by Seller and the other agreements to be executed and delivered by
Seller pursuant to this Agreement has been duly authorized by all requisite
corporation action.

3.3 Absence of Breach; Consents - Seller. The execution,
delivery, and performance of this Agreement and the other agreements to be
executed and delivered pursuant to this Agreement by the Seller does not and
will not: (i) contravene any order, writ, judgment, injunction, decree,
determination, or award of any court or other governmental authority which
affects or binds the Seller or the Shares, (ii) conflict with or result in a
breach of or default under any indenture, loan or credit agreement or any other
agreement or instrument to which the Seller is a party or by which the Seller
or the Shares are bound, (iii) violate any law, rule or regulation applicable
to Seller or the Shares, (iv) except for the consents reflected in Schedule
3.24, require the authorization, consent, approval or license of, or to make a
filing with, any third party or entity (governmental or otherwise).

3.4 Due Organization of the Company. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Florida with all requisite corporate power and authority to conduct
its respective business operations as now being conducted. The Company is duly
qualified and in good standing as a foreign corporation authorized to do
business in each jurisdiction listed in Schedule 3.4. There are no
jurisdictions where the Company is not so authorized where the failure to be so
authorized would have a material adverse effect on the business or operations
of the Company. Seller has delivered to Purchaser complete and correct copies
of the articles of incorporation and bylaws of the Company as amended to and in
effect on the Effective Date. The Company is not in default under or in
violation of any term or provision of its articles of incorporation or bylaws.

3.7 Capitalization of the Company. The authorized capital stock
of the Company consists of Fifty Million (50,000,000) shares of common stock,
$0.001 par value per share, of which 1,500,000 shares are validly issued and
outstanding, fully paid, and nonassessable. All of the issued and outstanding
shares of common stock of the Company are owned beneficially and of record by
the Seller. The Company has provided to the Purchaser a correct and complete
copy of the stock registry of the Company listing all stockholders of the
Company and the outstanding share certificates and total number of shares
issued to each stockholder of the Company. The Company has no other capital
stock authorized for issuance and has no treasury shares. There are no
outstanding options, warrants, convertible instruments, or other rights,
agreements, or commitments to issue or acquire any shares of common stock or
any other security constituting, or convertible or exchangeable into, capital
stock of the Company. Since the date of the Company Balance Sheet, no shares
of the Company's capital stock, no options, warrants, or other rights,
agreements, or commitments (contingent or otherwise) obligating the Company to
issue shares of capital stock, and no other securities or instruments
convertible or exchangeable into shares of capital stock, have been executed or
issued by the Company. The Company has not granted and is not a party to any
agreement granting preemptive rights, rights of first refusal, or registration
rights with respect to its outstanding capital stock or any capital stock of
the Company to be issued in the future. The Company is not bound by any
exclusive agency or indemnity agreement applicable to the issuance of shares of
its capital stock after the Effective Date.

3.8 Licenses/Compliance with Law. The Company has the lawful
authority and all federal, state or local governmental authorizations,
certificates of authority, licenses or permits necessary for or required to
conduct its respective business as such is presently being conducted. Schedule
3.8 contains a list and description of all authorizations, certificates of
authority, licenses and permits, including those granted or derived from
governmental sources, issued or granted to the Company. The Company is
licensed to own and operate prepaid dental plans in the states listed in
Schedule 3.8. For the proper conduct of its business, the Company is not
required to obtain any additional certificates of authority, permits, licenses
or similar authorizations from any governmental authority other than has
already obtained as listed on Schedule 3.8. There are no pending or, to the
knowledge of the Seller, threatened legal, administrative, arbitration or other
actions, notices, or proceedings and no pending or, to the knowledge of the
Seller, threatened governmental investigations by any federal, state or local
government or any subdivision thereof or by any public or private group which
assert or allege any violation of or non-compliance with any governmental
requirements or which would have the effect of limiting, prohibiting or
changing the business operations of the Company as authorized by the
authorizations, certificates of authority, licenses and permits set forth on
Schedule 3.8 and as presently conducted by the Company. The Company maintains
statutory reserves that satisfy the requirements of all applicable governmental
laws, rules and regulations. The Company has made all filings with
governmental agencies required for the conduct of its respective business
including, without limitation, all annual reports, all holding company

4
<PAGE> 11
statements required to be filed with insurance or similar regulatory agencies
and all filings required to sell the prepaid dental plans offered by the
Company. There are no judgments against the Company, and no orders, rules,
consent decrees or injunctions of any court, governmental department,
commission, agency or instrumentality by which the Company is bound or to which
the Company is subject. The Company has not entered into and is not subject to
any judgment, consent decree, compliance order or administrative order with
respect to any insurance, health maintenance organization or other similar law
or received any request for information, notice, demand letter, administrative
inquiry or formal or informal complaint or claim with respect to any insurance
or other similar law or the enforcement of any such law. Neither the Company's
operations nor any of the assets owned, leased, occupied or used by the Company
in the operation of its business materially violates or fails to comply in any
material respect with any applicable federal, state or local insurance, health
maintenance organization, or prepaid dental plan statutes, laws, rules or
regulations or, to the knowledge of Seller, any applicable federal, state or
local health, fire, environmental, safety, zoning, building or other codes,
laws, rules or regulations, and the Company has not received any notice of any
alleged violations thereof.

3.9 Financial Statements. The Company has delivered to Purchaser
a copy of (i) unaudited financial statements of the Company as of December 31,
1993 and audited financial statements of the Company as of December 31, 1994
and 1995 consisting in each case of a balance sheet at each such respective
date, and the related statements of income, changes in stockholders' equity and
cash flows for the applicable twelve (12) month period then ended and (ii)
unaudited financial statements of the Company as of July 31, 1996 (the "Balance
Sheet Date") consisting of a balance sheet of the Company at such date (the
"Company Balance Sheet") and the related statements of income, changes in
stockholders' equity and cash flows for the applicable month and year-to-date
period then ended. Complete and accurate copies of all such financial
statements are attached as a part of Schedule 3.9 (the "Financial Statements").
The Financial Statements present fairly in all material respects the financial
position of the Company, and the results of the operations, changes in
stockholders' equity and cash flows of the Company, as of the respective dates
thereof and for the respective periods covered thereby, in conformity with
generally accepted accounting principles ("GAAP"). Except as set forth in the
Company Balance Sheet included in the Financial Statements, as of the Balance
Sheet Date there were no liabilities, debts, claims or obligations, whether
accrued, absolute, contingent or otherwise, whether due or to become due, which
are required by GAAP to be set forth in a balance sheet of the Company which
have not been so set forth in the Company Balance Sheet. The Financial
Statements were prepared from the books and records of the Company. There are
no assets shown on the Company Balance Sheet which are valued thereon at an
amount materially in excess of their fair value as of the Balance Sheet Date.
At the Balance Sheet Date, the Company owned each of the assets included in the
Company Balance Sheet. From the date hereof through the Closing Date, the
Company will continue to prepare monthly and year-to-date unaudited financial
statements on the same basis and will promptly deliver the same to Purchaser.
The foregoing representations will be applicable to all such monthly unaudited
financial statements so prepared and delivered.

3.10 No Adverse Change. Except as set forth on Schedule 3.10,
since the Balance Sheet Date, the business of the Company has been conducted
only in the ordinary course and

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<PAGE> 12
there has not been (i) any material adverse change in the financial condition,
business, properties, assets, or results of operations of the Company
(financial or otherwise) exclusive of any general economic factors affecting
the prepaid dental plan industry in general; (ii) any material loss or damage
(whether or not covered by insurance) to any of the assets of the Company which
materially affects or impairs the ability of the Company to conduct its
business as previously conducted or any other event or condition of any
character which has materially and adversely affected the business or
operations of the Company; (iii) the attaching, placing or granting of, or the
agreement to attach, place or grant, any encumbrance on any of the assets of
the Company; (iv) any sale or transfer of any material portion of the assets of
the Company; (v) any material changes in the terms of any material contract of
the Company; (vi) any material change in the accounting systems, policies or
practices of the Company; (vii) any waiver by or on behalf of the Company of
any rights which have any material value; (viii) no taking under condemnation
or right of eminent domain of any of the assets of the Company; (ix) any entry
into or termination of any material commitment, contract, agreement, or
transaction (including, without limitation, any material borrowing or capital
expenditure or sale or other disposition of any material assets) by the
Company; (x) any redemption, repurchase, or other acquisition of any of its
capital stock by the Company, or any issuance of capital stock of the Company
or of securities convertible into or rights to acquire any such capital stock;
(xi) any dividend or distribution declared, set aside or paid on capital stock
of the Company; (xii) any transfer or right granted by the Company of or under
any material lease, license, agreement, patent, trademark, trade name, service
mark or copyright; (xiii) any sale or other disposition of any material asset
of the Company, or any mortgage, pledge, or imposition of any lien or other
encumbrance on any material asset of the Company, or any agreement relating to
or contemplating any of the foregoing not in the ordinary and usual course of
business; (xiv) any default or breach by the Company in any material respect
under any contract, license, or permit; or (xv) any material increase in the
statutory reserves required to be maintained by the Company. Since the Balance
Sheet Date, the Company has conducted its business only in the ordinary and
usual course of business and, without limiting the foregoing, no changes have
been made in (i) employee compensation levels, (ii) the manner in which
employees of the Company are compensated, (iii) supplemental benefits provided
to any employees, or (iv) the employment of any employees of the Company.

3.12 Title to and Condition of Properties. Except as disclosed in
Schedule 3.12 hereto, the Company has good, marketable, and insurable title, or
valid, effective and continuing

6
<PAGE> 13
leasehold rights in the case of leased property, to all of the assets reflected
on the Company Balance Sheet and all personal property owned or leased by it or
used by it in the conduct of its business in such a manner as to create the
appearance or reasonable expectation that the same is owned or leased by it,
free and clear of all liens, security interests, restrictions, claims,
encumbrances, and charges. The Seller does not know of any potential action or
assertion of rights, including condemnation, by any party, governmental or
other, and no proceedings with respect thereto have been instituted of which
the Seller has notice, that would materially affect the ability of the Company
to utilize each of such assets in its business. The Company has not received
any notices of default or other violations from any mortgagee regarding any
properties leased by the Company. Schedule 3.12 hereto contains a detailed
listing of all material assets of the Company. The assets now owned by the
Company constitute all assets reasonably necessary to enable Purchaser to
conduct the business and operations of the Company on substantially the same
terms as such business has been conducted historically. Except as disclosed in
Schedule 3.12, all such assets are well maintained and in good operating
condition, except for normal wear and tear.

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<PAGE> 14
part of the property subject to the Real Property Leases which is material to
the operations of the Company as presently conducted. The Company does not own
any real property.

3.15 Intellectual Property. Schedule 3.15 is an accurate and
complete list of all tradenames that the Company uses in its business
operations. The Company has no United States and foreign patents, patent
applications, patent licenses, trademarks, and service mark registrations (and
applications therefor), and has no copyrights and copyright registrations (and
applications therefor), trade secrets, inventions, processes, designs, know-how
and formula which are owned or licensed for use by the Company and utilized by
the Company in the business or operations of the Company as presently
conducted. There is no adverse claim against the Company, or to the knowledge
of the Seller, any threatened litigation or claim of infringement. To the
knowledge of the Seller, the Company does not utilize any intellectual or
proprietary trade secret information which infringes any trademark, tradename,
service mark, copyright or patent of another, and the Company has not received
any notice contesting its right to use any trade name now used by it in
connection with its business or the operation thereof. The Company has not
granted any license to a third party in respect of any intellectual property.

3.16 Contracts.

(a) Material Contracts. Schedule 3.16A lists all
material contracts or agreements of the following types to which the Company is
a party or by which the Company is bound:

(iii) any contract or agreement for the maintenance,
purchase or sale of equipment or capital assets having a value in excess
of $25,000;

(iv) any power of attorney (other than routine powers
given to governmental officials authorizing service of process);

(v) any lease of personal property;

(vi) any guaranty, suretyship agreement or other agreement
relating to any contingent liability.

8
<PAGE> 15
(vii) any contract with an independent agent or broker who
sells the prepaid dental plans of the Company;

(viii) any contract or agreement with independent
consultants;

(ix) any contract, agreement voting trust or proxy among
or by the stockholders of the Company;

(x) any contract or agreement restricting the method by
which the Company conducts its business or the marketing of any of its
products or services; and

(xi) any contract or agreement between the Company and any
stockholder of the Company or any other affiliate of the Company or a
stockholder of the Company.

(e) Management Contracts. Schedule 3.16E sets forth all
management, marketing, administrative services, data processing and third party
administration contracts to which the Company is a party.

(f) Copies. True and correct copies of all such
contracts referred to in Schedules 3.16A, 3.16B, 3.16C 3.16D, and 3.16E have
been made available for inspection by

9
<PAGE> 16
Purchaser and, except to the extent disclosed on Schedules 3.16A, 3.16B, 3.16C,
3.16D, and 3.16E, as of the date of this Agreement, (i) all of the contracts
listed on such Schedules are in full force and effect, (ii) the Company has not
received any notice of cancellation with respect to any such contract or been
advised that the other party thereto intends to cancel any such agreement,
(iii) there are no material outstanding disputes under such contracts, (iv)
each such contract is with an unrelated third party entered into on an
arms-length basis in the ordinary course of business, (v) there are no material
defaults under any of such contracts, and (vi), to the knowledge of the Seller,
to the extent required by any law or regulation have been filed with and
approved by all governmental regulatory agencies.

3.18 Employee Benefit Plans. Except as disclosed in Schedule 3.18:

(a) The Company does not maintain or contribute to, and
has not in the past maintained or contributed to, any Pension Plan or Welfare
Plan, except as a described on

10
<PAGE> 17
Schedule 3.18, nor is the Company presently, or has it ever been, a
participating employer in any Multiemployer Plan.

(b) With respect to each Pension Plan and each Welfare
Plan listed on Schedule 3.18, to the knowledge of the Seller: (i) there is no
fact, including, without limitation, any reportable event, that exists that
would constitute grounds for termination of such plan by the PBGC or for the
appointment by the appropriate United States District Court of a trustee to
administer such plan, in each case as contemplated by ERISA; (ii) neither the
Company nor any Subsidiary nor any fiduciary, trustee, or administrator of any
such Pension Plan or Welfare Plan, has engaged in a prohibited transaction that
would subject the Company to any material tax or any material penalty imposed
by ERISA or the Code; (iii) neither the Company has not incurred any material
liability to the PBGC (other than for payment of premiums); (iv) the Company
has contributed all amounts thereto it is required to contribute under the
terms of the plan in question and applicable law, and there is no accumulated
funding deficiency with respect to any such Pension Plan, whether or not
waived, other than routine, non-contested claims for benefits. There is not
any pending or, to the knowledge of the Seller, threatened claim by or on
behalf of any Pension Plan or Welfare Plan, by any employee or former employee
covered or previously covered under any Pension Plan or Welfare Plan, or
otherwise involving any Pension Plan or Welfare Plan.

(c) There has been no termination of any Pension Plan or
Welfare Plan by the Company that has occurred during the five-year period
ending on the date hereof.

(e) No Welfare Plan listed on Schedule 3.18 is funded
with a trust or other funding vehicle, other than insurance policies.

11
<PAGE> 18
(h) No bonus, severance pay, or any other employee
benefit under any Welfare Plan, Pension Plan, or any other type of pension,
profit sharing, deferred compensation, retirement, stock option, bonus,
severance, or other employee benefit or compensation plan, agreement,
arrangement, practice, or policy with respect to employees maintained by or
contributed to by the Company is payable or exercisable as a result of the
transaction contemplated by this Agreement, and the payment, exercise, or
vesting of any such bonus, severance pay, or employee benefit will not be
accelerated or otherwise enhanced by such transaction.

3.19 Receivables. To the knowledge of the Seller, all Receivables
of the Company whether or not reflected in the Company Balance Sheet, represent
transactions in the ordinary course of business, and, except as disclosed on
Schedule 3.19, are current and collectible net of any reserves therefor shown
on the Company Balance Sheet (which reserves are adequate and were calculated
consistent with past practice). Schedule 3.19 consists of an aged accounts
receivable report of the Company as of July 31, 1996.

12
<PAGE> 19
3.23 Insurance. Schedule 3.23 lists all insurance policies and
coverages maintained by or for the Company including but not limited to real
and personal property insurance, workers' compensation insurance and medical
malpractice and professional liability insurance. Schedule 4.20 lists all
insurance claims submitted in connection with property damage or medical
malpractice involving the Company for the latest three (3) years.

3.24 Consents. Except as set forth in Schedule 3.24 hereto, Seller
has no knowledge of any consents, approvals or authorizations by any person,
entity or governmental agency required in connection with the sale of the
Shares and the consummation of the transaction contemplated by this Agreement.
With respect to any consents, approvals or authorizations contemplated in
Schedule 3.24 herein, Seller covenants and agrees with Purchaser that it will
take all reasonable steps necessary and desirable, and will use all
commercially reasonable efforts to cooperate with Purchaser in obtaining, as
promptly as possible, all necessary approvals, authorizations and consents of
governmental, court and regulatory bodies, and officials required to consummate
the transaction contemplated hereby.

3.26 Taxes. All federal, state and other tax returns and reports
of the Company required to be filed have been prepared and properly filed or
valid extensions have been obtained, and, except as set forth on Schedule 3.26,
all taxes, charges, fees, duties, levies or other assessments which are imposed
by the United States, or any state, local or foreign government or subdivision
or agency thereof, including any interest, penalties or additions (collectively
"Taxes") upon the Company or any of its properties, assets or income which are
due and payable or claimed by any taxing authority to be due and payable
collectively have been paid. The liability for accrued taxes as shown in the
Company Balance Sheet (net of amounts reserved for deferred taxes) is
sufficient for the payment of all unpaid Taxes of the Company accrued for or
applicable to the periods prior to the Balance Sheet Date and all years and
periods prior thereto and for which the Company may at that date have been
liable in its own right or by reason of its being a member of any group of
corporations filing consolidated tax returns (including any such amounts
payable as a result of an audit of any tax return for any such period). The
Company utilizes the accrual method of accounting for tax purposes.

13
<PAGE> 20
the extension of time for the assessment of any tax, nor has any such waiver or
agreement been requested by the Internal Revenue Service (the "Service") or any
other taxing authority.

Except as set forth on Schedule 3.26, the Federal income tax returns of
the Company have not been examined or audited by the Service. Except as set
forth on Schedule 3.26, no material issues have been raised in any examination
by any taxing authority with respect to the businesses and operations of the
Company which, by application of similar principles, could be expected to
result in a proposed adjustment to the liability of the Company for taxes for
any other period not so examined.

The Company has not filed a consent under Section 341(f) of the Internal
Revenue Code of 1986, as amended (the "Code") concerning collapsible
corporations. Except as disclosed in Schedule 3.26, the Company has not made
any payments, is obligated to make any payments, or is a party to any agreement
that under certain circumstances could obligate it to make any payments that
will not be deductible under Section 280G of the Code. The Company has not
been a United States real property holding corporation within the meaning of
Section 897(c)(2) of the Code during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code. The Company has disclosed on their federal
income tax returns all positions taken therein that could give rise to a
substantial understatement of federal income tax within the meaning of Section
6662 of the Code. The Company is not a party to any tax allocation or sharing
agreement. The Company (a) has not been a member of an affiliated group filing
a consolidated federal income tax return and (b) has no liability for the taxes
of any person (other than any of the Company) under Treas. Reg. Section
1.1502-6 (or any similar provision of state, local, or foreign law), as a
transferee or successor, by contract, or otherwise.

3.27 Transactions With Affiliates. Except as set forth in Schedule
3.27, there are no loans, leases, agreements, contracts or other transactions
between the Company and any present or former stockholder, director or officer
of the Company, or any member of such stockholder's, director's or officer's
immediate family. Except as set forth in Schedule 3.27, no stockholder,
director or officer of the Company nor any of their respective spouses or
family members owns directly or indirectly on an individual or joint basis any
material interest in, or serves as an officer or director of, or in any similar
capacity for, any competitor, customer, provider or supplier of the Company or
any organization which has a material contract or arrangement with the Company.
Except as set forth in Schedule 3.27, neither Seller nor any of its affiliates
has any claim or cause of action against the Company and the Company has no
obligation or liability to Seller or any affiliate of Seller.

3.28 Improper Payments. To the knowledge of the Seller, neither
the Company, nor any director, officer, employee or agent of the Company has
made any improper bribes,

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<PAGE> 21
kickbacks or other payments on behalf of the Company to, or received any such
payments from, customers, vendors, suppliers or other persons contracting with
the Company.

3.29 Compliance with Insurance Laws. In all jurisdictions where the
failure to do so would result in a material adverse effect, the Company (i) has
made all required filings under applicable insurance or similar statutes or
regulations currently in effect and (ii) is duly licensed or authorized in each
jurisdiction where it is required under applicable insurance or similar
statutes or regulations currently in effect to be so licensed or authorized to
conduct its business as presently conducted. The Company holds licenses and
certificates of authority or is otherwise authorized in accordance with
applicable laws and regulations currently in effect, in each jurisdiction where
the Company is required to be so licensed or authorized to offer, sell or
otherwise provide the dental care products and other services offered, sold or
otherwise provided by the Company in the jurisdiction in which they are
currently being offered, sold or otherwise provided and to otherwise conduct
its businesses as presently conducted. In each jurisdiction, the dental care
products and other services offered and sold by the Company have been and are
offered and sold in compliance with the requirements of all relevant laws and
regulations currently in effect, in each case, with such exceptions,
individually or in the agreements, as would not have a material adverse effect
on the ability of the Company to conduct its business in any jurisdiction in
which the Company operates; and the Company has not received any notification
from any insurance regulatory or similar governmental authority to the effect
that any additional permit, license, authorization or certificate of authority
from such insurance regulatory or similar governmental authority is needed to
be obtained by the Company in any case in which it could be reasonably expected
that obtaining such permits or the failure to obtain such permits would have a
material adverse effect on the ability of the Company to conduct its business
in any jurisdiction in which the Company operates. Except as set forth in
Schedule 3.29, the Company has not entered into or been subject to any
judgment, consent decree, compliance order or administrative order with respect
to any insurance or other similar law or, other than in the ordinary course of
business, received any request for information, notice, demand letter,
administrative inquiry or formal or informal complaint or claim with respect to
any insurance or other similar law or the enforcement of any such law. As of
the date hereof there is no, and since the date of the Balance Sheet the Seller
has no knowledge of any, legislative or regulatory development or written
proposal relating to (i) any statute, rule or regulation or other law not
currently in effect or (ii) the scope or application of any statute, rule,
regulation or other law currently in effect but not currently applicable so
that, if enacted, promulgated or made applicable to the Company or its
business, may have or impose any additional regulatory obligations or
limitations on such Company or such Subsidiary or their respective products.
In any jurisdiction in which the Company is conducting or has prior to the date
hereof ever conducted any activities including without limitation activities
relating to the offer and sale of dental care products, plans or services, the
recruitment of dentists or dental offices in connection with the offer and sale
of such products, plans or services, the marketing of any such products plans
or services to potential purchasers or subscribers thereto, or any joint
venture with any other party relating to the foregoing, the Company has not
failed to comply with any applicable statute, ordinance, order, rule or
regulation, or failed to obtain any certificate of authority, license or
permit, which failure, in either case, would subject such Company to any fine,
penalty, assessment or other amount or could be the basis for any

15
<PAGE> 22
judgment, consent decree, compliance order or administrative order with respect
to any insurance or similar law. Seller shall be liable for any such fine,
penalty, assessment or judgment, or any liabilities incurred or payments
required under any such consent decree, compliance order or administrative
order as a result of actions or failures to act by the Company prior to the
Closing Date together, in each case, with all costs and expenses (including
reasonable fees, disbursements and expenses of attorneys) relating thereto, in
accordance with and subject to the limitations set forth in Article 10.

ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PURCHASER

The Purchaser represents and warrants to the Seller as follows:

16
<PAGE> 23
or (iv) except as reflected on Schedule 3.24, require the authorization,
consent, approval, or license of any third party.

4.4 Investment Representations. Purchaser will acquire the Shares
for its own account for investment and not with a view to the resale or
distribution thereof. Purchaser will not transfer or otherwise dispose of the
Shares, or any interest therein, in such manner as to violate any provisions of
the Securities Act of 1933, as amended, and the rules and regulations
thereunder (collectively, the "Securities Act"), or of any applicable state
securities laws regulating the disposition thereof. Purchaser agrees that the
certificates representing the Shares may bear legends to the effect that such
shares have not been registered under the Securities Act or such other state
securities laws, and that no interest therein may be transferred or otherwise
disposed of in violation of the provisions thereof or of any rules and
regulations issued thereunder.

ARTICLE 5
COVENANTS OF THE SELLER AND THE COMPANY

Pending the Closing, Seller and the Company shall do the following:

5.2 Access and Information. Seller shall cause the Company to
afford to Purchaser and its representatives reasonable access during reasonable
business hours and with at least twenty-four hours advance notice throughout
the period prior to the Closing to all properties, books, contracts,
commitments, computer programs and data, reports, manuals and records
(including, but not limited to, tax returns), and to all personnel of the
Company and the Subsidiaries and, during such period, shall promptly furnish to
Purchaser all other information concerning such business, properties, and
personnel as Purchaser may reasonably request. Purchaser shall maintain the
confidentiality of all such information as required by Section 6.5 hereof.

17
<PAGE> 24
their officers, employees, agents, and representatives (including any
investment banker) not, directly or indirectly, to solicit, encourage, or
initiate any discussion with, or negotiate or otherwise deal with, or provide
any information to, any person or entity other than Purchaser and its
representatives concerning any merger, sale of assets, or similar transaction
involving the Company, or sale of any capital stock of the Company, or any
interest therein. Seller will, or will cause the Company to, notify Purchaser
immediately upon receipt of any offer or proposal relating to any of the
foregoing and such notice shall describe in detail the terms thereof and
identify the party or parties thereto. From the date of this Agreement, until
the Closing or the termination of this Agreement pursuant to its terms, neither
the Company nor the Seller will furnish, without the prior written consent of
Purchaser, to any person or entity (other than Purchaser) any non-public
information concerning the Company or its businesses, financial affairs or
prospects for the purpose of or with the intent of permitting such person or
entity to evaluate a possible acquisition of any capital stock or (other than
in the ordinary course of business) assets of the Company.

(e) The Company shall not (i) adopt, enter into, or amend
any bonus, profit sharing, compensation, stock option, warrant, pension,
retirement, deferred compensation,

18
<PAGE> 25
employment, severance, termination, or other employee benefit plan, agreement,
trust fund, or arrangement for the benefit or welfare of any officer, director,
or employee of the Company or (ii) agree to any increase in the compensation
payable or to become payable to, or any increase in the contractual term of
employment of, any officer, director or employee of the Company; provided,
however, that the Company may (i) make usual and customary employee salary
adjustments; (ii) may pay usual and customary bonuses to employees; and (iii)
may terminate and employ non- management employees as needed to operate the
business of the Company, in each case consistent with past practices;

(i) The Company shall not prepay any loans, including,
without limitation, loans from its stockholders, officers, directors or
employees, and shall not make any principal payments on the outstanding loans
from the Seller or, except in the ordinary course of business consistent with
past practice, make any change in its borrowing arrangements or modify or amend
or terminate any material contract or release or assign any material rights or
claims;

(k) The Company will continue properly and promptly to
file when due all federal, state and local, foreign, and other tax returns,
reports, and declarations required to be

19
<PAGE> 26
filed by it, and will pay, or make full and adequate provision for the payment
of, all taxes and governmental charges due from or payable by it;

(l) The Company will comply with all laws and regulations
applicable to it and its operations;

(m) The Company will maintain in full force and effect
insurance coverage of a type and amount customary in its business, but not less
than that presently in effect;

(o) The Company will not make any change in any method of
reporting income or expenses for federal income tax purposes; and

(p) The Company shall not knowingly take any action which
would prevent compliance with any of the conditions in Articles 7 or 8 of this
Agreement.

5.5 Consents and Approvals. The Seller shall use and the Seller
shall cause the Company to use commercially reasonable efforts to cooperate
with the Purchaser to obtain all necessary consents and approvals required for
its performance of this Agreement and the transactions contemplated hereby,
including, without limitation, the consents listed on Schedule 3.24 other than
the regulatory change of control approvals to be obtained by Purchaser. As
required in connection with the performance of this Agreement, the Seller shall
cause the Company will promptly provide such other information and
communications to governmental and regulatory authorities, including, without
limitation, insurance regulatory authorities in any jurisdiction in which the
Company conducts business, as such regulatory authorities or Purchaser may
reasonably request. Between the date hereof and the Closing Date, the Seller
shall cause the Company to promptly provide Purchaser with copies of all
correspondence and filings to or from all governmental and regulatory bodies
and officials relating to the Company.

20
<PAGE> 27
5.7 Financial Information. Seller will cause the Company to
deliver as soon as reasonably practicable to Purchaser unaudited financial
statements of the Company for each month from and after the date hereof as and
when such financial statements become available in the usual course of
business.

5.8 Expenses. All costs and expenses incurred by Seller in
connection with this Agreement shall be paid by Seller and none of such costs
and expenses shall be paid by the Company.

ARTICLE 6
COVENANTS OF PURCHASER

Purchaser agrees that from the date hereof through the Closing Date:

6.1 Affirmative Covenants. Subject to the terms and conditions
stated herein, Purchaser will take every action reasonably required of it in
order to satisfy the conditions to Closing set forth in this Agreement on or
before the Closing Date and otherwise to ensure the prompt and expedient
consummation of the transactions substantially as contemplated hereby,

21
<PAGE> 28
and will exert all reasonable efforts to cause the transactions contemplated by
this Agreement to be consummated.

6.2 Cooperation. Purchaser shall cooperate with Seller and its
accountants and agents in carrying out the transaction, and in delivering all
documents and instruments deemed reasonably necessary or useful by Seller.

6.4 Consents and Approvals. Purchaser shall use commercially
reasonable efforts to obtain all necessary consents and approvals required for
its performance of this Agreement and the transactions contemplated hereby,
including, without limitation, the regulatory change of control approvals
listed on Schedule 3.24; provided, however, that Purchaser shall not be
required or obligated to pay any amounts necessary to satisfy conditions to or
in order to obtain such governmental regulatory consents other than normal and
customary filing fees and out-of-pocket costs and expenses of the Company
including attorney's fees incurred in providing its assistance with respect
thereto. Purchaser shall diligently and promptly proceed immediately after the
date of this Agreement to make all filings, applications, statements and
reports to all governmental authorities which are required to be made prior to
the Closing Date by or on behalf of it pursuant to any applicable statute, rule
or regulation in connection with this Agreement and the transactions
contemplated hereby and shall diligently and in good faith pursue the taking of
all action necessary to obtain approval of the transactions contemplated herein
by the insurance regulatory authorities of any jurisdiction in which the
Company conduct business. As required in connection with the performance of
this Agreement, Purchaser will promptly provide such information and
communications to governmental and regulatory bodies and authorities,
including, without limitation, insurance regulatory authorities in any
jurisdiction in which the Company conducts business, as such regulatory
authorities may reasonably request. Purchaser shall not be required to cure
any existing regulatory compliance requirements in order to obtain such
consents and approvals. Within five (5) business days after the written
request of the Seller, the Purchaser shall provide to the Seller a status
report as to all such filings and approvals.

22
<PAGE> 29
obtained before or after the execution hereof. Purchaser agrees that the
Seller shall have standing and may avail itself of any remedy at law or in
equity, including an action for injunctive relief, in the event of a breach or
threatened breach by Purchaser of any of the provisions of this Section 6.5.
The obligations of Purchaser under this Section 6.5 shall survive termination
of this Agreement for any reason whatsoever and shall remain in effect until
two (2) years from the Effective Date of this Agreement.

ARTICLE 7
CONDITIONS TO OBLIGATIONS OF SELLER

(c) Purchaser shall have performed in all material
respects its agreements, covenants and obligations contained in this Agreement
required to be performed at or prior to the Closing;

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<PAGE> 30
(d) The representations and warranties of Purchaser set
forth in this Agreement shall be true in all material respects as of the
Effective Date and as of the Closing Date as if made as of such time;

(e) Seller shall have received from Purchaser an
officers' certificate, executed by an authorized officer of Purchaser (in his
capacity as such), dated the Closing Date, as to the satisfaction of the
conditions stated in Sections 7.1(c) and (d) above (to the best of his
knowledge where appropriate) and further certifying that Purchaser has received
the Schedules and received copies of, or had the opportunity to review, the
agreements and documents listed in the Schedules to this Agreement.

(g) At or prior to the Closing, Purchaser shall perform
the respective obligations of and the actions to be taken by Purchaser at the
Closing as described in Section 10.3 of this Agreement.

(h) Prior to the Closing, Purchaser shall provide the
Seller a copy of the order from the Florida Insurance Commission approving the
acquisition of the Shares by Purchaser and the change of control of the
Company.

ARTICLE 8
CONDITIONS TO OBLIGATIONS OF PURCHASER

24
<PAGE> 31
(b) There shall not be in effect a restraining order, a
preliminary or permanent injunction or other order by any federal or state
authority which prohibits the consummation of this Agreement and no action or
proceeding shall have been instituted or remain pending seeking such relief or
seeking damages in respect of this Agreement or the consummation of the
transactions contemplated by the Agreement;

(c) Seller shall have performed in all material respects
each of its agreements, covenants and obligations contained in this Agreement
and required to be performed on or prior to the Closing and shall have complied
with all material requirements, rules, and regulations of all regulatory
authorities having jurisdiction relating to the transactions contemplated
herein;

(i) A reduction in total monthly premium revenue of the
Company to an amount less than one hundred percent (100%) of the average
of the monthly premium revenues of the Company for the six (6) calendar
months immediately preceding the Effective Date except for the
reductions resulting from the group agreement terminations reflected in
Schedule 3.10;

(ii) A reduction in the total number of members of the
prepaid dental plans of the Company to less than ninety-eight percent
(98%) of the total number of members of the prepaid dental plans of the
Company in the calendar month immediately preceding the

25
<PAGE> 32
Effective Date except for the reductions resulting from the group
agreement terminations reflected in Schedule 3.10;

(iii) a reduction in the total number of general dentist
(primary care) providers which have contracts with the Company to be a
provider to members of its prepaid dental plan to an amount less than
ninety- eight percent (98%) of such providers as of the end of the
calendar month immediately preceding the Effective Date determined on a
net basis taking into account all new dental provider agreements entered
into after the date of this Agreement (as used herein "general dental
providers" refers to dental providers who are treating as patients
members of the prepaid dental plans of the Company);

(iv) a casualty loss which is not covered by insurance in
excess of $100,000;

(i) None of the certificates of authority or licenses of
the Company listed on Schedule 3.8 shall have been canceled, revoked, suspended
or limited in any respect and no governmental regulatory agency shall have
instituted any proceeding, or given notice to the Company or a Subsidiary that
it intends to institute any proceeding to take such action or to place the
Company or a Subsidiary in a conservatorship or receivership due to its
financial condition or failure to comply or satisfy any governmental law, rule
or regulation.

(j) At the Closing, all the Seller shall perform his or
her or its respective obligations of and actions to be taken by all the Seller
at the Closing as described in Section 9.2 of this Agreement.

26
<PAGE> 33

ARTICLE 9
CLOSING

9.1 Date of Closing. The Closing shall take place at the offices
of Counsel to Purchaser in Dallas, Texas or at such other location as Purchaser
and Seller may mutually agree, within five (5) business days after the date on
which all governmental and third party consents necessary for the consummation
of the transactions contemplated by this Agreement are obtained and all other
conditions to Closing are satisfied (specifically including, without
limitation, the condition specified in Section 8.1(k); but in no event later
than one hundred fifty (150) days after the Effective Date unless extended by
the mutual agreement of the Purchasers and the Seller, subject to earlier
termination pursuant to the provisions of Article 2 hereof. In the event that
the Closing does not timely occur as stated above, then a party not in default
may immediately terminate this Agreement upon written notice to the other
parties in accordance with Section 2.1 below; provided, however, that this
Agreement shall terminate automatically and without further notice if the
Closing has not occurred within one hundred fifty (150) days of the Effective
Date, unless extended by the mutual agreement of the Purchaser and Seller.

9.2 Actions by Seller. At the Closing, Seller shall:

9.3 Actions by Purchaser. At the Closing, Purchaser shall:

27
<PAGE> 34

ARTICLE 10
SURVIVAL OF REPRESENTATIONS
AND WARRANTIES; INDEMNITY; POST-CLOSING MATTERS

10.1 Representations and Warranties to Survive. All statements
contained in any agreement, certificate, instrument, schedule, or document
delivered by or on behalf of any of the parties pursuant to this Agreement and
the transactions contemplated hereby shall be deemed representations and
warranties by the delivering party hereunder. All representations, warranties,
covenants and agreements made by the parties each to the other in this
Agreement shall be true at the Closing and shall survive the consummation of
this Agreement and the Closing hereunder for a period of two years, ending at
midnight on the second anniversary of the Closing Date; provided, however, that
indemnification with respect to losses relating to Taxes shall expire six (6)
months after the termination of the applicable statute of limitations and
provided further, however, that if, prior to the expiration of such two year
period, a state of facts shall have become known which threatens to give rise
to a liability against which any party hereto would be entitled to
indemnification hereunder and the indemnified party shall have given notice of
such facts to the indemnifying party, then the rights of the indemnified party
to indemnification with respect to such liability shall continue until such
liability shall have been finally determined and disposed of (including and
subject to disposition by the expiration of the applicable statute of
limitations with respect to such liability); and provided further, however,
that, if a claim for indemnification is made pursuant to this Article 10, then
such claim for indemnification or any claim arising out of the wrongful failure
to comply with the provisions of this Article 10 shall survive until the
expiration of the applicable period of limitations with respect to such claim
for indemnification; and provided further, however, that such two year
limitation specified above shall not apply to the extent provided otherwise in
Section 10.4(c) below. With respect to the representations and warranties of
the parties, such representations and warranties shall be true as of and at the
date of the Closing but nothing contained herein shall be deemed to require or
imply that the accuracy of such representations and warranties shall apply on a
continuing basis as to facts existing after the date of the Closing. Except to
the extent set forth herein, no investigation or examination made by any party
hereto shall constitute a waiver of any representation or warranty and no
representation or warranty shall be merged into the Closing hereunder.
However, to the extent information is apparent on the face of the Schedules or
is otherwise expressly set forth herein, such information shall be deemed to
amend, limit and/or restate any representation and warranties contained herein
to the extent such information is inconsistent with such representation or
warranty.

10.2 Indemnity. Subject to the provisions of Section 10.4 below,

28
<PAGE> 35
(i) Any misrepresentation, breach of warranty, or failure
to fulfill any agreement or covenant of the Seller under this Agreement
or under any other agreement or document delivered by the Seller at
Closing hereunder; and

(ii) Any and all actions, suits, proceedings, demands,
assessments, judgments, costs and legal and other expenses incident to
any of the foregoing.

(ii) Any obligation or liability of the Company, whether
arising out of any set of facts in existence before, on or after the
Closing Date; excluding, however, any obligation or liability with
respect to which the Seller are obligated to indemnify and hold the
Purchaser harmless pursuant to Section 10.2(a) above; and

(iii) Any and all actions, suits, proceedings, demands,
assessments, judgments, costs, and legal and other expenses incident to
any of the foregoing.

10.3 Indemnity Procedures. In case any claim, demand or action
shall be brought by any third party including, without limitation, any
governmental authority, against a party entitled to indemnity under Section
10.2(a) or 10.2(b) above, such party shall promptly notify the other party or
parties, as the case may be, from whom indemnity is or may validly be sought in
writing and the indemnifying party or parties shall assume the defense thereof,
including the employment of counsel. In addition, in case a party hereto shall
become aware of any facts which might result in any such claim, demand or
action, such party shall promptly notify the other party or parties who would
be obligated to provide indemnity hereunder with respect to such claim, demand
or action, and such other party or parties shall have the right to take such
action as it or they may deem appropriate to resolve such matter. The
indemnified party or parties shall have the right to employ separate counsel
in any such action and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such indemnified party or
parties, unless the employment of such counsel has been specifically authorized
by the indemnifying party or parties. Any settlement of any action subject to
indemnity hereunder shall require the consent of the indemnified and the
indemnifying party which consent shall not be unreasonably withheld and shall
be given within five (5) days following the giving of notice thereof. The
indemnifying party or parties shall not be liable for any settlement of any
action effected without its or their consent, but if settled with the consent
of the indemnifying party or parties or if there be a final judgment for the
plaintiff in any such action, the indemnifying party or parties shall indemnify
and hold harmless the indemnified party from and against any loss or liability
by reason of such settlement or judgment. If requested by

29
<PAGE> 36
the indemnifying party, the indemnified party shall cooperate with the
indemnifying party and its counsel and use its best efforts in contesting any
such claim or, if appropriate, in making any counter-claim or cross-complaint
against the party asserting the claim, provided that the indemnifying party
will reimburse the indemnified party for reasonable expenses incurred in so
cooperating upon presentation of receipts or other evidence of such expense.
The indemnifying party and its representatives shall have full and complete
access during reasonable business hours to all books, records and files of the
indemnified party expressly related to the defense of any claim for
indemnification undertaken by the indemnifying party pursuant to this Article
10, or for any other purpose in connection therewith; provided that the
indemnifying party shall safeguard and maintain the confidentiality of all such
books, records and files.

10.4 Limitations on Indemnification.

(i) Losses arising from fraud or an intentional
misrepresentation on the part of the Seller; and

(ii) Losses arising from the intentional breach of any
covenant or agreement by the Seller contained in this Agreement.

30
<PAGE> 37
10.5 Remedies; Default; Notice and Cure. In the event of a breach
of this Agreement prior to the Closing, the non-breaching party shall have all
rights and remedies available at law, in equity or under the terms of the
Agreement. If the Closing occurs, indemnification pursuant to this Article 10
is the sole and exclusive remedy of the parties after the Closing for matters
arising out of the representations, warranties, covenants and agreements of the
Seller and the Purchaser set forth in this Agreement (without limiting the
rights of the parties under any other agreement), except as otherwise expressly
provided in this Agreement. No party shall be deemed in breach of its
obligations hereunder unless it has received written notice from the other
party of noncompliance with a term or provision of this Agreement and has
failed to cure such noncompliance within ten (10) days after receipt of such
notice.

ARTICLE 11
NON-COMPETITION

(i) for a period of three (3) years from the date of this
Agreement, engage in the solicitation of any of the prepaid dental
customers or dental preferred providers of the Purchaser or its
affiliates for the benefit of any prepaid dental plan or dental
preferred provider organizations other than an affiliate of Purchaser in
the continental United States (the "Restricted Area");

31
<PAGE> 38
any of said customers any products or services similar to any products
or services heretofore sold or provided to any of such customers by the
Company; and

(iii) for a period of five (5) years from the date of this
Agreement, engage in any business which solicits any present or future
employee of the Company or initiates discussions with any such employee
regarding his or her termination or resignation from employment with the
Company, so that such employee may accept employment with, or engagement
as an employee, agent or consultant with Seller, directly or indirectly,
as specified above; provided, however, that Seller shall not be
prohibited by this Agreement from employing or soliciting the employment
of any employee that the Company terminates after the date of such
termination or with respect to whom the Company gives permission to
Seller to employ or solicit employment.

It shall not be deemed a violation of this Section 11.1, if, pursuant to an
agreement with the Purchaser or the Company, agents of the Seller solicit
business on behalf of the Company or other affiliates of Purchaser after the
Closing Date.

11.2 Permitted Activities. Seller shall have the right,
upon completion of the sale of the Shares to Purchaser, to continue to market
and sell its back-office, claims and other operational services and
applications involving technology solutions to dental organizations and
companies of all types, whether or not they compete with Purchaser or its
subsidiaries. Additionally, nothing contained herein shall be construed to
limit, exclude or prohibit Seller from marketing life, health (other than
dental), annuity, vision or drug products to Purchaser's customers or providing
third party administration to self-insured accounts. It is expressly
understood however that nothing contained in this Section 11.2 shall be deemed
in any way to limit, modify or release the obligation of Seller under Section
11.3 of this Agreement.

(a) Seller shall use its best efforts and exercise utmost
diligence to protect and safeguard all of such trade secrets and
confidential, proprietary information;

(b) Seller shall not, directly or indirectly, use, sell,
license, publish, disclose or otherwise transfer or make available to
others any of such trade secrets or confidential, proprietary
information;

32
<PAGE> 39
(c) Without the prior written consent of the Company,
Seller shall not, directly or indirectly, disclose any of such trade
secrets or confidential, proprietary information; and

(d) Seller shall not, directly or indirectly, use for its
own benefit or for the benefit of another, any of such trade secrets or
confidential, proprietary information.

(a) Specific Performance. In the event of a breach or
threatened breach of any covenant or agreement of Seller in this
Agreement, remedies at law will not adequately compensate the
Purchaser for its injuries incurred as a result thereof.
Accordingly, injunctive and/or equitable relief shall be available to
the Purchaser to

33
<PAGE> 40
specifically enforce this Agreement and prevent such breach and any
continued breach of any covenant and agreement herein. Seller agrees
that a bond of no more than $10,000 in the aggregate will provide
adequate protection to Seller and therefore no more than $10,000 in
bond or other security shall be required to be posted by the Company
by any court in any proceeding to obtain such injunctive or equitable
relief.

ARTICLE 12
TERMINATION; WAIVER

12.1 Termination. This Agreement may be terminated, and the
transaction may be abandoned, at any time prior to the Closing, as follows and
in no other manner:

(a) Mutual Consent. By the mutual consent of Purchaser
and the Seller;

(b) By Purchaser or Seller: Condition Precedent. By
Purchaser or Seller, upon written notice to the other, if the conditions to the
obligations of such canceling party or parties to consummate the transaction,
in the case of the Seller, as provided in Article 7 or, in the case of
Purchaser, as provided in Article 8, were not, or cannot reasonably be,
satisfied on or before one hundred twenty (120) days after the date of this
Agreement unless the failure of the condition is the result of the material
breach of this Agreement by the party seeking to terminate; provided, however,
that, in the event all such conditions have been satisfied except solely the
condition with respect to obtaining all required consents, authorizations, and
approvals of governmental and regulatory agencies set forth in Sections 7.1(a)
and 8.1(a), respectively, and such failure is not due to a breach of this
Agreement by the non-terminating party, such date shall be automatically
extended for one thirty (30) day period provided, however, that in no event
shall such date be extended beyond an aggregate of one hundred fifty (150) days
after the date of this Agreement unless extended by the mutual agreement of the
Purchaser and the Seller;

34
<PAGE> 41
No termination of this Agreement shall affect the liability of any party hereto
for any breach hereof arising at, prior to or out of such termination;
provided, however, that, in the event of a breach hereof by Purchaser, in
addition to any other remedies available at law or in equity to the Seller,
Seller shall be entitled to retain the Earnest Money. Any public announcement
of the termination of this Agreement shall be made only by means of a press
release issued jointly by Purchaser and the Company.

ARTICLE 13
CERTAIN DEFINED TERMS

13.1 Affiliate. When used with respect to a person, an "Affiliate"
of such person is a person controlling, controlled by, or under common control
with such person.

13.3 Closing. The completion of the transaction to take place as
described in Article 10.

13.4 Closing Date. The date on which the Closing actually occurs.

13.6 Code. The Internal Revenue Code of 1986, as amended and in
effect on the date of this Agreement.

13.7 Control. Generally, the power to direct the management or
affairs of an entity.

13.8 Counsel to Seller. Robert B. Vlach, Esq., 4001 McEwen Drive,
Ste. 200, Dallas, Texas 75244, telephone number (214) 851-9071; facsimile
number (214) 851-9033.

35
<PAGE> 42
13.9 Counsel to Purchaser. Strasburger & Price, L.L.P., 901 Main
Street, Suite 4300, Dallas, Texas 75202, telephone number (214) 651-4300,
facsimile number (214) 651-4330.

13.10 ERISA. The Employee Retirement Income Security Act of 1974,
as amended and in effect on the date of this Agreement.

13.15 PBGC. The Pension Benefit Guaranty Corporation.

36
<PAGE> 43
13.17 Receivables. Accounts receivable, notes receivable, and other
obligations appearing as assets on the books of the Company or any Subsidiary,
or customarily required to be reflected as assets in balance sheets of the
Company or any Subsidiary prepared in accordance with GAAP, indicating moneys
owed to the Company or such Subsidiary.

ARTICLE 14
MISCELLANEOUS

(a) If to Seller:

UICI
5215 N. O'Connor Boulevard, Suite 300
Irving, Texas 75039
Attn: W. Brian Harrigan, President
Facsimile:(214) 869-3336

37
<PAGE> 44
With a copy to Counsel to Seller:

UICI
4001 McEwen Drive
Suite 200
Dallas, Texas 75244
Attn: Robert B. Vlach, Esq., General Counsel
Facsimile:(214) 851-9033

(b) If to Purchaser:

United Dental Care, Inc.
14755 Preston Road
Suite 300
Dallas, Texas 75240
Attn: William H. Wilcox, President
Facsimile: (214) 458-7963

With a copy to Counsel to Purchaser:

Strasburger & Price, L.L.P.
901 Main Street, Suite 4300
Dallas, Texas 75202
Attn: David K. Meyercord, Esq.
Facsimile: (214) 651-4330

Any party may change the address or facsimile telephone number for notices to
be sent to it by written notice delivered pursuant to the terms of this Section
14.2.

14.4 Binding Effect/Assignability. This Agreement shall extend to
and be binding upon and inure to the benefit of the parties hereto, their
respective heirs, legal representatives, successors and assigns. Purchaser
shall have the right at any time to assign this Agreement to any affiliate of
Purchaser without the necessity of seeking the consent of the Seller; provided,
however, that Purchaser shall not be relieved of any obligations as a result of
such assignment and that, in addition to Purchaser remaining liable, any such
assignee shall assume and become liable for any and all of Purchaser's
obligations under this Agreement. Seller shall be entitled to assign any of it
respective rights or obligations under this Agreement; provided, however, that
the rights and obligations of Seller may be assigned by operation of law or may
be assigned to an individual retirement account, pension plan, trust or other
entity under the control of Seller

38
<PAGE> 45
but any such assignment shall not relieve or release Seller of any obligations
hereunder as a result of such assignment and that, in addition to Seller
remaining liable, any such assignee shall assume and become liable for any and
all of Seller's obligations under this Agreement. In connection with any such
assignment, Seller may transfer all or any portion of the Shares owned by the
Seller and thereby effect an assignment on the basis specified above.

14.5 Exhibits/Schedules. All Exhibits and Schedules referenced in
this Agreement are incorporated herein by reference and shall constitute a part
of this Agreement.

14.10 Time. Time is of the essence under this Agreement.

14.11 Governing Law. This Agreement shall be construed under and
governed by the internal laws, and not the law of conflicts, of the State of
Texas.

39
<PAGE> 46
14.12 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but which together
shall constitute one and the same agreement.

(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)

40
<PAGE> 47
IN WITNESS WHEREOF, the parties have executed this Stock Purchase
Agreement as of the day and year first written above.

PURCHASER: SELLER:

UNITED DENTAL CARE, INC. UICI

By: /s/ WILLIAM H. WILCOX By: /s/ W. BRIAN HARRIGAN
---------------------------------- ----------------------------------
William H. Wilcox, President W. Brian Harrigan, President

<PAGE> 1

EXHIBIT 10.31

EXHIBIT A

EARNEST MONEY ESCROW AGREEMENT

WHEREAS, Seller and Purchaser have entered into that certain Stock
Purchase Agreement dated September 10, 1996 (the "Stock Purchase Agreement")
providing for the purchase of all the issued and outstanding shares of capital
stock of International Dental Plan, Inc., a Florida corporation ("IDP"), (IDP
being sometimes collectively referred to herein as the "Company") (collectively
the "Shares") from the Seller by Purchaser; and

WHEREAS, the parties desire to effectuate the provisions of the Stock
Purchase Agreement with respect to the Escrow Money;

NOW, THEREFORE, IN CONSIDERATION OF THE PREMISES and the mutual terms
and conditions hereof, the parties hereby agree as follows:

2. Escrow Account. The Escrow Money shall be held in escrow by
the Escrow Agent pursuant to the terms and conditions of this Agreement. Upon
receipt of the Escrow Money, the Escrow Agent shall place the Escrow Money
deposit into a non-interest bearing escrow account (the "Escrow Account") under
the following terms and conditions: (i) at the Escrow Agent; (ii) under the
name of Texas Commerce Bank National Association, as Escrow Agent and (iii)
under the federal tax identification (ID) number of the Purchaser
(#75-2309712). All funds in the Escrow Account shall be invested by the Escrow
Agent in the Fidelity Institutional Cash Portfolio-Treasury Fund Number 695.
It is understood and agreed that the
<PAGE> 2
Escrow Agent will be issuing a 1099 INT statement to the Purchaser and the
Internal Revenue Service, even though the interest may be payable eventually to
either the Purchaser or the Seller as the case may be. In the event the
interest is paid to the Purchaser, the Purchaser shall have the responsibility
as to any 1099 INT reporting thereof. The Escrow Money shall at all times be
held the Escrow Account and shall only be delivered pursuant to the terms and
conditions of this Agreement.

3. Terms of Escrow. The Escrow Money shall only be applied by
the Escrow Agent in accordance with the following terms and directions:

(b) Application upon Termination. If Purchaser fails to
consummate the Stock Purchase Agreement for any reason other than (i)
a material breach of the Stock Purchase Agreement or this Agreement by
Seller or (ii) the valid exercise of any right of termination by
Purchaser expressly set forth in the Stock Purchase Agreement, then
the Seller shall furnish written notice to Purchaser and the Escrow
Agent of Purchaser's failure to consummate the Stock Purchase
Agreement and directing that the Escrow Money be paid to the Seller.
Ten (10) days after such notice is received by the Escrow Agent, the
Seller shall be entitled to be paid the Escrow Money and the Escrow
Agent shall release the Escrow Money to the Seller. Otherwise, ten
(10) days after receipt of written notice/demand from the Purchaser to
the Escrow Agent (certifying that such notice/demand has been
furnished to Seller) that one of the conditions stated in (i) or (ii)
above has occurred and that the Purchaser is entitled to receive a
refund of the Escrow Money, the Purchaser shall be entitled to be
refunded the Escrow Money and the Escrow Agent shall release the
Escrow Money to the Purchaser.

(d) Interest. Interest earned on the Escrow Money shall
be applied together with the Escrow Money and paid to the Seller or to
Purchaser as the case may be as specified above.

(a) The Escrow Agent is not a party to, and is not bound
by, or charged with notice of, any agreement out of which this escrow
may arise.

5. Compensation of Escrow Agent. As compensation for its
services hereunder, the Escrow Agent shall be entitled to the fees and expenses
set forth on Schedule 1 hereto. All fees and expenses of the Escrow Agent
shall be paid equally by the Seller and the Purchaser. In the event any of
such fees and expenses are not paid when due, the Escrow Agent may offset the
amount of such unpaid fees and expenses against amounts in the Escrow Account.

7. Notices. Any notices, claims or demands which any party is
required or may desire to give to another under or in conjunction with this
Agreement shall be in writing, and shall be given by addressing the same to
such other party(ies) at the address set forth below, and by (i) depositing the
same so addressed, postage prepaid, first class, certified or registered, in
the United States mail, return receipt requested, (herein referred to as
"Mailing"), (ii) overnight delivery by a nationally recognized overnight
courier service (e.g. UPS, Federal Express), (iii) delivery the same personally
to such other party(ies), or (iv) transmitting by facsimile and Mailing the
original. Any notice shall be deemed to have been given five (5) U.S. Post
Office delivery days following the date of Mailing; one day after timely
delivery to an overnight

4
<PAGE> 5
courier; if by personal delivery, upon such delivery; or if by facsimile, the
day of transmission if made within customary business hours, or if not
transmitted within customary business hours, the following business day.

a. If to Purchaser:

United Dental Care, Inc.
14755 Preston Road Dallas,
Texas 75240
Attention: Mr. William H. Wilcox, President
Facsimile Number: (214) 458-7963

b. If to Seller:

UICI 5215 N. O'Connor Blvd., Suite 300
Irving, Texas 75036
Attention: W. Brian Harrigan, President
Facsimile No.: (214) 869-3336

c. If to Escrow Agent:

Texas Commerce Bank National Association
2200 Ross Avenue, 5th Floor
Dallas, Texas 75201
Attention: Mr. Gary Jones
Facsimile No.: (214) 965-3577

Any of the parties hereto may change the address or facsimile telephone number
for notices to be sent to it by written notice delivered pursuant to the terms
of this section.

9. Capitalized Terms. Capitalized terms in this Agreement which
are not otherwise defined herein shall have the same meanings as are provided
for such terms in the Stock Purchase Agreement.

10. Binding Effect. This Agreement shall extend to and be binding
upon and inure to the benefit of the parties hereto, their respective
successors and assigns.

5
<PAGE> 6
11. Termination. This Agreement shall terminate at such time as
all of the Escrow Money shall have been released in accordance with the terms
and conditions of this Agreement; provided, however, that the terms and
provisions of Sections 4 and 5 shall survive the termination hereof.

15. Governing Law. This Agreement shall be construed under and
governed by the internal laws, and not the law of conflicts, of the State of
Texas.

16. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but which together
shall constitute one and the same agreement.

(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)

6
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first written above.

PURCHASER: SELLER:

UNITED DENTAL CARE, INC. UICI

By:/s/ WILLIAM H. WILCOX By: /s/ W. BRIAN HARRIGAN
------------------------------ -----------------------------------
William H. Wilcox, President W. Brian Harrigan, President

ESCROW AGENT:

Texas Commerce Bank, N.A.
- ---------------------------------

By: /s/ JOHN G. JONES
------------------------------
Its: Vice President
--------------------------

<PAGE> 1

EXHIBIT 10.32

STOCK PURCHASE AGREEMENT

AMONG

UNITED DENTAL CARE, INC.,
A DELAWARE CORPORATION

AS PURCHASER

AND

UICI,

UNITED MANAGEMENT & CONSULTING, INC.,

UNITED MANAGEMENT & CONSULTING, INC.
RETIREMENT PLAN

AND

MARIE C. MONTGOMERY REVOCABLE TRUST
U/T/A MARCH 23, 1992

AS SELLERS

AS OF
SEPTEMBER 10, 1996
<PAGE> 2
TABLE OF CONTENTS

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ARTICLE 1 DEFINED TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

ARTICLE 2 PURCHASE AND SALE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

2.1 Agreement to Sell and Purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.3 Closing Financial Statements: Purchase Price Adjustment . . . . . . . . . . . . . . . . . . . . 2
2.4 Allocation of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.5 Earnest Money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.6 Tender Offer to Other Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF EACH SELLER . . . . . . . . . . . . . . . . . . . . . . . . . 4

3.1 Authority Relative to This Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.2 Title to Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.3 Absence of Breach; Consents--Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF SELLERS . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

4.1 Due Organization of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.2 Due Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.3 Capitalization of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.4 Subsidiaries/Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.5 Capitalization of the Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.7 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.8 No Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.9 No Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.10 Title to and Condition of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.11 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.12 Real Property Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.13 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.14 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(a) Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(b) Dentists' Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(c) Other Provider Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(d) Employer Group Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(e) Management Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(f) Copies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(g) Government Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
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4.15 Employees, Et Cetera . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.16 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.17 Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.18 Accounts Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.19 Broker's and Finder's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.20 Labor Practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.21 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.22 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.23 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.24 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.25 Transactions With Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.26 Improper Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.27 Compliance with Insurance Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.28 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF PURCHASER . . . . . . . . . . . . . . . . . . . . . . . . . . 19

5.1 Due Incorporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.2 Corporate Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.3 Absence of Breach; No Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.4 Investment Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.5 Broker's or Finder's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

ARTICLE 6 COVENANTS OF THE SELLERS AND THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

6.1 Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.2 Access and Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.3 No Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.4 Conduct of Business Prior to Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.5 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.6 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.7 Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.8 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.9 Breach of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.10 No Transfer of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.11 Updating of Exhibits and Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

ARTICLE 7 COVENANTS OF PURCHASER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

7.1 Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.2 Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.3 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.4 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.5 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.6 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

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ARTICLE 8 CONDITIONS TO OBLIGATIONS OF SELLERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

8.1 Conditions to Obligations of Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

ARTICLE 9 CONDITIONS TO OBLIGATIONS OF PURCHASER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

9.1 Conditions To Obligations of Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

ARTICLE 10 CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

10.1 Date of Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.2 Actions by Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(a) Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(b) Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.3 Actions by Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(a) Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(b) Employment Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(c) Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

ARTICLE 11 SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNITY; POST-CLOSING MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

11.1 Representations and Warranties to Survive . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
11.2 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(a) Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(b) Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
11.3 Indemnity Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11.4 Limitations on Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
(a) General Threshold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
(b) Time Limits for Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(c) Certain Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
11.5 Remedies; Default; Notice and Cure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
11.6 Severance Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
11.7 Change of Control Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.8 Annuity Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.9 Tax Reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

ARTICLE 12 NON-COMPETITION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

12.1 Covenant Not to Compete; Non-Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
12.2 Permitted Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
12.3 Non-Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
12.4 Nondisparagement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
12.5 Reasonableness; Reformation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
12.6 Remedies for Breach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

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ARTICLE 13 TERMINATION; WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

13.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
(a) Mutual Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
(b) By Purchaser or Sellers: Condition Precedent . . . . . . . . . . . . . . . . . . . . . 38
(c) By Purchaser or Sellers: Representations, Warranties and Covenants . . . . . . . . . . 39
13.2 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

ARTICLE 14 CERTAIN DEFINED TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

14.1 Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
14.2 Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
14.3 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
14.4 Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
14.5 Closing Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
14.6 Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
14.7 Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
14.8 Counsel to Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
14.9 Counsel to Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
14.10 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
14.11 GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
14.12 Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
14.13 Multiemployer Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
14.14 Payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
14.15 PBGC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
14.16 Pension Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
14.17 Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
14.18 Welfare Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

ARTICLE 15 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

15.1 Further Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
15.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
15.3 Entire Agreement; Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
15.4 Binding Effect/Assignability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
15.5 Exhibits/Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
15.6 Invalid Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
15.7 Headings/Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
15.8 Waiver; Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
15.9 Attorney's Fees and Costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
15.10 Time. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
15.11 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
15.12 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

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LIST OF EXHIBITS

Exhibit A- Share Ownership of Sellers
Exhibit B- Adjusted Net Equity Statement
Exhibit C- Earnest Money Escrow Agreement
Exhibit D-1- Employment Agreement--Germany
Exhibit D-2- Employment--Crosswhite

LIST OF SCHEDULES

Schedule 4.1 - States Where Company Qualified
Schedule 4.4 - Subsidiaries/Investments
Schedule 4.6 - Licenses, Etc.
Schedule 4.7 - Financial Statements
Schedule 4.8 - Adverse Changes
Schedule 4.9 - Undisclosed Liabilities
Schedule 4.10 - Title Encumbrances
Schedule 4.11 - Litigation
Schedule 4.12 - Real Property Leases
Schedule 4.13 - Intellectual Property
Schedule 4.14A - Material Contracts
Schedule 4.14B - Dental Provider Contracts
Schedule 4.14C - Other Provider Contracts
Schedule 4.14D - Employer Group Contracts
Schedule 4.14E - Management Contracts
Schedule 4.15 - Employees, Etc.
Schedule 4.16 - Employee Benefit Plans
Schedule 4.17 - Receivables
Schedule 4.18 - Payables
Schedule 4.21 - Insurance
Schedule 4.22 - Consents
Schedule 4.23 - Environmental Matters
Schedule 4.24 - Taxes
Schedule 4.25 - Transactions with Affiliates

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STOCK PURCHASE AGREEMENT

This Stock Purchase Agreement (this "Agreement") is made as of the
10th day of September, 1996 (the "Effective Date") by and among United Dental
Care, Inc., a Delaware corporation ("Purchaser") and UICI, United Management &
Consulting, Inc., an Oklahoma corporation, The United Management & Consulting,
Inc. Retirement Plan and The Marie C. Montgomery Revocable Trust U/T/A dated
March 23, 1992 (collectively referred to herein as the "Sellers" and
individually as a "Seller").

WHEREAS, the Sellers each own the respective number of shares of
Common Stock of United Dental Care, Inc., an Oklahoma corporation (the
"Company"), as set forth opposite the respective name of each Seller in Exhibit
A (all of such shares being collectively referred to herein as the "Shares");
and

WHEREAS, the Shares represent approximately ninety percent (90%) of
the issued and outstanding shares of capital stock of the Company; and

WHEREAS, subject to the terms and conditions hereinafter set forth,
the Sellers desire to sell to the Purchaser, and the Purchaser desires to
purchase from the Sellers, the Shares;

NOW, THEREFORE, in consideration of the premises and the mutual terms
and conditions herein contained, the parties hereby agree as follows:

ARTICLE 1
DEFINED TERMS/SCHEDULES

1.2 Schedules. References to a Schedule shall include any
applicable disclosure expressly set forth on the face of any other Schedule
even if not specifically cross-referenced to such other Schedule. It is
specifically acknowledged by the parties hereto that certain agreements and
documents listed on the Schedules are not to be delivered herewith, but were
previously or will be delivered or made available to Purchaser or its
representatives in connection with the due diligence investigation of the
Company conducted by Purchaser and its representatives prior to Closing. All
such agreements and documents made available or delivered to Purchaser by the
Company and the Sellers shall be originals or true and correct copies of the
originals of all such agreements and documents. Each Schedule shall be
considered a part hereof as if set forth herein in full; provided, however,
that the representations and warranties of Sellers set forth in this Agreement
shall not be affected or deemed modified,

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waived or limited in any respect by the information contained in any agreement
or document listed or referenced in the Schedules unless and only to the extent
that any qualification, modification, exception or limitation to any
representation and warranty of the Sellers is expressly set forth on the face
of a Schedule.

ARTICLE 2
PURCHASE AND SALE

2.2 Purchase Price. Subject to the terms and conditions of this
Agreement and in reliance on the representations, warranties and covenants
herein set forth, the Purchaser shall pay to the Sellers as consideration for
the Shares, an aggregate purchase price (the "Purchase Price") equal to ninety
and 65/100s percent (90.65%) of the following:

(a) Five Million Seven Hundred Fifty Thousand Dollars
($5,750,000) less an amount equal to 90.65% of the reserve to be created
pursuant to Section 11.9 hereof; and

(b) plus or minus, as applicable, the Adjustment Amount
(as hereinafter defined in Section 2.3), if any, to be determined and paid in
accordance with Section 2.3 below.

At the Closing Purchaser shall pay to the Sellers the Purchase Price (less the
$200,000 amount to be retained in escrow pursuant to Section 2.3 below) by
certified or cashier's check (or by wire transfer of immediately available
funds to accounts of the Sellers in accordance with written directions provided
to Purchaser not less than two (2) business days prior to the Closing Date).

2.3 Closing Financial Statements: Purchase Price Adjustment.

(a) As soon as practicable following the calendar month
end immediately preceding the Closing Date but in no event later than ten (10)
days following such calendar month end, Sellers shall cause a statement setting
forth the consolidated adjusted net equity of the Company as of the end of the
month immediately preceding the Closing Date (the "Adjusted Net Equity
Statement") to be calculated and prepared in accordance with the principles and
procedures set forth on Exhibit B (the amount as thus determined shall
hereinafter be referred to as the "Adjusted Net Equity") and shall cause such
Adjusted Net Equity Statement to be delivered to the Purchaser not less than
three (3) business days prior to the Closing Date. The "Adjustment Amount"
shall be either (i) the positive amount (if applicable) by which the Adjusted
Net Equity is greater than $750,000, or (ii) the negative amount (if
applicable) by which the Adjusted Net Equity is less than $750,000. On the
basis of the Adjusted Net Equity

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<PAGE> 9
Statement subject, however, to the rights of the Purchaser as provided in
Section 2.3(b) and (c) below, Purchaser shall pay to the Sellers the Purchase
Price at the Closing which shall be allocated pro rata among the Stockholders
in accordance with their percentage ownership of the Shares; provided, however,
that the amount of Two Hundred Thousand Dollars ($200,000) shall be retained in
escrow pursuant to the Ernest Money Escrow Agreement (defined below until final
determination of the Adjustment Amount pursuant to Section 2.3(b) below).

(b) Within thirty (30) business days after delivery of
the Adjusted Net Equity Statement by Sellers, Purchaser may deliver written
notice (the "Protest Notice") to Purchaser of any objections, and the basis
therefor, which the Purchaser may have to the Adjusted Net Equity Statement.
The failure of Purchaser to deliver such Protest Notice within the prescribed
time period will constitute the acceptance of the Adjusted Net Equity Statement
as delivered by Sellers to Purchaser. During the ten (10) business days
following receipt of the Protest Notice by Sellers, Purchaser and Sellers shall
attempt to resolve any disagreement with respect to the Adjusted Net Equity
Statement and the appropriateness thereof. If, at the end of the period
specified in the immediately preceding sentence, Purchaser and Sellers shall
have failed to resolve the disagreement specified in the Protest Notice, the
items in dispute shall be referred to Price Waterhouse L.L.P. or such other
accounting firm of national reputation as may be agreed to by the parties (the
"Arbitrator") for final determination within 45 days. This provision for
arbitration shall be specifically enforceable by the parties and the
determination of the Arbitrator in accordance with the provisions hereof shall
be final and binding upon Purchaser and Seller with no right of appeal
therefrom. The fees and expenses of the Arbitrator shall be paid by the party
whose last proposed offer for settlement of the items in dispute, taken as a
whole, was farther away from the final determination of the Arbitrator.

(c) The Sellers, jointly and severally, and Purchaser
agree that within five (5) days after the final determination of the Adjustment
Amount as provided in this Exhibit B the Sellers shall pay to Purchaser, or
Purchaser shall pay to the Sellers which shall be allocated among the Sellers
in accordance with their percentage ownership of the Shares, as the case may
be, the balance of the Adjustment Amount which may be paid by Purchaser from
the escrowed funds held pursuant to the Earnest Money Escrow Agreement.

2.4 Allocation of Purchase Price. The Purchase Price shall be
allocated and payable to each Seller in accordance with the respective
percentage of the Shares owned by each Seller as shown on Exhibit A.

2.5 Earnest Money. Simultaneously with the execution and delivery
of this Agreement, Purchaser shall deposit the sum of Two Hundred Forty
Thousand Dollars ($240,000) as earnest money (the "Earnest Money") with Texas
Commerce Bank National Association (the "Escrow Agent") to be held in trust
pursuant to the terms and conditions of that certain Earnest Money Escrow
Agreement, a copy of which is attached hereto as Exhibit C (the "Escrow
Agreement"). The Escrow Agreement shall be executed and delivered by the
parties thereto simultaneously with the execution and delivery of this
Agreement. It is expressly agreed that the Earnest Money shall be applied
strictly in accordance with the terms of the Escrow Agreement.

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<PAGE> 10
2.6 Tender Offer to Other Stockholders. Prior to the Closing of
the Stock Purchase Agreement, Purchaser will initiate a tender offer to the
remaining stockholders of the Company (the "Minority Stockholders') at the same
purchase price that Purchaser has agreed to pay the Sellers for the Shares and
under the same purchase terms and conditions inclusive of any escrow or reserve
requirements. The tender offer shall be open for a period of thirty (30) days
beginning not less than two (2) weeks after the Effective Date. The shares
owned by the Minority Stockholders that are tendered pursuant to the tender
offer will beheld in trust subject to and conditioned upon the Closing. If the
Closing under this Stock Purchase Agreement does not occur as contemplated
herein, then the Purchaser shall not be obligated to consummate the tender
offer and the shares tendered pursuant to the tender offer shall be returned to
the Minority Stockholders. The Closing under this Stock Purchase Agreement
shall not be contingent upon the Minority Stockholders tendering shares to the
Purchaser pursuant to such tender offer.

ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF EACH SELLER

Each Seller, severally and not jointly, represents and warrants to
Purchaser that, as of the Effective Date and as of the Closing Date:

3.1 Authority Relative to This Agreement. This Agreement has been
duly and validly executed and delivered by the Seller and constitutes a valid
and binding agreement of the Seller enforceable in accordance with its terms.
The other agreements to be executed and delivered by the Seller pursuant to
this Agreement will be valid and binding agreements of the Seller enforceable
in accordance with their respective terms when so executed and delivered by the
Seller. With respect to each Seller that is not an individual, such Seller has
all requisite power and authority to enter into this Agreement and the other
agreements to be executed and delivered by the Sellers pursuant to this
Agreement. The execution, delivery and performance of this Agreement by such
Seller has been duly authorized by all requisite action on the part of each
Seller not an individual.

3.3 Absence of Breach; Consents--Sellers. The execution,
delivery, and performance of this Agreement and the other agreements to be
executed and delivered pursuant to this Agreement by the Seller does not and
will not: (i) contravene any order, writ, judgment, injunction, decree,
determination, or award of any court or other governmental authority which
affects or binds the Seller or the Shares owned by such Seller, (ii) conflict
with or result in a breach of or default under any indenture, loan or credit
agreement or any other agreement or instrument to which the Seller is a party
or by which the Seller or the Shares are bound, (iii) violate any law, rule or
regulation applicable to the Seller or to the Shares or (iv) except

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<PAGE> 11
for the consents reflected in Schedule 4.22, require the authorization,
consent, approval or license of any third party or entity (governmental or
otherwise).

ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLERS

In addition to the representations and warranties made in Article 3, the
Sellers, jointly and severally, represent and warrant to Purchaser that, as of
the Effective Date and as of the Closing Date:

4.1 Due Organization of the Company. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Oklahoma with all requisite corporate power and authority to conduct
its respective business operations as now being conducted. The Company is not
qualified as a foreign corporation and does not conduct business operations in
any other state. There are no other jurisdictions where the failure to be so
authorized would have a material adverse effect on the business or operations
of the Company. Sellers have delivered to Purchaser complete and correct
copies of the articles of incorporation and bylaws of the Company as amended to
and in effect on the Effective Date. The Company is not in violation of any
term or provision of its articles of incorporation or bylaws.

4.2 Due Authorization. Except for the consents reflected on
Schedule 4.22, the execution and delivery of this Agreement and the performance
of the transactions contemplated by this Agreement and all other instruments,
agreements, certificates and documents contemplated hereby to which either the
Sellers or the Company are or will be a party does not, on the date hereof, and
will not, on the Closing Date, (i) violate any decree or judgment of any court
or governmental authority which may be applicable to the Company or any
subsidiaries; (ii) violate any law, rule or regulation, or any decree or
judgment of any court or governmental authority binding on the Company or any
subsidiaries; (iii) violate or conflict with, or result in a breach of, or
constitute a default (or an event which, with or without notice or lapse of
time or both, would constitute a default) under, or permit cancellation of, or
result in the creation of any encumbrance upon, any of the Shares or any of the
assets of the Company or any subsidiaries under any of the terms, conditions,
or provisions of any contract, lease, sales order, purchase order, indenture,
mortgage, note, bond, instrument, license or other agreement to which the
Company or any subsidiaries is a party, or by which the Company or its assets
is bound; (iv) permit the acceleration of the maturity of any indebtedness of
the Company or any subsidiaries; (v) violate or conflict with any provision of
the articles of incorporation or bylaws of the Company or any subsidiaries;
(vi) has been duly authorized by all requisite corporate action of the Company;
and (vii) require the authorization, consent, approval, license of, or to make
a filing with, any third party or entity (governmental or otherwise).

4.3 Capitalization of the Company. The authorized capital stock
of the Company consists of twenty-five thousand (25,000) shares of common
stock, $2.00 par value per share, of which eight thousand eight hundred
eighteen (8,818) shares are validly issued and outstanding,

5
<PAGE> 12
fully paid, and nonassessable. All of the outstanding shares of common stock
of the Company are owned beneficially and of record by the Sellers and the
other stockholders of the Company as set forth in Exhibit A. The Company has
provided to the Purchaser a correct and complete copy of the stock registry of
the Company listing all stockholders of the Company and the outstanding share
certificates and total number of shares issued to each stockholder of the
Company. The Company has no other capital stock authorized for issuance and
has no treasury shares. There are no outstanding options, warrants,
convertible instruments, or other rights, agreements, or commitments to issue
or acquire any shares of common stock or any other security constituting, or
convertible or exchangeable into, capital stock of the Company. Since the date
of the Company Balance Sheet no shares of the Company's capital stock, no
options, warrants, or other rights, agreements, or commitments (contingent or
otherwise) obligating the Company to issue shares of capital stock, and no
other securities or instruments convertible or exchangeable into shares of
capital stock, have been executed or issued by the Company. The Company has
not granted and is not a party to any agreement granting preemptive rights,
rights of first refusal, or registration rights with respect to its outstanding
capital stock or any capital stock of the Company to be issued in the future.
The Company is not bound by any exclusive agency or indemnity agreement
applicable to the issuance of shares of its capital stock after the Effective
Date. The Company has complied with all federal and state securities laws in
connection with the issuance, reacquisition and recapitalization of its shares
and no present or former shareholder has any claim or cause of action against
the Company arising out of or resulting from any such activities.

4.4 Subsidiaries/Investments. Except for UDC Life and Health
Insurance Company, an Oklahoma corporation ("UDC Life") and UDC Vision Care,
Inc., an Oklahoma corporation ("UDC Vision") (collectively, the
"Subsidiaries"), the Company has no other subsidiaries, whether direct or
indirect. The Company has no equity interest or investment in, and does not
possesses any other right or obligation to purchase any equity or other
investment in, and is not a partner of or joint venturer with, any other person
or entity. The Subsidiaries are authorized to do business in each jurisdiction
listed in Schedule 4.4. There are no other jurisdictions where the failure to
be so authorized would have a material adverse effect on the business or
operations of the Subsidiaries. Sellers have delivered to Purchaser complete
and correct copies of the articles of incorporation and bylaws of the
Subsidiaries as amended to and in effect on the Effective Date. The
Subsidiaries are not in violation of any term or provision of its articles of
incorporation or bylaws.

4.5 Capitalization of the Subsidiaries. The authorized capital
stock of the UDC Life consists of one million (1,000,000) shares of common
stock, $1.00 par value per share, of which 500,000 shares are validly issued
and outstanding, fully paid and nonassessable. The authorized capital stock of
UDC Vision consists of fifty thousand (50,000) shares of common stock, $1.00
par value per share, of which five hundred (500) shares are validly issued and
outstanding, fully paid and nonassessable. All of the outstanding shares of
common stock of the Subsidiaries are owned beneficially and of record by the
Company. The Subsidiaries have provided to the Purchaser a correct and
complete copy of the stock registry of the Subsidiaries listing all
stockholders of the Subsidiaries and the outstanding share certificates and
total number of shares issued to each stockholder of the Subsidiaries. The
Subsidiaries have no other capital stock

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<PAGE> 13
authorized for issuance and have no treasury shares. There are no outstanding
options, warrants, convertible instruments, or other rights, agreements, or
commitments to issue or acquire any shares of common stock or any other
security constituting, or convertible or exchangeable into, capital stock of
the Subsidiaries. There are no options, warrants, or other rights, agreements,
or commitments (contingent or otherwise) obligating the Subsidiaries to issue
shares of capital stock, and no other securities or instruments convertible or
exchangeable into shares of capital stock, which have been executed or issued
by the Subsidiaries. The Subsidiaries have not granted and are not a party to
any agreement granting preemptive rights, rights of first refusal, or
registration rights with respect to their outstanding capital stock or any
capital stock of the Subsidiaries to be issued in the future. The Subsidiaries
are not bound by any exclusive agency or indemnity agreement applicable to the
issuance of shares of their capital stock after the Effective Date.

4.6 Licenses/Compliance with Law. Each of the Company and the
Subsidiaries (hereinafter for the purposes of this Articles 4 collectively
referred to as the "Company") has the lawful authority and all federal, state
or local governmental authorizations, certificates of authority, licenses or
permits necessary for or required to conduct its respective business as such is
presently being conducted. Schedule 4.5 contains a list and description of all
authorizations, certificates of authority, licenses and permits, including
those granted or derived from governmental sources, issued or granted to the
Company or the Subsidiaries. UDC Life is licensed to own and operate prepaid
dental plans in the states listed in Schedule 4.6. For the proper conduct of
its business as presently conducted, the Company and the Subsidiaries are not
required to obtain any additional certificates of authority, permits, licenses
or similar authorizations from any governmental authority other than has
already obtained as listed on Schedule 4.6. There are no pending or, to the
knowledge of the Sellers, threatened legal, administrative, arbitration or
other actions, notices, or proceedings and no pending or, to the knowledge of
the Sellers, threatened governmental investigations by any federal, state or
local government or any subdivision thereof or by any public or private group
which assert or allege any violation of or non-compliance with any governmental
requirements or which would have the effect of limiting, prohibiting or
changing the business operations of the Company or the Subsidiaries as
authorized by the authorizations, certificates of authority, licenses and
permits set forth on Schedule 4.6 and as presently conducted by the Company and
the Subsidiaries. UDC Life maintains statutory reserves that satisfy the
requirements of all applicable governmental laws, rules and regulations. The
Company and the Subsidiaries have made all filings with governmental agencies
required for the conduct of their respective business including, without
limitation, all annual reports, all holding company statements required to be
filed with insurance or similar regulatory agencies and all filings required to
sell the prepaid dental plans offered by UDC Life. There are no judgments
against the Company and the Subsidiaries, and no orders, rules, consent decrees
or injunctions of any court, governmental department, commission, agency or
instrumentality by which the Company and the Subsidiaries are bound or to which
the Company and the Subsidiaries are subject. The Company and the Subsidiaries
have not entered into or are subject to any judgment, consent decree,
compliance order or administrative order with respect to any insurance or other
similar law or received any request for information, notice, demand letter,
administrative inquiry or formal or informal complaint or claim with respect to
any insurance, health maintenance organization or other

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<PAGE> 14
similar law or the enforcement of any such law. Neither the Company's or the
Subsidiaries' operations nor any of the assets owned, leased, occupied or used
by the Company or the Subsidiaries in the operation of their business
materially violates or fails to comply in any material respect with any
applicable federal, state or local insurance, health maintenance organization,
or prepaid dental plan codes, laws, rules or regulations or, to the knowledge
of Sellers, federal, any applicable state or local health, fire, environmental,
safety, zoning, building or other codes, laws, rules or regulations, and the
Company and the Subsidiaries have not received any notice of alleged violations
thereof.

4.7 Financial Statements. The Company has delivered to Purchaser
a copy of (i) the audited consolidated financial statements of the Company as
of December 31, 1993, 1994 and 1995 consisting in each case of a consolidated
balance sheet at each such respective date, and the related consolidated
statements of income, changes in stockholders' equity and cash flows for the
applicable twelve (12) month period then ended and (ii) unaudited consolidated
financial statements of the Company as of June 30, 1996 (the "Balance Sheet
Date") consisting of a consolidated balance sheet of the Company at such date
(the "Company Balance Sheet") and the related statements of income, changes in
stockholders' equity and cash flows for the applicable month and year-to-date
period then ended. Complete and accurate copies of all such financial
statements are attached as a part of Schedule 4.7 (the "Financial Statements").
The Financial Statements present fairly in all material respects the financial
position of the Company, and the results of the operations, changes in
stockholders' equity and cash flows of the Company, as of the respective dates
thereof and for the respective periods covered thereby, in conformity with
generally accepted accounting principles ("GAAP"). Except as set forth in the
Company Balance Sheet included in the Financial Statements, as of the Balance
Sheet Date there were no liabilities, debts, claims or obligations, whether
accrued, absolute, contingent or otherwise, whether due or to become due, which
are required by GAAP to be set forth in a balance sheet of the Company which
have not been so set forth in the Company Balance Sheet. The Financial
Statements were prepared from the books and records of the Company. There are
no assets shown on the Company Balance Sheet which are valued thereon at an
amount materially in excess of their fair value as of the Balance Sheet Date.
At the Balance Sheet Date, the Company owned each of the assets included in the
Company Balance Sheet. From the date hereof through the Closing Date, the
Company will continue to prepare monthly and year-to-date unaudited
consolidated financial statements on the same basis and will promptly deliver
the same to Purchaser. The foregoing representations will be applicable to all
such monthly unaudited financial statements so prepared and delivered.

4.8 No Adverse Change. Except as set forth on Schedule 4.8, since
the Balance Sheet Date, the business of the Company and the Subsidiaries
(hereinafter collectively referred to as the "Company" for the purposes of this
Section 4.8 and the following Sections of this Article Four) has been conducted
only in the ordinary course and there has not been (i) any material adverse
change in the financial condition, business, properties, assets, or results of
operations of the Company (financial or otherwise) exclusive of any general
economic factors affecting the prepaid dental plan industry in general; (ii)
any material loss or damage (whether or not covered by insurance) to any of the
assets of the Company which materially affects or impairs the ability of the
Company to conduct its business as previously conducted or any other event or
condition

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<PAGE> 15
of any character which has materially and adversely affected the business or
operations of the Company; (iii) the attaching, placing or granting of, or the
agreement to attach, place or grant, any encumbrance on any of the assets of
the Company; (iv) any sale or transfer of any material portion of the assets of
the Company; (v) any material changes in the terms of any material contract of
the Company; (vi) any material change in the accounting systems, policies or
practices of the Company; (vii) any waiver by or on behalf of the Company of
any rights which have any material value; (viii) no taking under condemnation
or right of eminent domain of any of the assets of the Company; (ix) any entry
into or termination of any material commitment, contract, agreement, or
transaction (including, without limitation, any material borrowing or capital
expenditure or sale or other disposition of any material assets) by the
Company; (x) any redemption, repurchase, or other acquisition of any of its
capital stock by the Company, or any issuance of capital stock of the Company
or of securities convertible into or rights to acquire any such capital stock;
(xi) any dividend or distribution declared, set aside or paid on capital stock
of the Company; (xii) any transfer or right granted by the Company of or under
any material lease, license, agreement, patent, trademark, trade name, service
mark or copyright; (xiii) any sale or other disposition of any material asset
of the Company, or any mortgage, pledge, or imposition of any lien or other
encumbrance on any material asset of the Company, or any agreement relating to
or contemplating any of the foregoing not in the ordinary and usual course of
business; (xiv) any default or breach by the Company in any material respect
under any contract, license, or permit; or (xv) any material increase in the
statutory reserves required to be maintained by the Company. Since the Balance
Sheet Date, the Company has conducted its business only in the ordinary and
usual course of business and, without limiting the foregoing, no changes have
been made in (i) employee compensation levels, (ii) the manner in which
employees of the Company are compensated, (iii) supplemental benefits provided
to any employees, or (iv) the employment of any employees of the Company.

4.9 No Undisclosed Liabilities. True and correct copies of all
notes, agreements or other documents evidencing the outstanding indebtedness of
the Company, as amended to and in effect on the Effective Date, have been
delivered to Purchaser by the Company. The Company has no liabilities which
are not adequately reflected or reserved against on the face of the Company
Balance Sheet, except liabilities incurred since the Balance Sheet Date in the
ordinary course of business consistent with past practice which, in the
aggregate, would not have a material adverse effect on the condition (financial
or otherwise), assets or business of the Company. Schedule 4.9 hereto sets
forth each liability of the Company in an amount in excess of $10,000 and each
person to whom the aggregate amount of liabilities owed to such person by the
Company exceeds $10,000.

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respect thereto have been instituted of which any Seller or the Company has
notice, that would materially affect the ability of the Company to utilize each
of such assets in its business. The Company has not received any notices of
default or other violations from any mortgagee regarding any properties leased
by the Company. Schedule 4.10 hereto contains a detailed listing of all
material assets of the Company. The assets now owned by the Company constitute
all assets reasonably necessary to enable Purchaser to conduct the business and
operations of the Company on substantially the same terms as such business has
been conducted historically. Except as disclosed in Schedule 4.10, all such
assets are well maintained and in good operating condition, except for normal
wear and tear.

4.11 Litigation. Except as set forth on Schedule 4.11 hereto, (i)
no material investigation or review by any governmental entity with respect to
the Company is pending or, to the knowledge of the Sellers, threatened, nor has
any governmental entity indicated to the Company an intention to conduct the
same; and (ii) there is no action, suit, or administrative, condemnation,
arbitration or other proceeding (including proceedings concerning labor
disputes or grievances or union recognition) pending or, to the knowledge of
the Sellers, threatened against or affecting the Company to which the Company
is a party, at law or in equity, before any federal, state, or municipal court
or other governmental department, commission, board, bureau, agency, or
instrumentality. The Company is not now, and has not been, a party to any
injunction, order or decree restricting the method of the conduct of its
business or the marketing of any of its products or services.

4.12 Real Property Leases . Schedule 4.12 lists all leases of real
property to which the Company is a party (the "Real Property Leases").
Accurate and complete copies of the Real Property Leases, as amended to the
Effective Date, have been delivered to Purchaser. Except as disclosed on
Schedule 4.12, to the knowledge of the Sellers, all land, buildings, facilities
and other structures and improvements subject to the Real Property Leases are
in compliance with any applicable zoning, environmental or health laws and
regulations or any other similar law, statute, regulation or ordinance. The
Company is the lessee and in peaceful and undisturbed possession of the
property subject to the Real Property Leases. To the knowledge of the Sellers,
all covenants or other restrictions (if any) to which any of the property
leased to the Company pursuant to the Real Property Leases are being properly
performed and observed in all material respects by the Company, and the Company
has not received any notice of violation (or claimed violation) thereof which
has not been resolved. The Company has delivered to Purchaser true, correct
and complete copies of all reports or audits of any engineers, environmental
consultants or other consultants in its possession relating to any of the Real
Property Leases. There is no pending or, to the knowledge of the Sellers, any
threatened proceeding or governmental action to condemn or take by the power of
eminent domain (or to purchase in lieu thereof) all or any part of the property
subject to the Real Property Leases which is material to the operations of the
Company as presently conducted. The Company does not own any real property.

4.13 Intellectual Property. Schedule 4.13 is an accurate and
complete list of all tradenames that the Company uses in its business
operations. The Company has no United States and foreign patents, patent
applications, patent licenses, trademarks, and service mark registrations (and
applications therefor), and has no copyrights and copyright registrations (and

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<PAGE> 17
applications therefor), trade secrets, inventions, processes, designs, know-how
and formula which are owned or licensed for use by the Company and utilized by
the Company in the business or operations of the Company as presently conducted
except as set forth in Schedule 4.13. There is no adverse claim against the
Company, or to the knowledge of the Sellers, any threatened litigation or claim
of infringement. To the knowledge of the Sellers, the Company does not utilize
any intellectual or proprietary trade secret information which infringes any
trademark, tradename, service mark, copyright or patent of another, and the
Company has not received any notice contesting its right to use any trade name
now used by it in connection with its business or the operation thereof. The
Company has not granted any license to a third party in respect of any
intellectual property.

4.14 Contracts.

(a) Material Contracts. Schedule 4.14A lists all
material contracts or agreements of the following types to which the Company is
a party or by which the Company is bound:

(iii) any contract or agreement for the maintenance,
purchase or sale of equipment or capital assets having a value in excess
of $25,000;

(iv) any power of attorney (other than routine powers
given to governmental officials authorizing service of process);

(v) any lease of personal property;

(vi) any guaranty, suretyship agreement or other agreement
relating to any contingent liability.

(vii) any contract with an independent agent or broker who
sells the prepaid dental plans of the Company;

(viii) any contract or agreement with independent
consultants;

(ix) any contract or agreement among the stockholders of
the Company;

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(x) any contract or agreement restricting the method by
which the Company conducts its business or the marketing of any of its
products or services;

(xi) all reinsurance and coinsurance agreements to which
the Company is a party; and

(xii) any contract or agreement between the Company or any
stockholder or affiliate of the Company or a stockholder of the Company.

(b) Dentists' Contracts. Schedule 4.14B (i) includes
copies of representative forms of all dentist and other dental provider
agreements to which the Company is a party and (ii) lists all dentist and other
dental provider agreements executed by the Company. Except for any agreement
as to which a copy thereof is specifically included as a part of Schedule
4.14B, the agreements listed in Schedule 4.14B are in all material respects in
the same form as one of the representative forms of such agreements provided as
a part of Schedule 4.14B.

(c) Other Provider Contracts. Schedule 4.14C (i)
includes copies of representative forms of all other health provider agreements
to which the Company is a party and (ii) lists all other health provider
agreements executed by the Company. Except for any agreement as to which a
copy thereof is specifically included as a part of Schedule 4.14C, all of the
agreements listed in Schedule 4.14C are in all material respects in the same
form as one of the representative forms of such agreements provided as a part
of Schedule 4.14C.

(d) Employer Group Contracts. Schedule 4.14D (i)
includes copies of representative forms of all employer group agreements to
which the Company is a party and (ii) lists all employer group agreements to
which the Company is a party and the number of participants for each such
employer. Except for any agreement as to which a copy thereof is specifically
included as a part of Schedule 4.14D, all of the agreements listed in Schedule
4.14D are in all material respects in the same form as one of the
representative forms and such agreements provided as a part of Schedule 4.14D.
Schedule 4.14D also sets forth the premium rates for the largest twenty (20) in
revenues of the employer group agreements in each state in which the Company
conduct business operations and the monthly premium revenues of each employer
group agreement listed in Schedule 4.14D.

(e) Management Contracts. Schedule 4.14E sets forth all
management, marketing, administrative services, data processing and third party
administration contracts to which the Company is a party.

12
<PAGE> 19
contract is with an unrelated third party entered into on an arms-length basis
in the ordinary course of business, (v) there are no material defaults under
any of such contracts, and (vi), to the knowledge of the Sellers, to the extent
required by any law or regulation have been filed with and approved by all
governmental regulatory agencies.

(g) Government Contracts. Neither the Company nor the
Subsidiaries (i) has any liability for renegotiation of government contracts or
subcontracts, (ii) has been suspended or debarred from bidding on contracts or
subcontracts with any federal, state or local agency or governmental authority,
(iii) has been audited or investigated by any such agency or authority with
respect to contracts entered into or goods and services provided by the Company
or the Subsidiaries or (iv) has had a contract terminated by any such agency or
authority for default or failure to perform in accordance with applicable
standards.

4.15 Employees, Et Cetera. Schedule 4.15 hereto lists in accurate
and complete detail all employees of the Company as of the Effective Date,
their job titles, annual rates of compensation, accrued vacation, holiday and
sick leave as of such date, other fringe benefits, if any, a description of any
severance pay arrangements, if any, and the amounts payable with respect to
such accrued vacation, holiday and sick leave as of the Effective Date and the
rate at which such vacation, holiday and sick leave will accrue after the
Effective Date. Except as shown on Schedule 4.15, the Company is not bound by
any written contract of employment with any of its employees and all oral
employment contracts are terminable at will, subject to applicable law, or by
any consulting or similar agreements. The Company is not a party to any
employment or other agreement, whether written or oral, pursuant to which the
Company has agreed to make a loan to, or guarantee any loan of, any employee or
relating to any bonus, deferred compensation, severance pay or similar plan,
agreement, arrangement or understanding except as reflected in Schedule 4.15.
Except as listed on Schedule 4.15 or Schedule 4.16 hereof, the Company has no
Welfare Plan, Pension Plan, or any other type of pension, profit sharing,
deferred compensation, retirement, stock option, bonus, severance, medical,
dental, life insurance, accident, or other employee benefit or compensation
plan, agreement, arrangement, practice or policy with respect to employees.
The Company has complied with all requirements of Sections 6001 through 6008 of
the ERISA and Section 4980B of the Code with respect to itself and its
employees. The Company is not bound, and following the Closing will not be
bound, by any express or implied contract or agreement to employ, directly or
as a consultant or otherwise, any person for any specific period of time or
until any specific age except as specified in the written agreements identified
in Schedule 4.16.

4.16 Employee Benefit Plans. Except as disclosed in Schedule 4.16:

(a) The Company does not maintain or contribute to, and
has not in the past maintained or contributed to, any Pension Plan or Welfare
Plan, except as a described on Schedule 4.16, nor is the Company presently, or
has it ever been, a participating employer in any Multiemployer Plan.

(b) With respect to each Pension Plan and each Welfare
Plan listed on Schedule 4.16, to the knowledge of the Sellers: (i) there is no
fact, including, without

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<PAGE> 20
limitation, any reportable event, that exists that would constitute grounds for
termination of such plan by the PBGC or for the appointment by the appropriate
United States District Court of a trustee to administer such plan, in each case
as contemplated by ERISA; (ii) neither the Company nor any Subsidiaries nor any
fiduciary, trustee, or administrator of any such Pension Plan or Welfare Plan,
has engaged in a prohibited transaction that would subject the Company to any
material tax or any material penalty imposed by ERISA or the Code; (iii)
neither the Company has not incurred any material liability to the PBGC (other
than for payment of premiums); (iv) the Company has contributed all amounts
thereto it is required to contribute under the terms of the plan in question
and applicable law, and there is no accumulated funding deficiency with respect
to any such Pension Plan, whether or not waived, other than routine, non-
contested claims for benefits. There is not any pending or, to the knowledge
of the Sellers, threatened claim by or on behalf of any Pension Plan or Welfare
Plan, by any employee or former employee covered or previously covered under
any Pension Plan or Welfare Plan, or otherwise involving any Pension Plan or
Welfare Plan.

(c) There has been no termination of any Pension Plan or
Welfare Plan by the Company that has occurred during the five-year period
ending on the date hereof.

(e) No Welfare Plan listed on Schedule 4.16 is funded
with a trust or other funding vehicle, other than insurance policies.

(g) Each Pension Plan listed on Schedule 4.16 which is
intended to be qualified under Section 401(a) of the Code, has received a
favorable determination letter from the Internal Revenue Service as to the
qualification under the Code of each such Pension Plan as amended to comply
with the Tax Reform Act of 1986 and all applicable, subsequent legislation,
and, to the knowledge of the Sellers, no event has occurred since the date of
such favorable determination letter that would adversely affect such
qualification.

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<PAGE> 21
contributed to by the Company is payable or exercisable as a result of the
transaction contemplated by this Agreement, and the payment, exercise, or
vesting of any such bonus, severance pay, or employee benefit will not be
accelerated or otherwise enhanced by such transaction.

True, correct and complete copies of each Pension Plan and Welfare Plan listed
on Schedule 4.16 as amended to and in effect on the date hereof; any agreements
entered into in connection with each such Pension Plan and Welfare Plan; the
most recent annual report filed with the Internal Revenue Service for each such
Pension Plan and Welfare Plan; the most recent actuarial report, if any, for
each such Pension Plan and Welfare Plan; the most recent summary plan
description, together with each summary of material modifications; and any
other communication generally disseminated to employees or former employees of
the Company and describing benefits provided under each such Pension Plan and
Welfare Plan, have been delivered to Purchaser by the Company.

4.17 Receivables. To the knowledge of the Sellers, all Receivables
of the Company whether or not reflected in the Company Balance Sheet, represent
transactions in the ordinary course of business, and, except as disclosed on
Schedule 4.17, are current and collectible net of any reserves therefor shown
on the Company Balance Sheet (which reserves are adequate and were calculated
consistent with past practice). Schedule 4.17 consists of an aged accounts
receivable report of the Company as of June 30, 1996.

4.18 Accounts Payable. The accounts payable reflected on the
Company Balance Sheet and those reflected on the books of the Company at the
time of the Closing will reflect all material amounts owed by the Company in
respect of trade accounts due and other Payables as required by GAAP to be
identified on such Company Balance Sheet or in the books of the Company.
Except as set forth on Schedule 4.18, to the knowledge of the Sellers, no
account payable of the Company is past due or otherwise in default by the
Company.

4.19 Broker's and Finder's Fees. No agent, broker, employee,
officer, stockholder or other person or entity acting on behalf of, or under
the authority of, the Sellers or the Company is or will be entitled to any
commission or broker's or finder's fee from any of the parties hereto in
connection with this Agreement or any of the transactions contemplated hereby.

4.20 Labor Practices. The Company has no collective bargaining or
other labor union agreements. There is no unfair labor practice complaint
against the Company pending before the National Labor Relations Board, there is
no pending or, to the knowledge of the Sellers, threatened labor dispute,
strike or work stoppage affecting the Company's business, nor has there been
any of the same or any labor union organizing activity relating to the Company
within the last three (3) years.

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<PAGE> 22
Schedule 4.20 lists all insurance claims submitted in connection with property
damage or medical malpractice involving the Company for the latest three (3)
years.

4.22 Consents. Except as set forth in Schedule 4.22 hereto,
Sellers have no knowledge of any consents, approvals, or authorizations of any
person, entity or governmental agency required in connection with the sale of
the Shares and the consummation of the transaction contemplated by this
Agreement. With respect to any consents, approvals or authorizations
contemplated in Schedule 4.22 herein, Sellers covenant and agree with Purchaser
that they will take, and shall cause the Company to take, all reasonable steps
necessary and desirable, and will use all commercially reasonable efforts to
cooperate with Purchaser in obtaining, as promptly as possible, all necessary
approvals, authorizations and consents of governmental, court and regulatory
bodies, and officials required to consummate the transaction contemplated
hereby.

4.23 Environmental Matters. Except as disclosed on Schedule 4.23,
(a) the Company has not received any notice from any governmental authority or
private person or entity advising it that the operation of the Company's
business is in violation of any environmental law or any applicable
environmental permit or that any of them is responsible (or potentially
responsible) for the cleanup of any pollutants, contaminants or hazardous or
toxic wastes, substances or materials at, on or beneath the property subject to
the Real Property Leases; and (b) to the knowledge of the Sellers, the Company
is not the subject of federal, state, local or private litigation or
proceedings involving a demand for damages or other potential liability with
respect to violations of environmental laws.

4.24 Taxes. All federal, state and other tax returns and reports
of the Company required by law to be filed have been prepared and properly
filed or valid extensions have been obtained, and, except as set forth on
Schedule 4.24, all taxes, charges, fees, duties, levies or other assessments
which are imposed by the United States, or any state, local or foreign
government or subdivision or agency thereof, including any interest, penalties
or additions (collectively "Taxes") upon the Company or any Subsidiaries or any
of its properties, assets or income which are due and payable or claimed by any
taxing authority to be due and payable have been paid. The liability for
accrued taxes as shown in the Company Balance Sheet (net of amounts reserved
for deferred taxes) is sufficient for the payment of all unpaid Taxes of the
Company accrued for or applicable to the periods prior to the Balance Sheet
Date and all years and periods prior thereto and for which the Company may at
that date have been liable in its own right or by reason of its being a member
of any group of corporations filing consolidated tax returns (including any
such amounts payable as a result of an audit of any tax return for any such
period). The Company utilizes the accrual method of accounting for tax
purposes.

Except as set forth on Schedule 4.24, there are no claims for Taxes
pending against the Company, and the Sellers do not know of any threatened
claim for tax deficiencies or any basis for such claims, and there are not now
in force any waivers or agreements by the Company for the extension of time for
the assessment of any tax, nor has any such waiver or agreement been requested
by the Internal Revenue Service (the "Service") or any other taxing authority.

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<PAGE> 23
Except as set forth on Schedule 4.24, the Federal income tax returns of
the Company have not been examined or audited by the Service. Except as set
forth on Schedule 4.24, no material issues have been raised in any examination
by any taxing authority with respect to the businesses and operations of the
Company which, by application of similar principles, could be expected to
result in a proposed adjustment to the liability of the Company for taxes for
any other period not so examined.

The Company has not filed a consent under Section 341(f) of the Internal
Revenue Code of 1986, as amended (the "Code") concerning collapsible
corporations. Except as disclosed in Schedule 4.24, the Company has not made
any payments, is obligated to make any payments, or is a party to any agreement
that under certain circumstances could obligate it to make any payments that
will not be deductible under Section 280G of the Code. The Company has not
been a United States real property holding corporation within the meaning of
Section 897(c)(2) of the Code during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code. The Company has disclosed on their federal
income tax returns all positions taken therein that could give rise to a
substantial understatement of federal income tax within the meaning of Section
6662 of the Code. The Company is not a party to any tax allocation or sharing
agreement. The Company (a) has not been a member of an affiliated group filing
a consolidated federal income tax return and (b) has no liability for the taxes
of any person (other than any of the Company) under Treas. Reg. Section
1.1502-6 (or any similar provision of state, local, or foreign law), as a
transferee or successor, by contract, or otherwise.

4.25 Transactions With Affiliates. Except as set forth in Schedule
4.25, there are no loans, leases, agreements, contracts or other transactions
between the Company and any present or former stockholder, director or officer
of the Company, or any member of such stockholder's, director's or officer's
immediate family. Except as set forth in Schedule 4.25, no stockholder,
director or officer of the Company nor any of their respective spouses or
family members owns directly or indirectly on an individual or joint basis any
material interest in, or serves as an officer or director of, or in any similar
capacity for, any competitor, customer, provider or supplier of the Company or
any organization which has a material contract or arrangement with the Company.
Except as set forth in Schedule 4.25, no Seller or any of its affiliates has
any claim or cause of action against the Company and the Company has no
obligation or liability to a Seller or any affiliate of Seller.

4.26 Improper Payments. To the knowledge of the Sellers, neither
the Company, nor any director, officer, employee or agent of the Company has
made any improper bribes, kickbacks or other payments on behalf of the Company
to, or received any such payments from, customers, vendors, suppliers or other
persons contracting with the Company.

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<PAGE> 24
4.27 Compliance with Insurance Laws. In all jurisdictions where the
failure to do so would result in a material adverse effect, the Company (i) has
made all required filings under applicable insurance or similar statutes or
regulations currently in effect and (ii) is duly licensed or authorized in each
jurisdiction where it is required under applicable insurance or similar
statutes or regulations currently in effect to be so licensed or authorized to
conduct its business as presently conducted. The Company holds licenses and
certificates of authority or is otherwise authorized in accordance with
applicable laws and regulations currently in effect, in each jurisdiction where
the Company is required to be so licensed or authorized to offer, sell or
otherwise provide the dental care products and other services offered, sold or
otherwise provided by the Company in the jurisdiction in which they are
currently being offered, sold or otherwise provided and to otherwise conduct
its businesses as presently conducted. In each jurisdiction, the dental care
products and other services offered and sold by the Company have been and are
offered and sold in compliance with the requirements of all relevant laws and
regulations currently in effect, in each case, with such exceptions,
individually or in the agreements, as would not have a material adverse effect
on the ability of the Company to conduct its business in any jurisdiction in
which the Company operates; and the Company has not received any notification
from any insurance regulatory or similar governmental authority to the effect
that any additional permit, license, authorization or certificate of authority
from such insurance regulatory or similar governmental authority is needed to
be obtained by the Company in any case in which it could be reasonably expected
that obtaining such permits or the failure to obtain such permits would have a
material adverse effect on the ability of the Company to conduct its business
in any jurisdiction in which the Company operates. The Company has not entered
into or been subject to any judgment, consent decree, compliance order or
administrative order with respect to any insurance or other similar law or,
other than in the ordinary course of business, received any request for
information, notice, demand letter, administrative inquiry or formal or
informal complaint or claim with respect to any insurance or other similar law
or the enforcement of any such law. As of the date hereof there is no, and
since the date of the Balance Sheet there has not been any, legislative or
regulatory development or written proposal relating to (i) any statute, rule or
regulation or other law not currently in effect or (ii) the scope or
application of any statute, rule, regulation or other law currently in effect
but not currently applicable so that, if enacted, promulgated or made
applicable to the Company or its business, may have or impose any additional
regulatory obligations or limitations on such Company or such Subsidiaries or
their respective products. In any jurisdiction in which the Company is
conducting or has prior to the date hereof ever conducted any activities
including without limitation activities relating to the offer and sale of
dental care products, plans or services, the recruitment of dentists or dental
offices in connection with the offer and sale of such products, plans or
services, the marketing of any such products plans or services to potential
purchasers or subscribers thereto, or any joint venture with any other party
relating to the foregoing, the Company has not failed to comply with any
applicable statute, ordinance, order, rule or regulation, or failed to obtain
any certificate of authority, license or permit, which failure, in either case,
would subject the Company to any fine, penalty, assessment or other amount or
could be the basis for any judgment, consent decree, compliance order or
administrative order with respect to any insurance or similar law. Seller
shall be liable for any such fine, penalty, assessment or judgment, or any
liabilities incurred or payments required under any such consent decree,
compliance order or administrative order as a result of any actions or failures
to act by

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<PAGE> 25
the Company prior to the Closing Date together, in each case, with all costs
and expenses (including reasonable fees, disbursements and expenses of
attorneys) relating thereto, in accordance with and subject to the limitations
set forth in Article 11.

4.28 Full Disclosure. To the knowledge of the Sellers, this
Agreement and the documents, certificates, and other writings furnished or to
be furnished by or on behalf of Sellers to Purchaser pursuant to the provisions
of this Agreement do not and will not contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements made, in the light of the circumstances under which they are made,
not misleading. To the knowledge of the Sellers, there is no material
liability or obligation which relates to the agreements and documents
identified in the Schedules which is not generic to the identified agreement or
document and readily ascertainable from a review of such agreement or document,
and not otherwise disclosed herein or identified on the face of the Schedules.

ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF PURCHASER

The Purchaser represents and warrants to the Sellers as follows:

5.2 Corporate Authority. Purchaser has all requisite corporate
power and authority to enter into this Agreement and to carry out its
obligations under this Agreement. The execution, delivery and performance of
this Agreement by Purchaser has been duly authorized by all necessary corporate
action on the part of Purchaser. This Agreement has been duly executed and
delivered by Purchaser and constitutes the legal, valid and binding obligation
of Purchaser, enforceable in accordance with its terms.

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<PAGE> 26
5.4 Investment Representations. Purchaser will acquire the Shares
for its own account for investment and not with a view to the resale or
distribution thereof. Purchaser will not transfer or otherwise dispose of the
Shares, or any interest therein, in such manner as to violate any provisions of
the Securities Act of 1933, as amended, and the rules and regulations
thereunder (collectively, the "Securities Act"), or of any applicable state
securities laws regulating the disposition thereof. Purchaser agrees that the
certificates representing the Shares may bear legends to the effect that such
shares have not been registered under the Securities Act or such other state
securities laws, and that no interest therein may be transferred or otherwise
disposed of in violation of the provisions thereof or of any rules and
regulations issued thereunder.

ARTICLE 6
COVENANTS OF THE SELLERS AND THE COMPANY

Pending the Closing, Sellers and the Company shall do the following:

6.2 Access and Information. Sellers shall cause the Company to
afford, and the Company shall afford, to Purchaser and its representatives
reasonable access during reasonable business hours and with at least
twenty-four (24) hours advance notice throughout the period prior to the
Closing to all properties, books, contracts, commitments, computer programs and
data, reports, manuals and records (including, but not limited to, tax
returns), and to all personnel of the Company and the Subsidiaries and, during
such period, shall promptly furnish to Purchaser all other information
concerning such business, properties, and personnel as Purchaser may reasonably
request. Purchaser shall maintain the confidentiality of all such information
as required by Section 7.5 hereof.

20
<PAGE> 27
with, or negotiate or otherwise deal with, or provide any information to, any
person or entity other than Purchaser and its representatives concerning any
merger, sale of assets, or similar transaction involving the Company, or sale
of any capital stock of the Company, or any interest therein. Sellers will, or
will cause the Company to, notify Purchaser immediately upon receipt of any
offer or proposal relating to any of the foregoing and such notice shall
describe in detail the terms thereof and identify the party or parties thereto.
From the date of this Agreement, until the Closing or the termination of this
Agreement pursuant to its terms, neither the Company nor any of the Sellers
will furnish, without the prior written consent of Purchaser, to any person or
entity (other than Purchaser) any non-public information concerning the Company
or its businesses, financial affairs or prospects for the purpose of or with
the intent of permitting such person or entity to evaluate a possible
acquisition of any capital stock or (other than in the ordinary course of
business) assets of the Company.

6.4 Conduct of Business Prior to Closing. Sellers and the Company
covenant and agree that, prior to the consummation of this Agreement or to the
termination of this Agreement pursuant to its terms, unless Purchaser shall
otherwise consent in writing, and, except as otherwise contemplated by this
Agreement, each of the following shall be complied with:

(b) The Company shall not (i) amend its articles of
incorporation or bylaws or (ii) split, combine, or reclassify any of its
outstanding securities, or (iii) declare, set aside, or pay any dividend or
other distribution on, or make, agree or commit to make any exchange for or
redemption of, any of its outstanding securities whether payable in cash, stock
or property; provided, however, that the Company may pay cash dividends to the
Sellers in an aggregate amount equal to the net income of the Company during
the period from January 1, 1996 to the date of the Closing;

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<PAGE> 28
(ii) agree to any increase in the compensation payable or to become payable to,
or any increase in the contractual term of employment of, any officer, director
or employee of the Company; provided, however, that the Company may (i) make
usual and customary employee salary adjustments (not in excess of 5%),
excluding, however, the Sellers; (ii) may pay usual and customary bonuses to
employees, excluding, however, the Sellers; and (iii) may terminate and employ
non-management employees as needed to operate the business of the Company, in
each case consistent with past practices; (iv) set up a trust fund for the
Jensen annuities as specified in Section 11.8; and (v) cancel the reinsurance
agreement with MEGA Life and Health Insurance Company and transfer all the
reserves currently held in a trust account pursuant to that reinsurance
contract to MEGA Life and Health Insurance Company.

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<PAGE> 29
Purchaser (except for expenses that the Company and its Subsidiaries would have
incurred in any event, such as the expense of an annual audit);

(l) The Company will comply with all laws and regulations
applicable to it and its operations;

(m) The Company will maintain in full force and effect
insurance coverage of a type and amount customary in its business, but not less
than that presently in effect;

(o) The Company will not make any change in any method of
reporting income or expenses for federal income tax purposes; and

(p) The Company shall not knowingly take any action which
would prevent compliance with any of the conditions in Articles 8 or 9 of this
Agreement.

6.5 Consents and Approvals. The Company shall use commercially
reasonable efforts to obtain all necessary consents and approvals required for
its performance of this Agreement and the transactions contemplated hereby,
including, without limitation, the consents listed on Schedule 4.22 other than
the regulatory change of control approvals to be obtained by Purchaser. The
Company shall make all filings, applications, statements and reports to all
governmental authorities which are required to be made prior to the Closing
Date by or on behalf of the Sellers, the Company or the Subsidiaries pursuant
to any applicable statute, rule or regulation in connection with this Agreement
and the transactions contemplated hereby. As required in connection with the
performance of this Agreement by the Company, the Company will promptly provide
such other information and communications to governmental and regulatory
authorities, including, without limitation, insurance regulatory authorities in
any jurisdiction in which the Company conducts business, as such regulatory
authorities or Purchaser may reasonably request. Between the date hereof and
the Closing Date, the Company shall promptly provide Purchaser with copies of
all correspondence and filings to or from all governmental and regulatory
bodies and officials relating to the Company.

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<PAGE> 30
by Purchaser, provided, however, that (i) such approval shall not be
unreasonably withheld and (ii) such review and approval shall not be required
of statements and announcements if prior review and approval would prevent the
timely and accurate dissemination of such statements and announcements as
required to comply, in the judgment of counsel, with any applicable law, rule
or policy. Sellers and Purchaser shall issue a press release regarding the
execution of this Agreement within one day of the date hereof or such other
time as Sellers and Purchaser may mutually agree.

6.8 Expenses. All costs and expenses incurred by Sellers in
connection with this Agreement shall be paid by Sellers and none of such costs
and expenses shall be paid by the Company.

6.11 Updating of Exhibits and Schedules. Sellers shall notify
Purchaser of any changes, additions, or events which may cause any change in or
addition to the Schedules delivered by them under this Agreement promptly after
the occurrence of the same and again at the Closing by delivery of appropriate
updates to all such Schedules. No notification of a change or addition to a
Schedule made pursuant to this Section shall be deemed to cure any breach of
any representation or warranty resulting from such change or addition unless
Purchaser specifically agrees thereto in writing, nor shall any such
notification be considered to constitute or give rise to a waiver by Purchaser
of any condition set forth in this Agreement. Nothing contained herein shall
be deemed to create or impose on Purchaser any duty to examine or investigate
any matter or thing for the purposes of verifying the representations and
warranties made by Sellers herein. Purchaser shall not be deemed to have
waived any misrepresentation or breach of warranty unless and except Purchaser
has actual knowledge of such misrepresentation or breach of warranty and
executes such waiver in writing.

24
<PAGE> 31

ARTICLE 7
COVENANTS OF PURCHASER

Purchaser agrees that from the date hereof through the Closing Date:

7.1 Affirmative Covenants. Subject to the terms and conditions
stated herein, Purchaser will take every action reasonably required of it in
order to satisfy the conditions to Closing set forth in this Agreement on or
before the Closing Date and otherwise to ensure the prompt and expedient
consummation of the transactions substantially as contemplated hereby, and will
exert all reasonable efforts to cause the transactions contemplated by this
Agreement.

7.4 Consents and Approvals. Purchaser shall use commercially
reasonable efforts to obtain all necessary consents and approvals required for
its performance of this Agreement and the transactions contemplated hereby,
including, without limitation, the regulatory change of control approvals
listed on Schedule 4.22; provided, however, that Purchaser shall not be
required or obligated to pay any amounts necessary to satisfy conditions to or
in order to obtain such governmental regulatory consents other than normal and
customary filing fees and out-of-pocket costs and expenses of the Company
incurred in providing its assistance with respect thereto. Purchaser shall
diligently and promptly proceed immediately after the date of this Agreement to
make all filings, applications, statements and reports to all governmental
authorities which are required to be made prior to the Closing Date by or on
behalf of it pursuant to any applicable statute, rule or regulation in
connection with this Agreement and the transactions contemplated hereby and
shall diligently and in good faith pursue the taking of all action necessary to
obtain approval of the transactions contemplated herein by the insurance
regulatory authorities of any jurisdiction in which the Company conduct
business. As required in connection with the performance of this Agreement,
Purchaser will promptly provide such information and communications to
governmental and regulatory bodies and authorities, including, without
limitation, insurance regulatory authorities in any jurisdiction in which the
Company conducts business, as such regulatory authorities may reasonably
request. Purchaser shall not be required to cure any existing regulatory
compliance requirements in order to obtain such consents and approvals. Within
five (5) business days after the written request of the Sellers, the Purchaser
shall provide to the Sellers a status report as to all such filings and
approvals.

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<PAGE> 32
transaction, until such time as such information is otherwise publicly
available; provided, however, that this sentence will not apply to any
information that becomes generally available to the public, was available on a
non-confidential basis to Purchaser prior to its disclosure pursuant hereto, or
becomes available on a non-confidential basis from a third party who is not
bound to keep such information confidential. In the event of the termination
of this Agreement, Purchaser will, and will cause its representatives to,
deliver to the Company all documents and other written materials, and all
copies thereof, obtained by Purchaser or on its behalf from the Sellers or the
Company as a result of this Agreement or in connection herewith, whether so
obtained before or after the execution hereof. Purchaser agrees that the
Company shall have standing and may avail itself of any remedy at law or in
equity, including an action for injunctive relief, in the event of a breach or
threatened breach by Purchaser of any of the provisions of this Section 7.5.
The obligations of Purchaser under this Section 7.5 shall survive termination
of this Agreement for any reason whatsoever and shall remain in effect until
two (2) years from the Effective Date of this Agreement.

7.6 Publicity. Prior to the Closing, any public statement or
announcement by the Purchaser, including but not limited to any written news
releases by the Purchaser, pertaining to this Agreement or the transactions
contemplated hereby shall be submitted to the Sellers for review and approval
prior to the release by the Purchaser, and shall be released only in a form
reasonably approved by the Sellers provided however, that (i) such approval
shall not be unreasonably withheld and (ii) such review and approval shall not
be required of statements and announcements by the Purchaser if prior review
and approval would prevent the timely and accurate dissemination of such
statements and announcements as requested to comply, in the judgment of
counsel, with any applicable law, rule or policy. Sellers and Purchasers shall
issue a press release regarding the execution and delivery of this Agreement
within one day after the date hereof or such other time as Sellers and
Purchaser may mutually agree.

ARTICLE 8
CONDITIONS TO OBLIGATIONS OF SELLERS

(b) There shall not be in effect a restraining order, a
preliminary or permanent injunction or other order by any federal or state
authority which prohibits the consummation of

26
<PAGE> 33
this Agreement and no action or proceeding shall have been instituted and
remain pending before any court seeking such relief or seeking damages in
respect to this Agreement or the consummation of the transactions contemplated
by this Agreement;

(c) Purchaser shall have performed in all material
respects its agreements, covenants and obligations contained in this Agreement
required to be performed at or prior to the Closing;

(d) The representations and warranties of Purchaser set
forth in this Agreement shall be true in all material respects as of the
Effective Date and as of the Closing Date as if made as of such time;

(e) Sellers shall have received from Purchaser an
officer's certificate, executed by an authorized officer of Purchaser (in his
capacity as such), dated the Closing Date, as to the satisfaction of the
conditions stated in Sections 8.1(c) and (d) above (to the best of his
knowledge where appropriate) and further certifying that Purchaser has received
the Schedules and received copies of, or had the opportunity to review, the
agreements and documents listed in the Schedules to this Agreement.

(f) Sellers shall have received, on and as of the Closing
Date, an opinion of Counsel to Purchaser, subject to customary limitations,
reasonably satisfactory in form and substance to Counsel to Sellers, and such
other closing documents and instruments as Sellers shall reasonably require, in
each case reasonably satisfactory in form and substance to Sellers and Counsel
to Sellers.

(g) At or prior to the Closing, Purchaser shall enter
into separate Employment Agreements with Don Germany and Donna Crosswhite in
the form of Exhibits D-1 and D-2, respectively, attached hereto (the
"Employment Agreements").

(h) At or prior to the Closing, Purchaser shall pay or
shall cause the Company to pay in full that certain promissory note having an
outstanding principal balance of $87,500.00, plus any accrued interest thereon,
payable to The MEGA Life and Health Insurance Company.

(i) At the Closing, there shall simultaneously occur the
closing and consummation of the transactions contemplated by and between UICI
and Purchaser relating to the acquisition by Purchaser from UICI of all the
issued and outstanding capital stock of Association Dental Plan, Inc., a
District of Columbia corporation (the "ADP Agreement").

(j) At or prior to the Closing, Purchaser shall perform
the respective obligations of and the actions to be taken by Purchaser at the
Closing as described in Section 10.3 of this Agreement.

(k) Prior to the Closing, Purchaser shall provide to the
Sellers a copy of the Order from the Oklahoma Insurance Commission approving
the acquisition of the Shares by Purchaser and the resulting change of control
of the Company.

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ARTICLE 9
CONDITIONS TO OBLIGATIONS OF PURCHASER

(a) This Agreement and the transactions contemplated by
this Agreement shall have received all approvals, consents, authorizations, and
waivers from governmental and other regulatory agencies and other third parties
(including lenders, holders of debt securities, and lessors) required by law or
contract to consummate this Agreement and required to keep all certificates of
authority and licenses held by the Company and the Subsidiaries in full force
and effect after the Closing; and no material adverse change in the business,
operations and condition, financial or otherwise, to the Company or its
Subsidiaries shall have occurred or will occur in the future as a result of any
regulatory requirement or condition to such approvals, consents, authorizations
and waivers.

(b) There shall not be in effect a restraining order, a
preliminary or permanent injunction or other order by any federal or state
authority which prohibits the consummation of this Agreement and no action or
proceeding shall have been instituted or remain pending seeking such relief or
seeking damages in respect of this Agreement or the consummation of the
transactions contemplated by the Agreement;

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Purchaser shall reasonably request, in each case reasonably satisfactory in
form and substance to Purchaser and Counsel to Purchaser;

(i) A reduction in total monthly revenues of the Company
relating to its prepaid dental plans to an amount less than one hundred
percent (100%) of the average of the monthly premium revenues of the
Company for the six (6) calendar months immediately preceding the
Effective Date;

(ii) A reduction in the total number of members of the
prepaid dental plans of the Company to less than ninety-eight percent
(98%) of that total number of members of the prepaid dental plans of the
Company in the calendar month immediately preceding the Effective Date;

(iii) a reduction in the total number of general dentist
(primary care) providers which have contracts with the Company to be a
provider to members of its prepaid dental plan to an amount less than
ninety-eight percent (98%) of such providers as of the calendar month
immediately preceding the Effective Date determined on a net basis
taking into account all new dental provider agreements entered into
after the date of this Agreement (as used herein "general dental
providers" refers to dental providers who are treating as patients
members of the prepaid dental plans of the Company);

(iv) a casualty loss which is not covered by insurance in
excess of $100,000;

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officers of the Company. Each such resignation shall be effective on or prior
to the Closing Date and shall acknowledge that there are no obligations,
liabilities or amounts due from the Company to such respective individuals
except as expressly set forth in this Agreement.

(i) None of the certificates of authority or licenses of
the Company listed on Schedule 4.6 shall have been canceled, revoked, suspended
or limited in any respect and no governmental regulatory agency shall have
instituted any proceeding, or given notice to the Company or its Subsidiaries
that it intends to institute any proceeding to take such action or to place the
Company or a Subsidiaries in a conservatorship or receivership due to its
financial condition or failure to comply or satisfy any governmental law, rule
or regulation.

(j) At the Closing, there shall simultaneously occur the
closing and consummation of the transaction contemplated by and under the ADP
Agreement.

(k) At the Closing, all the Sellers shall perform his or
her or its respective obligations of and actions to be taken by all the Sellers
at the Closing as described in Section 10.2 of this Agreement.

(l) The reinsurance contract between the Company and MEGA
Life and Health Insurance Company shall have been terminated and the Company
shall have no further obligation or liability of any kind under such
reinsurance contract or under the insurance policy and risks which were the
subject matter of such reinsurance contract.

ARTICLE 10
CLOSING

10.1 Date of Closing. The Closing shall take place at the offices
of Counsel to Purchaser in Dallas, Texas, or at such other location as
Purchaser and Sellers may mutually agree, within five (5) business days after
the date on which all governmental and third party consents necessary for the
consummation of the transactions contemplated by this Agreement and the ADP
Agreement are obtained and all other conditions to Closing are satisfied
specifically including, without limitation, the condition specified in Section
8.1(i) hereof, but in no event later than one hundred fifty (150) days after
the Effective Date unless extended by the mutual agreement of the Purchasers
and the Sellers, subject to earlier termination pursuant to the provisions of
Article 12 hereof. In the event that the Closing does not timely occur as
stated above, then a party not in default may immediately terminate this
Agreement upon written notice to the other parties in accordance with Section
12.1 below; provided, however, that this Agreement shall terminate
automatically and without further notice if the Closing has not occurred within
one hundred fifty (150) days of the Effective Date, unless extended by the
mutual agreement of Purchaser and Sellers.

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10.2 Actions by Seller. At the Closing, each Seller shall:

(a) Stock. Deliver to Purchaser the original
certificates representing the Shares owned by such Seller duly endorsed for
transfer or with appropriate stock powers with respect thereto duly endorsed in
blank by such Seller with such signature guarantee and such other documents as
may be reasonably required to effect a valid transfer of the Shares to
Purchaser, free and clear of any and all claims.

10.3 Actions by Purchaser. At the Closing, Purchaser shall:

(a) Payment. Pay the Purchase Price to the Sellers in
accordance with payment instructions of each Seller submitted in writing to the
Purchaser, less, however, the amount of the Earnest Money paid to the Sellers
and credited against the Purchase Price pursuant to the Escrow Agreement and
less, however, the amount of the Earnest Money to be retained after the Closing
pursuant to Section 2.3 until final determination of the Adjustment Amount
pursuant to the provisions of Section 2.3.

(b) Employment Agreements. Purchaser shall execute and
deliver the Employment Agreements.

ARTICLE 11
SURVIVAL OF REPRESENTATIONS
AND WARRANTIES; INDEMNITY; POST-CLOSING MATTERS

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notice of such facts to the indemnifying party, then the rights of the
indemnified party to indemnification with respect to such liability shall
continue until such liability shall have been finally determined and disposed
of (including and subject to disposition by the expiration of the applicable
statute of limitations with respect to such liability); and provided further,
however, that if a claim for indemnification is made pursuant to this Article
11, then such claim for indemnification or any claim arising out of the
wrongful failure to comply with the provisions of this Article 11 shall survive
until the expiration of the applicable period of limitations with respect to
such claim for indemnification; and provided further, however, that such two
year limitation specified above shall not apply to the extent provided
otherwise in Section 11.4(c) below. With respect to the representations and
warranties of the parties, such representations and warranties shall be true as
of and at the date of the Closing but nothing contained herein shall be deemed
to require or imply that the accuracy of such representations and warranties
shall apply on a continuing basis as to facts existing after the date of the
Closing. Except to the extent set forth herein, no investigation or
examination made by any party hereto shall constitute a waiver of any
representation or warranty and no representation or warranty shall be merged
into the Closing hereunder. However, to the extent information is apparent on
the face of the Schedules or is otherwise expressly set forth herein, such
information shall be deemed to amend, limit and/or restate any representation
and warranties contained herein to the extent such information is inconsistent
with such representation or warranty.

11.2 Indemnity. Subject to the provisions of Section 11.4 below,

(a) Sellers. Each Seller, jointly and severally (except
as to the representations and warranties contained in Article 3 which shall be
several and not joint), agrees to indemnify and hold harmless the Company, its
Subsidiaries, and Purchaser, and their respective shareholders, partners,
directors, officers, employees and agents, from, against, and in respect of,
any loss, liability, claim, demand, or expense, including but not limited to
attorney, investigation and consultant fees and costs, and of any other kind
whatsoever arising out of or resulting from any of the following:

(ii) Any and all actions, suits, proceedings, demands,
assessments, judgments, costs and legal and other expenses incident to
any of the foregoing.

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(ii) Any obligation or liability of the Company, whether
arising out of any set of facts in existence before, on or after the
Closing Date; excluding, however, any obligation or liability with
respect to which the Sellers are obligated to indemnify and hold the
Purchaser harmless pursuant to Section 11.2(a) above; and

(iii) Any and all actions, suits, proceedings, demands,
assessments, judgments, costs, and legal and other expenses incident to
any of the foregoing.

11.3 Indemnity Procedures. In case any claim, demand or action
shall be brought by any third party including, without limitation, any
governmental authority, against a party entitled to indemnity under Section
11.2(a) or 11.2(b) above, such party shall promptly notify the other party or
parties, as the case may be, from whom indemnity is or may validly be sought in
writing and the indemnifying party or parties shall assume the defense thereof,
including the employment of counsel. In addition, in case a party hereto shall
become aware of any facts which might result in any such claim, demand or
action, such party shall promptly notify the other party or parties who would
be obligated to provide indemnity hereunder with respect to such claim, demand
or action, and such other party or parties shall have the right to take such
action as it or they may deem appropriate to resolve such matter. The
indemnified party or parties shall have the right to employ separate counsel
in any such action and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such indemnified party or
parties, unless the employment of such counsel has been specifically authorized
by the indemnifying party or parties. Any settlement of any action subject to
indemnity hereunder shall require the consent of the indemnified and the
indemnifying party which consent shall not be unreasonably withheld and shall
be given within five (5) days following the giving of notice thereof. The
indemnifying party or parties shall not be liable for any settlement of any
action effected without its or their consent, but if settled with the consent
of the indemnifying party or parties or if there be a final judgment for the
plaintiff in any such action, the indemnifying party or parties shall indemnify
and hold harmless the indemnified party from and against any loss or liability
by reason of such settlement or judgment. If requested by the indemnifying
party, the indemnified party shall cooperate with the indemnifying party and
its counsel and use its best efforts in contesting any such claim or, if
appropriate, in making any counter-claim or cross-complaint against the party
asserting the claim, provided that the indemnifying party will reimburse the
indemnified party for reasonable expenses incurred in so cooperating upon
presentation of receipts or other evidence of such expense. The indemnifying
party and its representatives shall have full and complete access during
reasonable hours to all books, records and files of the indemnified party
expressly related to the defense of any claim for indemnification undertaken by
the indemnifying party pursuant to this Article 11, or for any other purpose in
connection therewith; provided that the indemnifying party shall safeguard and
maintain the confidentiality of all such books, records and files.

11.4 Limitations on Indemnification.

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which excess amount shall be recoverable in accordance with the terms hereof;
provided, however, that the $25,000 limitation set forth in this Section
11.4(a) shall not apply to the matters described in Section 11.4(c).

(b) Time Limits for Claims. No claim for indemnification
may be made by any indemnified party in respect of indemnifiable losses unless
written notice thereof shall have been received by the indemnifying party on or
prior to two years after the date hereof; provided, however, that the two-year
limitation set forth in Section 11.1 and this Section 11.4(b) shall not apply
to the matters described otherwise in Section 11.1 and Section 11.4(c) as to
which the indemnification obligations hereunder shall expire six (6) months
after the termination of the applicable statute of limitations relating to the
subject matter covered by such provisions; and provided further, however, that
in each case if, prior to the applicable date of expiration, a specific state
of facts shall have become known which is reasonably likely to constitute or
give rise to any indemnifiable loss as to which indemnity may be payable and
the indemnified party shall have given notice of such facts to the indemnifying
party and made a claim for indemnification within such two-year period, then
the right to indemnification with respect thereto shall remain in effect until
such matter shall have been finally determined and disposed of and any
indemnification due in respect thereof shall have been paid.

(i) Losses arising from fraud or an intentional
misrepresentation on the part of any Seller; and

(ii) Losses arising from the intentional breach of any
covenant or agreement by a Seller contained in this Agreement.

11.6 Severance Benefits. The Purchaser shall not be obligated to,
or obligated to cause the Company to, extend any severance benefits to
employees of the Company who may be terminated after the Closing or who are
rendering services to the Company and are terminated prior to the Closing. In
the event that the Purchaser shall elect to pay or cause the Company to pay any
severance benefits to employees of the Company who may be terminated at or
after

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the Closing, it is expressly understood that the Sellers shall not be entitled
to receive such severance benefits.

11.7 Change of Control Application. Purchaser hereby agrees to
file the applications for governmental approval of a change of control
described in Schedule 4.21 with the appropriate governmental or regulatory
agencies within five (5) business days of the Effective Date.

11.8 Annuity Contracts. UDC Life has issued annuity policy
contracts UDC000003, UDC000004 and UDC000005 to Ronald L. and Gladys Jensen
(the "Jensens") representing the annuity reserves in UDC Life. Purchaser
agrees to place the annuity account values for these annuity policies (at June
30, 1996 in the amount of $388,308.56) in a custodial trust account with
American Bank & Trust, 3001 E. Memorial Road, Edmond, Oklahoma 73013, and
provide an annual custodial trust account statement to the Jensens as of the
end of each respective calendar year as long as such annuity policy contracts
remain with UDC Life. Prior to Closing, UDC Life intends to sell additional
annuity policy contracts and receive an additional $150,000 in annuity
reserves. Such annuity account value reserves shall also be included in such
custodial trust account. In the event UDC Life is liquidated, terminated or
purchased by another entity subsequent to the execution of this Agreement and
the annuity policy contracts remain in force, then Purchaser agrees to cause
UDC Life to reinsure the annuity policy contracts by assumption reinsurance to
The MEGA Life and Health Insurance Company or such other life insurance company
as the Jensens may direct. If the annuity policy contracts expire, terminate
or are surrendered prior to UDC Life's liquidation, termination or purchase by
another entity, then the terms of this Section 11.8 governing the annuity
policy contracts shall terminate. Purchaser agrees that it shall follow the
investment directions of the Mega Life and Health Insurance Company with
respect to the investment of such trust funds.

11.9 Tax Reserve. Purchaser and Sellers agree that at the Closing
the Company shall establish a reserve on its books for potential tax
liabilities arising out of periods prior to the Closing Date. Such tax reserve
shall be in the approximate amount of $150,000 with the precise amount thereof
to be determined by Purchaser and Sellers at or prior to the Closing Date. The
precise amount of such reserve shall be deducted from the Purchase Price as
specified in Section 2.2(a) hereof. The Company shall further credit such
reserve with interest at an interest rate equal to the interest rate paid on
eighteen (18) month United States Treasury Bills from and after the Closing
Date. Such reserve shall be maintained until the final tax year for the
periods to which such reserve relates is closed (approximately September 15,
1999). The funds in such tax reserve may be used to pay any such tax
liabilities with the consent of the Sellers and any funds remaining in such
reserve when the final tax year is closed, if any, shall be distributed to the
Sellers and the Minority Stockholders on a prorata basis based on their share
ownership on the Closing Date. Notwithstanding any provision hereof to the
contrary, nothing contained in this Section 11.9 shall be deemed to limit or
restrict any obligation of the Sellers to indemnify the Purchaser or the
Company with respect to such matters except, solely, to the extent funds are
actually used from such reserve to pay any such tax liabilities.

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ARTICLE 12
NON-COMPETITION

12.1 Covenant Not to Compete; Non-Solicitation. For and in
consideration of the purchase by the Purchaser of the Shares pursuant to this
Agreement, and the payments payable by the Purchaser pursuant to this
Agreement, each Seller covenants and agrees that it shall not, directly or
indirectly, through its officers, employees, agents or representatives as an
employer, consultant, creditor, investor, owner, agent, principal, partner,
shareholder, or through any other kind of ownership (other than ownership of
securities of any publicly held entity in which the Seller, directly or
indirectly, in the aggregate beneficially owns less than two percent (2%) of
any class of outstanding securities), or in any other representative or
individual capacity, do any of the following:

(i) for a period of three (3) years from the date of this
Agreement, engage in (i) the operation of a dental health indemnity
insurance company, (ii) the operation of prepaid dental plans and dental
preferred provider organizations, and (iii) the provision of management,
administrative and related services to dental health indemnity insurance
carriers, dental preferred provider organizations, and prepaid dental
plans (collectively the "Dental Services Business") in the continental
United States (the "Restricted Area");

12.2 Permitted Activities. UICI shall have the right,
upon completion of the sale of the Company to Purchaser, to continue to market
and sell its back-office, claims and other operational applications involving
technological solutions to dental organizations and companies of all types,
whether or not in competition with Purchaser. Additionally, nothing contained
herein shall be construed to limit, exclude or prohibit UICI from marketing
life, health (other than dental), annuity vision or drug products to
Purchaser's customers or providing third party administration to self-insured
accounts.

12.3 Non-Disclosure. Each Seller covenants and agrees
that all information concerning the Company, including without limitation (i)
information regarding prices or

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premiums charged for products and services, (ii) the assets, liabilities and
financial condition of the Company and its subsidiaries, (iii) the names and
identities of customers and analyses of the amount and types of products and
services purchased by each such customer, (iv) the dental health providers
utilized by the Company and its subsidiaries and the financial arrangements
with such providers, and (v) the amount of compensation to employees,
constitute trade secrets and confidential, proprietary business information
which is the property of the Company and that, unless otherwise required by
law, from and after the date of this Agreement:

(a) Each Seller shall use its best efforts and exercise
utmost diligence to protect and safeguard all of such trade secrets and
confidential, proprietary information;

(b) Each Seller shall not, directly or indirectly, use,
sell, license, publish, disclose or otherwise transfer or make available
to others any of such trade secrets or confidential, proprietary
information;

(c) Without the prior written consent of the Company,
each Seller shall not, directly or indirectly, disclose any of such
trade secrets or confidential, proprietary information; and

(d) Each Seller shall not, directly or indirectly, use
for his own benefit or for the benefit of another, any of such trade
secrets or confidential, proprietary information.

12.4 Nondisparagement. For a period of three (3) years and after
the date of this Agreement, each Seller further agrees that it shall not make
or publish any statement, written or oral, disparaging the reputation of the
Company or its subsidiaries, executive officers or any of its business services
or products or solicit or encourage any member of any prepaid dental plan of
the Company or its subsidiaries or any third party having a group agreement
with the Company or its subsidiaries to terminate the membership of such person
in the plan of the Company or its subsidiaries or to terminate such group
agreement.

12.5 Reasonableness; Reformation. Each Seller acknowledges and
agrees that (i) the provisions of this Article 12 are ancillary to the
transaction pursuant to which the Seller sold and the Purchaser acquired the
Shares, (ii) the provisions of this Agreement contain reasonable limitations as
to time, geographical area and scope of activities to be restrained and do not
impose a greater restraint than is necessary to protect goodwill and other
business interests of the Company and its subsidiaries, (iii) if any portion of
the covenants and agreements set forth in this Agreement are held to be
invalid, unreasonable, arbitrary or against public policy, then such portion of
such covenants shall be considered divisible as to time, scope of activities
covered, and geographical area, and (iv) if any court of competent jurisdiction
determines the specified time period, scope of activities covered, or the
specified geographical area applicable

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to any provision of this Agreement to be invalid, unreasonable, arbitrary or
against public policy, a lesser time period, scope of activities covered,
and/or geographical area which is determined to be reasonable, non-arbitrary
and not against public policy may be enforced against each Seller.

12.6 Remedies for Breach. If a Seller has failed to satisfactorily
cure any breach or threatened breach of any covenant or agreement contained
herein within ten (10) days after written notice of such breach or threatened
breach given by the Purchaser to each Seller, any one or more of the following
remedies, as selected by the Purchaser in its sole discretion, shall be
available to the Purchaser in the event of a breach of this Agreement by the
Seller hereunder:

(a) Specific Performance. In the event of a breach or
threatened breach of any covenant or agreement of a Seller in this
Agreement, remedies at law will not adequately compensate the
Purchaser for its injuries incurred as a result thereof.
Accordingly, injunctive and/or equitable relief shall be available to
the Purchaser to specifically enforce this Agreement and prevent such
breach and any continued breach of any covenant and agreement herein.
Such Seller agrees that a bond of no more than $10,000 in the
aggregate will provide adequate protection to such Seller and
therefore no more than $10,000 in bond or other security shall be
required to be posted by the Company by any court in any proceeding to
obtain such injunctive or equitable relief.

(b) Suit for Damages. In addition to the remedies stated
in Section 12.5(a) above, in the event of any breach of any covenant
or agreement of a Seller herein, Purchaser may sue for damages arising
out of such breach and otherwise enforce this Agreement and obtain all
other remedies available to the Seller under applicable law.

ARTICLE 13
TERMINATION; WAIVER

13.1 Termination. This Agreement may be terminated, and the
transaction may be abandoned, at any time prior to the Closing, as follows and
in no other manner:

(a) Mutual Consent. By the mutual consent of Purchaser
and the Sellers;

(b) By Purchaser or Sellers: Condition Precedent. By
Purchaser or Sellers, upon written notice to the other, if the conditions to
the obligations of such canceling party or parties to consummate the
transaction, in the case of the Sellers, as provided in Article 8 or, in the
case of Purchaser, as provided in Article 9, were not, or cannot reasonably be,
satisfied on or before one hundred twenty (120) days after the date of this
Agreement unless the failure of the condition is the result of the material
breach of this Agreement by the party seeking to terminate; provided, however,
that, in the event all such conditions have been satisfied except solely the
condition with respect to obtaining all required consents, authorizations, and
approvals of governmental and regulatory agencies set forth in Sections 8.1(a)
and 9.1(a), respectively, and such failure is not due to a breach of this
Agreement by the non-terminating party, such date

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shall be automatically extended for one thirty (30) day period provided,
however, that in no event shall such date be extended beyond an aggregate of
one hundred fifty (150) days after the date of this Agreement unless extended
by the mutual agreement of the Purchaser and the Sellers;

(c) By Purchaser or Sellers: Representations, Warranties
and Covenants. By Purchaser, on the one hand, or Sellers, on the other, if (i)
any representation or warranty of the other hereunder shall not have been true
and correct in all material respects at the time at which made, or (ii) default
shall be made by the other in the due and timely observance or performance of
any of its covenants and agreements herein contained, but in such event only if
such representation or warranty cannot be made true and correct or such default
cannot be cured on or prior to the earlier of (x) sixty (60) days after the
non-defaulting or non-breaching party notifies the other in writing of such
default or breach, specifying the nature thereof or (y) one hundred fifty (150)
days after the date of this Agreement, unless such date is extended by mutual
agreement of Purchaser and Sellers.

No termination of this Agreement shall affect the liability of any party hereto
for any breach hereof arising at, prior to or out of such termination;
provided, however, that, in the event of a breach hereof by Purchaser, in
addition to any other remedies available at law or in equity to the Sellers,
Sellers shall be entitled to retain the Earnest Money. Any public announcement
of the termination of this Agreement shall be made only by means of a press
release issued jointly by Purchaser and the Company.

13.2 Waiver. At any time at or prior to the Closing, Purchaser, on
the one hand, or Sellers, on the other, may (i) extend the time for the
performance of any of the obligations or other acts of the other party hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto, or (iii) waive compliance
with any of the agreements or conditions contained herein. Any agreement on
the part of a party hereto to any such extension or waiver shall be valid only
if set forth in an instrument in writing signed on behalf of such party.

ARTICLE 14
CERTAIN DEFINED TERMS

14.1 Affiliate. When used with respect to a person, an "Affiliate"
of such person is a person controlling, controlled by, or under common control
with such person.

14.2 Agreement. This Stock Purchase Agreement, including all
Schedules and Exhibits hereto, and all other documents specifically referred to
in this Agreement that have been or, are to be delivered by a party to this
Agreement to another such party in connection with this Agreement, and
including all duly adopted amendments, modifications, and supplements to or of
this Agreement and such Schedules, Exhibits, and other documents.

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14.3 Closing. The completion of the transaction to take place as
described in Article 10.

14.4 Closing Date. The date on which the Closing actually occurs.

14.5 Closing Time. The time at which the Closing actually occurs.
All events that are to occur at the Closing Time shall, for all purposes, be
deemed to occur simultaneously, except to the extent, if at all, that a
specific order of occurrence is otherwise described.

14.6 Code. The Internal Revenue Code of 1986, as amended and in
effect on the date of this Agreement.

14.7 Control. Generally, the power to direct the management or
affairs of an entity.

14.8 Counsel to Sellers. Robert B. Vlach, Esq., UICI, 4001 McEwen
Drive, Suite 200, Dallas, Texas 75244, telephone number (214) 851-9071.

14.9 Counsel to Purchaser. Strasburger & Price, L.L.P., 901 Main
Street, Suite 4300, Dallas, Texas 75202, telephone number (214) 651-4300,
facsimile number (214) 651-4330.

14.10 ERISA. The Employee Retirement Income Security Act of 1974,
as amended and in effect on the date of this Agreement.

14.11 GAAP. Generally accepted accounting principles, as in effect
on the date of any statement, report, or determination that purports to be, or
is required to be, prepared or made in accordance with GAAP. All references
herein to financial statements prepared in accordance with GAAP shall mean in
accordance with GAAP consistently applied throughout the periods to which
reference is made.

14.12 Knowledge. As used in this Agreement, the term "knowledge" or
the phrase "to the knowledge of" or "known to" shall mean the existence of
actual or constructive knowledge by such party; provided, however, that no
party shall be deemed to have been performed, or be obligated to perform, an
independent investigation or inquiry with respect to the matter to which such
knowledge pertains.

14.13 Multiemployer Plan. A "multiemployer plan," as defined in
ERISA Section 3(37) or Section 414(f) of the Code, or, in either case,
successor provisions to such provisions adopted by amendments to ERISA or the
Code, as the case may be, and including, in each case, other provisions of
ERISA, of the Code, or of other law, and regulations adopted under ERISA or the
Code or such other law, modifying, amending, interpreting, or otherwise
affecting the application of such provisions, either in general or as applied
to the nature or circumstances of a particular entity that is a party to, or is
affected by or is involved in, the Agreement and with respect to which entity
the use of the term in this Agreement, or in particular location in this
Agreement, is relevant.

40
<PAGE> 47
14.14 Payables. Liabilities of a party arising from the borrowing
of money or the incurring of obligations for merchandise, goods or services
purchased appearing as liabilities on the books of the Company or any
Subsidiaries, or customarily required to be reflected as liabilities in the
balance sheets of the Company or any Subsidiaries prepared in accordance with
GAAP, indicating monies owed by the Company or such Subsidiaries.

14.15 PBGC. The Pension Benefit Guaranty Corporation.

14.16 Pension Plan. A "pension plan" or "employee pension benefit
plan," as defined in Section 3(2) of ERISA or successor provisions to such
provision adopted by amendments to ERISA and including other provisions of
ERISA or of other law, and regulations adopted under ERISA or such other law,
modifying, amending, interpreting or otherwise affecting the application of
such provisions, either in general or as applied to the nature or circumstances
of a particular entity that is a party to, or is affected by or is involved in,
the Agreement and with respect to which entity the use of the term in this
Agreement, or in the particular location in this Agreement, is relevant. A
reference to a Pension Plan shall include the trust, if any, forming a part
thereof.

14.17 Receivables. Accounts receivable, notes receivable, and other
obligations appearing as assets on the books of the Company or any
Subsidiaries, or customarily required to be reflected as assets in balance
sheets of the Company or any Subsidiaries prepared in accordance with GAAP,
indicating moneys owed to the Company or such Subsidiaries.

14.18 Welfare Plan. A "welfare plan" or an "employee welfare
benefit plan," as defined in Section 3(1) of ERISA or successor provisions to
such provision adopted by amendments to ERISA and including other provisions of
ERISA or of other law, and regulations adopted under ERISA or such other law,
modifying, amending, interpreting or otherwise affecting the application of
such provision, either in general or as applied to the nature or circumstances
of a particular entity that is a party to, or is affected by or is involved in,
the Agreement and with respect to which entity the use of the term in this
Agreement, or in the particular location in this Agreement, is relevant.

ARTICLE 15
MISCELLANEOUS

15.1 Further Instruments. The parties hereto agree to execute and
deliver such instruments and take such other action as shall be reasonably
necessary, or as shall be reasonably requested by any other party, in order to
carry out the transactions, agreements and covenants contemplated in this
Agreement at or prior to the Closing Date.

41
<PAGE> 48
the United States mail (herein referred to as "Mailing"), (ii) overnight
delivery by a nationally recognized overnight courier service (e.g. UPS,
Federal Express), (iii) delivering the same personally to such other
party(ies), or (iv) transmitting by facsimile and Mailing the original. Any
notice shall be deemed to have been given five (5) U.S. Post Office delivery
days following the date of Mailing; one day after timely delivery to an
overnight courier; if by personal delivery, upon such delivery; or if by
facsimile, the day of transmission if made within customary business hours, or
if not transmitted within customary business hours, the following business day.

(a) If to Sellers:

To the respective address of such Seller set forth on
the signature page hereto executed by such Seller

With a copy to Counsel to Sellers:

Robert B. Vlach, Esq.
UICI
4001 McEwen Drive
Suite 200
Dallas, Texas 75244
Facsimile: (214) 851-9033

(b) If to Purchaser:

United Dental Care, Inc.
14755 Preston Road
Suite 300
Dallas, Texas 75240
Attn: William H. Wilcox, President
Facsimile: (214) 458-7963

With a copy to Counsel to Purchaser:

Strasburger & Price, L.L.P.
901 Main Street, Suite 4300
Dallas, Texas 75202
Attn: David K. Meyercord, Esq.
Facsimile: (214) 651-4330

Any party may change the address or facsimile telephone number for notices to
be sent to it by written notice delivered pursuant to the terms of this Section
15.2.

15.3 Entire Agreement; Amendments. This Agreement and the
documents to be delivered at Closing hereunder set forth the entire
understanding of the parties and supersede all

42
<PAGE> 49
prior agreements or understandings, whether written or oral, with respect to
the subject matter hereof. This Agreement may be amended, modified or
supplemented only by a written agreement executed by Purchaser and Sellers.

15.4 Binding Effect/Assignability. This Agreement shall extend to
and be binding upon and inure to the benefit of the parties hereto, their
respective heirs, legal representatives, successors and assigns. Purchaser
shall have the right at any time to assign this Agreement to any affiliate of
Purchaser without the necessity of seeking the consent of the Sellers;
provided, however, that Purchaser shall not be relieved of any obligations as a
result of such assignment and that, in addition to Purchaser remaining liable,
any such assignee shall assume and become liable for any and all of Purchaser's
obligations under this Agreement. None of the Sellers shall be entitled to
assign any of their respective rights or obligations under this Agreement;
provided, however, that the rights and obligations of a Seller may be assigned
by operation of law or may be assigned to an individual retirement account,
pension plan, trust or other entity under the control of such Seller but any
such assignment shall not relieve or release such Seller of any obligations
hereunder as a result of such assignment and that, in addition to such Seller
remaining liable, any such assignee shall assume and become liable for any and
all of such Seller's obligations under this Agreement. In connection with any
such assignment, a Seller may transfer all or any portion of the Shares owned
by the Seller and thereby effect an assignment on the basis specified above.

15.5 Exhibits/Schedules. All Exhibits and Schedules referenced in
this Agreement are incorporated herein by reference and shall constitute a part
of this Agreement.

15.6 Invalid Provisions. If any provision of this Agreement is
held to be illegal, invalid or unenforceable under present or future laws
effective during the term hereof, such provisions shall be fully severable and
this Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part hereof with the remaining
provisions remaining in full force and effect and not affected by the illegal,
invalid or unenforceable provision or by severance herefrom. Furthermore, in
lieu of such illegal, invalid or unenforceable provision there shall be added
automatically as part of this Agreement a provision similar in terms to such
illegal, invalid, or unenforceable provision as may be possible and still be
legal, valid and enforceable.

15.7 Headings/Captions. The captions to sections and subsections
of this Agreement have been inserted solely for convenience and reference, and
shall not control or affect the meaning or construction of any of the
provisions of this Agreement.

15.8 Waiver; Remedies. Waiver by any party hereto of any breach of
or exercise of any rights under this Agreement shall not be deemed to be a
waiver of similar or other breaches or rights or a future breach of the same
duty. The failure of a party to take any action by reason of any such breach
or to exercise any such right shall not deprive any party of the right to take
any action at any time while such breach or condition giving rise to such right
continues. Except as expressly limited by this Agreement, the parties shall
have all remedies permitted to them by this Agreement or law, and all such
remedies shall be cumulative.

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<PAGE> 50
15.9 Attorney's Fees and Costs. In the event of a breach by any
party to this Agreement and commencement of a subsequent legal action in a
court of law or forum of arbitration, or in the event legal counsel is
consulted in the event of any such breach or in anticipation of any such
prospective legal action, the prevailing party in any such dispute shall be
entitled to reimbursement of reasonable attorney's fees and court costs,
including, but not limited to, the costs of expert witnesses, transportation,
lodging and meal costs of the parties and witnesses, costs of transcript
preparation and other reasonable and necessary direct and incidental costs of
such dispute. "Prevailing party" is the party in whose favor final judgment is
rendered.

15.10 Time. Time is of the essence under this Agreement.

15.11 Governing Law. This Agreement shall be construed under and
governed by the internal laws, and not the law of conflicts, of the State of
Texas.

15.12 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but which together
shall constitute one and the same agreement.

(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)

44
<PAGE> 51
IN WITNESS WHEREOF, the parties have executed this Stock Purchase
Agreement as of the day and year first written above.

PURCHASER:

UNITED DENTAL CARE, INC.

By:/s/ WILLIAM H. WILCOX
---------------------------------
William H. Wilcox, President

SELLERS:

UICI
UNITED MANAGEMENT &
CONSULTING, INC.
By: /s/ W. BRIAN HARRIGAN
--------------------------------
Its: President
--------------------------------
Address: 4001 McEwen Drive, Suite 200 By: /s/ CHARLES M. MONTGOMERY
Dallas, Texas 75244 --------------------------------
Its: President
-------------------------------

Address: 501 W. I-44 Rd. Ste. 580
---------------------------
Oklahoma City, Oklahoma
---------------------------
73118
---------------------------

UNITED MANAGEMENT & CONSULTING, MARIE C. MONTGOMERY REVOCABLE
INC. RETIREMENT PLAN TRUST U/T/A dated 3/23/92
-----------

By: /s/ CHARLES M. MONTGOMERY By: Charles M. Montgomery
--------------------------------- --------------------------------
Its: Trustee Its: Trustee
-------------------------------- -------------------------------

Address: 501 W. I-44 Rd. Ste. 580 Address: 501 W. I-44 Rd. Ste. 580
---------------------------- ---------------------------
Oklahoma City, Oklahoma Oklahoma City, Oklahoma
---------------------------- ---------------------------
73118 73118
---------------------------- ---------------------------

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<PAGE> 52
EXHIBIT A

SHARE OF OWNERSHIP OF SELLERS

<TABLE>
<CAPTION>
Number of
Seller Shares Percentage
- ------ ---------- ----------
<S> <C> <C>
UICI, Inc. 5,898 66.85%
United Management & Consulting, Inc. 1,201 13.60
United Management & Consulting, Inc. Retirement
Plan 600 6.80
Marie C. Montgomery Revocable Trust 300 3.40
----- ------

TOTAL: 8,818 90.65%

</TABLE>

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<PAGE> 53
EXHIBIT B

Adjusted Net Equity Statement

The Adjusted Net Equity Statement for the purposes of Section 2.3 of
the Stock Purchase Agreement shall be a determination of the consolidated
Stockholders' Equity of the Company prepared on an accrual basis in accordance
with generally accepted accounting principles consistently applied using the
past practices of the Company in the preparation of its financial statements
less the minimum required equity of $750,000. Specifically "Adjusted Net
Equity" shall mean the Assets of the Company less the Liabilities of the
Company (i.e. the Stockholders' Equity of the Company) determined on a
consolidated basis including the subsidiaries of the Company, less $750,000.

The form of the Net Equity Statement shall be as follows:

As of _______________ (calendar month end preceding Closing Date)

<TABLE>
<S> <C>
Capital Stock $
--------------
Paid In Surplus
--------------
Retained Earnings
--------------

Total Stockholders' Equity $
--------------

Less Minimum Required Equity ($ 750,000 )
---------------

Adjustment Amount
to Seller/Purchaser $
--------------
</TABLE>

47
<PAGE> 54
EXHIBIT D-1

EMPLOYMENT AGREEMENT

This Employment Agreement (this "Agreement") is made as of __________,
1996 (the "Effective Date"), by and between United Dental Care, Inc., an
Oklahoma corporation acting by and through its hereunto duly authorized officer
(the "Company"), and Don Germany (the "Executive").

NOW, THEREFORE, in consideration of premises and the mutual terms and
conditions hereof, the Company and the Executive hereby agree as follows:

1. Employment. The Company hereby employs the Executive and the
Executive hereby accepts employment with the Company upon the terms and
conditions hereinafter set forth.

2. Exclusive Services. The Executive shall devote his full working
time, ability and attention exclusively to the business of the Company during
the term of this Agreement and shall not, directly or indirectly, render any
services of a business, commercial or professional nature to any other person,
corporation or organization whether for compensation or otherwise, without the
prior knowledge and consent of the Board of Directors of the Company.

Executive has disclosed to the Company that (a) the Executive has an
ownership interest in DRG Reinsurance LTD and United Insurance Agency; (b) that
the Executive receives commissions from Courtsey Insurance Agency and American
Insurance Agency, and (c) the Executive serves on the Board of Directors of the
Retail Merchants Association of Oklahoma City, Oklahoma. The Executive has
represented to the Company that such activities do not constitute any conflict
of interest with his responsibilities under this Agreement and do not involve a
significant amount of time that would interfere with his ability to perform his
duties under this Agreement. Based on such representations, the Company has
consented to such activities.

3. Duties. The Executive is hereby employed by the Company and shall
render his services at the principal business offices of the Company located in
the State of Oklahoma, as such may be located from time to time, unless
otherwise agreed between the Board of Directors of the Company (the "Board")
and the Executive. The Executive shall have such authority and

1
<PAGE> 55

shall perform such duties as are specified by the President of the Company;
subject, however, to such limitations, instructions, directions, and control as
the Board may specify from time to time in its sole discretion.

4. Term. This Agreement shall have a term of four (4) years commencing
as of the Effective Date, subject to earlier termination as hereinafter
provided.

5. Compensation. As compensation for his services rendered under this
Agreement, the Executive shall be entitled to receive the following:

(a) Base Salary. The Executive shall initially be paid a base
annual salary of Seventy-Seven Thousand and No/100 Dollars
($77,000.00) per year, payable in installments on the regular payroll
dates of each month for the Company during the term of this Agreement,
prorated for any partial employment month. Such basic annual salary
shall be subject to increase from time to time as authorized by the
Board in its sole discretion.

(b) Bonuses. In addition to his base annual salary, the
Executive shall be entitled to receive a bonus in an amount equal to
$1.00 for each enrollment application of a subscriber (irrespective of
whether or not any dependents are covered by such application) which
application is accepted by the Company. Additionally, the Executive
shall be entitled to an incentive bonus of not less than $5,000 per
year based on whether the Company meets or exceeds its annual budget
for such year. The specific terms and conditions of such incentive
bonus for each year during the term of this Agreement shall be
mutually established by the Company and the Executive.

(c) Additional Compensation. The Executive shall be paid such
additional compensation and bonuses, if any, as may be determined in
the sole discretion of the Board.

7. Reimbursement of Expenses. Subject to such rules and procedures as
from time to time are specified by the Company acting by and through the
President of the Company and/or the Board, the Company shall reimburse the
Executive on a monthly basis for reasonable business expenses necessarily
incurred in the performance of his duties under this Agreement.

2
<PAGE> 56

business information of the Company. Both during the term of this Agreement and
thereafter, the Executive covenants and agrees as follows:

(b) that he shall not disclose any of such trade secrets and
confidential and proprietary information, except as may be required in
the course of his employment; and

(c) that he shall not use, directly or indirectly, for his
own benefit or for the benefit of another, any of such trade secrets
and confidential and proprietary information.

All files, records, documents, drawings, specifications, memoranda,
notes, or other documents relating to the business of the Company, whether
prepared by the Executive or otherwise coming into his possession, shall be the
exclusive property of the Company and shall be delivered to the Company and not
retained by the Executive upon termination of his employment for any reason
whatsoever or at any other time upon request of the Board.

9. Intellectual Property. The Executive covenants and agrees that he
will fully inform and disclose to the Company all inventions, designs,
improvements, discoveries and processes ("Inventions") which he has now or may
hereafter have during his employment with the Company and which pertain or
relate to the business of the Company or to any experimental work, products,
services or processes of the Company in progress or planned for the future,
whether conceived by the Executive alone or with others and whether or not
conceived during regular working hours. All such Inventions shall be the
exclusive property of the Company. The Executive shall assist the Company, at
any time during or after his employment, in perfecting its rights in all
Inventions and shall execute all documents and do all things necessary to vest
the Company with full and exclusive title thereto and to protect the same
against infringement by others. If such assistance takes place after his
employment is terminated the Executive shall be paid by the Company at a
reasonable rate for any time actually spent in rendering such assistance at the
request of the Company.

10. Non-Competition. (a) The Executive covenants and agrees that,
during the period of his employment, he shall not, without the prior written
consent of the Board, directly or indirectly, as an employee, employer,
consultant, agent, principal, partner, shareholder, corporate officer,
director, or through any other kind of ownership (other than ownership of
securities of publicly held corporations of which the Executive owns less than
two percent (2%) of any class of outstanding securities) or in any other
representative or individual capacity, engage in any business or render any
services to any business that is in competition in any manner whatsoever with
the business of the Company.

3
<PAGE> 57

(b) In addition, after termination of this Agreement, the Executive
covenants and agrees that, for the period that the Company is continuing to
make severance payments pursuant to Section 12(c) below, if applicable, he
shall not directly or indirectly, as an employee, employer, consultant,
creditor, investor, owner, agent, principal, partner, shareholder, corporate
officer, director or through any other kind of ownership (other than ownership
of securities of any publicly held entity in which Executive, directly or
indirectly, in the aggregate owns less than two percent (2%) of any class of
outstanding securities), or in any other representative or individual capacity,
do any of the following:

(i) engage in the dental services business in the
States of Oklahoma, Kansas, Missouri, Arkansas and Texas (the
"Restricted Area") that is in competition in any manner
whatsoever with the Dental Services Business conducted by the
Company, including, without limitation, the business of a
dental health indemnity insurance company, a prepaid dental
plan, a dental preferred provider organization, a dental
referral plan or the provision of management, administrative,
or related services to any of the foregoing anywhere in the
Restricted Area;

(ii) engage in any business which calls upon,
solicits, diverts or takes away any customer or customers of
the Company in the Restricted Area for the purpose of selling
or attempting to sell to any of said customers any products
or services similar to any products or services heretofore
sold or provided to any of such customers by the Company;

(iii) engage in any business which solicits any
present or future employee of the Company or initiates
discussions with any such employee regarding his or his
termination or resignation from employment with the Company,
so that such employee may accept employment with, or
engagement as a partner, investor, shareholder, employee,
agent or consultant with Executive, directly or indirectly,
as specified above; provided, however, that Executive shall
not be prohibited by this Agreement from employing or
soliciting the employment of any employee that the Company
terminates after the date of such termination; and

(iv) make or publish any statement, written or oral,
disparaging the reputation of the Company or its
subsidiaries, executive officers or any of its business
services or products or solicit or encourage any member of
any prepaid dental plan of the Company or its subsidiaries or
any third party having a group agreement with the Company or
its subsidiaries to terminate the membership of such person
in the plan of the Company or its subsidiaries or to
terminate such group agreement.

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<PAGE> 58

covenants not to compete contained in this Agreement as applicable to
Executive, including, without limitation, reducing the scope of
covenant not to compete applicable to Executive or reducing the time
period or the geographical area of the covenant not to compete
applicable to Executive; provided that as so amended by waiver such
covenant not to compete shall remain fully in effect. In order to be
effective, any such waiver must be in writing, approved by the Board
of Directors of the Company as provided above, and executed by an
authorized officer of the Company.

(e) Executive acknowledges and agrees that the provisions of
this Agreement contain reasonable limitations as to time, geographical
area and scope of activities to be restrained and do not impose a
greater restraint than is necessary to protect goodwill and
other business interests of the Company and its subsidiaries, (iii) if
any portion of the covenants and agreements set forth in this
Agreement are held to be invalid, unreasonable, arbitrary or against
public policy, then such portion of such covenants shall be considered
divisible as to time, scope of activities covered, and geographical
area, (iv) if any court of competent jurisdiction determines the
specified time period, scope of activities covered, or the specified
geographical area applicable to any provision of this Agreement to be
invalid, unreasonable, arbitrary or against public policy, a lesser
time period, scope of activities covered, and/or geographical area
which is determined to be reasonable, non-arbitrary and not against
public policy may be enforced against Executive.

11. Remedies for Breach of Covenants of the Executive. The covenants
set forth in Paragraphs 8, 9 and 10 of this Agreement shall continue to be
binding upon the Executive, notwithstanding the termination of his employment
with the Company for any reason whatsoever. Such covenants shall be deemed and
construed as separate agreements independent of any other provisions of this
Agreement and any other agreement between the Company and the Executive. The
existence of any claim or cause of action by the Executive against the Company,
whether predicated on this Agreement or otherwise, shall not constitute a
defense to the enforcement by the Company of any or all of such covenants. It
is expressly agreed that the remedy at law for the breach of any such covenant
is inadequate and the injunctive relief shall be available to prevent to the
breach or any threatened breach thereof.

12. Termination. This Agreement may be terminated upon the occurrence
of any one of the following events:

(a) Voluntary. The Executive may terminate this Agreement and
his employment at any time during the term of this Agreement by giving
thirty (30) days prior written notice of termination to the Board.

(b) Involuntary Without Cause. The Board, without cause, may
terminate this Agreement at any time during the term of this Agreement
upon thirty (30) days prior written notice to the Executive.

5
<PAGE> 59

(1) If the Executive becomes disabled for a period
of more than forty-eight (48) consecutive days;

(2) If the Executive for reasons other than illness
or injury absents himself from his duties without the consent
of the Board for more than ten (10) consecutive days;

(3) If the Executive should die (effective on the
date of death);

(4) If the Executive should be convicted of a crime
punishable by imprisonment; and

In the event of the termination of this Agreement by either party prior to the
expiration of the term of this Agreement, the Executive shall be entitled to
compensation earned by his prior to the date of termination as provided herein
computed on a pro rata basis to and including such date of termination. In the
event the Company terminates this Agreement without cause pursuant to Paragraph
12(b) above, the Executive shall be entitled to receive a severance payment as
liquidated damages for, and in lieu of, any and all damages which he may incur
as a result of such termination in an amount equal to his basic salary as
specified in Paragraph 5(a) as then in effect on the date of termination equal
to such salary which otherwise would have been payable over the remaining term
of this Agreement. Such severance payment shall be payable in installments on
the same dates that such payments would have been made during the term of this
Agreement. The Executive shall be entitled to no further compensation as of the
date of termination of this Agreement specifically including but not limited to
any unearned bonuses under this Agreement. Any termination of this Agreement
shall be without prejudice to any right or remedy to which the terminating
party may be entitled either at law, in equity, or under this Agreement.

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<PAGE> 60

the date of Mailing; one day after timely delivery to an overnight courier; if
by personal delivery, upon such delivery; or if by facsimile, the day of
transmission if made within customary business hours, or if not transmitted
within customary business hours, the following business day.

(a) If to the Company:

United Dental Care, Inc.
14755 Preston Road
Suite 300
Dallas, Texas 75240
Attention: President
Facsimile: (214) 458-7963

(b) If to the Executive:

Don Germany
6601 N.W. 109th
Oklahoma City, OK 73162

Either party may change its address for notice by giving notice in accordance
with the terms of this Paragraph 13.

14. General Provisions.

(a) Law Governing. This Agreement shall be governed by and
construed in accordance with the laws of the State of Oklahoma.

7
<PAGE> 61

(f) Titles. Titles of the paragraphs herein are used solely
for convenience and shall not be used for interpretation or construing
any work, clause, paragraph, or provision of this Agreement.

(g) Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but
which together shall constitute one and the same instrument.

(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)

8
<PAGE> 62

IN WITNESS WHEREOF, the Company and the Executive have executed this
Employment Agreement as of the day and year first written above.

COMPANY: EXECUTIVE:

United Dental Care, Inc.
An Oklahoma Corporation -----------------------------------
Don Germany

By:
------------------------------
Its
-----

GUARANTEE OF PERFORMANCE

UNITED DENTAL CARE, INC.
A Delaware Corporation

By:
-----------------------------------
Mark E. Pape
Senior Vice President

9
<PAGE> 63
EXHIBIT D-2

EMPLOYMENT AGREEMENT

NOW, THEREFORE, in consideration of premises and the mutual terms and
conditions hereof, the Company and the Executive hereby agree as follows:

1. Employment. The Company hereby employs the Executive and the
Executive hereby accepts employment with the Company upon the terms and
conditions hereinafter set forth.

2. Exclusive Services. The Executive shall devote her full working
time, ability and attention exclusively to the business of the Company during
the term of this Agreement and shall not, directly or indirectly, render any
services of a business, commercial or professional nature to any other person,
corporation or organization whether for compensation or otherwise, without the
prior knowledge and consent of the Board of Directors of the Company.

3. Duties. The Executive is hereby employed by the Company and shall
render her services at the principal business offices of the Company located in
the State of Oklahoma, as such may be located from time to time, unless
otherwise agreed between the Board of Directors of the Company (the "Board")
and the Executive. The Executive shall have such authority and shall perform
such duties as are specified by the President of the Company; subject, however,
to such limitations, instructions, directions, and control as the Board may
specify from time to time in its sole discretion.

4. Term. This Agreement shall have a term of four (4) years commencing
as of the Effective Date, subject to earlier termination as hereinafter
provided.

5. Compensation. As compensation for her services rendered under this
Agreement, the Executive shall be entitled to receive the following:

1
<PAGE> 64

(a) Base Salary. The Executive shall initially be paid a base
annual salary of FIFTY-SEVEN THOUSAND EIGHT HUNDRED and No/100 Dollars
($57,800) per year, payable in installments on the regular payroll
dates of each month for the Company during the term of this Agreement,
prorated for any partial employment month. Such basic annual salary
shall be subject to increase from time to time as authorized by the
Board in its sole discretion.

(b) Bonus. In addition to her base annual salary, the
Executive shall also be entitled to receive a bonus in an amount equal
to $1.00 for each enrollment application of a subscriber (irrespective
of whether or not any dependents are covered by such application)
which application is accepted by the Company.

(c) Additional Compensation. The Executive shall be paid such
additional compensation and bonuses, if any, as may be determined in
the sole discretion of the Board.

6. Benefits. In addition to the compensation to be paid to the
Executive pursuant to Paragraph 5 hereof, the Executive shall further be
included in any hospital, surgical, and medical benefit plan, any group term
life insurance policy, any pension or profit sharing plan, and all other
benefits which may be extended from time to time to employees of the Company
generally by the Board in its sole discretion. Attached to this Agreement as
Exhibit A is a memorandum dated August 5, 1996 specifying certain accrued
benefits applicable to an anticipated maternity leave of the Executive. The
Company agrees that it shall honor such accrued benefits as specified in such
memorandum.

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<PAGE> 65

(b) that she shall not disclose any of such trade secrets and
confidential and proprietary information, except as may be required in
the course of her employment; and

(c) that she shall not use, directly or indirectly, for her
own benefit or for the benefit of another, any of such trade secrets
and confidential and proprietary information.

9. Intellectual Property. The Executive covenants and agrees that she
will fully inform and disclose to the Company all inventions, designs,
improvements, discoveries and processes ("Inventions") which she has now or may
hereafter have during her employment with the Company and which pertain or
relate to the business of the Company or to any experimental work, products,
services or processes of the Company in progress or planned for the future,
whether conceived by the Executive alone or with others and whether or not
conceived during regular working hours. All such Inventions shall be the
exclusive property of the Company. The Executive shall assist the Company, at
any time during or after her employment, in perfecting its rights in all
Inventions and shall execute all documents and do all things necessary to vest
the Company with full and exclusive title thereto and to protect the same
against infringement by others. If such assistance takes place after her
employment is terminated the Executive shall be paid by the Company at a
reasonable rate for any time actually spent in rendering such assistance at the
request of the Company.

10. Non-Competition. (a) The Executive covenants and agrees that,
during the period of her employment, she shall not, without the prior written
consent of the Board, directly or indirectly, as an employee, employer,
consultant, agent, principal, partner, shareholder, corporate officer,
director, or through any other kind of ownership (other than ownership of
securities of publicly held corporations of which the Executive owns less than
two percent (2%) of any class of outstanding securities) or in any other
representative or individual capacity, engage in any business or render any
services to any business that is in competition in any manner whatsoever with
the business of the Company.

(b) In addition, after termination of this Agreement, the Executive
covenants and agrees that, for the period that the Company is continuing to
make severance payments pursuant to Section 12(c) below, if applicable, she
shall not directly or indirectly, as an employee, employer, consultant,
creditor, investor, owner, agent, principal, partner, shareholder, corporate
officer, director or through any other kind of ownership (other than ownership
of securities of any publicly held entity in which Executive, directly or
indirectly, in the aggregate owns less than two percent (2%) of any class of
outstanding securities), or in any other representative or individual capacity,
do any of the following:

3
<PAGE> 66

(iii) engage in any business which solicits any
present or future employee of the Company or initiates
discussions with any such employee regarding his or her
termination or resignation from employment with the Company,
so that such employee may accept employment with, or
engagement as a partner, investor, shareholder, employee,
agent or consultant with Executive, directly or indirectly,
as specified above; provided, however, that Executive shall
not be prohibited by this Agreement from employing or
soliciting the employment of any employee that the Company
terminates after the date of such termination; and

(d) In its sole discretion, the Company shall have the right
at any time and from time to time, evidenced solely by the written
approval of the Board of Directors of the Company, to waive all or any
portion of the rights of the Company under the covenants not to
compete contained in this Agreement as applicable to Executive,
including, without limitation, reducing the scope of covenant not to
compete applicable to Executive or reducing the time period or the
geographical area of the covenant not to compete applicable to
Executive; provided that as so amended by waiver such covenant not to
compete shall remain fully in effect. In order to be effective, any
such waiver must be in writing, approved by the Board of Directors of
the Company as provided above, and executed by an authorized officer
of the Company.

4
<PAGE> 67

(e) Executive acknowledges and agrees that the provisions of
this Agreement contain reasonable limitations as to time, geographical
area and scope of activities to be restrained and do not impose a
greater restraint than is necessary to protect goodwill and other
business interests of the Company and its subsidiaries, (iii) if any
portion of the covenants and agreements set forth in this Agreement
are held to be invalid, unreasonable, arbitrary or against public
policy, then such portion of such covenants shall be considered
divisible as to time, scope of activities covered, and geographical
area, (iv) if any court of competent jurisdiction determines the
specified time period, scope of activities covered, or the specified
geographical area applicable to any provision of this Agreement to be
invalid, unreasonable, arbitrary or against public policy, a lesser
time period, scope of activities covered, and/or geographical area
which is determined to be reasonable, non-arbitrary and not against
public policy may be enforced against Executive.

11. Remedies for Breach of Covenants of the Executive. The covenants
set forth in Paragraphs 8, 9 and 10 of this Agreement shall continue to be
binding upon the Executive, notwithstanding the termination of her employment
with the Company for any reason whatsoever. Such covenants shall be deemed and
construed as separate agreements independent of any other provisions of this
Agreement and any other agreement between the Company and the Executive. The
existence of any claim or cause of action by the Executive against the Company,
whether predicated on this Agreement or otherwise, shall not constitute a
defense to the enforcement by the Company of any or all of such covenants. It
is expressly agreed that the remedy at law for the breach of any such covenant
is inadequate and the injunctive relief shall be available to prevent to the
breach or any threatened breach thereof.

12. Termination. This Agreement may be terminated upon the occurrence
of any one of the following events:

(a) Voluntary. The Executive may terminate this Agreement and
her employment at any time during the term of this Agreement by giving
thirty (30) days prior written notice of termination to the Board.

(b) Involuntary Without Cause. The Board, without cause, may
terminate this Agreement at any time during the term of this Agreement
upon thirty (30) days prior written notice to the Executive.

(1) If the Executive becomes disabled for a period
of more than forty-eight (48) consecutive days;

5
<PAGE> 68

(2) If the Executive for reasons other than illness
or injury absents herself from her duties without the consent
of the Board for more than ten (10) consecutive days;

(3) If the Executive should die (effective on the
date of death);

(4) If the Executive should be convicted of a crime
punishable by imprisonment; and

In the event of the termination of this Agreement by either party prior to the
expiration of the term of this Agreement, the Executive shall be entitled to
compensation earned by her prior to the date of termination as provided herein
computed on a pro rata basis to and including such date of termination. In the
event the Company terminates this Agreement without cause pursuant to Paragraph
12(b) above, the Executive shall be entitled to receive a severance payment as
liquidated damages for, and in lieu of, any and all damages which she may incur
as a result of such termination in an amount equal to her basic salary as
specified in Paragraph 5(a) as then in effect on the date of termination equal
to such salary which otherwise would have been payable over the remaining term
of this Agreement. Such severance payment shall be payable in installments on
the same dates that such payments would have been made during the term of this
Agreement. The Executive shall be entitled to no further compensation as of the
date of termination of this Agreement specifically including but not limited to
any unearned bonuses under this Agreement. Any termination of this Agreement
shall be without prejudice to any right or remedy to which the terminating
party may be entitled either at law, in equity, or under this Agreement.

6
<PAGE> 69

(a) If to the Company:

United Dental Care, Inc.
14755 Preston Road
Suite 300
Dallas, Texas 75240
Attention: President
Facsimile: (214) 458-7963

(b) If to the Executive:

Donna Crosswhite
609 N.W. 138th
Edmond, Oklahoma 73013

Either party may change its address for notice by giving notice in accordance
with the terms of this Paragraph 13.

14. General Provisions.

(a) Law Governing. This Agreement shall be governed by and
construed in accordance with the laws of the State of Oklahoma.

7
<PAGE> 70

(f) Titles. Titles of the paragraphs herein are used solely
for convenience and shall not be used for interpretation or construing
any work, clause, paragraph, or provision of this Agreement.

(g) Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but
which together shall constitute one and the same instrument.

IN WITNESS WHEREOF, the Company and the Executive have executed this
Agreement as of the day and year first written above.

COMPANY: EXECUTIVE:

United Dental Care, Inc.,
an Oklahoma corporation

By:
------------------------------ -----------------------------------
Its Donna Crosswhite
-----

GUARANTEE OF PERFORMANCE

UNITED DENTAL CARE, INC.,
a Delaware corporation

By:
-----------------------------------
Mark E. Pape
Senior Vice President

8
<PAGE> 71

"EXHIBIT A"

<PAGE> 1

EXHIBIT 10.33

EXHIBIT C

EARNEST MONEY ESCROW AGREEMENT

This Earnest Money Escrow Agreement (the "Agreement") is made as of the
10th day of September, 1996 among UICI, a Delaware corporation, United
Management & Consulting, Inc., an Oklahoma corporation, United Management &
Consulting, Inc. Retirement Plan and Marie C. Montgomery Revocable Trust U/T/A
March 23, 1992 referred to herein collectively as the "Sellers" and
individually as a "Seller"); United Dental Care, Inc., a Delaware corporation
("Purchaser"); and Texas Commerce Bank National Association (the "Escrow
Agent").

WHEREAS, Sellers and Purchaser have entered into that certain Stock
Purchase Agreement dated September 10, 1996 (the "Stock Purchase Agreement")
providing for the purchase of ninety and 65/100ths percent (90.65%) the issued
and outstanding shares of capital stock of United Dental Care, Inc., an
Oklahoma corporation (the "Company"), (collectively the "Shares") from the
Sellers by Purchaser; and

WHEREAS, in connection with the execution of the Stock Purchase
Agreement, Purchaser has agreed to place the sum of Two Hundred Forty Thousand
and no/100ths Dollars ($240,000) in escrow for the purposes hereinafter set
forth. (Such escrow deposit and any interest earned thereon while such funds
are in escrow are referred to herein as the "Escrow Money"); and

WHEREAS, the parties desire to effectuate the provisions of the Stock
Purchase Agreement with respect to the Escrow Money;

NOW, THEREFORE, IN CONSIDERATION OF THE PREMISES and the mutual terms
and conditions hereof, the parties hereby agree as follows:

1. Escrow Money. Simultaneously with the execution of this
Agreement, Purchaser has deposited the sum of $240,000 in immediately available
funds with the Escrow Agent, the receipt of which is hereby acknowledged by the
Escrow Agent by its execution hereof.

1
<PAGE> 2
All funds in the Escrow Account shall be invested by the Escrow Agent in the
Fidelity Institutional Cash Portfolio-Treasury Fund Number 695. It is
understood and agreed that the Escrow Agent will be issuing a 1099 INT
statement to the Purchaser and the Internal Revenue Service, even though the
interest may be payable eventually to either the Purchaser or the Sellers as
the case may be. In the event the interest is paid to the Purchaser, the
Purchaser shall have the responsibility as to any 1099 INT reporting thereof.
The Escrow Money shall at all times be held in the Escrow Account and shall
only be delivered pursuant to the terms and conditions of this Agreement.

3. Terms of Escrow. The Escrow Money shall only be applied by
the Escrow Agent in accordance with the following terms and directions:

(a) Application upon Closing. In the event that the
Sellers have not furnished written notice to Purchaser and the Escrow
Agent of the failure of Purchaser to consummate the Stock Purchase
Agreement in accordance with Section 3(b) below prior to Closing under
the Stock Purchase Agreement, then, upon the Closing, Escrow Agent
shall receive a notice executed by Purchaser and Sellers directing
Escrow Agent to either (i) pay the Escrow Money to Sellers as the
notice shall direct in which case the Escrow Money shall constitute a
credit against the Purchase Price or (ii) refund the Escrow Money to
the Purchaser in which case it shall not constitute a credit against
the Purchase Price; provided, however, that the Escrow Agent shall
retain the sum of $200,000 to be held until final determination of the
Adjustment Amount pursuant to Section 2.3 of the Stock Purchase
Agreement. Such $200,000 balance of the Escrow Money and any interest
earned thereon shall be paid in accordance with a notice given by
Purchaser and Sellers after such final determination.

(b) Application upon Termination. If Purchaser fails to
consummate the Stock Purchase Agreement for any reason other than (i) a
material breach of the Stock Purchase Agreement or this Agreement by
Sellers or (ii) the valid exercise of any right of termination by
Purchaser expressly set forth in the Stock Purchase Agreement, then the
Sellers shall furnish written notice to Purchaser and the Escrow Agent
of Purchaser's failure to consummate the Stock Purchase Agreement and
directing that the Escrow Money be paid to the Sellers. Ten (10) days
after such notice is received by the Escrow Agent, the Sellers shall be
entitled to be paid the Escrow Money on pro rata basis determined
according to the percentage of the Purchase Price under the Stock
Purchase Agreement that would have been payable to the Sellers and the
Escrow Agent shall release the Escrow Money to the Sellers on such pro
rata basis. Otherwise, ten (10) days after receipt of written
notice/demand from the Purchaser to the Escrow Agent (certifying that
such notice/demand has been furnished to Sellers) that one of the
conditions stated in (i) or (ii) above has occurred and that the
Purchaser is entitled to receive a refund of the Escrow Money, the
Purchaser shall be entitled to be refunded the Escrow Money and the
Escrow Agent shall release the Escrow Money to the Purchaser.

(c) Automatic Termination. In the event that the Escrow
Agent has not received instructions as to the release of the Escrow
Money before February 15, 1997,

2
<PAGE> 3
then this Escrow Agreement shall automatically terminate on February
15, 1997 and the Escrow Agent shall refund the Escrow Money to
Purchaser without the necessity of any further notice or instructions
of any kind.

(d) Interest. Interest earned on the Escrow Money shall
be applied together with the Escrow Money and paid to the Sellers or to
Purchaser as the case may be as specified above.

4. Liability of Escrow Agent. Purchaser and Sellers hereby agree
that the following provisions shall control with respect to the rights, duties,
liabilities, privileges and amenities of the Escrow Agent:

(a) The Escrow Agent is not a party to, and is not bound
by, or charged with notice of, any agreement out of which this escrow
may arise.

(b) The Escrow Agent acts hereunder as a depository only,
and is not responsible or liable in any manner whatsoever for the
sufficiency, correctness, genuineness or validity of the subject matter
of the escrow, or any part thereof, or for the form or execution
thereof, or for the identity or authority of any person executing or
deposition the escrow or for any loss on any investment made pursuant
to the provisions hereof.

(c) The Escrow Agent shall be protected in acting upon any
written notice, request, waiver, consent, certificate, receipt,
authorization, power of attorney, or other paper or document which the
Escrow Agent in good faith believes to be genuine and what it purports
to be.

(d) Purchaser and the Sellers, jointly and severally,
agree to indemnify and hold the Escrow Agent harmless against any and
all losses, claims, demands, liabilities and expenses, including
attorney's fees and costs, which may be incurred by the Escrow Agent in
connection with the acceptance and performance or non-performance of
its duties hereunder whether such losses, claims, demands, liabilities
and expenses arise during or subsequent to performance of this
Agreement, directly or indirectly, excluding, however, any such
liability resulting from its gross negligence or willful misconduct.
In the event the Escrow Agent becomes involved in litigation in
connection with this escrow, Purchaser and the Sellers, jointly and
severally, agree to indemnify and save the Escrow Agent harmless from
any and all losses, claims, damages, liabilities and expenses,
including attorney's fees and costs, interpleader costs and judgments,
which may be incurred or suffered by Escrow Agent as a result thereof,
excluding, however, any such liability resulting from its gross
negligence or willful misconduct. It is the express intent of the
Purchaser and the Sellers to indemnify and hold the Escrow Agent
harmless against its own ordinary negligence.

(e) In the event of any disagreement between any of the
parties to this Agreement or with any third person resulting in adverse
claims or demands being made

3
<PAGE> 4
in connection with the Escrow Money, or in the event the Escrow Agent
in good faith is in doubt as to what action it should take hereunder,
the Escrow Agent may, at its option, refuse to comply with any claims
or demands on it, or refuse to take any other action hereunder, so long
as such disagreement continues or doubt exists, and in such event, the
Escrow Agent shall not be or become liable in any way or to any person
for its failure or refusal to act, and the Escrow Agent shall be
entitled to continue to so refrain from acting until (i) the rights of
all the parties shall have been fully and finally adjudicated by a
court of competent jurisdiction, or (ii) all differences shall have
adjusted and all doubt resolved by agreement among all the interested
parties and the Escrow Agent shall have been notified thereof pursuant
to written directions duly executed by all such persons. In the event
of conflicting demands on the Escrow Agent, the Escrow Agent may, at
its option, deposit any and all funds in question with the court that
would have jurisdiction over the matter, and in such event, the Escrow
Agent is relieved of any further responsibility in connection with this
escrow.

(g) Escrow Agent may resign hereunder upon thirty (30)
days' prior notice to the Seller and Purchaser. Upon the effective
date of such resignation, Escrow Agent shall deliver the Escrow Money
to any substitute escrow agent designated by Seller and Purchaser in
writing. If Seller and Purchaser fail to designate a substitute escrow
agent within thirty (30) days after the giving of such notice, Escrow
Agent may institute a petition for the appointment of a successor
escrow agent hereunder. Escrow Agent's sole responsibility after such
30-day notice period expires shall be to hold the Escrow Money (without
any obligation to reinvest the same) and to deliver the same to a
designated substitute escrow agent, if any, or in accordance with the
directions of a final order or judgment of a court of competent
jurisdiction, at which time of delivery Escrow Agent's obligations
hereunder shall cease and terminate.

5. Compensation of Escrow Agent. As compensation for its
services hereunder, the Escrow Agent shall be entitled to the fees and expenses
set forth on Schedule 1 hereto. All fees and expenses of the Escrow Agent
shall be paid equally by the Sellers and the Purchaser. In the event any of
such fees and expenses are not paid when due, the Escrow Agent may offset the
amount of such unpaid fees and expenses against amounts in the Escrow Account.

6. Non-Waiver. Nothing contained in this Agreement shall be
deemed or construed to release or waive any of the rights or obligations of
Purchaser or Sellers under the Stock Purchase Agreement, all rights and
remedies of Purchaser and Sellers under this Agreement are cumulative of all
other rights which either of them may have under the Stock Purchase Agreement,
by law or otherwise.

4
<PAGE> 5

7. Notices. Any notices, claims or demands which any party is
required or may desire to give to another under or in conjunction with this
Agreement shall be in writing, and shall be given by addressing the same to
such other party(ies) at the address set forth below, and by (i) depositing the
same so addressed, postage prepaid, first class, certified or registered, in
the United States mail, return receipt requested, (herein referred to as
"Mailing"), (ii) overnight delivery by a nationally recognized overnight
courier service (e.g. UPS, Federal Express), (iii) delivery the same personally
to such other party(ies), or (iv) transmitting by facsimile and Mailing the
original. Any notice shall be deemed to have been given five (5) U.S. Post
Office delivery days following the date of Mailing; one day after timely
delivery to an overnight courier; if by personal delivery, upon such delivery;
or if by facsimile, the day of transmission if made within customary business
hours, or if not transmitted within customary business hours, the following
business day.

a. If to Purchaser:

United Dental Care, Inc.
14755 Preston Road
Dallas, Texas 75240
Attention: Mr. William H. Wilcox, President
Facsimile Number: (214) 458-7963

b. If to Sellers:

c/o UICI
4001 McEwen, Suite 200
Dallas, Texas 75244
Attention: Robert B. Vlach
Facsimile No.: (214) 851-9033

c. If to Escrow Agent:

Texas Commerce Bank National Association
2200 Ross Avenue, 5th Floor
Dallas, Texas 75201
Attention: Mr. Gary Jones
Facsimile No.: (214) 965-3577

Any of the parties hereto may change the address or facsimile telephone number
for notices to be sent to it by written notice delivered pursuant to the terms
of this section.

5
<PAGE> 6

9. Capitalized Terms. Capitalized terms in this Agreement which
are not otherwise defined herein shall have the same meanings as are provided
for such terms in the Stock Purchase Agreement.

10. Binding Effect. This Agreement shall extend to and be binding
upon and inure to the benefit of the parties hereto, their respective
successors and assigns.

11. Termination. This Agreement shall terminate at such time as
all of the Escrow Money shall have been released in accordance with the terms
and conditions of this Agreement; provided, however, that the terms and
provisions of Sections 4 and 5 shall survive the termination hereof.

14. Attorney's Fees. As between Sellers and Purchaser only, in
the event any action or proceeding is commenced by Sellers or the Purchaser
against the other to (i) determine rights, duties or obligations hereunder,
(ii) determine a breach hereof and obtain damages therefor, or (iii) otherwise
enforce this Agreement, the prevailing party in such action or proceeding shall
be entitled to recover from the other party all costs and expenses thereof,
including reasonable attorney's fees and costs.

15. Governing Law. This Agreement shall be construed under and
governed by the internal laws, and not the law of conflicts, of the State of
Texas.

16. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but which together
shall constitute one and the same agreement.

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<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have executed this Earnest Money
Escrow Agreement as of the day and year first written above.

PURCHASER: SELLERS:

UNITED DENTAL CARE, INC. UICI

By: /s/ WILLIAM H. WILCOX By: /s/ W. BRIAN HARRIGAN
------------------------------- ---------------------------------
William H. Wilcox, President Its President
------------------------------

UNITED MANAGEMENT & CONSULTING, INC.

By:/s/ CHARLES M. MONTGOMERY
---------------------------------
Its President
------------------------------

ESCROW AGENT: UNITED MANAGEMENT & CONSULTING, INC.
RETIREMENT PLAN

Texas Commerce Bank, N.A. By: /s/ CHARLES M. MONTGOMERY
- ---------------------------------- ---------------------------------
Its Trustee
------------------------------

MARIE C. MONTGOMERY REVOCABLE TRUST
By: /s/ JOHN G. JONES
-------------------------------
Its: Vice President By: /s/ CHARLES M. MONTGOMERY
--------------------------- ---------------------------------
Its Trustee
------------------------------

<PAGE> 1
EXHIBIT 10.34

STOCK PURCHASE AGREEMENT

AMONG

UNITED DENTAL CARE, INC.,

AS PURCHASER

AND

JOHN E. CARLIN, PH.D.,

FRANK J. SCHLOEGEL, III,

J. DENNIS DLABAL, D.D.S.

THE JOHN E. CARLIN CHARITABLE REMAINDER UNITRUST,
UID JUNE 28, 1996,

THE FRANK J. SCHLOEGEL CHARITABLE REMAINDER UNITRUST I,
UID JULY 12, 1996, AND

THE FRANK J. SCHLOEGEL CHARITABLE REMAINDER UNITRUST II,
UID JULY 12, 1996,

THE J. DENNIS DLABAL CHARITABLE REMAINDER TRUST,
UID SEPTEMBER 5, 1996

AS SELLERS,

AND

KANSAS CITY DENTAL CARE, INC.

AS OF
SEPTEMBER 11, 1996
<PAGE> 2
TABLE OF CONTENTS

<TABLE>
<S> <C> <C>
ARTICLE 1 DEFINED TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

ARTICLE 2 PURCHASE AND SALE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF EACH SELLER . . . . . . . . . . . . . . . . . . . . . . . . . 4

ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF INDIVIDUAL SELLERS . . . . . . . . . . . . . . . . . . . . . . 5

4.1 Due Organization of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.2 Due Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.3 Capitalization of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.4 Subsidiaries/Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.5 Licenses/Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.6 Surplus/Net Working Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.7 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.8 No Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.9 No Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.10 Title to and Condition of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.11 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.12 Real Property Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.13 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.14 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(a) Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(b) Dentists' Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(c) Other Provider Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(d) Employer Group Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(e) Management Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(f) Copies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
</TABLE>

i
<PAGE> 3
<TABLE>
<S> <C> <C>
(g) Government Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.15 Employees, Et Cetera . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.16 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.17 Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.18 Accounts Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.19 Broker's and Finder's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.20 Labor Practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.21 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.22 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.23 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.24 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.25 Transactions With Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.26 Improper Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.27 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF PURCHASER . . . . . . . . . . . . . . . . . . . . . . . . . . 17

5.1 Due Incorporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.2 Corporate Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.3 Absence of Breach; No Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.4 Investment Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.5 Broker's or Finder's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.6 No Reliance on Oral Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

ARTICLE 6 COVENANTS OF THE SELLERS AND THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

6.1 Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.2 Access and Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.3 No Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.4 Conduct of Business Prior to Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.5 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.6 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.7 Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.8 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.9 Breach of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.10 No Transfer of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.11 Updating of Exhibits and Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.12 Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

ARTICLE 7 COVENANTS OF PURCHASER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

7.1 Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.2 Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.3 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.4 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
</TABLE>

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7.5 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.6 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.7 Control of Audits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.8 Severance Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.9 Change of Control Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.10 Transfer of Automobiles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

ARTICLE 8 CONDITIONS TO OBLIGATIONS OF SELLERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

8.1 Conditions to Obligations of Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

ARTICLE 9 CONDITIONS TO OBLIGATIONS OF PURCHASER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

9.1 Conditions To Obligations of Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

ARTICLE 10 CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

10.1 Date of Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.2 Actions by Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(a) Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(b) Release Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(c) Post-Closing Escrow Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(d) Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.3 Actions by Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(a) Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(b) Employment Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(c) Post-Closing Escrow Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(d) Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

ARTICLE 11 SURVIVAL OF REPRESENTATIONS
AND WARRANTIES; INDEMNITY; POST-CLOSING MATTERS . . . . . . . . . . . . . . . . . . . . . . . . 32

11.1 Representations and Warranties to Survive . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
11.2 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(a) Individual Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(b) Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11.3 Indemnity Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11.4 Limitations on Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(a) General Threshold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(b) Time Limits for Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(c) Certain Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.5 Remedies; Default; Notice and Cure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
</TABLE>

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ARTICLE 12 NON-COMPETITION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

12.1 Covenant Not to Compete; Non-Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
12.2 Non-Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
12.3 Reasonableness; Reformation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
12.4 Remedies for Breach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

ARTICLE 13 TERMINATION; WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

13.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
(a) Mutual Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
(b) By Purchaser or Sellers: Condition Precedent . . . . . . . . . . . . . . . . . . . . . 38
(c) By Purchaser or Sellers: Representations, Warranties and Covenants . . . . . . . . . . 38
13.2 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

ARTICLE 14 CERTAIN DEFINED TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

14.1 Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
14.2 Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
14.3 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
14.4 Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
14.5 Closing Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
14.6 Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
14.7 Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
14.8 Counsel to Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
14.9 Counsel to Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
14.10 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
14.11 GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
14.12 Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
14.13 Multiemployer Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
14.14 Net Working Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
14.15 Payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
14.16 PBGC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
14.17 Pension Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
14.18 Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
14.19 Welfare Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

ARTICLE 15 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

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15.6 Invalid Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
15.7 Headings/Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
15.8 Waiver; Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
15.9 Time. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
15.10 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
15.11 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
</TABLE>

LIST OF EXHIBITS

Exhibit A - Share Ownership of Sellers
Exhibit B - Earnest Money Escrow Agreement
Exhibit C-1 - Employment Agreement--Kopp
Exhibit C-2 - Employment--Carlin
Exhibit D - Release Agreement
Exhibit E - Post-Closing Escrow Agreement

LIST OF SCHEDULES

Schedule 2.3 - Operating Profit Statement
Schedule 4.5 - Licenses, Etc.
Schedule 4.7 - Financial Statements
Schedule 4.8 - Adverse Changes
Schedule 4.9 - Undisclosed Liabilities
Schedule 4.10 - Title Encumbrances
Schedule 4.11 - Litigation
Schedule 4.12 - Real Property Leases
Schedule 4.13 - Intellectual Property
Schedule 4.14A - Material Contracts
Schedule 4.14B - Dental Provider Contracts
Schedule 4.14C - Other Provider Contracts
Schedule 4.14D - Employer Group Contracts
Schedule 4.14E - Management Contracts
Schedule 4.15 - Employees, Etc.
Schedule 4.16 - Employee Benefit Plans
Schedule 4.17 - Receivables
Schedule 4.21 - Insurance
Schedule 4.22 - Consents
Schedule 4.25 - Transactions with Affiliates
Schedule 6.4 - Automobiles

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STOCK PURCHASE AGREEMENT

This Stock Purchase Agreement (this "Agreement") is made as of the
11th day of September, 1996 (the "Effective Date") by and among United Dental
Care, Inc., a Delaware corporation ("Purchaser"), John E. Carlin, Ph.D.
("Carlin"), Frank J. Schloegel, III ("Schloegel"), J. Dennis Dlabal, D.D.S.
("Dlabal," and together with Carlin and Schloegel, the "Individual Sellers"),
The John E. Carlin Charitable Remainder Unitrust, UID June 28, 1996, The Frank
J. Schloegel Charitable Remainder Unitrust I, UID July 12, 1996, The Frank J.
Schloegel Charitable Remainder Unitrust II, UID July 12, 1996, and The J.
Dennis Dlabal Charitable Remainder Trust, UID September 5, 1996, (collectively
referred to herein as the "Sellers" and individually as a "Seller"), and Kansas
City Dental Care, Inc., a Missouri corporation (the "Company").

WHEREAS, the Sellers each own the respective number of shares of
Common Stock of the Company set forth in Exhibit A (all of such shares being
collectively referred to herein as the "Shares"); and

WHEREAS, the Shares represent all of the issued and outstanding shares
of capital stock of the Company and the Sellers constitute all the shareholders
of the Company; and

WHEREAS, subject to the terms and conditions hereinafter set forth,
the Sellers desire to sell to the Purchaser, and the Purchaser desires to
purchase from the Sellers, the Shares;

NOW, THEREFORE, in consideration of the premises and the mutual terms
and conditions herein contained, the parties hereby agree as follows:

ARTICLE 1
DEFINED TERMS/SCHEDULES

1
<PAGE> 8
delivered to Purchaser by the Company and the Sellers shall be originals or
true and correct copies of the originals of all such agreements and documents.
Each Schedule shall be considered a part hereof as if set forth herein in full;
provided, however, that the representations and warranties of Sellers set forth
in this Agreement shall not be affected or deemed modified, waived or limited
in any respect by the information contained in any agreement or document listed
or referenced in the Schedules unless and only to the extent that any
qualification, modification, exception or limitation to any representation and
warranty of the Sellers is expressly set forth on the face of a Schedule.

ARTICLE 2
PURCHASE AND SALE

2.1 Agreement to Sell and Purchase. Subject to the terms and
conditions of this Agreement and in reliance on the representations, warranties
and covenants herein set forth, at the Closing each Seller shall sell to
Purchaser, and Purchaser shall purchase from each Seller, the Shares, free and
clear of any and all liens, claims, options, charges, pledges, security
interests, voting agreements or trusts, encumbrances or other restrictions or
interests of any kind or nature whatsoever (collectively, "Claims"). Purchaser
shall have no obligation to purchase any of the Shares hereunder unless the
Sellers collectively deliver for purchase all the Shares.

(a) Twelve Million Five Hundred Thousand Dollars
($12,500,000) less, however, the reduction to such amount applicable pursuant
to the provisions Section 8.1(h) of this Agreement (the "Initial Payment"); and

(b) plus the Adjustment Amount (as hereinafter defined in
Section 2.3), if any, to be determined and paid in accordance with Section 2.3
below.

At the Closing Purchaser shall pay to the Sellers the Initial Payment by
certified or cashier's check (or by wire transfer of immediately available
funds to the accounts of the Sellers in accordance with written directions
provided to Purchaser by each Seller not less than two (2) business days prior
to the Closing Date). The Initial Payment shall be allocated to each of the
Sellers in accordance with the percentages set forth on Exhibit A.

2.3 Closing Financial Statements: Purchase Price Adjustment.

(a) Attached hereto as a part of Schedule 2.3 is the pro
forma combined operating statement of the Company and the Kansas and Missouri
operations of the Purchaser for the six month period ended June 30, 1996 which
has been annualized for a full year of assumed combined operations (the "First
Year Operating Profit Statement"). The First Year

2
<PAGE> 9
Operating Profit Statement has been prepared and calculated in accordance with
the principles, procedures and definitions set forth in Schedule 2.3. As soon
as practicable following the end of the twenty-four (24) calendar month period
beginning with the first day of the calendar month after the calendar month in
which the Closing occurs but in no event later than sixty (60) days following
such date, Purchaser shall prepare a statement (the "Second Year Operating
Profit Statement") setting forth the operating profit of the Company as of the
end of the most recent twelve (12) month period ending as of the end of such
twenty-four (24) month period (the "Second Fiscal Year"). The Second Year
Operating Profit Statement shall be calculated and prepared in accordance with
the principles, procedures and definitions set forth on Schedule 2.3. The
Second Year Operating Profit Statement shall be delivered to the Sellers not
more than sixty (60) days after the end of such twenty-four (24) month period.
The amount of the excess, if any, of the Operating Profit of the Second Fiscal
Year over the Operating Profit of the First Fiscal Year times 2.5 up to a
maximum of $2,000,000 shall be the "Adjustment Amount." The Sellers and the
Purchaser have agreed, as reflected on Schedule 2.3 that the Operating Profit
for the First Fiscal Year shall be $1,136,000.

(b) Within thirty (30) days after delivery of the Second
Year Operating Profit Statement by Purchaser, Sellers may deliver written
notice (the "Protest Notice") to Purchaser of any objections, and the basis
therefor, which the Sellers may have to the Second Year Operating Profit
Statement. The failure of Sellers to deliver such Protest Notice within the
prescribed time period will constitute the acceptance of the Second Year
Operating Profit Statement as delivered by Purchaser by Sellers. During the
ten (10) business days following receipt of the Protest Notice by Purchaser,
Purchaser and Sellers shall attempt to resolve any disagreement with respect to
the Second Year Operating Profit Statement and the appropriateness thereof.
If, at the end of the period specified in the immediately preceding sentence,
Purchaser and Sellers shall have failed to resolve the disagreement specified
in the Protest Notice, the items in dispute shall be referred to the Kansas
City office of Price Waterhouse L.L.P. or such other accounting firm of
national reputation as may be agreed to by the parties (the "Arbitrator") for
final determination within 45 days. This provision for arbitration shall be
specifically enforceable by the parties and the determination of the Arbitrator
in accordance with the provisions hereof shall be final and binding upon
Purchaser and Seller with no right of appeal therefrom. The fees and expenses
of the Arbitrator shall be paid by the party whose last proposed offer for
settlement of the items in dispute, taken as a whole, (which offer each party
shall submit to the other in writing prior to the commencement of arbitration)
was farther away from the final determination of the Arbitrator.

(c) Purchaser agrees that within five (5) days after the
final determination of the Adjustment Amount as provided in this Section 2.3,
Purchaser shall pay the Adjustment Amount. Purchaser and Sellers agree that
the Adjustment Amount shall be paid as follows: the first $1,000,000 (or any
lesser amount) of the Adjustment Amount shall be paid to George C. Kopp, III
("Kopp"), and the balance of the Adjustment Amount in excess of $1,000,000, if
any, shall be paid 25% to Kopp and 75% to the Sellers in accordance with the
percentages set forth on Exhibit A.

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<PAGE> 10
2.4 Earnest Money. Simultaneously with the execution and delivery
of this Agreement, Purchaser shall deposit the sum of Two Hundred Thousand
Dollars ($200,000) as earnest money (the "Earnest Money") with UMB Bank, N.A.
(the "Escrow Agent") to be held in trust pursuant to the terms and conditions
of that certain Earnest Money Escrow Agreement, a copy of which is attached
hereto as Exhibit B (the "Escrow Agreement"). The Escrow Agreement shall be
executed and delivered by the parties thereto simultaneously with the execution
and delivery of this Agreement. It is expressly agreed that the Earnest Money
shall be applied strictly in accordance with the terms of the Escrow Agreement.

ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF EACH SELLER

Each Seller, severally and not jointly, represents and warrants to
Purchaser that, as of the Effective Date and as of the Closing Date:

3.1 Authority Relative to This Agreement. This Agreement has been
duly and validly executed and delivered by the Seller and constitutes a valid
and binding agreement of the Seller enforceable in accordance with its terms,
except as the enforceability thereof may be limited by bankruptcy, insolvency,
moratorium or other laws affecting the rights of creditors generally or by
general principles of equity. The other agreements to be executed and
delivered by the Seller pursuant to this Agreement will be valid and binding
agreements of the Seller enforceable in accordance with their respective terms
when so executed and delivered by the Seller, except as the enforceability
thereof may be limited by bankruptcy, insolvency, moratorium or other laws
affecting the rights of creditors generally or by general principles of equity.
With respect to each Seller that is not an individual, such Seller has all
requisite power and authority to enter into this Agreement and the other
agreements to be executed and delivered by each Seller pursuant to this
Agreement. The execution, delivery and performance of this Agreement by such
Seller has been duly authorized by all requisite action on the part of each
Seller not an individual.

3.2 Title to Stock. Each Seller is the unconditional sole legal,
beneficial, record and equitable owner of the Shares shown as owned by such
Seller on Exhibit A, free and clear of any and all Claims. At the Closing,
each Seller will convey to Purchaser valid and marketable title to the Shares
owned by each Seller as set forth on Exhibit A, free and clear of any and all
Claims.

3.3 Absence of Breach; Consents--Sellers. The execution,
delivery, and performance of this Agreement and the other agreements to be
executed and delivered pursuant to this Agreement by the Seller does not and
will not: (i) contravene any order, writ, judgment, injunction, decree,
determination, or award of any court or other governmental authority which
affects or binds the Seller or the Shares owned by such Seller, (ii) conflict
with or result in a breach of or default under any trust agreement, indenture,
loan or credit agreement or any other agreement or instrument to which the
Seller is a party or by which the Seller or the Shares are bound, or (iii)
violate any law, rule or regulation applicable to the Seller or to the Shares.

4
<PAGE> 11
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF INDIVIDUAL SELLERS

In addition to the representations and warranties made in Article 3, the
Individual Sellers, jointly and severally, represent and warrant to Purchaser
that, as of the Effective Date and as of the Closing Date:

4.1 Due Organization of the Company. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Missouri with all requisite corporate power and authority to conduct
its respective business operations as now being conducted. The Company is duly
qualified and in good standing as a foreign corporation authorized to do
business in the State of Kansas. There are no other jurisdictions where the
failure to be so authorized would have a material adverse effect on the
business or operations of the Company. Sellers have delivered to Purchaser
complete and correct copies of the articles of incorporation and bylaws of the
Company as amended to and in effect on the date hereof. The Company is not in
violation of any term or provision of its articles of incorporation or bylaws.

4.2 Due Authorization. Except for the consents reflected on
Schedule 4.22, the execution and delivery of this Agreement and the performance
of the transactions contemplated by this Agreement and all other instruments,
agreements, certificates and documents contemplated hereby to which either the
Sellers or the Company are or will be a party does not, on the date hereof, and
will not, on the Closing Date, (i) violate any decree or judgment of any court
or governmental authority which may be applicable to the Company; (ii) violate
any law, rule or regulation, or any decree or judgment of any court or
governmental authority binding on the Company or any subsidiary; (iii) violate
or conflict with, or result in a breach of, or constitute a default (or an
event which, with or without notice or lapse of time or both, would constitute
a default) under, or permit cancellation of, or result in the creation of any
encumbrance upon, any of the Shares or any of the assets of the Company under
any of the terms, conditions, or provisions of any contract, lease, sales
order, purchase order, indenture, mortgage, note, bond, instrument, license or
other agreement to which the Company or any subsidiary is a party, or by which
the Company or its assets is bound; (iv) permit the acceleration of the
maturity of any indebtedness of the Company; (v) violate or conflict with any
provision of the articles of incorporation or bylaws of the Company; (vi) has
been duly authorized by all requisite corporate action of the Company; and
(vii) require the authorization, consent, approval, license of, or to make a
filing with, any third party or entity (governmental or otherwise).

4.3 Capitalization of the Company. The authorized capital stock
of the Company consists of ten thousand (10,000) shares of common stock, $10.00
par value per share, of which 5,001 shares are validly issued and outstanding,
fully paid, and nonassessable. All of the outstanding shares of common stock
of the Company are owned beneficially and of record by the Sellers. The
Company has provided to the Purchaser a correct and complete copy of the stock
registry of the Company listing all stockholders of the Company and the
outstanding share

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<PAGE> 12
certificates and total number of shares issued to each stockholder of the
Company. The Company has no other capital stock authorized for issuance. The
Company has no treasury shares. There are no outstanding options, warrants,
convertible instruments, or other rights, agreements, or commitments to issue
or acquire any shares of common stock or any other security constituting, or
convertible or exchangeable into, capital stock of the Company, other than
certain oral commitments to issue stock options to Kopp, which will be canceled
on or before the Closing Date. Since the date of the Company Balance Sheet, no
shares of the Company's capital stock, no options, warrants, or other rights,
agreements, or commitments (contingent or otherwise) obligating the Company to
issue shares of capital stock, and no other securities or instruments
convertible or exchangeable into shares of capital stock, have been executed or
issued by the Company. The Company has not granted and is not a party to any
agreement granting preemptive rights, rights of first refusal, or registration
rights with respect to its outstanding capital stock or any capital stock of
the Company to be issued in the future, other than that certain Stock Purchase
Agreement dated May 24, 1990, among the Company and each of the Individual
Sellers, which agreement will be canceled on or before the Closing Date. The
transfers of certain of the Shares to the Sellers which are not Individual
Sellers were permitted under such Stock Purchase Agreement. The Company is not
bound by any exclusive agency or indemnity agreement applicable to the issuance
of shares of its capital stock after the Effective Date.

4.4 Subsidiaries/Investments. The Company has no subsidiaries,
whether direct or indirect. The Company has no equity, partnership, joint
venture, membership or other interest or investment in, and does not possesses
any other right or obligation to purchase any equity or other investment in,
and is not a partner of or joint venturer with, any other person or entity.

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<PAGE> 13
conduct of its respective business including, without limitation, all annual
reports, all holding company statements required to be filed with insurance or
similar regulatory agencies and all filings required to sell the prepaid dental
plans offered by the Company. In each jurisdiction, the dental care products
and other services offered and sold by the Company have been and are offered
and sold in compliance with the requirements of all relevant laws and
regulations currently in effect, in each case, with such exceptions,
individually or in the agreements, as would not have a material adverse effect
on the ability of the Company to conduct its business in any jurisdiction in
which the Company operates. In any jurisdiction in which the Company is
conducted or has prior to the date hereof ever conducted any activities
including without limitation activities relating to the offer and sale of
dental care products, plans or services, the recruitment of dentists or dental
offices in connection with the offer and sale of such products, plans or
services, the marketing of any such products plans or services to potential
purchasers or subscribers thereto, or any joint venture with any other party
relating to the foregoing, the Company has not failed to comply with any
applicable statute, ordinance, order, rule or regulation, or failed to obtain
any certificate of authority, license or permit, which failure, in either case,
would subject such Companies to any fine, penalty, assessment or other amount
or could be the basis for any judgment, consent decree, compliance order or
administrative order with respect to any insurance or similar law, it being
understood that the Seller shall be liable for any such fine, penalty,
assessment or judgment, or any liabilities incurred or payments required under
any such consent decree, compliance order or administrative order together, in
each case, with all costs and expenses (including reasonable fees,
disbursements and expenses of attorneys) relating thereto, in accordance with
and subject to the limitations set forth in Article 11. There are no judgments
against the Company and no orders, rulings, consent decrees or injunctions of
any court, governmental department, commission, agency or instrumentality by
which the Company is bound or to which the Company is subject. Except for the
holding company registration/reporting matter disclosed on Schedule 4.5, the
Company has not entered into or is subject to any judgment, consent decree,
compliance order or administrative order with respect to any insurance or other
similar law or received any request for information, notice, demand letter,
administrative inquiry or formal or informal complaint or claim with respect to
any insurance, health maintenance organization or other similar law or the
enforcement of any such law. The Company operations and the assets owned,
leased, occupied or used by the Company in the operation of its business do not
materially violate or fail to comply in any material respect with any
applicable federal, state or local insurance, health maintenance organization,
or prepaid dental plan codes, laws, rules or regulations or, to the knowledge
of the Individual Sellers, federal, any applicable state or local health, fire,
environmental, safety, zoning, building or other codes, laws, rules or
regulations, and the Company has not received any notice of alleged violations
thereof.

4.6 Surplus/Net Working Capital. On the Closing Date, after
taking into account all transactions which the Company is permitted or required
to complete at or prior to the Closing, the Company shall have (a) total
stockholders' equity (determined in accordance with GAAP) of not less than
$271,065 and (b) positive Net Working Capital of not less than $100,000.

4.7 Financial Statements. The Company has delivered to Purchaser
a complete and correct copy of (i) the audited financial statements of the
Company as of December 31, 1993,

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<PAGE> 14
1994 and 1995 consisting in each case of a balance sheet at each such
respective date, and the related consolidated statements of income, changes in
stockholders' equity and cash flows for the applicable twelve (12) month period
then ended and (ii) unaudited financial statements of the Company as of June
30, 1996 (the "Balance Sheet Date") consisting of a balance sheet of the
Company at such date (the "Company Balance Sheet") and the related statements
of income, changes in stockholders' equity and cash flows for the applicable
month and year-to-date period then ended (collectively, the "Financial
Statements"). Complete and accurate copies of all such financial statements
are attached as a part of Schedule 4.7 (the "Financial Statements"). The
Financial Statements present fairly in all material respects the financial
position of the Company, and the results of the operations, changes in
stockholders' equity and cash flows of the Company, as of the respective dates
thereof and for the respective periods covered thereby. The Financial
Statements for the years 1993 and 1994 have been prepared in conformity with
Missouri insurance statutory methods of accounting. The audited Financial
Statements for the year 1995 have been prepared in conformity with generally
accepted accounting principles ("GAAP"). The unaudited compiled Financial
Statements for the period ended June 30, 1996, have been prepared in conformity
with GAAP, subject to customary year-end adjustments. Except as set forth in
the Company Balance Sheet, as of the Balance Sheet Date there were no
liabilities, debts, claims or obligations, whether accrued, absolute,
contingent or otherwise, whether due or to become due, which are required by
GAAP to be set forth in a balance sheet of the Company which have not been so
set forth in the Company Balance Sheet. The Financial Statements were prepared
from the books and records of the Company. At the Balance Sheet Date, the
Company owned each of the assets included in the Company Balance Sheet. From
the date hereof through the Closing Date, the Company will continue to prepare
monthly and year-to-date unaudited consolidated financial statements on the
same basis and will promptly deliver the same to Purchaser. The foregoing
representations will be applicable to all such monthly unaudited financial
statements so prepared and delivered.

4.8 No Adverse Change. Except as set forth on Schedule 4.8, since
the Balance Sheet Date, the business of the Company has been conducted only in
the ordinary course and there has not been (i) any material adverse change in
the financial condition, business, properties, assets, or results of operations
of the Company (financial or otherwise) exclusive of any general economic
factors affecting the prepaid dental plan industry in general; (ii) any
material loss or damage (whether or not covered by insurance) to any of the
assets of the Company which materially affects or impairs the ability of the
Company to conduct its business as previously conducted or any other event or
condition of any character which has materially and adversely affected the
business or operations of the Company; (iii) the attaching, placing or granting
of, or the agreement to attach, place or grant, any encumbrance on any of the
assets of the Company; (iv) any sale or transfer of any material portion of the
assets of the Company; (v) any material changes in the terms of any material
contract of the Company; (vi) any material change in the accounting systems,
policies or practices of the Company; (vii) any waiver by or on behalf of the
Company of any rights which have any material value; (viii) no taking under
condemnation or right of eminent domain of any of the assets of the Company;
(ix) any entry into or termination of any material commitment, contract,
agreement, or transaction (including, without limitation, any material
borrowing or capital expenditure or sale or other disposition of any material
assets) by the Company; (x) any redemption, repurchase, or other acquisition of

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<PAGE> 15
any of its capital stock by the Company, or any issuance of capital stock of
the Company or of securities convertible into or rights to acquire any such
capital stock; (xi) any dividend or distribution declared, set aside or paid on
capital stock of the Company; (xii) any transfer or right granted by the
Company of or under any material lease, license, agreement, patent, trademark,
trade name, service mark or copyright; (xiii) any sale or other disposition of
any material asset of the Company, or any mortgage, pledge, or imposition of
any lien or other encumbrance on any material asset of the Company, or any
agreement relating to or contemplating any of the foregoing not in the ordinary
and usual course of business; (xiv) any default or breach by the Company in any
material respect under any contract, license, or permit; or (xv) any material
increase in the statutory reserves required to be maintained by the Company.
Except as set forth on Schedule 4.8, since the Balance Sheet Date, the Company
has conducted its business only in the ordinary and usual course of business
and, without limiting the foregoing, no changes have been made in (i) employee
compensation levels, (ii) the manner in which employees of the Company are
compensated, (iii) supplemental benefits provided to any employees, or (iv) the
employment of any employees of the Company.

4.9 No Undisclosed Liabilities. True and correct copies of all
notes, agreements or other documents evidencing the outstanding indebtedness of
the Company, as amended to and in effect on the Effective Date, have been
delivered to Purchaser by the Company. The Company has no liabilities that are
required by GAAP to be reflected as a liability on the Company Balance Sheet
and that are not adequately reflected or reserved against on the face of the
Company Balance Sheet, except liabilities incurred since the Balance Sheet Date
in the ordinary course of business consistent with past practice which, in the
aggregate, would not have a material adverse effect on the condition (financial
or otherwise), assets or business of the Company. Schedule 4.9 hereto sets
forth each liability of the Company in an amount in excess of $10,000 (whether
or not required by GAAP to be reflected on the Company Balance Sheet) and each
person to whom the aggregate amount of liabilities owed to such person by the
Company exceeds $10,000.

4.10 Title to and Condition of Properties. Except as disclosed in
Schedule 4.10 hereto, the Company has good, marketable, and insurable title, or
valid, effective and continuing leasehold rights in the case of leased
property, to all of the assets reflected on the Company Balance Sheet and all
personal property owned or leased by it or used by it in the conduct of its
business in such a manner as to create the appearance or reasonable expectation
that the same is owned or leased by it, free and clear of all liens, security
interests, restrictions, claims, encumbrances, and charges. The Individual
Sellers do not know of any potential action or assertion of rights, including
condemnation, by any party, governmental or other, and no proceedings with
respect thereto have been instituted of which any Individual Seller or the
Company has notice, that would materially affect the ability of the Company to
utilize each of such assets in its business. The Company has not received any
notices of default or other violations from any mortgagee regarding any
properties leased by the Company. Schedule 4.10 hereto contains a detailed
listing of all material assets of the Company. The assets now owned by the
Company constitute all assets reasonably necessary to enable the Company to
conduct the business and operations of the Company on substantially the same
terms as such business has been conducted historically. All personal property
and fixtures of the Company are conveyed

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<PAGE> 16
with the Shares on a where is/as is basis, and the Individual Sellers make no
representation or warranty as to the condition of any items of personal
property or fixtures, other than as set forth in this Section 4.10.

4.11 Litigation. Except as set forth on Schedule 4.11 hereto, (i)
no material investigation or review by any governmental entity with respect to
the Company is pending or, to the knowledge of the Individual Sellers,
threatened, nor has any governmental entity indicated to the Company an
intention to conduct the same; and (ii) there is no action, suit, or
administrative, condemnation, arbitration or other proceeding (including
proceedings concerning labor disputes or grievances or union recognition)
pending or, to the knowledge of the Individual Sellers, threatened against or
affecting the Company to which the Company is a party, at law or in equity,
before any federal, state, or municipal court or other governmental department,
commission, board, bureau, agency, or instrumentality. The Company is not now,
and has not been, a party to any injunction, order or decree restricting the
method of the conduct of its business or the marketing of any of its products
or services.

4.13 Intellectual Property. The Company has no tradenames and no
United States or foreign patents, patent applications, patent licenses,
trademarks, or service mark registrations (and applications therefor), and has
no copyrights or copyright registrations (or applications therefor),
inventions, designs, or formula which are owned or licensed for use by the
Company and utilized by the Company in the business or operations of the
Company as presently conducted. There is no adverse claim against the Company,
or to the knowledge of the Individual Sellers, any threatened litigation or
claim of infringement of any intellectual property right of any other person.
To the knowledge of the Individual Sellers, the Company does not utilize any
intellectual or proprietary trade secret information which infringes any
trademark, tradename, service mark, copyright or patent of another, and the
Company has not received any notice contesting its right to use any trade name
now used by it in connection with its business or the operation thereof. The
Company has not granted any license to a third party in respect of any
intellectual property.

4.14 Contracts.

(a) Material Contracts. Schedule 4.14A lists all
material contracts or agreements of the following types to which the Company is
a party or by which the Company is bound:

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<PAGE> 17
(i) other than the contracts described in subparagraphs
(b) and (c) below any contract or agreement with a dentist or other
health provider or any partnership or professional association or
corporation owned by dentists or other health providers and any contract
or agreement with any indemnity insurers, health maintenance
organizations or other prepaid dental plans;

(iii) any contract or agreement for the maintenance,
purchase or sale of equipment or capital assets having a value in excess
of $25,000;

(iv) any power of attorney (other than routine powers
given to governmental officials authorizing service of process);

(v) any lease of personal property;

(vi) any guaranty, suretyship agreement or other agreement
relating to any contingent liability.

(vii) any contract with an independent agent or broker who
sells the prepaid dental plans of the Company;

(viii) any contract or agreement with independent
consultants;

(ix) any contract or agreement among the stockholders of
the Company;

(x) any contract or agreement restricting the method by
which the Company conducts its business or the marketing of any of its
products or services;

(xi) all reinsurance and coinsurance agreements to which
the Company is a party; and

(xii) any contract or agreement between the Company or any
stockholder or affiliate of the Company or a stockholder of the Company.

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<PAGE> 18
(c) Other Provider Contracts. Schedule 4.14C (i)
includes copies of representative forms of all other health provider agreements
to which the Company is a party and (ii) lists all other health provider
agreements executed by the Company. Except for any agreement as to which a
copy thereof is specifically included as a part of Schedule 4.14C, all of the
agreements listed in Schedule 4.14C are in all material respects in the same
form as one of the representative forms of such agreements provided as a part
of Schedule 4.14C.

(d) Employer Group Contracts. Schedule 4.14D (i)
includes copies of representative forms of all employer group agreements to
which the Company is a party and (ii) lists all employer group agreements to
which the Company is a party and the number of participants for each such
employer. Except for any agreement as to which a copy thereof is specifically
included as a part of Schedule 4.14D, all of the agreements listed in Schedule
4.14D are in all material respects in the same form as one of the
representative forms and such agreements provided as a part of Schedule 4.14D.
Schedule 4.14D also sets forth the premium rates for the month of August 1996
for the largest twenty (20) in revenues of the employer group agreements and
the monthly premium revenues of each employer group agreement listed in
Schedule 4.14D.

(e) Management Contracts. Schedule 4.14E sets forth all
management, marketing, administrative services, data processing and third party
administration contracts to which the Company is a party.

(f) Copies. True and correct copies of all such
contracts referred to in Schedules 4.14A, 4.14B, 4.14C 4.14D, and 4.14E have
been made available for inspection by Purchaser and, except to the extent
disclosed on Schedules 4.14A, 4.14B, 4.14C, 4.14D, and 4.14E, as of the date of
this Agreement to the knowledge of the Individual Sellers, (i) all of the
contracts listed on such Schedules are in full force and effect, (ii) the
Company has not received any notice of cancellation with respect to any such
contract or been advised that the other party thereto intends to cancel any
such agreement, (iii) there are no material outstanding disputes under such
contracts, (iv) each such contract is with an unrelated third party entered
into on an arms-length basis in the ordinary course of business, (v) there are
no material defaults by the Company under any of such contracts, and (vi), to
the extent required by any law or regulation, have been filed with and approved
by all governmental regulatory agencies.

(g) Government Contracts. Neither the Company nor the
Subsidiary (i) has any liability for renegotiation of government contracts or
subcontracts, (ii) has been suspended or debarred from bidding on contracts or
subcontracts with any federal, state or local agency or governmental authority,
(iii) has been audited or investigated by any such agency or authority with
respect to contracts entered into or goods and services provided by the
Company, or (iv) has had a contract terminated by any such agency or authority
for default or failure to perform in accordance with applicable standards.

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<PAGE> 19
severance pay arrangements, if any, and the amounts payable with respect to
such accrued vacation, holiday and sick leave as of the Effective Date and the
rate at which such vacation, holiday and sick leave will accrue after the
Effective Date. Except as shown on Schedule 4.15, the Company is not bound by
any written contract of employment with any of its employees and all oral
employment contracts are terminable at will, subject to applicable law, or by
any consulting or similar agreements. The Company is not a party to any
employment or other agreement, whether written or oral, pursuant to which the
Company has agreed to make a loan to, or guarantee any loan of, any employee or
relating to any bonus, deferred compensation, severance pay or similar plan,
agreement, arrangement or understanding except as reflected in Schedule 4.15.
Except as listed on Schedule 4.15 or Schedule 4.16 hereof, the Company has no
Welfare Plan, Pension Plan, or any other type of pension, profit sharing,
deferred compensation, retirement, stock option, bonus, severance, medical,
dental, life insurance, accident, or other employee benefit or compensation
plan, agreement, arrangement, practice or policy with respect to employees.
The Company has complied in all material respects with all requirements of
Sections 6001 through 6008 of the ERISA and Section 4980B of the Code with
respect to itself and its employees. The Company is not bound, and following
the Closing will not be bound, by any express or implied contract or agreement
to employ, directly or as a consultant or otherwise, any person for any
specific period of time or until any specific age except as specified in the
written agreements identified in Schedule 4.15.

4.16 Employee Benefit Plans. Except as disclosed in Schedule 4.16:

(a) The Company does not maintain or contribute to, and
has not in the past maintained or contributed to, any Pension Plan and the
Company does not presently maintain or contribute to any Welfare Plan, in each
case except as a described on Schedule 4.16, nor is the Company presently, or
has it ever been, a participating employer in any Multiemployer Plan.

(b) With respect to each Pension Plan and each Welfare
Plan listed on Schedule 4.16, to the knowledge of the Individual Sellers: (i)
there is no fact, including, without limitation, any reportable event, that
exists that would constitute grounds for termination of such plan by the PBGC
or for the appointment by the appropriate United States District Court of a
trustee to administer such plan, in each case as contemplated by ERISA; (ii)
neither the Company nor any fiduciary, trustee, or administrator of any such
Pension Plan or Welfare Plan, has engaged in a prohibited transaction that
would subject the Company to any material tax or any material penalty imposed
by ERISA or the Code; (iii) the Company has not incurred any material liability
to the PBGC (other than for payment of premiums); (iv) the Company has
contributed all amounts thereto it is required to contribute under the terms of
the plan in question and applicable law, and there is no accumulated funding
deficiency with respect to any such Pension Plan, whether or not waived, other
than routine, non-contested claims for benefits. There is not any pending or,
to the knowledge of the Individual Sellers, threatened claim by or on behalf of
any Pension Plan or Welfare Plan, by any employee or former employee covered or
previously covered under any Pension Plan or Welfare Plan, or otherwise
involving any Pension Plan or Welfare Plan.

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<PAGE> 20
(c) There has been no termination of any Pension Plan by
the Company that has occurred during the five-year period ending on the date
hereof.

(d) The Individual Sellers have no knowledge of any
material liability being incurred by the Company under Title IV of ERISA by the
Company with respect to any Pension Plan maintained by a trade or business
(whether or not incorporated) which is under common control with, or part of a
controlled group of corporations with, the Company, within the meaning of
Sections 414(b) or (c) of the Code.

(e) No Welfare Plan listed on Schedule 4.16 is funded
with a trust or other funding vehicle, other than insurance policies.

(f) Each Welfare Plan, Pension Plan, and any other type
of pension, profit sharing, deferred compensation, retirement, stock option,
bonus, severance, medical, dental, life insurance, accident, or other employee
benefit or compensation plan, agreement, arrangement, practice, or policy with
respect to employees maintained by or contributed to by the Company is
maintained, administered, and operated in accordance with all material
requirements, applicable laws, including but not limited to, ERISA and the
Code.

(g) Each Pension Plan listed on Schedule 4.16 which is
intended to be qualified under Section 401(a) of the Code, has received a
favorable determination letter from the Internal Revenue Service as to the
qualification under the Code of each such Pension Plan as amended to comply
with the Tax Reform Act of 1986 and all applicable, subsequent legislation,
and, to the knowledge of the Individual Sellers, no event has occurred since
the date of such favorable determination letter that would adversely affect
such qualification.

(h) Except as set forth in Schedule 4.16, no bonus,
severance pay, or any other employee benefit under any Welfare Plan, Pension
Plan, or any other type of pension, profit sharing, deferred compensation,
retirement, stock option, bonus, severance, or other employee benefit or
compensation plan, agreement, arrangement, practice, or policy with respect to
employees maintained by or contributed to by the Company is payable or
exercisable as a result of the transaction contemplated by this Agreement, and
the payment, exercise, or vesting of any such bonus, severance pay, or employee
benefit will not be accelerated or otherwise enhanced by such transaction.

True, correct and complete copies of each Pension Plan and Welfare Plan listed
on Schedule 4.16 as amended to and in effect on the date hereof; any agreements
entered into in connection with each such Pension Plan and Welfare Plan; the
most recent annual report filed with the Internal Revenue Service for each such
Pension Plan and Welfare Plan; the most recent actuarial report, if any, for
each such Pension Plan and Welfare Plan; the most recent summary plan
description, together with each summary of material modifications; and any
other communication generally disseminated in the last 12 months to employees
or former employees of the Company and describing benefits provided under each
such Pension Plan and Welfare Plan, have been delivered to Purchaser by the
Company.

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<PAGE> 21
4.17 Receivables. To the knowledge of the Individual Sellers, all
Receivables of the Company whether or not reflected in the Company Balance
Sheet, represent transactions in the ordinary course of business. Schedule
4.17 consists of an aged accounts receivable report of the Company as of August
31, 1996.

4.18 Accounts Payable. The accounts payable reflected on the
Company Balance Sheet and those reflected on the books of the Company at the
time of the Closing will reflect all material amounts owed by the Company in
respect of trade accounts due and other Payables as required by GAAP to be
identified on such Company Balance Sheet or in the books of the Company. To
the knowledge of the Individual Sellers, no account payable of the Company is
past due or otherwise in default by the Company.

4.20 Labor Practices. The Company has no collective bargaining or
other labor union agreements. There is no unfair labor practice complaint
against the Company pending before the National Labor Relations Board, there is
no pending or, to the knowledge of the Individual Sellers, threatened labor
dispute, strike or work stoppage affecting the Company's business, nor has
there been any of the same or any labor union organizing activity relating to
the Company within the last three (3) years.

4.21 Insurance. Schedule 4.21 lists all insurance policies and
coverages maintained by or for the Company including but not limited to real
and personal property insurance, workers' compensation insurance and medical
malpractice and professional liability insurance. Schedule 4.21 lists all
insurance claims submitted in connection with property damage or medical
malpractice involving the Company for the latest three (3) years.

4.22 Consents. Except as set forth in Schedule 4.22 hereto, no
consents, approvals, or authorizations of any person, entity or governmental
agency are required by or of the Company or the Sellers in connection with the
sale of the Shares and the consummation of the transactions contemplated by
this Agreement.

4.23 Environmental Matters. (a) the Company has not received any
notice from any governmental authority or private person or entity advising it
that the operation of the Company's business is in violation of any
environmental law or any applicable environmental permit or that it is
responsible (or potentially responsible) for the cleanup of any pollutants,
contaminants or hazardous or toxic wastes, substances or materials at, on or
beneath the property subject to the Real Property Leases; and (b) to the
knowledge of the Individual Sellers, the Company is not the subject of federal,
state, local or private litigation or proceedings involving a demand for
damages or other potential liability with respect to violations of
environmental laws.

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<PAGE> 22
4.24 Taxes. All federal, state and other tax returns and reports
of the Company required by law to be filed have been prepared and properly
filed or valid extensions have been obtained, and all taxes, charges, fees,
duties, levies or other assessments which are imposed by the United States, or
any state, local or foreign government or subdivision or agency thereof,
including any interest, penalties or additions (collectively "Taxes") upon the
Company or any of its properties, assets or income which are due and payable or
claimed by any taxing authority to be due and payable have been paid. The
liability for accrued taxes as shown in the Company Balance Sheet (net of
amounts reserved for deferred taxes) is sufficient for the payment of all
unpaid Taxes of the Company accrued for or applicable to the periods prior to
the Balance Sheet Date and all years and periods prior thereto and for which
the Company may at that date have been liable in its own right or by reason of
its being a member of any group of corporations filing consolidated tax returns
(including any such amounts payable as a result of an audit of any tax return
for any such period). The Company utilizes the accrual method of accounting
for tax purposes.

There are no claims for Taxes pending against the Company, and the
Individual Sellers do not know of any threatened claim for tax deficiencies or
any basis for such claims, and there are not now in force any waivers or
agreements by the Company for the extension of time for the assessment of any
tax, nor has any such waiver or agreement been requested by the Internal
Revenue Service (the "Service") or any other taxing authority.

The Federal income tax returns of the Company have not been examined or
audited by the Service. No material issues have been raised in any examination
by any taxing authority with respect to the businesses and operations of the
Company which, by application of similar principles, could be expected to
result in a proposed adjustment to the liability of the Company for taxes for
any other period not so examined.

The Company has not filed a consent under Section 341(f) of the Internal
Revenue Code of 1986, as amended (the "Code") concerning collapsible
corporations. The Company has not made any payments, is obligated to make any
payments, or is a party to any agreement that under certain circumstances could
obligate it to make any payments that will not be deductible under Section 280G
of the Code. The Company has not been a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Code during the
applicable period specified in Section 897(c)(1)(A)(ii) of the Code. The
Company has disclosed on their federal income tax returns all positions taken
therein that could give rise to a substantial understatement of federal income
tax within the meaning of Section 6662 of the Code. The Company is not a party
to any tax allocation or sharing agreement. The Company (a) has not been a
member of an affiliated group filing a consolidated federal income tax return
and (b) has no liability for the taxes of any person (other than any of the
Company) under Treas. Reg. Section 1.1502-6 (or any similar provision of
state, local, or foreign law), as a transferee or successor, by contract, or
otherwise.

The Company has paid or are withholding and have or will pay when due to
the proper taxing authorities all withholding amounts and taxes required to be
withheld or paid for all income, unemployment, social security, medicare or
other similar Taxes programs or benefits

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<PAGE> 23
with respect to wages, salary and other compensation of directors, officers and
employees of the Company.

4.26 Improper Payments. To the knowledge of the Individual
Sellers, neither the Company, nor any director, officer, employee or agent of
the Company has made any improper bribes, kickbacks or other payments on behalf
of the Company to, or received any such payments from, customers, vendors,
suppliers or other persons contracting with the Company.

4.27 Full Disclosure. To the knowledge of the Individual Sellers,
this Agreement and the documents, certificates, and other writings furnished or
to be furnished by or on behalf of Sellers to Purchaser pursuant to the
provisions of this Agreement do not and will not contain any untrue statement
of a material fact or omit to state any material fact necessary to make the
statements made, in the light of the circumstances under which they are made,
not misleading. To the knowledge of the Individual Sellers, there is no
material liability or obligation of the Company which relates to the agreements
and documents identified in the Schedules which is not generic to the
identified agreement or document and readily ascertainable from a review of
such agreement or document, and not otherwise disclosed herein or identified on
the face of the Schedules.

ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF PURCHASER

The Purchaser represents and warrants to the Sellers as follows:

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Purchaser, enforceable in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency, moratorium or
other laws affecting the rights of creditors generally or by general principles
of equity.

5.6 No Reliance on Oral Representations. Purchaser has relied
solely upon the written representations and warranties of the Sellers set forth
herein, the Schedules hereto and the written materials referred to herein and
therein and has not relied upon any oral representations or warranties of the
Company or any of the Sellers in making its determination to purchase the
Shares.

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<PAGE> 25
ARTICLE 6
COVENANTS OF THE SELLERS AND THE COMPANY

Pending the Closing, Sellers (or Individual Sellers, as specified) and
the Company shall do the following:

6.1 Affirmative Covenants. Subject to the terms and conditions
stated herein, each Seller will take, and cause the Company to take, and the
Company will take, every action reasonably required of each Seller and the
Company to satisfy the conditions to Closing set forth in this Agreement on or
before the Closing Date and otherwise to ensure the prompt and expedient
consummation of the transactions substantially as contemplated by this
Agreement, and will exert all reasonable efforts to cause the transactions
contemplated by this Agreement to be consummated.

6.2 Access and Information. Individual Sellers shall cause the
Company to afford, and the Company shall afford, to Purchaser and its
representatives reasonable access during reasonable hours throughout the period
prior to the Closing to all properties, books, contracts, commitments, computer
programs and data, reports, manuals and records (including, but not limited to,
tax returns), and to all personnel of the Company and, during such period,
shall promptly furnish to Purchaser all other information concerning such
business, properties, and personnel as Purchaser may reasonably request.
Purchaser shall maintain the confidentiality of all such information as
required by Section 7.5 hereof.

6.3 No Solicitation. From the date of this Agreement until the
Closing or the termination of this Agreement pursuant to its terms, the Company
and the Individual Sellers, and those acting on behalf of any of them, will
not, and the Company and Individual Sellers will use its and their best efforts
to cause its and their officers, employees, agents, and representatives
(including any investment banker) not, directly or indirectly, to solicit,
encourage, or initiate any discussion with, or negotiate or otherwise deal
with, or provide any information to, any person or entity other than Purchaser
and its representatives concerning any merger, sale of assets, or similar
transaction involving the Company, or sale of any capital stock of the Company,
or any interest therein. Individual Sellers will, or will cause the Company
to, notify Purchaser immediately upon receipt of any offer or proposal relating
to any of the foregoing and such notice shall describe in detail the terms
thereof and identify the party or parties thereto. From the date of this
Agreement, until the Closing or the termination of this Agreement pursuant to
its terms, neither the Company nor any of the Individual Sellers will furnish,
without the prior written consent of Purchaser, to any person or entity (other
than Purchaser) any non-public information concerning the Company or its
businesses, financial affairs or prospects for the purpose of or with the
intent of permitting such person or entity to evaluate a possible acquisition
of any capital stock or (other than in the ordinary course of business) assets
of the Company.

6.4 Conduct of Business Prior to Closing. (a) The Individual
Sellers and the Company covenant and agree that, prior to the consummation of
this Agreement or to the termination of this Agreement pursuant to its terms,
unless Purchaser shall otherwise

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<PAGE> 26
consent in writing, and except as specifically provided in Paragraph 6.4(b)
below or as otherwise expressly contemplated by this Agreement, each of the
following shall be complied with:

(i) The business of the Company shall be conducted only
in the ordinary and usual course and the Company shall use reasonable
efforts to keep intact its business organization and good will, to keep
available the services of its and their respective officers and
employees and to maintain a good relationship with suppliers, lenders,
creditors, distributors, employees, customers, and others having
business or financial relationship with them, and the Company shall
immediately notify Purchaser of any event or occurrence or emergency
material to, and not in the ordinary and usual course of business of,
the Company;

(ii) The Company shall not (1) amend its articles of
incorporation or bylaws or (2) split, combine, or reclassify any of its
outstanding securities, or (3) declare, set aside, or pay any dividend
or other distribution on, or make, agree or commit to make any exchange
for or redemption of, any of its outstanding securities whether payable
in cash, stock or property;

(iii) The Company shall not (1) issue or agree to issue any
additional shares of, or rights of any kind to acquire any shares of,
its capital stock of any class; or (2) enter into any contract,
agreement, commitment, or arrangement with respect to any of the
foregoing;

(iv) The Company shall not create, incur, or assume any
long-term or short-term indebtedness for money borrowed or make any
capital expenditures or commitment for capital expenditures in excess of
$10,000 individually or $50,000 in the aggregate, without the prior
written consent of Purchaser;

(v) The Company shall not (1) adopt, enter into, or amend
any bonus, profit sharing, compensation, stock option, warrant, pension,
retirement, deferred compensation, employment, severance, termination,
or other employee benefit plan, agreement, trust fund, or arrangement
for the benefit or welfare of any officer, director, or employee of the
Company or (2) agree to any increase in the compensation payable or to
become payable to, or any increase in the contractual term of employment
of, any officer, director or employee of the Company; provided, however,
that the Company may (1) make usual and customary employee salary
adjustments, excluding, however, the Sellers (not in excess of 5%); (2)
may pay usual and customary bonuses to employees; and (3) may terminate
and employ non-management employees as needed to operate the business of
the Company, in each case consistent with past practices;

(vi) The Company shall not sell, lease, mortgage,
encumber, or otherwise dispose of or grant any interest in any of its
assets or properties except for liens for taxes not yet due or liens or
encumbrances that are not material in amount or effect and do not impair
the use of the property, or as specifically provided for or permitted in
this Agreement;

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<PAGE> 27
(vii) The Company shall not enter into, or terminate, any
material contract, agreement, commitment, or understanding other than
agreements entered into with unaffiliated third parties, on an
arms-length basis and in the ordinary course of business constituting
either (1) employer group agreements at premium rates and for terms
comparable to its most recent employer group agreements, (2) dental
provider agreements on terms comparable with its existing agreements of
such nature and (3) marketing affiliation and sales agreements on terms
comparable with its existing agreements of such nature;

(viii) The Company shall not incur or modify any contingent
liability as a guarantor or otherwise with respect to the obligations of
third parties except in the ordinary course of business consistent with
past practice excluding, however, the guarantee of loans to dental
providers contracting with the Company, or as required by law;

(ix) The Company shall not, except in the ordinary course
of business consistent with past practice, make any change in its
borrowing arrangements or modify or amend or terminate any material
contract or release or assign any material rights or claims;

(x) In connection with any filings to be made by the
Purchaser under the Securities Act of 1933, as amended, the Company
shall (1) provide for inclusion therein the financial and other
information and documents pertaining to the Company required by
applicable SEC rules and regulations to be included therein, (2) use
commercially reasonable efforts to cause the accountants for the Company
to deliver such consents, reports and comfort letters in connection
therewith as the Purchaser may reasonably request and (3) generally
cooperate with the Purchaser in connection therewith; provided, however,
that all expenses relating to such consents, reports, comfort letters
and cooperation shall be paid directly and promptly by the Purchaser
(except for expenses that the Company would have incurred in any event,
such as the expense of an annual audit);

(xi) The Company will continue properly and promptly to
file when due all federal, state and local, foreign, and other tax
returns, reports, and declarations required to be filed by it, and will
pay, or make full and adequate provision for the payment of, all taxes
and governmental charges due from or payable by it;

(xii) The Company will comply with all laws and regulations
applicable to it and its operations;

(xiii) The Company will maintain in full force and effect
insurance coverage of a type and amount customary in its business, but
not less than that presently in effect;

(xiv) The Company will not knowingly take any action (or
omit to take any action) which would cause any representation or
warranty contained in Article 3 or Article 4 of this Agreement to be
untrue at any time prior to Closing as if such representation or
warranty were made at and as of such time;

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<PAGE> 28
(xv) The Company will not make any change in any method of
reporting income or expenses for federal income tax purposes; and

(xvi) The Company shall not knowingly take any action which
would prevent compliance with any of the conditions in Articles 8 or 9
of this Agreement.

(b) Notwithstanding any provision of Paragraph 6.4(a)
above or any other provision of this Agreement to the contrary, it is expressly
agreed and understood that, at or prior to the Closing, the Company may (i)
make distributions or dividends to the Sellers, (ii) transfer and assign to the
Sellers and Kopp the automobiles currently leased by the Company and provided
to such individuals described on Schedule 6.4; (iii) sell the real property in
Salina, Kansas described in Schedule 4.12; (iv) enter into contracting dentist
agreements with the dentist purchasing the dental practices in Columbia,
Missouri and at 63rd Street in Kansas City, Missouri from J. Dennis Dlabal,
D.D.S., P.C. at standard capitation rates and for terms not in excess of three
(3) years; and (v) obtain the release of the guaranty of any indebtedness of
the Company by the Individual Sellers, provided, however, that all of such
transactions shall be subject to the requirement that the condition precedent
specified in Section 9.1(k) hereof must be satisfied on the Closing Date after
taking into account the consummation of such transactions.

6.5 Consents and Approvals. Unless Purchaser deems it inadvisable
to seek any such consent, approval or authorization (except with respect to any
consent, approval or authorization lawfully required to consummate this
transaction) and so advises the Company in writing, the Company will apply for
(or assist the Purchaser in applying for) or otherwise seek, and use its
reasonable best efforts to obtain, all consents, approvals and authorizations
of all governmental entities (other than applications for approval of a change
of control required to be filed in each state where the Company holds a
certificate of authority to operate a prepaid dental plan which shall be the
responsibility of Purchaser to prepare, file and obtain) and of all parties
with whom the Company has contractual or other relationships whose consent or
approval is necessary for the valid and effective consummation and completion
of the transactions contemplated hereby or is necessary in order that the
Company may validly, lawfully and effectively perform and carry out its
obligations hereunder without becoming in default under any agreement with any
party or subjecting the Company to any claim or penalty due to the failure to
obtain such consent which would have a materially adverse effect on the
business or operations of the Company. With respect to any such consents which
Purchaser requests the Company not to seek as provided above, the Company will
cooperate with Purchaser to provide for Purchaser the benefits under any such
agreement (including enforcement thereof) at the sole cost and for the benefit
of Purchaser, and Purchaser will assume liabilities associated therewith.
Following the Effective Date, the Company will use its reasonable best efforts
to obtain all consents specifically identified by Purchaser as reasonably
necessary to continue the uninterrupted operation of the business of the
Company. The Company shall use commercially reasonable efforts to obtain all
necessary consents and approvals required for its performance of this Agreement
and the transactions contemplated hereby, including, without limitation, the
consents listed on Schedule 4.22 other than the regulatory change of control
approvals to be obtained by Purchaser. The Company shall make all filings,
applications, statements and reports to all governmental authorities which are
required to be made prior to the Closing Date by or on

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<PAGE> 29
behalf of the Sellers or the Company pursuant to any applicable statute, rule
or regulation in connection with this Agreement and the transactions
contemplated hereby. As required in connection with the performance of this
Agreement by the Company, the Company will promptly provide such other
information and communications to governmental and regulatory authorities,
including, without limitation, insurance regulatory authorities in any
jurisdiction in which the Company conducts business, as such regulatory
authorities or Purchaser may reasonably request. Between the date hereof and
the Closing Date, the Company shall promptly provide Purchaser with copies of
all correspondence and filings to or from all governmental and regulatory
bodies and officials relating to the Company.

6.6 Publicity. Prior to the Closing, any public statement or
announcement by the Sellers or Company, including but not limited to any
written news releases, pertaining to this Agreement or the transactions
contemplated thereby shall be submitted to Purchaser for review and approval
prior to the release by the Company, and shall be released only in a form
approved by Purchaser, provided, however, that (i) such approval shall not be
unreasonably withheld and (ii) such review and approval shall not be required
of statements and announcements if prior review and approval would prevent the
timely and accurate dissemination of such statements and announcements as
required to comply, in the judgement of counsel, with any applicable law, rule
or policy. The Company and Purchaser shall issue a press release regarding the
execution of this Agreement within one day of the date hereof or such other
time as the Company and Purchaser may mutually agree.

6.7 Financial Information. The Individual Sellers will cause the
Company to, and the Company will, deliver as soon as reasonably practicable to
Purchaser unaudited financial statements of the Company for each month from and
after the date hereof as and when such financial statements become available in
the usual course of business.

6.8 Expenses. All costs and expenses incurred by the Company or
the Individual Sellers in connection with this Agreement shall be paid by the
Company on or prior to the Closing Date; provided, however, that the condition
precedent specified in Section 9.1(k) must be satisfied on the Closing Date
after taking into account the payment of such costs and expenses by the
Company.

6.9 Breach of Representations and Warranties. Promptly upon any
Individual Seller or the Company becoming aware of any breach of any of the
representations and warranties of the Sellers contained in this Agreement, or
any event which would cause the Sellers to be unable to deliver the
certificates contemplated by Section 9.1(e) hereof, the Individual Sellers
shall give detailed written notice thereof to the Purchaser and shall use all
commercially reasonable efforts to prevent or promptly remedy the same.

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<PAGE> 30
6.11 Updating of Exhibits and Schedules. The Individual Sellers
shall notify Purchaser of any changes, additions, or events which may cause any
change in or addition to the Schedules delivered by them under this Agreement
promptly after the occurrence of the same and again at the Closing by delivery
of appropriate updates to all such Schedules. No notification of a change or
addition to a Schedule made pursuant to this Section shall be deemed to cure
any breach of any representation or warranty resulting from such change or
addition unless Purchaser specifically agrees thereto in writing, nor shall any
such notification be considered to constitute or give rise to a waiver by
Purchaser of any condition set forth in this Agreement; provided, however, that
the closing of the purchase and sale of the Shares hereunder by Purchaser shall
be deemed to constitute Purchaser's acceptance of any written updates to the
Schedules provided by the Company or any of the Sellers prior to the Closing
Date and the waiver of any breach of any representation or warranty or
misstatement in the original Schedules that is disclosed in or corrected by
such updated Schedules. Purchaser shall not be deemed to have waived any
misrepresentation or breach of warranty unless and except Purchaser has actual
knowledge of such misrepresentation or breach of warranty.

6.12 Contribution. The Individual Sellers agree among themselves
to contribute on an equal one-third basis to the satisfaction of any valid
claims of Purchaser for indemnification under Article 11. Nothing contained in
this Section 6.12 shall limit the right of Purchaser to seek indemnification
from any one Individual Seller for the full amount Purchaser is entitled to
receive for indemnification hereunder.

ARTICLE 7
COVENANTS OF PURCHASER

Purchaser agrees that from the date hereof through the Closing Date:

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<PAGE> 31
control approvals listed on Schedule 4.22; provided, however, that Purchaser
shall not be required or obligated to pay any amounts necessary to satisfy
conditions to or in order to obtain such governmental regulatory consents other
than normal and customary filing fees and out-of-pocket costs and expenses of
the Company incurred in providing its assistance with respect thereto.
Purchaser shall diligently and promptly proceed immediately after the date of
this Agreement to make all filings, applications, statements and reports to all
governmental authorities which are required to be made prior to the Closing
Date by or on behalf of it pursuant to any applicable statute, rule or
regulation in connection with this Agreement and the transactions contemplated
hereby and shall diligently and in good faith pursue the taking of all action
necessary to obtain approval of the transactions contemplated herein by the
insurance regulatory authorities of any jurisdiction in which the Company
conduct business. As required in connection with the performance of this
Agreement, Purchaser will promptly provide such information and communications
to governmental and regulatory bodies and authorities, including, without
limitation, insurance regulatory authorities in any jurisdiction in which the
Company conducts business, as such regulatory authorities may reasonably
request. Purchaser shall not be required to cure any existing regulatory
compliance requirements in order to obtain such consents and approvals. Within
five (5) business days after the written request of the Sellers, the Purchaser
shall provide to the Sellers a status report as to all such filings and
approvals.

7.5 Confidentiality. Prior to Closing, unless otherwise required
by law, Purchaser will hold in confidence, and will cause its employees and
agents to hold in confidence, all confidential information that has been
disclosed by the Sellers and the Company and will not use any such confidential
information except in connection with the transaction, until such time as such
information is otherwise publicly available; provided, however, that this
sentence will not apply to any information that becomes generally available to
the public other than due to a breach hereof by Purchaser or its employees or
agents, was available on a non-confidential basis to Purchaser prior to its
disclosure pursuant hereto, or becomes available on a non-confidential basis
from a third party who is not bound to keep such information confidential. In
the event of the termination of this Agreement, Purchaser will, and will cause
its representatives to, deliver to the Company all documents and other written
materials, and all copies thereof, obtained by Purchaser or on its behalf from
the Sellers or the Company as a result of this Agreement or in connection
herewith, whether so obtained before or after the execution hereof. Purchaser
agrees that the Company shall have standing and may avail itself of any remedy
at law or in equity, including an action for injunctive relief, in the event of
a breach or threatened breach by Purchaser of any of the provisions of this
Section 7.5. The obligations of Purchaser under this Section 7.5 shall
survive termination of this Agreement for any reason whatsoever and shall
remain in effect until two (2) years from the Effective Date of this Agreement.

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<PAGE> 32
and announcements by the Purchaser if prior review and approval would prevent
the timely and accurate dissemination of such statements and announcements as
requested to comply, in the judgment of counsel, with any applicable law, rule
or policy. The Company and Purchasers shall issue a press release regarding
the execution and delivery of this Agreement within one day after the date
hereof or such other time as the Company and Purchaser may mutually agree.

7.7 Control of Audits. Purchaser shall afford the Individual
Sellers the opportunity to control any audit of the Tax returns of the Company
(including the selection of tax professionals) for any period prior to the
Closing Date upon the acknowledgment by the Individual Sellers of their
indemnification obligations under Article 11 for any liability or deficiency
arising out of such audit.

7.8 Severance Benefits. The Purchaser shall not be obligated to,
or obligated to cause the Company to, extend any severance benefits to
employees of the Company who may be terminated after the Closing or who are
rendering services to the Company and are terminated prior to the Closing. In
the event that the Purchaser shall elect to pay or cause the Company to pay any
severance benefits to employees of the Company who may be terminated at or
after the Closing, it is expressly understood that the Sellers shall not be
entitled to receive such severance benefits.

7.9 Change of Control Application. Purchaser hereby agrees to
file the applications for governmental approval of a change of control
described in Schedule 4.22 with the appropriate governmental or regulatory
agencies within five (5) business days of the Effective Date.

7.10 Transfer of Automobiles. On the Closing Date, Purchaser
shall, at Purchaser's expense, cause the Company to transfer to Carlin,
Schloegel and Kopp the automobiles presently leased by the Company and set
forth on Schedule 6.4, free and clear of any liens or encumbrances.

ARTICLE 8
CONDITIONS TO OBLIGATIONS OF SELLERS

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<PAGE> 33
(b) There shall not be in effect a restraining order, a
preliminary or permanent injunction or other order by any federal or state
authority which prohibits the consummation of this Agreement and no action or
proceeding shall have been instituted and remain pending before any court
seeking such relief or seeking damages in respect to this Agreement or the
consummation of the transactions contemplated by this Agreement;

(c) Purchaser shall have performed in all material
respects its agreements, covenants and obligations contained in this Agreement
required to be performed at or prior to the Closing;

(d) The representations and warranties of Purchaser set
forth in this Agreement shall be true in all material respects as of the
Effective Date and as of the Closing Date as if made as of such time;

(g) At or prior to the Closing, Purchaser shall enter
into separate Employment Agreements with Kopp and Carlin in the form of
Exhibits C-1 and C-2, respectively, attached hereto (the "Employment
Agreements").

(h) At or prior to Closing, the Purchaser shall pay or
cause the Company to pay those certain monetary obligations owed by the Company
described in Schedule 8.1(h) attached hereto. The amount of all payments
required to satisfy fully such monetary obligations shall be credited against
and reduce the $12,500,000 amount to determine the Initial Payment as specified
in Section 2.2(a) hereof.

(i) At or prior to the Closing, Purchaser shall perform
the respective obligations of and the actions to be taken by Purchaser at the
Closing as described in Section 10.3 of this Agreement.

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<PAGE> 34
ARTICLE 9
CONDITIONS TO OBLIGATIONS OF PURCHASER

(a) This Agreement and the transactions contemplated by
this Agreement shall have received all approvals, consents, authorizations, and
waivers from governmental and other regulatory agencies and other third parties
(including lenders, holders of debt securities, and lessors) required by law or
contract to consummate this Agreement and required to keep all certificates of
authority and licenses held by the Company in full force and effect after the
Closing; and no material adverse change in the business, operations and
condition, financial or otherwise, to the Company shall have occurred or will
occur in the future as a result of any regulatory requirement or condition to
such approvals, consents, authorizations and waivers.

(b) There shall not be in effect a restraining order, a
preliminary or permanent injunction or other order by any federal or state
authority which prohibits the consummation of this Agreement and no action or
proceeding shall have been instituted or remain pending seeking such relief or
seeking damages in respect of this Agreement or the consummation of the
transactions contemplated by the Agreement;

(d) The representations and warranties of Sellers set
forth in this Agreement shall be true in all material respects as of the date
of this Agreement and, except in such respects as do not materially and
adversely affect the business, condition (financial or otherwise), operations,
or prospects of the Company, as of the Closing Time as if made as of such time;

(e) Purchaser shall have received from Individual Sellers
a certificate, dated the Closing Date, executed by the Individual Sellers, and
an officer's certificate, executed by a duly authorized officer of the Company
(in his capacity as such), dated the Closing Date, as to the satisfaction of
the conditions in subsections (c) and (d) of this Section 9.1;

(f) Purchaser shall have received, on and as of the
Closing Date, an opinion of Counsel to Sellers, subject to customary
limitations, reasonably satisfactory in form and substance to Counsel to
Purchaser and such other closing documents and instruments as Purchaser shall
reasonably request, in each case reasonably satisfactory in form and substance
to Purchaser and Counsel to Purchaser;

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<PAGE> 35
(g) Since the date of this Agreement, there shall not
have been any material adverse change in, or other event or condition of any
character which in any one case or in the aggregate has materially adversely
affected, or can be reasonably expected in any one case or in the aggregate to
materially adversely affect in the future, the condition (financial or
otherwise), assets, liability, results of operations, business or prospects of
the Company; including, without limitation, the following which shall be
considered a material adverse change, to-wit:

(iii) a reduction in the total number of general dentist
(primary care) providers which have contracts with the Company to be a
provider to members of its prepaid dental plan to an amount less than
ninety- eight percent (98%) of such providers as of the end of the
calendar month immediately preceding the Effective Date determined on a
net basis taking into account all new dental provider agreements entered
into after the date of this Agreement (as used herein "general dental
providers" refers to dental providers who are treating as patients
members of the prepaid dental plans of the Company);

(iv) a casualty loss which is not covered by insurance in
excess of $100,000;

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<PAGE> 36
(i) At the Closing, each of the Sellers and Kopp shall
execute a release in favor of Purchaser and the Company in the form of Exhibit
D attached hereto.

(j) None of the certificates of authority or licenses of
the Company listed on Schedule 4.5 shall have been canceled, revoked suspended
or limited in any respect and no governmental regulatory agency shall have
instituted any proceeding, or given notice to the Company that it intends to
institute any proceeding to take such action or to place the Company in a
conservatorship or receivership due to its financial condition or failure to
comply or satisfy any governmental law, rule or regulation.

(k) On the Closing Date, the total stockholders' equity
of the Company (determined in accordance with GAAP) shall be not less than the
total stockholders' equity of the Company (determined in accordance with GAAP)
at December 31, 1995 of $271,065 and the Company shall have positive Net
Working Capital of not less than $100,000.

(l) At or prior to the Closing, (1) the real property
located in Salina, Kansas owned by the Company shall have been sold and the
mortgage indebtedness secured by such real property shall have been paid in
full, (2) the dental clinics owned by J. Dennis Dlabal, D.D.S., P.C. in
Columbia and Kansas City Missouri shall have been sold and the dentists
purchasing such dental clinics shall have entered into dental provider
agreements with the Company on terms satisfactory to Purchaser and (3) those
certain four (4) guarantees listed on Schedule 4.9 relating to third party
loans to certain dental providers who have contracted with the Company have
been amended to guarantee only the loans made to such dentist set forth on
Schedule 4.9 and shall not be unlimited or guarantee any other indebtedness of
such dentists or any other third party.

(m) At the Closing, all the Sellers shall perform his or
her or its respective obligations of and actions to be taken by all the Sellers
at the Closing as described in Section 10.2 of this Agreement.

ARTICLE 10
CLOSING

10.1 Date of Closing. The Closing shall take place at the offices
of the Company in Kansas City, Missouri, or at such other location as Purchaser
and Sellers may mutually agree, within five (5) business days after the date on
which all governmental and third party consents necessary for the consummation
of the transactions contemplated by this Agreement are obtained and all other
conditions to Closing are satisfied hereof, but in no event later than one
hundred eighty (180) days after the Effective Date, unless extended by the
mutual agreement of the Purchasers and the Sellers, subject to earlier
termination pursuant to the provisions of Article 12 hereof. In the event that
the Closing does not timely occur as stated above, then a party not in default
may immediately terminate this Agreement upon written notice to the other
parties in accordance with Section 12.1 below; provided, however, that this
Agreement shall terminate

30
<PAGE> 37
automatically and without further notice if the Closing has not occurred within
one hundred eighty (180) days after the Effective Date.

10.2 Actions by Seller. At the Closing:

(a) Stock. Each Seller shall deliver to Purchaser the
original certificates representing the Shares owned by such Seller duly
endorsed for transfer or with appropriate stock powers with respect thereto
duly endorsed in blank by such Seller.

(b) Release Agreements. Each Seller and Kopp shall
execute and deliver the Release Agreement.

(c) Post-Closing Escrow Agreement. Each Individual
Seller shall execute and deliver the Post- Closing Escrow Agreement in the form
of Exhibit E attached hereto and collectively the Individual Sellers shall
deposit the sum of $350,000 with the Escrow Agent to be held pursuant thereto.

(d) Other Agreements. Each Seller shall have performed
all of the covenants and agreements contained in this Agreement to be performed
or complied with by such Seller at or prior to the Closing hereunder.

10.3 Actions by Purchaser. At the Closing, Purchaser shall:

(a) Payment. Pay the Initial Payment to the Sellers in
accordance with payment instructions of each Seller submitted in writing to the
Purchaser or, otherwise, by check mailed to the Seller at such Seller's
respective address, less, however, the amount of the Earnest Money paid to the
Sellers and credited against the Purchase Price pursuant to the Escrow
Agreement and less in the cash of the Individual Sellers than the $350,000
amount deposited into the Escrow Agreement pursuant to the Post-Closing Escrow
Agreement.

(b) Employment Agreements. Execute and deliver the
Employment Agreements.

(d) Other Agreements. Perform or shall have performed
all of the covenants and agreements contained in this Agreement to be performed
or complied with by Purchaser at or prior to the Closing hereunder.

31
<PAGE> 38
ARTICLE 11
SURVIVAL OF REPRESENTATIONS
AND WARRANTIES; INDEMNITY; POST-CLOSING MATTERS

11.1 Representations and Warranties to Survive. All
representations, warranties, covenants and agreements made by the parties each
to the other in this Agreement shall be true at the Closing and shall survive
the consummation of this Agreement and the Closing hereunder for a period of
two years, ending at midnight on the second anniversary of the Closing Date;
provided, however, that the indemnification with respect to losses relating to
Taxes shall expire six (6) months after the termination of the applicable
statute of limitations and provided, further, however, that if, prior to the
expiration of such two year period, a state of facts shall have become known
which threatens to give rise to a liability against which any party hereto
would be entitled to indemnification hereunder and the indemnified party shall
have given notice of such facts to the indemnifying party, then the rights of
the indemnified party to indemnification with respect to such liability shall
continue until such liability shall have been finally determined and disposed
of (including and subject to disposition by the expiration of the applicable
statute of limitations with respect to such liability); and provided further,
however, that if a claim for indemnification is made pursuant to this Article
11, then such claim for indemnification or any claim arising out of the
wrongful failure to comply with the provisions of this Article 11 shall survive
until the expiration of the applicable period of limitations with respect to
such claim for indemnification; and provided further, however, that such two
year limitation specified above shall not apply to the extent provided
otherwise in Section 11.4(c) below. With respect to the representations and
warranties of the parties, such representations and warranties shall be true as
of and at the date of the Closing but nothing contained herein shall be deemed
to require or imply that the accuracy of such representations and warranties
shall apply on a continuing basis as to facts existing after the date of the
Closing. Except to the extent set forth herein, no investigation or
examination made by any party hereto shall constitute a waiver of any
representation or warranty and no representation or warranty shall be merged
into the Closing hereunder. However, to the extent information is apparent on
the face of the Schedules or is otherwise expressly set forth herein, such
information shall be deemed to amend, limit and/or restate any representation
and warranties contained herein to the extent such information is inconsistent
with such representation or warranty.

11.2 Indemnity. Subject to the provisions of Section 11.4 below,

(a) Individual Sellers. Each Individual Seller, jointly
and severally (except as to the representations and warranties contained in
Article 3 which shall be several and not joint), agrees to indemnify and hold
harmless the Company, and Purchaser, and their respective shareholders,
partners, directors, officers, employees and agents, from, against, and in
respect of, any loss, liability, claim, demand, or expense, including but not
limited to attorney, investigation and consultant fees and costs, and of any
other kind whatsoever arising out of or resulting from any of the following:

32
<PAGE> 39
(i) Any misrepresentation, breach of warranty, or failure
to fulfill any agreement or covenant of the Sellers and the Company
under this Agreement or under any other agreement or document delivered
by the Sellers at Closing hereunder;

(ii) Any liabilities or obligations or claims of any kind
arising out of or resulting from the termination and cancellation of the
Kopp stock option and employment agreement or the Dlabal stock option
and employment agreement; and

(iii) Any liabilities, obligations, fines or penalties of
any kind arising out of, or resulting from, the matter set forth in
Paragraph 5 of Schedule 4.5 to this Agreement; and

(iv) Any and all actions, suits, proceedings, demands,
assessments, judgments, costs and legal and other expenses incident to
any of the foregoing.

(iii) Any and all actions, suits, proceedings, demands,
assessments, judgments, costs, and legal and other expenses incident to
any of the foregoing.

33
<PAGE> 40
authorized by the indemnifying party or parties. Any settlement of any action
subject to indemnity hereunder shall require the consent of the indemnified and
the indemnifying party which consent shall not be unreasonably withheld and
shall be given within ten (10) days following the giving of notice thereof.
The indemnifying party or parties shall not be liable for any settlement of any
action effected without its or their consent, but if settled with the consent
of the indemnifying party or parties or if there be a final judgment for the
plaintiff in any such action, the indemnifying party or parties shall indemnify
and hold harmless the indemnified party from and against any loss or liability
by reason of such settlement or judgment. If requested by the indemnifying
party, the indemnified party shall cooperate with the indemnifying party and
its counsel and use its best efforts in contesting any such claim or, if
appropriate, in making any counter-claim or cross-complaint against the party
asserting the claim, provided that the indemnifying party will reimburse the
indemnified party for reasonable expenses incurred in so cooperating upon
presentation of receipts or other evidence of such expense. The indemnifying
party and its representatives shall have full and complete access during
reasonable hours to all books, records and files of the indemnified party
expressly related to the defense of any claim for indemnification undertaken by
the indemnifying party pursuant to this Article 11, or for any other purpose in
connection therewith; provided that the indemnifying party shall safeguard and
maintain the confidentiality of all such books, records and files.

11.4 Limitations on Indemnification.

(a) General Threshold. Neither the Individual Sellers
nor the Purchaser shall be obligated to indemnify the other party except to the
extent that the cumulative amount of all indemnifiable losses exceeds Twenty-
Five Thousand Dollars ($25,000.00) (the "Threshold"), which excess amount shall
be recoverable in accordance with the terms hereof; provided, however, that the
$25,000 limitation set forth in this Section 11.4(a) shall not apply to the
matters described in Section 11.4(c). With respect to any indemnifiable loss
payable by the Individual Sellers, the funds in the Post-Closing Escrow Account
shall be used for such purpose first before any recovery is sought directly
from an Individual Seller; provided, however, that to the extent the
indemnification loss or losses exceed the funds in the Post-Closing Escrow
Account, then the Purchaser may seek recovery of the amount of such
indemnifiable loss in excess of such funds contemporaneously with the recovery
of any funds in the Post-Closing Escrow Account.

(b) Time Limits for Claims. No claim for indemnification
may be made by any indemnified party in respect of indemnifiable losses unless
written notice thereof shall have been received by the indemnifying party on or
prior to two years after the date hereof; provided, however, that the two-year
limitation set forth in Section 11.1 and this Section 11.4(b) shall not apply
to the matters described otherwise in Section 11.1 and Section 11.4(c) as to
which the indemnification obligations hereunder shall expire six (6) months
after the termination of the applicable statute of limitations relating to the
subject matter covered by such provisions; and provided further, however, that
in each case if, prior to the applicable date of expiration, a specific state
of facts shall have become known which is reasonably likely to constitute or
give rise to any indemnifiable loss as to which indemnity may be payable and
the indemnified party shall have given notice of such facts to the indemnifying
party and made a claim for

34
<PAGE> 41
indemnification within such two-year period, then the right to indemnification
with respect thereto shall remain in effect until such matter shall have been
finally determined and disposed of and any indemnification due in respect
thereof shall have been paid.

(i) Losses arising from fraud or an intentional
misrepresentation on the part of any Seller or Purchaser; and

(ii) Losses arising from the intentional breach of any
covenant or agreement by a Seller or Purchaser contained in this
Agreement.

ARTICLE 12
NON-COMPETITION

12.1 Covenant Not to Compete; Non-Solicitation. For and in
consideration of the purchase by the Purchaser of the Shares pursuant to this
Agreement, and the payments payable by the Purchaser pursuant to this
Agreement, each Individual Seller covenants and agrees that he shall not,
directly or indirectly, as an employer, consultant, creditor, investor, owner,
agent, principal, partner, shareholder, or through any other kind of ownership
(other than ownership of securities of any publicly held entity in which the
Individual Seller, directly or indirectly, in the aggregate beneficially owns
less than two percent (2%) of any class of outstanding securities), or in any
other representative or individual capacity, do any of the following:

35
<PAGE> 42
"Dental Services Business") in the States of Missouri, Kansas and each
state contiguous to the States of Missouri and Kansas (the "Restricted
Area");

(iii) for a period of three (3) years from the date of this
Agreement, engage in any business which solicits any present or future
employee of the Company or initiates discussions with any such employee
regarding his or her termination or resignation from employment with the
Company, so that such employee may accept employment with, or engagement
as a partner, investor, shareholder, employee, agent or consultant with
Individual Seller, directly or indirectly, as specified above; provided,
however, that Individual Seller shall not be prohibited by this
Agreement from employing or soliciting the employment of any employee
that the Company terminates after the date of such termination;

provided, however, that the term "Dental Services Business" shall not include,
and this Section 12.1 shall not preclude Dlabal, directly or indirectly, from
continuing to provide professional dental care services to any person or
individual, or from entering into agreements to provide professional dental
care services for or on behalf of any other prepaid dental plan, dental health
indemnity insurance company or dental preferred provider organization.

12.2 Non-Disclosure. Each Individual Seller covenants and
agrees that all information concerning the Company, including without
limitation (i) information regarding prices or premiums charged for products
and services, (ii) the assets, liabilities and financial condition of the
Company, (iii) the names and identities of customers and analyses of the amount
and types of products and services purchased by each such customer, (iv) the
dental health providers utilized by the Company and the financial arrangements
with such providers, and (v) the amount of compensation to employees,
constitute trade secrets and confidential, proprietary business information
which is the property of the Company and that, unless otherwise required by
law, from and after the date of this Agreement:

(a) Each Individual Seller shall not, directly or
indirectly, use, sell, license, publish, disclose or otherwise transfer
or make available to others any of such trade secrets or confidential,
proprietary information;

(b) Without the prior written consent of the Company,
each Individual Seller shall not, directly or indirectly, disclose any
of such trade secrets or confidential, proprietary information; and

36
<PAGE> 43
(c) Each Individual Seller shall not, directly or
indirectly, use for his own benefit or for the benefit of another, any
of such trade secrets or confidential, proprietary information.

12.3 Reasonableness; Reformation. Each Individual Seller
acknowledges and agrees that (i) the provisions of this Article 12 are
ancillary to the transaction pursuant to which the Sellers sold and the
Purchaser acquired the Shares, (ii) the provisions of this Agreement contain
reasonable limitations as to time, geographical area and scope of activities to
be restrained and do not impose a greater restraint than is necessary to
protect goodwill and other business interests of the Company, (iii) if any
portion of the covenants and agreements set forth in this Agreement are held to
be invalid, unreasonable, arbitrary or against public policy, then such portion
of such covenants shall be considered divisible as to time, scope of activities
covered, and geographical area, and (iv) if any court of competent jurisdiction
determines the specified time period, scope of activities covered, or the
specified geographical area applicable to any provision of this Agreement to be
invalid, unreasonable, arbitrary or against public policy, a lesser time
period, scope of activities covered, and/or geographical area which is
determined to be reasonable, non-arbitrary and not against public policy may be
enforced against each Individual Seller.

12.4 Remedies for Breach. If an Individual Seller has failed to
satisfactorily cure any breach or threatened breach of any covenant or
agreement contained herein within ten (10) days after written notice of such
breach or threatened breach given by the Purchaser to each Individual Seller,
any one or more of the following remedies, as selected by the Purchaser in its
sole discretion, shall be available to the Purchaser in the event of a breach
of this Agreement by the Individual Seller hereunder:

(a) Specific Performance. In the event of a breach or
threatened breach of any covenant or agreement of an Individual Seller
in this Agreement, remedies at law will not adequately compensate the
Purchaser for its injuries incurred as a result thereof.
Accordingly, injunctive and/or equitable relief shall be available to
the Purchaser to specifically enforce this Agreement and prevent such
breach and any continued breach of any covenant and agreement herein.
Such Individual Seller agrees that a bond of no more than $10,000 in
the aggregate will provide adequate protection to such Seller and
therefore no more than $10,000 in bond or other security shall be
required to be posted by the Company by any court in any proceeding to
obtain such injunctive or equitable relief.

37
<PAGE> 44
(b) Suit for Damages. In addition to the remedies stated
in Section 12.5(a) above, in the event of any breach of any covenant
or agreement of a Seller herein, Purchaser may sue for damages arising
out of such breach and otherwise enforce this Agreement and obtain all
other remedies available to the Purchaser under applicable law.

ARTICLE 13
TERMINATION; WAIVER

13.1 Termination. This Agreement may be terminated, and the
transaction may be abandoned, at any time prior to the Closing, as follows and
in no other manner:

(a) Mutual Consent. By the mutual consent of Purchaser
and the Sellers;

(b) By Purchaser or Sellers: Condition Precedent. By
Purchaser or Sellers, upon written notice to the other, if the conditions to
the obligations of such canceling party or parties to consummate the
transaction, in the case of the Sellers, as provided in Article 8 or, in the
case of Purchaser, as provided in Article 9, were not, or cannot reasonably be,
satisfied on or before ninety (90) days after the date of this Agreement unless
the failure of the condition is the result of the material breach of this
Agreement by the party seeking to terminate; provided, however, that, in the
event all such conditions have been satisfied except solely the condition with
respect to obtaining all required consents, authorizations, and approvals of
governmental and regulatory agencies set forth in Sections 8.1(a) and 9.1(a),
respectively, and such failure is not due to a breach of this Agreement by the
non-terminating party, such date shall be automatically extended for three (3)
consecutive thirty (30) day periods provided, however, that in no event shall
such date be extended beyond an aggregate of one hundred eighty (180) days
after the date of this Agreement unless extended by the mutual agreement of the
Purchaser and the Sellers;

(c) By Purchaser or Sellers: Representations, Warranties
and Covenants. By Purchaser, on the one hand, or Sellers, on the other, if (i)
any representation or warranty of the other hereunder shall not have been true
and correct in all material respects at the time at which made, or (ii) default
shall be made by the other in the due and timely observance or performance of
any of its covenants and agreements herein contained, but in such event only if
such representation or warranty cannot be made true and correct or such default
cannot be cured on or prior to the earlier of (x) sixty (60) days after the
non-defaulting or non-breaching party notifies the other in writing of such
default or breach, specifying the nature thereof or (y) one hundred eighty
(180) days after the date of this Agreement, unless such date is extended by
mutual agreement of Purchaser and Sellers.

No termination of this Agreement shall affect the liability of any party hereto
for any breach hereof arising at, prior to or out of such termination;
provided, however, that, in the event of a breach hereof by Purchaser, in
addition to any other remedies available at law or in equity to the Sellers,
Sellers shall be entitled to retain the Earnest Money. Any public announcement
of

38
<PAGE> 45
the termination of this Agreement shall be made only by means of a press
release issued jointly by Purchaser and the Company.

ARTICLE 14
CERTAIN DEFINED TERMS

14.1 Affiliate. When used with respect to a person, an "Affiliate"
of such person is a person controlling, controlled by, or under common control
with such person.

14.3 Closing. The completion of the transaction to take place as
described in Article 10.

14.4 Closing Date. The date on which the Closing actually occurs.

14.6 Code. The Internal Revenue Code of 1986, as amended and in
effect on the date of this Agreement.

14.7 Control. Generally, the power to direct the management or
affairs of an entity.

14.8 Counsel to Sellers. Gilmore & Bell, P.C., 700 West 47th
Street, Suite 400, Kansas City, Missouri 64112, telephone number (816)
931-7500; facsimile number (816) 931-7599.

14.9 Counsel to Purchaser. Strasburger & Price, L.L.P., 901 Main
Street, Suite 4300, Dallas, Texas 75202, telephone number (214) 651-4300,
facsimile number (214) 651-4330.

39
<PAGE> 46
14.10 ERISA. The Employee Retirement Income Security Act of 1974,
as amended and in effect on the date of this Agreement.

14.12 Knowledge. As used in this Agreement, the term "knowledge" or
the phrase "to the knowledge of" or "known to" shall mean the existence of
actual knowledge by such party; provided, however, that no party shall be
deemed to have been performed, or be obligated to perform, an independent
investigation or inquiry with respect to the matter to which such knowledge
pertains.

14.14 Net Working Capital. As used in this Agreement, the term "Net
Working Capital" shall be the "Current Assets" of the Company less the "Current
Liability" of the Company as of the date of determination based on the
definition of, and determined in conformity with, GAAP.

14.15 Payables. Liabilities of a party arising from the borrowing
of money or the incurring of obligations for merchandise, goods or services
purchased appearing as liabilities on the books of the Company or any
Subsidiary, or customarily required to be reflected as liabilities in the
balance sheets of the Company prepared in accordance with GAAP, indicating
monies owed by the Company.

14.16 PBGC. The Pension Benefit Guaranty Corporation.

14.17 Pension Plan. A "pension plan" or "employee pension benefit
plan," as defined in Section 3(2) of ERISA or successor provisions to such
provision adopted by amendments to ERISA and including other provisions of
ERISA or of other law, and regulations adopted under ERISA or such other law,
modifying, amending, interpreting or otherwise affecting the application of
such provisions, either in general or as applied to the nature or circumstances
of a particular entity that is a party to, or is affected by or is involved in,
this Agreement and with respect to which entity the use of the term in this
Agreement, or in the particular location in this

40
<PAGE> 47
Agreement, is relevant. A reference to a Pension Plan shall include the trust,
if any, forming a part thereof.

14.18 Receivables. Accounts receivable, notes receivable, and other
obligations appearing as assets on the books of the Company or any Subsidiary,
or customarily required to be reflected as assets in balance sheets of the
Company prepared in accordance with GAAP, indicating moneys owed to the
Company.

14.19 Welfare Plan. A "welfare plan" or an "employee welfare
benefit plan," as defined in Section 3(1) of ERISA or successor provisions to
such provision adopted by amendments to ERISA and including other provisions of
ERISA or of other law, and regulations adopted under ERISA or such other law,
modifying, amending, interpreting or otherwise affecting the application of
such provision, either in general or as applied to the nature or circumstances
of a particular entity that is a party to, or is affected by or is involved in,
the Agreement and with respect to which entity the use of the term in this
Agreement, or in the particular location in this Agreement, is relevant.

ARTICLE 15
MISCELLANEOUS

15.2 Notices. Any notices, claims or demands which any party is
required or may desire to give to another under or in conjunction with this
Agreement shall be in writing, and shall be given by addressing the same to
such other party(ies) at the address set forth below, and by (i) depositing the
same so addressed, postage prepaid, first class, certified or registered, in
the United States mail (herein referred to as "Mailing"), (ii) overnight
delivery by a nationally recognized overnight courier service (e.g. UPS,
Federal Express), (iii) delivering the same personally to such other
party(ies), or (iv) transmitting by facsimile and Mailing the original. Any
notice shall be deemed to have been given five (5) U.S. Post Office delivery
days following the date of Mailing; one day after timely delivery to an
overnight courier; if by personal delivery, upon such delivery; or if by
facsimile, the day of transmission if made within customary business hours, or
if not transmitted within customary business hours, the following business day.

(a) If to Sellers:

To the respective address of such Seller set forth on
the signature page hereto executed by such Seller

41
<PAGE> 48
With a copy to Counsel to Sellers:

Gilmore & Bell, P.C.
700 West 47th Street
Suite 400
Kansas City, Missouri 64112
Attention: Richard M. Wright, Jr.
Facsimile (816) 931-7599

(b) If to Purchaser:

United Dental Care, Inc.
14755 Preston Road
Suite 300
Dallas, Texas 75240
Attn: William H. Wilcox, President
Facsimile: (214) 458-7963

With a copy to Counsel to Purchaser:

Strasburger & Price, L.L.P.
901 Main Street, Suite 4300
Dallas, Texas 75202
Attn: David K. Meyercord, Esq.
Facsimile: (214) 651-4330

Any party may change the address or facsimile telephone number for notices to
be sent to it by written notice delivered pursuant to the terms of this Section
15.2.

15.3 Entire Agreement; Amendments. This Agreement and the
documents to be delivered at Closing hereunder set forth the entire
understanding of the parties and supersede all prior agreements or
understandings, whether written or oral, with respect to the subject matter
hereof. This Agreement may be amended, modified or supplemented only by a
written agreement executed by Purchaser and Sellers.

42
<PAGE> 49
control of such Seller or the remainder beneficiary of any charitable remainder
trust upon the death of all the noncharitable income beneficiaries, but any
such assignment shall not relieve or release such Seller of any obligations
hereunder as a result of such assignment and that, in addition to such Seller
remaining liable, any such assignee shall assume and become liable for any and
all of such Seller's obligations under this Agreement. In connection with any
such assignment, a Seller may transfer all or any portion of the Shares owned
by the Seller and thereby effect an assignment on the basis specified above.

15.5 Exhibits/Schedules. All Exhibits and Schedules referenced in
this Agreement are incorporated herein by reference and shall constitute a part
of this Agreement.

15.9 Time. Time is of the essence under this Agreement.

15.10 Governing Law. This Agreement shall be construed under and
governed by the internal laws, and not the law of conflicts, of the State of
Missouri.

15.11 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but which together
shall constitute one and the same agreement.

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<PAGE> 50
IN WITNESS WHEREOF, the parties have executed this Stock Purchase
Agreement as of the day and year first written above.

<TABLE>
<S> <C>
PURCHASER: COMPANY:

UNITED DENTAL CARE, INC. KANSAS CITY DENTAL CARE, INC.

By: /s/ WILLIAM H. WILCOX By: /s/ GEORGE C. KOPP
---------------------------------------- -------------------------------------------
William H. Wilcox, President George C. Kopp, III, President
Address: 7447 Holmes
Kansas City, Missouri 64131
SELLERS:

/s/ JOHN E. CARLIN /s/ FRANK J. SCHLOEGEL, III
- ------------------------------------------- ----------------------------------------------
JOHN E. CARLIN, Ph.D. FRANK J. SCHLOEGEL, III
Address: 1712 Denholm Address: 415 West Dartmouth
Manhattan, Kansas 66503 Kansas City, Missouri 64113

THE JOHN E. CARLIN CHARITABLE
REMAINDER UNITRUST, UID
JUNE 28, 1996

By: /s/ DANIEL J. MARKOWITZ /s/ J. DENNIS DLABAL
--------------------------------------- ----------------------------------------------
Daniel J. Markowitz, Independent Trustee J. DENNIS DLABAL, D.D.S.
Address: 9300 W. 110th Street, Suite 480 Address: 3415 Top of the World
Overland Park, Missouri 66210 Manhattan, Kansas 66502

THE FRANK J. SCHLOEGEL THE FRANK J. SCHLOEGEL
CHARITABLE REMAINDER UNITRUST CHARITABLE REMAINDER UNITRUST
I, UID JULY 12, 1996 II, UID JULY 12, 1996

By: /s/ ROBERT E. MILLER By: /s/ ROBERT E. MILLER
--------------------------------------- -------------------------------------------
Robert E. Miller, Independent Trustee Robert E. Miller, Independent Trustee
Address: 114 W. Gregory Address: 114 W. Gregory
Kansas City, Missouri 64114 Kansas City Missouri 64114

THE J. DENNIS DLABAL CHARITABLE
REMAINDER TRUST, UID SEPTEMBER 1996

By: Trust Company of Manhattan,
Independent Trustee

By: /s/ JODI L. KAUS
--------------------------------------
Its: Asst. Trust Officer
--------------------------------------
Address: 330 Poyntz
Manhattan, Kansas 66502
</TABLE>

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<PAGE> 51
EXHIBIT A

SHARE OWNERSHIP OF THE COMPANY
as of the date of the
Stock Purchase Agreement

<TABLE>
<CAPTION>
Number
Seller of Shares Percentage
- ------ --------- ----------
<S> <C> <C>
John E. Carlin, Ph.D. 787 15.737%

Frank J. Schloegel, III 767 15.337%

J. Dennis Dlabal, D.D.S. 834 16.677%

The John E. Carlin Charitable Reminder 880 17.596%
Unitrust, UID June 28, 1996

The Frank J. Schloegel Charitable 450 8.998%
Remainder Unitrust I, UID July 12, 1996

The Frank J. Schloegel Charitable 450 8.998%
Remainder Unitrust II, UID July 12, 1996

The J. Dennis Dlabal Charitable Remainder
Trust, UID September 5, 1996 833 16.657%
----- ------

TOTAL: 5,001 100%
===== ======
</TABLE>

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<PAGE> 52
EXHIBIT C-1

EMPLOYMENT AGREEMENT

This Employment Agreement (this "Agreement") is made as of __________,
1996 (the "Effective Date"), by and between Kansas City Dental Care, Inc., a
Missouri corporation acting by and through its hereunto duly authorized officer
(the "Company"), and George C. Kopp, III (the "Executive").

WHEREAS, the Company desires to employ the Executive and the Executive
is willing to render his services to the Company on the terms and conditions
with respect to such employment hereinafter set forth;

NOW, THEREFORE, in consideration of premises and the mutual terms and
conditions hereof, the Company and the Executive hereby agree as follows:

1. Employment. The Company hereby employs the Executive and the
Executive hereby accepts employment with the Company upon the terms and
conditions hereinafter set forth.

2. Exclusive Services. The Executive shall devote his primary time,
ability and attention to the business of the Company during regular working
hours for the term of this Agreement. The Executive is engaged as a full-time
employee of the Company and is expected to devote his primary efforts to the
business of the Company during regular working hours. The Executive will not
render services to any other person that will cause the Executive not to be
available for full-time service to the Company. The Company acknowledges that
the Executive may now or hereafter have other business interests and/or
investments (including those set forth in Section 10(a)) that may require the
Executive's time, attention and energies, which pursuits shall not be precluded
by this Agreement so long as they are in accordance with the immediately
preceding sentence.

3. Duties. The Executive is hereby employed by the Company and shall
render his services at the principal business offices of the Company located in
Kansas City, Missouri. The Executive shall be under no obligation to relocate
to any office of the Company outside of Jackson County, Missouri or Johnson
County, Kansas. The Executive shall have such authority and shall perform such
duties as are specified by the President of the Company; subject, however, to
such limitations, instructions, directions, and control as the Board may
specify from time to time in its sole discretion.

1
<PAGE> 53

4. Term. This Agreement shall have a term of three (3) years
commencing as of the Effective Date, subject to earlier termination as
hereinafter provided.

5. Compensation. As compensation for his services rendered under this
Agreement, the Executive shall be entitled to receive the following:

(a) Base Salary. The Executive shall initially be paid a base
annual salary of One Hundred Fifty Thousand and No/100 Dollars
($150,000) per year, payable in installments on the regular payroll
dates of each month for the Company during the term of this Agreement,
prorated for any partial employment month. Such base annual salary
shall be subject to increase from time to time as authorized by the
Board of Directors of the Company (the "Board") in its sole
discretion.

(b) Additional Compensation. The Executive shall be paid such
additional compensation and bonuses, if any, as may be determined in
the sole discretion of the Board.

6. Benefits. In addition to the compensation to be paid to the
Executive pursuant to Paragraph 5 hereof, the Executive shall further be
included in any hospital, surgical, and medical benefit plan, any group term
life insurance policy, any pension or profit sharing plan, and all other
benefits which may be extended from time to time to employees of the Company
generally by the Board in its sole discretion. The Executive shall be entitled
to four (4) weeks of vacation leave each calendar year.

8. Confidentiality/Trade Secrets. The Executive acknowledges that his
position with the Company is one of the highest trust and confidence both by
reason of his position and by reason of his access to and contact with the
trade secrets and confidential and proprietary business information of the
Company. Both during the term of this Agreement and for a period of two (2)
years thereafter, the Executive covenants and agrees as follows:

(a) that he shall use the efforts and diligence of a
reasonable business person in the protection of his own trade secrets
and confidential and proprietary information to protect and safeguard
the trade secrets and confidential and proprietary information of the
Company including but not limited to the identity of its customers and
suppliers, its arrangements with customers and suppliers, and its
technical data, records, compilations of information, processes, and
specifications relating to its customers, suppliers, products and
services;

2
<PAGE> 54

(b) that he shall not disclose any of such trade secrets and
confidential and proprietary information, except as may be required in
the course of his employment; and

(c) that he shall not use, directly or indirectly, for his
own benefit or for the benefit of another, any of such trade secrets
and confidential and proprietary information.

All files, records, documents, drawings, specifications, memoranda,
notes, or other documents relating to the business of the Company, whether
prepared by the Executive or otherwise coming into his possession, shall be the
exclusive property of the Company and shall be delivered to the Company and not
retained by the Executive upon termination of his employment for any reason
whatsoever or at any other time upon request of the Board.

10. Non-Competition.

(a) The Executive covenants and agrees that, during the
period of his employment, he shall not, without the prior written
consent of the Board, directly or indirectly, as an employee,
employer, consultant, agent, principal, partner, shareholder,
corporate officer, director, or through any other kind of ownership
(other than ownership of securities of publicly held corporations of
which the Executive owns less than two percent (2%) of any class of
outstanding securities) or in any other representative or individual
capacity, engage in any business or render any services to any
business that is in competition in any manner whatsoever with the
business of the Company. The Executive has disclosed to the Company
his interest in and participation with Direct Dental Care, Inc.,
Dental Care Management Company and Midwest Dental Care, Inc., and his
continuing participation therein shall not violate this Section 10 so
long as none of such companies engages in the prepaid dental plan
business, the dental health indemnity insurance business or the dental
preferred provider organization business.

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<PAGE> 55

termination of this Agreement by the Company with cause, for the
remaining term of this Agreement after the date of termination, he
shall not directly or indirectly, as an employee, employer,
consultant, creditor, investor, owner, agent, principal, partner,
shareholder, corporate officer, director or through any other kind of
ownership (other than ownership of securities of any publicly held
entity in which Executive, directly or indirectly, in the aggregate
owns less than two percent (2%) of any class of outstanding
securities), or in any other representative or individual capacity, do
any of the following:

(i) engage in the dental services business in the
States of Missouri or Kansas, or any state contiguous to the
States of Kansas and Missouri (the "Restricted Area") that is
in competition in any manner whatsoever with the dental
services business conducted by the Company, including,
without limitation, the business of a dental health indemnity
insurance company, a prepaid dental plan, a dental preferred
provider organization, a dental referral plan or the
provision of management, administrative, or related services
to any of the foregoing anywhere in the Restricted Area;

4
<PAGE> 56

including, without limitation, reducing the scope of covenant not to
compete applicable to Executive or reducing the time period or the
geographical area of the covenant not to compete applicable to
Executive; provided that as so amended by waiver such covenant not to
compete shall remain fully in effect. In order to be effective, any
such waiver must be in writing, approved by the Board of Directors of
the Company as provided above, and executed by an authorized officer
of the Company.

(e) Executive acknowledges and agrees that the provisions of
this Agreement contain reasonable limitations as to time, geographical
area and scope of activities to be restrained and do not impose a
greater restraint than is necessary to protect goodwill and other
business interests of the Company and its subsidiaries, (iii) if any
portion of the covenants and agreements set forth in this Agreement
are held to be invalid, unreasonable, arbitrary or against public
policy, then such portion of such covenants shall be considered
divisible as to time, scope of activities covered, and geographical
area, (iv) if any court of competent jurisdiction determines the
specified time period, scope of activities covered, or the specified
geographical area applicable to any provision of this Agreement to be
invalid, unreasonable, arbitrary or against public policy, a lesser
time period, scope of activities covered, and/or geographical area
which is determined to be reasonable, non-arbitrary and not against
public policy may be enforced against Executive.

12. Termination. This Agreement may be terminated upon the occurrence
of any one of the following events:

(a) Voluntary. The Executive may terminate this Agreement and
his employment at any time during the term of this Agreement by giving
thirty (30) days prior written notice of termination to the Board.

(b) Involuntary Without Cause. The Board, without cause, may
terminate this Agreement at any time during the term of this Agreement
upon thirty (30) days prior written notice to the Executive.

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<PAGE> 57

(1) If the Executive becomes disabled for a period
of more than ninety (90) consecutive days (for the purposes
hereof, "disabled" shall have the same meaning as is provided
for such term in the group long-term disability insurance
policy maintained by the Company on the Effective Date);

(2) If the Executive for reasons other than
vacation, illness or injury absents himself from his duties
without the consent of the Board for more than ten (10)
consecutive days;

(3) If the Executive should die (effective on the
date of death);

(4) If the Executive should be convicted of a crime
punishable by imprisonment; and

(5) If the Executive should willfully breach or,
after written notice from the Company, habitually neglect his
duties which he is required to perform under this Agreement
or otherwise fail to comply with the terms and conditions of
this Agreement specifically including, but not limited to,
the covenants set forth in Paragraphs 8, 9 and 10 hereof.

In the event of the termination of this Agreement by either party prior to the
expiration of the term of this Agreement, the Executive shall be entitled to
compensation earned by his prior to the date of termination as provided herein
computed on a pro rata basis to and including such date of termination. In the
event the Company terminates this Agreement without cause pursuant to Paragraph
12(b) above, the Executive shall be entitled to receive a severance payment as
liquidated damages for, and in lieu of, any and all damages which he may incur
as a result of such termination in an amount equal to his basic salary as
specified in Paragraph 5(a) as then in effect on the date of termination over
the remaining term of this Agreement. Such severance payment shall be payable
in installments on the same dates that such payments would have been made
during the term of this Agreement. In addition, in such event, the Company
shall continue to pay for the group health and life insurance provided for the
Executive on the date of termination until the end of the original term of this
Agreement. The Executive shall be entitled to no further compensation as of the
date of termination of this Agreement specifically including but not limited to
any unearned bonuses under this Agreement. Any termination of this Agreement
shall be without prejudice to any right or remedy to which the terminating
party may be entitled either at law, in equity, or under this Agreement.

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<PAGE> 58

the United States mail (herein referred to as "Mailing"), (ii) overnight
delivery by a nationally recognized overnight courier service (e.g. UPS,
Federal Express), (iii) delivery the same personally to such other party(ies),
or (iv) transmitting by facsimile and Mailing the original. Any notice shall be
deemed to have been given five (5) U.S. Post Office delivery days following the
date of Mailing; one day after timely delivery to an overnight courier; if by
personal delivery, upon such delivery; or if by facsimile, the day of
transmission if made within customary business hours, or if not transmitted
within customary business hours, the following business day.

(a) If to the Company:

United Dental Plan, Inc.
14755 Preston Road
Suite 300
Dallas, Texas 75240
Attention: President
Facsimile: (214) 458-7963

(b) If to the Executive:

George C. Kopp, III
5204 West 83rd Terrace
Prairie Village, Kansas 66207

Either party may change its address for notice by giving notice in accordance
with the terms of this Paragraph 13.

14. General Provisions.

(a) Law Governing. This Agreement shall be governed by and
construed in accordance with the laws of the State of Missouri.

(c) Entire Agreement. This Agreement sets forth the entire
understanding of the parties and supersedes all prior agreements or
understandings, whether written or

7
<PAGE> 59

oral, with respect to the subject matter hereof. No terms, conditions,
warranties, other than those contained herein, and no amendments or
modifications hereto shall be binding unless made in writing and
signed by the parties hereto.

(f) Titles. Titles of the paragraphs herein are used solely
for convenience and shall not be used for interpretation or construing
any work, clause, paragraph, or provision of this Agreement.

(g) Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but
which together shall constitute one and the same instrument.

IN WITNESS WHEREOF, the Company and the Executive have executed this
Agreement as of the date and year first written above.

COMPANY: EXECUTIVE:

Kansas City Dental Care, Inc.

By:
------------------------------ ------------------------------
Its George C. Kopp, III
-------------------------

GUARANTEE OF PERFORMANCE

UNITED DENTAL CARE, INC.

By:
------------------------------
Mark E. Pape
Senior Vice President

8
<PAGE> 60
EXHIBIT C-2

EMPLOYMENT AGREEMENT

NOW, THEREFORE, in consideration of premises and the mutual terms and
conditions hereof, the Company and the Executive hereby agree as follows:

1. Employment. The Company hereby employs the Executive and the
Executive hereby accepts employment with the Company upon the terms and
conditions hereinafter set forth.

3. Duties. The Executive is hereby employed by the Company and shall
render his services at the business office of the Company located in Manhattan,
Kansas. The Executive shall be under no obligation to relocate to any other
office of the Company. The Executive shall have such authority and shall
perform such duties as are specified by the President of the Company; subject,
however, to such limitations, instructions, directions, and control as the
Board may specify from time to time in its sole discretion.

4. Term. This Agreement shall have a term of three (3) years
commencing as of the Effective Date, subject to earlier termination as
hereinafter provided.

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<PAGE> 61

5. Compensation. As compensation for his services rendered under this
Agreement, the Executive shall be entitled to receive the following:

(b) Additional Compensation. The Executive shall be paid such
additional compensation and bonuses, if any, as may be determined in
the sole discretion of the Board.

6. Benefits. In addition to the compensation to be paid to the
Executive pursuant to Paragraph 5 hereof, the Executive shall further be
included in any hospital, surgical, and medical benefit plan, any group term
life insurance policy, any pension or profit sharing plan, and all other
benefits which may be extended from time to time to employees of the Company
generally by the Board in its sole discretion. The Executive shall be entitled
to four (4) weeks of vacation leave each calendar year.

8. Confidentiality/Trade Secrets. The Executive acknowledges that his
position with the Company is one of the highest trust and confidence both by
reason of his position and by reason of his access to and contact with the
trade secrets and confidential and proprietary business information of the
Company. Both during the term of this Agreement and for a period of two (2)
years thereafter, the Executive covenants and agrees as follows:

(b) that he shall not disclose any of such trade secrets and
confidential and proprietary information, except as may be required in
the course of his employment; and

2
<PAGE> 62

(c) that he shall not use, directly or indirectly, for his
own benefit or for the benefit of another, any of such trade secrets
and confidential and proprietary information.

All files, records, documents, drawings, specifications, memoranda,
notes, or other documents relating to the business of the Company, whether
prepared by the Executive or otherwise coming into his possession, shall be the
exclusive property of the Company and shall be delivered to the Company and not
retained by the Executive upon termination of his employment for any reason
whatsoever or at any other time upon request of the Board.

10. Non-Competition.

(b) In addition, after termination of this Agreement, the
Executive covenants and agrees that, for the period that the Company
is continuing to make severance payments pursuant to Section 12(c)
below, if applicable, or, in the event of the termination of this
Agreement by the Company with cause for the remaining term of this
Agreement after the date of termination, he shall not directly or
indirectly, as an employee, employer, consultant, creditor, investor,
owner, agent, principal, partner,

3
<PAGE> 63

shareholder, corporate officer, director or through any other kind of
ownership (other than ownership of securities of any publicly held
entity in which Executive, directly or indirectly, in the aggregate
owns less than two percent (2%) of any class of outstanding
securities), or in any other representative or individual capacity, do
any of the following:

(i) engage in the dental services business in the
States of Missouri or Kansas or any state contiguous to the
States of Kansas and Missouri (the "Restricted Area") that is
in competition in any manner whatsoever with the dental
services business conducted by the Company, including,
without limitation, the business of a dental health indemnity
insurance company, a prepaid dental plan, a dental preferred
provider organization, a dental referral plan or the
provision of management, administrative, or related services
to any of the foregoing anywhere in the Restricted Area;

4
<PAGE> 64

not to compete applicable to Executive or reducing the time period or
the geographical area of the covenant not to compete applicable to
Executive; provided that as so amended by waiver such covenant not to
compete shall remain fully in effect. In order to be effective, any
such waiver must be in writing, approved by the Board of Directors of
the Company as provided above, and executed by an authorized officer
of the Company.

(e) Executive acknowledges and agrees that the provisions of
this Agreement contain reasonable limitations as to time, geographical
area and scope of activities to be restrained and do not impose a
greater restraint than is necessary to protect goodwill and other
business interests of the Company and its subsidiaries, (iii) if any
portion of the covenants and agreements set forth in this Agreement
are held to be invalid, unreasonable, arbitrary or against public
policy, then such portion of such covenants shall be considered
divisible as to time, scope of activities covered, and geographical
area, (iv) if any court of competent jurisdiction determines the
specified time period, scope of activities covered, or the specified
geographical area applicable to any provision of this Agreement to be
invalid, unreasonable, arbitrary or against public policy, a lesser
time period, scope of activities covered, and/or geographical area
which is determined to be reasonable, non-arbitrary and not against
public policy may be enforced against Executive.

12. Termination. This Agreement may be terminated upon the occurrence
of any one of the following events:

(a) Voluntary. The Executive may terminate this Agreement and
his employment at any time during the term of this Agreement by giving
thirty (30) days prior written notice of termination to the Board.

(b) Involuntary Without Cause. The Board, without cause, may
terminate this Agreement at any time during the term of this Agreement
upon thirty (30) days prior written notice to the Executive.

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<PAGE> 65

(2) If the Executive for reasons other than
vacation, illness or injury absents herself from his duties
without the consent of the Board for more than ten (10)
consecutive days;

(3) If the Executive should die (effective on the
date of death);

(4) If the Executive should be convicted of a crime
punishable by imprisonment; and

In the event of the termination of this Agreement by either party prior to the
expiration of the term of this Agreement, the Executive shall be entitled to
compensation earned by his prior to the date of termination as provided herein
computed on a pro rata basis to and including such date of termination. In the
event the Company terminates this Agreement without cause pursuant to Paragraph
12(b) above, the Executive shall be entitled to receive a severance payment as
liquidated damages for, and in lieu of, any and all damages which he may incur
as a result of such termination in an amount equal to his base salary as
specified in Paragraph 5(a) as then in effect on the date of termination over
remaining term of this Agreement. Such severance payment shall be payable in
installments on the same dates that such payments would have been made during
the term of this Agreement. In addition, in such event, the Company shall
continue to pay for the group health and life insurance provided for the
Executive on the date of the termination until the end of the original term of
this Agreement. The Executive shall be entitled to no further compensation as
of the date of termination of this Agreement specifically including but not
limited to any unearned bonuses under this Agreement. Any termination of this
Agreement shall be without prejudice to any right or remedy to which the
terminating party may be entitled either at law, in equity, or under this
Agreement.

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<PAGE> 66

(a) If to the Company:

United Dental Plan, Inc.
14755 Preston Road
Suite 300
Dallas, Texas 75240
Attention: President
Facsimile: (214) 458-7963

(b) If to the Executive:

John E. Carlin, Ph.D.
3415 Denholm
Manhattan, KS 66503

Either party may change its address for notice by giving notice in accordance
with the terms of this Paragraph 13.

14. General Provisions.

(a) Law Governing. This Agreement shall be governed by and
construed in accordance with the laws of the State of Missouri.

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<PAGE> 67

(f) Titles. Titles of the paragraphs herein are used solely
for convenience and shall not be used for interpretation or construing
any work, clause, paragraph, or provision of this Agreement.

(g) Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but
which together shall constitute one and the same instrument.

IN WITNESS WHEREOF, the Company and the Executive have executed this
Agreement as of the date and year first written above.

COMPANY: EXECUTIVE:

Kansas City Dental Care, Inc.

By:
------------------------------ ------------------------------
Its John E. Carlin, Ph.D.
---------------------------

GUARANTEE OF PERFORMANCE

UNITED DENTAL CARE, INC.

By:
------------------------------
Mark E. Pape
Senior Vice President

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<PAGE> 68
EXHIBIT D

RELEASE AGREEMENT

This Release Agreement (the "Release") is executed as of
_______________, 1996, by and among United Dental Care, Inc., a Delaware
corporation ("Purchaser"), John E. Carlin, Ph.D. ("Carlin"), Frank J.
Schloegel, III ("Schloegel") , J. Dennis Dlabal, D.D.S. ("Dlabal", and together
with Carlin and Schloegel, the "Individual Sellers"), The John E. Carlin
Charitable Remainder Unitrust, UID June 28, 1996, the Frank J. Schloegel
Charitable Remainder Unitrust I, UID July 12, 1996, and the Frank J. Schloegel
Charitable Remainder Unitrust II, UID July 12, 1996, and The J. Dennis Dlabal
Charitable Remainder Trust, UID September 5, 1996 (collectively referred to
herein as the "Sellers" and individually as a "Seller"), Kansas City Dental
Care, Inc., a Missouri corporation (the "Company"), and George C. Kopp, III
("Kopp").

RECITALS

WHEREAS, the Sellers are parties to that certain Stock Purchase
Agreement dated as of September 11, 1996 (the "Stock Purchase Agreement"),
pursuant to which Purchaser has this day purchased all of the issued and
outstanding shares of capital stock of the Company; and

WHEREAS, the Company, Carlin, Schloegel, Dlabal and Kopp, the
President of the Company, have previously entered into a Settlement Agreement
dated as of September 4, 1996 (the "Settlement Agreement"); and

WHEREAS, the Sellers were the owners of all the capital stock of the
Company and are executing this Release pursuant to the Stock Purchase Agreement
and the Individual Sellers and Kopp are executing this Release pursuant to the
Settlement Agreement, in each case as a part of the consideration thereunder;

NOW, THEREFORE, IN CONSIDERATION OF THE PREMISES and the terms and
conditions hereof and other good and valuable consideration, the parties hereto
hereby agree as follows:

1. Release.

(a) Subject to the provisions of Section 2 hereof, each Seller and
Kopp hereby unconditionally and irrevocably releases and forever discharges the
other Sellers, Kopp, the Purchaser, the Company and their respective
stockholders, directors, officers, employees, successors and assigns of and
from any and all rights, claims, demands, judgments, obligations,

1
<PAGE> 69

liabilities, damages, losses, attorney's fees, costs, expenses, actions, causes
of action, and controversies of any kind whatsoever, whether at law or in
equity, statutory or common law, accrued or unaccrued, fixed or contingent,
asserted or unasserted, known or unknown, relating to the Purchaser or the
Company (or their capacities as officers, directors, shareholders or employees
of the Company) which ever existed, now exist or may hereafter exist, by reason
of any tort, breach of contract, violation of law, act or failure to act, or
any other matter or thing which shall have occurred at or prior to the date of
this Release including, without limitation, any contractual or other
obligation, loan, debt or liability of any kind owed to any Seller or Kopp by
the Purchaser or the Company on the date of this Release.

(b) Subject to the provisions of Section 2 hereof, the Company
hereby unconditionally and irrevocably releases and forever discharges the
Sellers, Kopp, and their respective successors and assigns of and from any and
all rights, claims, demands, judgments, obligations, liabilities, damages,
losses, attorneys' fees, costs, expenses, actions, causes of action, and
controversies of any kind whatsoever, whether at law or in equity, statutory or
common law, accrued or unaccrued, fixed or contingent, asserted or unasserted,
known or unknown, relating to the operation of the Company (or their capacities
as officers, directors, shareholders or employees of the Company) which ever
existed, now exist or may hereafter exist, by reason of any tort, breach of
contract, violation of law, act or failure to act, or any other matter or thing
which shall have occurred at or prior to the date of this Release.

(c) The parties hereto expressly intend that the foregoing release
shall be effective regardless of whether the basis for any claim or right
released hereby shall have been known or anticipated by the parties hereto.
Notwithstanding the foregoing or anything herein to the contrary, however,
nothing herein is intended to release or limit in any manner the rights or
obligations of any party with respect to the exceptions stated in Section 2
hereof.

2. Exception. Notwithstanding anything herein to the contrary, the
release stated in Section 1 hereof shall not apply to (a) any rights which a
Seller holds, or to any obligations which the Purchaser has to a Seller arising
under, by reason of, or incident to the Stock Purchase Agreement, or any of the
other documents and agreements executed by the Purchaser or the Company
pursuant to the Stock Purchase Agreement; (b) any rights which Kopp holds or to
any obligation which the Company or Purchaser has to Kopp arising under, by
reason of, or incident to that certain Employment Agreement of even date
herewith between the Company and Kopp; (c) any rights which Carlin holds or to
any obligation which the Company or Purchaser has to Carlin arising under, by
reason of, or incident to that certain Employment Agreement of even date
herewith between the Company and Carlin, (d) any rights which the Individual
Sellers, Kopp or the Company holds or to any obligation any of them may have to
the others under the Settlement Agreement; and (e) any rights which the
Purchaser holds, or to any obligations which a Seller has to the Purchaser
under, by reason of, or incident to the Stock Purchase Agreement, or any of the
other documents and agreements executed by the Sellers or a Seller pursuant to
the Stock Purchase Agreement, including, without limitation, the Post- Closing
Escrow Agreement.

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<PAGE> 70

3. Resignations. Each Individual Seller and Kopp hereby resigns his
position as an employee, director and/or officer of the Company effective
immediately as of the date of this Release.

4. Miscellaneous Provisions.

(b) Survival. The provisions of this Release shall survive the
consummation of the transactions contemplated by the Stock Purchase Agreement,
and shall continue in full force and effect thereafter.

(c) Binding Effect. The provisions of this Release shall apply to
and be binding upon the Sellers and their respective successors, assigns,
heirs, executors and legal representatives.

(d) Number and Gender. Whenever the singular number is used herein,
the same shall include the plural where appropriate, and words of any gender
shall include each other gender where appropriate.

(e) Waivers. No waiver of any provision hereof shall be valid or
enforceable unless such waiver is in writing and signed by the party hereto
giving such waiver. Notwithstanding anything herein to the contrary, nothing
herein shall affect, limit, or modify in any way the representations and
warranties or other agreements and covenants of the Sellers or the Purchaser
contained in the Stock Purchase Agreement.

(f) Intent of the Parties. The purpose and intent of this Release is
the termination and discharge of all disputes, controversies, claims, debts and
causes of action which exist or could exist as of the date hereof between the
Purchaser and/or the Company and a Seller, or among any of the Sellers, except
as otherwise specifically provided in Section 2 hereof, and this Release shall
be interpreted and construed broadly so as to accomplish such purpose and
intent.

(g) Acknowledgment. The Sellers acknowledge that each of them has
read and fully understands all of the provisions of the Release, and recognize
and acknowledge that such Release is a general release by each such party of
all claims against the Purchaser, the Company, Kopp and the Sellers, subject
only to the exception stated in Section 2 hereof.

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<PAGE> 71

(h) Counterparts. This Release may be executed in two or more
counterparts, each of which shall be an original, but which together shall
constitute one with the same agreement.

(i) Governing Law. This Release shall be governed by and construed
and enforced in accordance with the law of the State of Missouri.

(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)

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<PAGE> 72

IN WITNESS WHEREOF, the parties have executed this Release as of the
day and year first above written.

PURCHASER: COMPANY:

UNITED DENTAL CARE, INC. KANSAS CITY DENTAL CARE, INC.

By: By:
------------------------------ ------------------------------
William H. Wilcox, President George C. Kopp, III, President

SELLERS:

- ------------------------------ ---------------------------------
JOHN E. CARLIN, Ph.D. FRANK J. SCHLOEGEL, III

---------------------------------
J. DENNIS DLABAL, D.D.S.

THE FRANK J. SCHLOEGEL
CHARITABLE REMAINDER
UNITRUST I, UID JULY 12, 1996

THE JOHN E. CARLIN CHARITABLE
By: REMAINDER UNITRUST, UID
------------------------------ JUNE 28, 1996
Robert E. Miller,
Independent Trustee
By:
------------------------------
Daniel J. Markowitz,
Independent Trustee
THE FRANK J. SCHLOEGEL
CHARITABLE REMAINDER THE J. DENNIS DLABAL CHARITABLE
UNITRUST II, UID JULY 12, 1996 TRUST, UID SEPTEMBER 5, 1996

By: TRUST COMPANY OF MANHATTAN,
By: Independent Trustee
------------------------------
Robert E. Miller,
Independent Trustee By:
------------------------------
Its:
-----------------------------

- ------------------------------
GEORGE C. KOPP, III

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<PAGE> 73
EXHIBIT E

POST-CLOSING ESCROW AGREEMENT

This Post-Closing Escrow Agreement (this "Agreement") is made as of
the _______ day of __________, 1996 (the "Effective Date") by and among United
Dental Care, Inc., a Delaware corporation ("Purchaser"), John E. Carlin, Ph.D.
("Carlin"), Frank J. Schloegel, III ("Schloegel") and J. Dennis Dlabal, D.D.S.
("Dlabal"), (collectively referred to herein as the "Individual Sellers" and
individually as an "Individual Seller"), and UMB Bank, N.A., escrow agent (the
"Escrow Agent").

WHEREAS, Purchaser, the Individual Sellers, and Kansas City Dental
Care, Inc., a Missouri corporation (the "Company"), together with certain other
stockholders of the Company, entered into a Stock Purchase Agreement, dated as
of September ___, 1996 (the "Stock Purchase Agreement"), providing for the sale
of all of the issued and outstanding shares of capital stock of the Company to
Purchaser; and

WHEREAS, pursuant to the Stock Purchase Agreement, the Individual
Sellers agreed to place the sum of Three Hundred Fifty Thousand Dollars
($350,000) of the Purchase Price paid to Individual Sellers in escrow for the
purposes hereinafter set forth upon the consummation of the transactions
contemplated by the Stock Purchase Agreement; and

WHEREAS, the transactions contemplated by Stock Purchase Agreement
have been consummated on the date hereof and the parties desire to effectuate
the provisions of the Stock Purchase Agreement with respect to such
post-closing escrow fund;

NOW, THEREFORE, in consideration of the premises and the mutual terms
and conditions of the Stock Purchase Agreement hereof, the parties hereby agree
as follows:

1. Escrow Money. Simultaneously with the execution of this Agreement,
the Individual Sellers have deposited with the Escrow Agent the sum of Three
Hundred Fifty Thousand Dollars ($350,000) (the "Escrow Money") which
constitutes a portion of the purchase price paid to the Individual Sellers
pursuant to the Stock Purchase Agreement. Each Individual Seller has an equal
one-third (33.3%) interest in the Escrow Money. The receipt of the deposit of
the Escrow Money is hereby acknowledged by the Escrow Agent by its execution
hereof.

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Care/John E. Carlin, Ph.D./Frank J. Schloegel, III/J. Dennis Dlabal
Post-Closing Escrow Account" and shall deposit the Escrow Money into such
escrow account. The Escrow Agent shall invest monies held in the Escrow Account
in Scout Prime Money Market Fund, Scout Federal Money Market Fund, UMB Money
Market Special, treasury bills or other similar instruments directed in writing
by the Individual Sellers with a maturity date not in excess of ninety (90)
days under the social security numbers of Individual Sellers. It is understood
and agreed that the Escrow Agent will be issuing a 1099 INT Statement to each
Seller and the Internal Revenue Service. Individual Sellers shall have the
responsibility as to any 1099 INT reporting thereof. The Escrow Agent shall
invest the Escrow Money as the Individual Sellers direct pursuant to reasonable
investment instructions of Individual Sellers which in each case may be given
verbally and confirmed in writing and sent to the Escrow Agent no later than
the next business day. The Escrow Money shall at all times be held in a
separate escrow account and shall only be delivered pursuant to the terms and
conditions of this Agreement.

3. Terms of Escrow. The Escrow Money shall be held in the Escrow
Account as a fund available to satisfy any obligations of Individual Sellers to
Purchaser which may arise under Section 11.2(a) of the Stock Purchase Agreement
in the manner set forth below:

(a) In the event that Purchaser shall assert a claim or
claims against Individual Sellers arising out of or relating to any
matter with respect to which Purchaser asserts that it is entitled to
be indemnified by Individual Sellers pursuant to Section 11.2(a) of
the Stock Purchase Agreement (collectively, the "Claims"; singularly a
"Claim"), Purchaser shall furnish written notice of the Claim (the
"Notice of Claim") to Individual Sellers and the Escrow Agent on or
before the day preceding the second anniversary of the Effective Date
(the "Release Date"). The Notice of Claim: (i) shall state in
reasonable detail the nature of Individual Sellers' alleged liability;
(ii) shall state the amount of the payment that Purchaser claims it is
entitled to receive from the Escrow Money based upon Purchaser's
estimate of the potential loss; and (iii) shall further provide a
particularized statement explaining the basis for such estimate.
Individual Sellers shall have thirty (30) days after receipt by the
Escrow Agent of the Notice of Claim in which to advise the Escrow
Agent and Purchaser that it disputes the Claim by delivering written
notice of Individual Sellers' dispute ("the Notice of Dispute") to the
Escrow Agent and Purchaser. The Notice of Dispute may contest all or
any portion of the Notice of Claim based on a dispute concerning the
existence of a Claim, Individual Sellers' liability, the estimated
amount of the alleged loss or any other related matter.

(b) If Escrow Agent fails to receive a Notice of Dispute
within such thirty (30) day period, Individual Sellers shall be deemed
to have acknowledged that Purchaser is entitled to payment as set
forth in the Notice of Claim and shall be deemed to have directed the
Escrow Agent to disburse such payment (the "Claim Payment") to
Purchaser. In the event a Notice of Dispute is timely received by the
Escrow Agent, then the undisputed portion of the Claim, if any (the
"Undisputed Claim Payment"), shall be promptly disbursed to Purchaser
from the Escrow Account and only the sum that is subject to a dispute
shall be held by the Escrow Agent until the Claim is resolved;
provided, however, that any Claim which is based upon the assertion or
threat of a third

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<PAGE> 75

party claim against Purchaser shall be conclusively deemed to be
resolved two (2) years after the Notice of Claim is delivered unless
litigation, arbitration, assessment or some other formal proceeding is
commenced against Purchaser by the Escrow Agent within that two (2)
year period. If such a formal proceeding is not commenced within such
two (2) year period, then the Claim shall be deemed abandoned and of
no further force and effect for purposes of this Agreement. In the
event a formal proceeding is commenced within the two (2) year period,
then the resolution of the Claim will occur only upon the resolution
of such proceeding and any related appellate proceedings.

(c) Subject to Individual Sellers' right to dispute a Claim,
once a Notice of Claim is received by the Escrow Agent, the Escrow
Agent shall not permit the Escrow Money to be reduced by disbursement
to Individual Sellers to an amount which is less than the difference
between the aggregate dollar amount of each Claim for which a Notice
of Claim has been received by the Escrow Agent on or prior to the
Release Date in accordance with the terms of Section 3(a) above less
the amount of $25,000 (unless such claim is not subject to the
Threshold limitation as specified in Section 11.4(a) of the Stock
Purchase Agreement and such fact is so stated in the Notice of Claim).
Furthermore, if the amount of any Claim or the aggregate amount of any
Claims should ever exceed the sum of $25,000 plus the amount of the
Escrow Money, then no portion of the Escrow Money shall be disbursed
pursuant to Section 3(d) below, during such time that such a deficit
exists.

(d) On the Release Date, the Escrow Agent shall
unconditionally disburse to Individual Sellers the portion of the
Escrow Money to the extent it exceeds the sum of: (i) the aggregate
dollar amount of each Claim previously paid pursuant to the terms of
this Agreement and the Stock Purchase Agreement; plus (ii) the
aggregate dollar amount of any then existing Claim or Claims for which
a Notice of Claim was delivered on or prior to the Release Date in
accordance with the terms of Section 3(a) above less the amount of
$25,000 (unless such claim is not subject to the Threshold limitation
as specified in Section 11.4(a) of the Stock Purchase Agreement and
such fact is so stated in the Notice of Claim). The remaining portion
of the Escrow Money not distributed, if any, shall continue to be held
pursuant to the terms of this Agreement and shall be unconditionally
disbursed to Individual Sellers (or Purchaser, if appropriate), in one
or more disbursements, from time to time, upon final resolution of all
Claims involving such funds. Notwithstanding the foregoing, if the
aggregate amount of the Adjustment Amount to be paid by the Purchaser
pursuant to Section 2.3 of the Stock Purchase Agreement (which amount,
when agreed upon, shall be certified in writing by the Purchaser to
the Escrow Agent) is less than $350,000, then the Escrow Agent shall
disburse any amount payable to the Individual Sellers under this
Section 3(d) to George C. Kopp, III until the sum of the Adjustment
Amount and the disbursements to George C. Kopp, III equal $350,000.
George C. Kopp, III is an intended third party beneficiary of this
Section 3(d) and shall be entitled to enforce the same against the
Individual Sellers and the Escrow Agent as if he were a signatory
hereto.

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<PAGE> 76

(e) Unless delivery is made in person at the Escrow Agent's
office or unless the Escrow Agent is properly instructed in writing by
Purchaser or Individual Sellers, as the case may be, to make delivery
in such other manner, the Escrow Agent shall be deemed to have
properly delivered to Purchaser or Individual Sellers, as the case may
be, such funds as Purchaser or Individual Sellers are entitled to
receive, upon placing a check or draft for such amount in United
States Mail in a suitable package or envelope, registered or certified
mail, return receipt requested, postage prepaid, addressed to the
address listed in Section 7 hereof or such other address as may be
furnished to the Escrow Agent in writing.

(f) Without any notice to or consent by Purchaser, interest,
dividends, capital gains, distributions or other earnings on the
Escrow Money shall be released to Individual Sellers by the Escrow
Agent quarterly on a pro-rata basis pursuant to the instructions of
Individual Sellers, both before and after the Release Date.

(g) Notwithstanding any other provision hereof which shall
direct the release of all or a part of the Escrow Money on a
particular date, without the prior written consent of Purchaser and
Individual Sellers as to any withdrawal before the Release Date, and
without the prior written consent of Individual Sellers as to any
withdrawal on or after the Release Date, the Escrow Agent shall not
withdraw any investment of the Escrow Money prior to the maturity date
of such investment to make a payment to Purchaser or Individual
Sellers hereunder if such withdrawal will cause an early withdrawal
penalty to be imposed or any loss of principal from such withdrawal to
occur. If such a penalty would be imposed or any loss of principal
would occur if the investment were to be withdrawn, the payment of any
amounts of the Escrow Money due to Individual Sellers or to Purchaser
shall be made as soon as practicable after the maturity date of the
investment.

4. Liability of Escrow Agent. Individual Sellers and Purchaser agree
that the following provisions shall control with respect to the rights, duties,
liabilities, privileges and immunities of the Escrow Agent:

(a) The Escrow Agent is not a party to, and is not bound by,
or charged with notice of, any agreement out of which this escrow may
arise.

(b) The Escrow Agent acts hereunder as a depository only, and
is not responsible or liable in any manner whatsoever for the
sufficiency, correctness, genuineness or validity of the subject
matter of the escrow, or any part thereof, or for the form or
execution thereof, or for the identity or authority of any person
executing or depositing the escrow. The Escrow Agent shall not be
liable for anything that it may do or refrain from doing in connection
herewith, except its gross negligence or willful misconduct.

(c) The Escrow Agent shall be protected in acting upon any
written notice, request, waiver, consent, certificate, receipt,
authorization, power of attorney, or other

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<PAGE> 77

paper or document which the Escrow Agent in good faith believes to be
genuine and what it purports to be.

(d) Individual Sellers and Purchaser, jointly and severally,
agree to indemnify and hold the Escrow Agent harmless against any and
all losses, claims, demands, liabilities and expenses, including
attorney's fees and costs, which may be incurred by the Escrow Agent
in connection with the acceptance and performance or non-performance
of its duties hereunder, excluding, however, any such liability
resulting from its gross negligence, willful misconduct or breach of
its instructions under this Agreement. In the event the Escrow Agent
becomes involved in litigation in connection with this escrow,
Individual Sellers and Purchaser, jointly and severally, agree to
indemnify and save the Escrow Agent harmless from any and all losses,
claims, damages, liabilities and expenses, including attorney's fees
and costs, which may be incurred or suffered by Escrow Agent as a
result thereof, excluding, however, any such liability resulting from
its gross negligence, willful misconduct, or breach of its
instructions under this Agreement.

(e) In the event of any disagreement between any of the
parties to this Agreement resulting in adverse claims or demands being
made in connection with the Escrow Money, or in the event the Escrow
Agent in good faith is in doubt as to what action it should take
hereunder, the Escrow Agent may, at its option, refuse to comply with
any claims or demands on it, or refuse to take any other action
hereunder, so long as such disagreement continues or doubt exists, and
in such event, the Escrow Agent shall not be or become liable in any
way or to any person for its failure or refusal to act, and the Escrow
Agent shall be entitled to continue to so refrain from acting until
(i) the rights of all the parties shall have been fully and finally
adjudicated by a court of competent jurisdiction, or (ii) all
differences shall have been adjudicated and all doubt resolved by
agreement among all the interested parties and the Escrow Agent shall
have been notified thereof pursuant to written directions duly
executed by all such persons.

(f) The Escrow Agent may consult with legal counsel in the
event of any dispute or question as to the construction of any of the
provisions hereof or its duties hereunder, and it shall incur no
liability and shall be fully protected in acting in accordance with
the opinion and instructions of such counsel.

5. Compensation of Escrow Agent. The fees and expenses of the Escrow
Agent in connection with this Agreement shall be paid by Purchaser. The
acceptance and routine maintenance fee for the Escrow Agent in connection with
this Agreement shall be Two Thousand Two Hundred Dollars ($2,200.00); provided,
however, that such fee is acknowledged to represent the fee for expected
minimum routine services and expenses for the expected duration of the escrow
(i.e. assumes no more than three disbursements by wire transfer, ten investment
purchases of Treasury Bills or commercial paper, quarterly disbursement of
income to the three Individual Sellers and termination on or before the
twenty-eighth month of the escrow) and does not include services and expenses
in connection with disputes, extensions or other additional services.
Additional services will be charged and payable at the rates in force for the
Corporate

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<PAGE> 78

Trust Division of the Escrow Agent at the time such services are provided, plus
reimbursement for any out-of-pocket expenses incurred. The employment of
outside counsel or agents is not anticipated and the above fees and expenses
include no fees or expenses for such employment.

6. Non-Waiver. Nothing contained in this Agreement shall be deemed or
construed to release or waive any of the rights or obligations of Purchaser or
Individual Sellers under the Stock Purchase Agreement, and all rights and
remedies of Individual Sellers and Purchaser under this Agreement are
cumulative of all other rights which either of them may have under the Stock
Purchase Agreement, by law or otherwise.

7. Notices. Any notices, claims or demands which any party is required
or may desire to give to another under or in conjunction with this Agreement
shall be in writing, and shall be given by addressing the same to such other
party(ies) at the address set forth below, and by: (i) depositing the same so
addressed, postage prepaid, certified or registered, in United States mail,
return receipt requested, (herein referred to as "Mailing"); (ii) overnight
delivery by a nationally recognized overnight courier service (e.g. UPS,
Federal Express); (iii) delivering the same personally to such other
party(ies); or (iv) transmitting by facsimile and Mailing the original. Any
notice shall be deemed to have been given upon actual receipt by the addressee
if addressed as follows:

(a) If to Individual Sellers, at their respective addresses
shown below their signatures to this Agreement.

(b) If to Purchaser:

United Dental Care, Inc.
14755 Preston Road
Suite 300
Dallas, Texas 75240
Attn: Mr. William H. Wilcox, President

UMB Bank, N.A.
928 Grant Avenue
Kansas City, MO 64106
Attn: Corporate Trust Division
Facsimile Number: (816) 221-0438

Any of the parties hereto may change the address for notices to be sent to it
by written notice delivered pursuant to the terms of this section.

8. Entire Agreement; Amendments. This Agreement sets forth the entire
understanding of the parties and supersedes all prior agreements or
understandings, whether

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<PAGE> 79

written or oral, with respect to the subject matter hereof. No terms,
conditions or agreements other than those contained herein, and no amendments
or modifications hereto shall be valid unless made in writing and signed by the
parties hereto.

9. Capitalized Terms. Capitalized terms in this Agreement which are
not otherwise defined herein shall have the same meanings as are provided for
such terms in the Stock Purchase Agreement.

10. Binding Effect. This Agreement shall extend to and be binding upon
and inure to the benefit of the parties hereto, their respective successors and
assigns.

11. Waiver; Remedies. Waiver by any party hereto of any breach of or
exercise of any rights under this Agreement shall not be deemed to be a waiver
of similar or other breaches or rights or a future breach of the same duty. The
failure of a party to take any action by reason of any such breach or to
exercise any such right shall not deprive any party of the right to take any
action at any time while such breach or condition giving rise to such right
continues. The parties shall have all remedies permitted to them by this
Agreement or law, and all such remedies shall be cumulative.

12. Termination. This Agreement shall terminate at such time as all of
the Escrow Money shall have been released in accordance with the terms and
conditions of this Agreement.

13. Notification. Escrow Agent by Escrow Agent's execution
acknowledges that Escrow Agent has received notification of Purchaser's
interest in the Escrow Money.

14. Resignation and Termination. The Escrow Agent may resign as such
by delivering written notice to that effect at least sixty (60) days prior to
the effective date of such resignation to Individual Sellers and Purchaser.
Upon expiration of such sixty (60) day notice period, the Escrow Agent may
deliver the portion of the Escrow Money remaining in its possession to any
successor Escrow Agent appointed by Individual Sellers and Purchaser pursuant
to this Section 14 or, if no successor Escrow Agent has been appointed, to any
court of competent jurisdiction in Jackson County, Missouri, or in accordance
with the joint written instructions of Purchaser and Individual Sellers.
Purchaser and Individual Sellers, acting jointly, may terminate the Escrow
Agent from its position as such by delivering to the Escrow Agent written
notice to that effect executed by Purchaser and Individual Sellers at least
thirty (30) days prior to the effective date of such termination. In the event
of such resignation or termination of the Escrow Agent, a successor Escrow
Agent shall be appointed by mutual agreement between Purchaser and Individual
Sellers, and the Escrow Agent shall deliver the portion of the Escrow Money
remaining in its possession to such successor Escrow Agent. From and after the
appointment of a successor Escrow Agent pursuant to this Section 14, the rights
and duties of the Escrow Agent hereunder shall cease and terminate, and all
references herein to the Escrow Agent shall be deemed to be to such successor
Escrow Agent. The delivery by the Escrow Agent of the Escrow Money hereunder in
accordance with the provisions of this Section 14 shall constitute a full and
sufficient discharge and acquittance of the Escrow Agent in respect to such
sums delivered, and the Escrow Agent shall be entitled to receive releases and
discharges

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<PAGE> 80

therefor. The indemnities in favor of the Escrow Agent contained in this
Agreement and the obligations of Purchaser and Individual Sellers under Section
4 hereof shall survive for the benefit of the Escrow Agent after any
resignation or termination.

15. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but which together
shall constitute one and the same agreement.

16. Security Interests. No party to this Agreement shall grant a
security interest in any monies or other property deposited with the Escrow
Agent under this Agreement, or otherwise create a lien, encumbrance or other
claim against such monies or borrow against the same."

(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)

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IN WITNESS WHEREOF, the parties hereto have executed this Post-Closing
Escrow Agreement as of the day and year first written above.

PURCHASER: SELLERS:

UNITED DENTAL CARE, INC.
---------------------------------
By: JOHN E. CARLIN, Ph.D.
------------------------------ Address: 1712 Denholm
William H. Wilcox, President Manhattan, KS 66503

ESCROW AGENT:

UMB Bank, N.A. ---------------------------------
By: FRANK J. SCHLOEGEL, III
------------------------------ Address: 415 West Dartmouth
Its: Kansas City, MO 64113
-----------------------------
Address: 928 Grand Avenue
Kansas City, MO 64106

---------------------------------
J. DENNIS DLABAL, D.D.S.
Address: 3415 Top of the World
Manhattan, KS 66502

<PAGE> 1

EXHIBIT 10.35

EXHIBIT B

EARNEST MONEY ESCROW AGREEMENT

This Earnest Money Escrow Agreement (this "Agreement") is made as of
the 11 day of September, 1996 (the "Effective Date") by and among United Dental
Care, Inc., a Delaware corporation ("Purchaser"), John E. Carlin, Ph.D.
("Carlin"), Frank J. Schloegel, III ("Schloegel"), J. Dennis Dlabal, D.D.S.
("Dlabal", and together with Carlin and Schloegel, the "Individual Sellers"),
The John E. Carlin Charitable Remainder Unitrust, UID June 28, 1996, the Frank
J. Schloegel Charitable Remainder Unitrust I, UID July 12, 1996, and the Frank
J. Schloegel Charitable Remainder Unitrust II, UID July 12, 1996, and The J.
Dennis Dlabal Charitable Remainder Trust, UID September 5, 1996 (collectively
referred to herein as the "Sellers" and individually as a "Seller"), and UMB
Bank, N.A., escrow agent (the "Escrow Agent").

WHEREAS, Sellers and Purchaser have entered into that certain Stock
Purchase Agreement dated September 11, 1996 (the "Stock Purchase Agreement")
providing for the purchase of all the issued and outstanding shares (the
"Shares") of capital stock of Kansas City Dental Care, Inc., a Missouri
corporation (the "Company"), from the Sellers by Purchaser; and

WHEREAS, in connection with the execution of the Stock Purchase
Agreement, Purchaser agreed to place the sum of Two Hundred Thousand and
no/100ths Dollars ($200,000) in escrow for the purposes hereinafter set forth.
(Such escrow deposit and any interest earned thereon while such funds are in
escrow are referred to herein as the "Escrow Money"); and

WHEREAS, the parties desire to effectuate the provisions of the Stock
Purchase Agreement with respect to the Escrow Money;

NOW, THEREFORE, IN CONSIDERATION OF THE PREMISES and the mutual terms
and conditions hereof, the parties hereby agree as follows:

1. Escrow Money. Simultaneously with the execution of this
Agreement, Purchaser has deposited the sum of $200,000 with the Escrow Agent,
the receipt of which is hereby acknowledged by the Escrow Agent by its
execution hereof.

2. Escrow Account. The Escrow Money shall be held in escrow by
the Escrow Agent pursuant to the terms and conditions of this Agreement. Upon
receipt of the Escrow Money, the Escrow Agent shall establish a separate escrow
account entitled "United Dental Care and Kansas City Dental Care Earnest Money
Escrow Account" and shall deposit the Escrow Money therein and shall report any
income thereon under the federal tax identification (ID)

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<PAGE> 2
number of the Purchaser (#75-2309712) as certified by the Purchaser in a Form
W-9 executed and delivered to the Escrow Agent simultaneously with the
execution of this Agreement. It is understood and agreed that the Escrow Agent
will be issuing a 1099 INT statement to the Purchaser and the Internal Revenue
Service, even though the interest may be payable eventually to either the
Purchaser or the Sellers as the case may be. The Purchaser shall have the
responsibility as to any 1099 INT reporting thereof. The Escrow Agent may
invest the Escrow Money in UMB Money Market Special, Scout Prime Money Market
Fund or Scout Federal Money Mutual Fund as the Purchaser may direct pursuant to
reasonable investment instructions of Purchaser which in each case may be given
verbally and confirmed in writing and sent to the Escrow Agent no later than
the next business day. The Escrow Money shall at all times be held in a
separate escrow account and shall only be delivered pursuant to the terms and
conditions of this Agreement.

3. Terms of Escrow. The Escrow Money shall be held as a trust
deposit and shall be applied by the Escrow Agent in accordance with the
following terms and directions:

(b) Application upon Termination. If Purchaser fails to
consummate the Stock Purchase Agreement for any reason other than (i)
a material breach of the Stock Purchase Agreement or this Agreement by
Sellers or (ii) the valid exercise of any right of termination by
Purchaser expressly set forth in the Stock Purchase Agreement, then
the Sellers shall furnish written notice to Purchaser and the Escrow
Agent of Purchaser's failure to consummate the Stock Purchase
Agreement and directing that the Escrow Money be paid to the Sellers.
Ten (10) days after such notice is received by Purchaser and the
Escrow Agent as proven by cancellation marks on registered or
certified mail return receipts, the Sellers shall be entitled to be
paid the Escrow Money on pro rata basis determined according to the
percentage of the Purchase Price under the Stock Purchase Agreement
(which amounts shall be certified in writing to the Escrow Agent by
the Sellers) that would have been payable to the Sellers and the
Escrow Agent shall release the Escrow Money to the Sellers on such pro
rata basis. Otherwise, ten (10) days after receipt of written
notice/demand from the Purchaser to the Sellers and the Escrow Agent
that one of the conditions stated in (i) or (ii) above has occurred
and that the Purchaser is entitled to receive a refund of the Escrow
Money, as proven by cancellation marks on registered or certified mail
return receipts, the Purchaser shall be entitled to be refunded the
Escrow Money and the Escrow Agent shall release the Escrow Money to
the Purchaser.

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<PAGE> 3
(c) Automatic Termination. In the event that the Escrow
Agent has not received instructions as to the release of the Escrow
Money before March 11, 1997, then this Escrow Agreement shall
automatically terminate on March 11, 1997 and the Escrow Agent shall
refund the Escrow Money to Purchaser without the necessity of any
further notice or instructions of any kind.

(d) Interest. Interest earned on the Escrow Money shall
be deemed a part of and applied together with the Escrow Money and
paid to the Sellers or to Purchaser as the case may be as specified
above.

4. Liability of Escrow Agent. Purchaser and Sellers hereby agree
that the following provisions shall control with respect to the rights, duties,
liabilities, privileges and immunities of the Escrow Agent:

(a) The Escrow Agent is not a party to, and is not bound
by, or charged with notice of, any agreement out of which this escrow
may arise.

(b) The Escrow Agent acts hereunder as a depository only,
and is not responsible or liable in any manner whatsoever for the
sufficiency, correctness, genuineness or validity of the subject
matter of the escrow, or any part thereof, or for the form or
execution thereof, or for the identity or authority of any person
executing or deposition the escrow. The Escrow Agent shall not be
liable for anything that it may do or refrain from doing in connection
herewith, except its gross negligence or willful misconduct.

(d) Purchaser and the Sellers, jointly and severally,
agree to indemnify and hold the Escrow Agent harmless against any and
all losses, claims, demands, liabilities and expenses, including
attorney's fees and costs, which may be incurred by the Escrow Agent
in connection with the acceptance and performance or non- performance
of its duties hereunder whether such losses, claims, demands,
liabilities and expenses arise during or subsequent to performance of
this Agreement, directly or indirectly, excluding, however, any such
liability resulting from its gross negligence, willful misconduct, or
breach of its instructions under this Agreement. In the event the
Escrow Agent becomes involved in litigation in connection with this
escrow, Purchaser and the Sellers, jointly and severally, agree to
indemnify and save the Escrow Agent harmless from any and all losses,
claims, damages, liabilities and expenses, including attorney's fees
and costs, interpleader costs and judgments, which may be incurred or
suffered by Escrow Agent as a result thereof, excluding, however, any
such liability resulting from its gross negligence, willful
misconduct, or breach of its instructions under this Agreement.

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<PAGE> 4
(e) In the event of any disagreement between any of the
parties to this Agreement or with any third person resulting in
adverse claims or demands being made in connection with the Escrow
Money, or in the event the Escrow Agent in good faith is in doubt as
to what action it should take hereunder, the Escrow Agent may,
at its option, refuse to comply with any claims or demands on it, or
refuse to take any other action hereunder, so long as such
disagreement continues or doubt exists, and in such event, the Escrow
Agent shall not be or become liable in any way or to any person for
its failure or refusal to act, and the Escrow Agent shall be entitled
to continue to so refrain from acting until (i) the rights of all the
parties shall have been fully and finally adjudicated by a court of
competent jurisdiction, or (ii) all differences shall have adjusted
and all doubt resolved by agreement among all the interested parties
and the Escrow Agent shall have been notified thereof pursuant to
written directions duly executed by all such persons. In the event of
conflicting demands on the Escrow Agent by the principals, the Escrow
Agent may, at its option, deposit any and all funds in question with
the court that would have jurisdiction over the matter, and in such
event, the Escrow Agent is relieved of any further responsibility in
connection with this escrow.

(f) The Escrow Agent may consult with legal
counsel in the event of any dispute or question as to the construction
of any of the provisions hereof or its duties hereunder, and it shall
incur no liability and shall be fully protected in acting in
accordance with the opinion and instructions of such counsel.

5. Compensation of Escrow Agent. All fees and expenses of the
Escrow Agent shall be paid equally by the Sellers and the Purchaser. The
acceptance and routine maintenance fee for the Escrow Agent in connection with
this Agreement shall be Eight Hundred Fifty and no/100ths Dollars ($850.00);
provided, however, that such fee is acknowledged to represent the fee for
expected minimum routine services and expenses for the expected six (6) month
duration of the escrow and does not include services and expenses in connection
with disputes, extensions or other additional services. Additional services
will be charged and payable at the rates in force for the Corporate Trust
Division of the Escrow Agent at the time such services are provided, plus
reimbursement for any out-of-pocket expenses incurred. The employment of
outside counsel or agents is not anticipated and the above fees and expenses
include no fees or expenses for such employment.

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<PAGE> 5
by a nationally recognized overnight courier service (e.g. UPS, Federal
Express), (iii) delivering the same personally to such other party(ies), or
(iv) transmitting by facsimile and Mailing the original. Any notice shall be
deemed to have been given upon actual receipt by the addressee if addressed as
follows:

a. If to Purchaser:

United Dental Care, Inc.
14755 Preston Road
Dallas, Texas 75240
Attention: Mr. William H. Wilcox, President
Facsimile Number: (214) 458-7963

b. If to Sellers:

c/o Kansas City Dental Care, Inc.
7447 Holmes
Kansas City, Missouri 64131
Attention: George C. Kopp, III
Facsimile No.: (816) 523-8161

c. If to Escrow Agent:

UMB Bank, N.A.
928 Grand Avenue
Kansas City, Missouri 64106
Attention: Corporate Trust Division
Facsimile No.: (816) 221-0438

Any of the parties hereto may change the address or facsimile telephone number
for notices to be sent to it by written notice delivered pursuant to the terms
of this section.

9. Capitalized Terms. Capitalized terms in this Agreement which
are not otherwise defined herein shall have the same meanings as are provided
for such terms in the Stock Purchase Agreement.

10. Binding Effect. This Agreement shall extend to and be binding
upon and inure to the benefit of the parties hereto, their respective
successors and assigns.

5
<PAGE> 6
11. Termination. This Agreement shall terminate at such time as
all of the Escrow Money shall have been released in accordance with the terms
and conditions of this Agreement.

14. Attorney's Fees. In the event any action or proceeding is
commenced by Sellers or the Purchaser, to (i) determine rights, duties or
obligations hereunder, (ii) determine a breach hereof and obtain damages
therefor, or (iii) otherwise enforce this Agreement, the prevailing party in
such action or proceeding shall be entitled to recover from the other party all
costs and expenses thereof, including reasonable attorney's fees and costs.

15. Governing Law. This Agreement shall be construed under and
governed by the internal laws, and not the law of conflicts, of the State of
Missouri.

16. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but which together
shall constitute one and the same agreement.

17. Resignation and Termination. The Escrow Agent may resign as
such by delivering written notice to that effect at least sixty (60) days prior
to the effective date of such resignation to Individual Sellers and Purchaser.
Upon expiration of such sixty (60) day notice period, the Escrow Agent may
deliver the portion of the Escrow Money remaining in its possession to any
successor Escrow Agent appointed by Individual Sellers and Purchaser pursuant
to this Section 17 or, if no successor Escrow Agent has been appointed, to any
court of competent jurisdiction in Jackson County, Missouri, or in accordance
with the joint written instructions of Purchaser and Individual Sellers.
Purchaser and Individual Sellers, acting jointly, may terminate the Escrow
Agent from its position as such by delivering to the Escrow Agent written
notice to that effect executed by Purchaser and Individual Sellers at least
thirty (30) days prior to the effective date of such termination. In the event
of such resignation or termination of the Escrow Agent, a successor Escrow
Agent shall be appointed by mutual agreement between Purchaser and Individual
Sellers, and the Escrow Agent shall deliver the portion of the Escrow Money
remaining in its possession to such successor Escrow Agent. From and after the
appointment of a successor Escrow Agent pursuant to this Section 17, the rights
and duties of the Escrow Agent hereunder shall cease and terminate, and all
references herein to the Escrow Agent shall be deemed to be to such successor
Escrow Agent. The delivery by the Escrow

6
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Agent of the Escrow Money hereunder in accordance with the provisions of this
Section 17 shall constitute a full and sufficient discharge and acquittance of
the Escrow Agent in respect to such sums delivered, and the Escrow Agent shall
be entitled to receive releases and discharges therefor. The indemnities in
favor of the Escrow Agent contained in this Agreement and the obligations of
Purchaser and Individual Sellers under Section 4 hereof shall survive for the
benefit of the Escrow Agent after any resignation or termination.

18. Security Interests. No party to this Agreement shall grant a
security interest in any monies or other property deposited with the Escrow
Agent under this Agreement, or otherwise create a lien, encumbrance or other
claim against such monies or borrow against the same.

(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)

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IN WITNESS WHEREOF, the parties have executed this Earnest Money
Escrow Agreement as of the day and year first written above.

<TABLE>
<CAPTION>
PURCHASER: ESCROW AGENT:

<S><C> <C> <C>
UNITED DENTAL CARE, INC. UMB BANK, N.A.
By: /s/ WILLIAM H. WILCOX By: /s/ FRANK BARNWELL
------------------------------------- -------------------------------------
William H. Wilcox, President Its: Vice President
-------------------------------------
Address: 928 Grand Avenue
Kansas City, Missouri 64106

SELLERS:

/s/ JOHN E. CARLIN /s/ FRANK J. SCHLOEGEL, III
- ---------------------------------------------- ----------------------------------------------
JOHN E. CARLIN, Ph.D. FRANK J. SCHLOEGEL, III
Address: 1712 Denholm Address: 415 West Dartmouth
Manhattan, Kansas 66503 Kansas City, Missouri 64113

THE JOHN E. CARLIN CHARITABLE
REMAINDER UNITRUST, UID
JUNE 28, 1996

By: /s/ DANIEL J. MARKOWITZ /s/ J. DENNIS DLABAL
---------------------------------------------- ----------------------------------------------
Daniel J. Markowitz, Independent Trustee J. DENNIS DLABAL, D.D.S.
Address: 9300 W. 110th Street, Suite 480 Address: 3415 Top of the World
Overland Park, Missouri 66210 Manhattan, Kansas 66502

THE FRANK J. SCHLOEGEL THE FRANK J. SCHLOEGEL
CHARITABLE REMAINDER UNITRUST CHARITABLE REMAINDER UNITRUST
I, UID JULY 12, 1996 II, UID JULY 12, 1996

By: /s/ ROBERT E. MILLER By: /s/ ROBERT E. MILLER
---------------------------------------------- ----------------------------------------------
Robert E. Miller, Independent Trustee Robert E. Miller, Independent Trustee
Address: 114 W. Gregory Adress: 114 W. Gregory
Kansas City, Missouri 64114 Kansas City, Missouri 64114

THE J. DENNIS DLABAL CHARITABLE
REMAINDER TRUST, UID SEPTEMBER 1996

By: Trust Company of Manhattan,
Independent Trustee

By: /s/ JODI L. KAUS
------------------------------------
Its: Asst. Trust Officer
------------------------------------
Address: 330 Poyntz
Manhattan, Kansas 66502
</TABLE>

<PAGE> 1

EXHIBIT 10.36

STOCK PURCHASE AGREEMENT

AMONG

UNITED DENTAL CARE, INC.,

AS PURCHASER

AND

FRANK A. PETTISANI, D.D.S.,

LISA M. MAZZONE,

FRANK A. PETTISANI, JR., D.D.S.,

CHARLES A. COSTA,

AND

DONNA COSTA,

AS SELLERS,

AND

ORACARE CONSULTANTS, INC.

AS OF
SEPTEMBER 5, 1996
<PAGE> 2
TABLE OF CONTENTS

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ARTICLE 1 DEFINED TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

1.1 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

ARTICLE 2 PURCHASE AND SALE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

2.1 Agreement to Sell and Purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.3 Additional Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.4 Allocation of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.5 Earnest Money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.6 Covenants During Earn-Out . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF EACH SELLER . . . . . . . . . . . . . . . . . . . . . . . . . 5

3.1 Authority Relative to This Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.2 Title to Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.3 Absence of Breach; No Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF SELLERS . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

4.1 Due Organization of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.2 Subsidiaries/Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.3 Due Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.4 Capitalization of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.5 Licenses/Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.6 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.7 No Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.8 No Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.9 Title to and Condition of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.10 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.11 Real Property Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.12 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.13 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(a) Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(b) Dentists' Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(c) Other Provider Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(d) Employer Group Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(e) Management Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(f) Copies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.14 Employees, Et Cetera . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

</TABLE>

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4.15 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.16 Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.17 Accounts Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.18 Broker's and Finder's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.19 Labor Practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.20 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.21 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.22 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.23 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.24 Transactions With Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.25 Improper Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.26 Oracare DPO Agreement and Oracare PA Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.27 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF PURCHASER . . . . . . . . . . . . . . . . . . . . . . . . . . 19

5.1 Due Incorporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.2 Corporate Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.3 Absence of Breach; No Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.4 Investment Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.5 Broker's or Finder's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

ARTICLE 6 COVENANTS OF THE SELLERS AND THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

6.1 Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.2 Access and Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.3 No Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.4 Conduct of Business Prior to Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.5 Permitted Transactions Prior to Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.6 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.7 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.8 Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.9 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.10 Breach of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.11 No Transfer of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.12 Updating of Exhibits and Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

ARTICLE 7 COVENANTS OF PURCHASER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

7.1 Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.2 Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.3 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.4 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.5 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.6 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

</TABLE>

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ARTICLE 8 CONDITIONS TO OBLIGATIONS OF SELLERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

8.1 Conditions to Obligations of Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

ARTICLE 9 CONDITIONS TO OBLIGATIONS OF PURCHASER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

9.1 Conditions To Obligations of Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

ARTICLE 10 CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

10.1 Date of Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.2 Actions by Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(a) Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(b) Post-Closing Escrow Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(c) Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.3 Actions by Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(a) Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(b) Post-Closing Escrow Account. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(c) Employment Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(d) Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
10.4 Post-Closing Escrow Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

ARTICLE 11 SURVIVAL OF REPRESENTATIONS
AND WARRANTIES; INDEMNITY; POST-CLOSING MATTERS . . . . . . . . . . . . . . . . . . . . . . . . 32

11.1 Representations and Warranties to Survive . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
11.2 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
(a) Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
(b) Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11.3 Indemnity Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
11.4 Limitations on Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(a) General Threshold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(b) Time Limits for Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(c) Certain Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.5 Remedies; Default; Notice and Cure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.6 Severance Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.7 Change of Control Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

ARTICLE 12 TERMINATION; WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

12.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
(a) Mutual Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
(b) By Purchaser or Sellers: Condition Precedent . . . . . . . . . . . . . . . . . . . . . 36
(c) By Purchaser or Sellers: Representations, Warranties and Covenants . . . . . . . . . . 36

</TABLE>

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12.2 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

ARTICLE 13 CERTAIN DEFINED TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

13.1 Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
13.2 Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
13.3 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
13.4 Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
13.5 Closing Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
13.6 Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
13.7 Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
13.8 Counsel to Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
13.9 Counsel to Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
13.10 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
13.11 GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
13.12 Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
13.13 Multiemployer Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
13.14 Net Income of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
13.15 Payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
13.16 PBGC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
13.17 Pension Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
13.18 Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
13.19 Welfare Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

ARTICLE 14 NON-COMPETITION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

14.1 Covenant Not to Compete; Non-Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
14.2 Non-Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
14.3 Nondisparagement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
14.4 Reasonableness; Reformation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
14.5 Remedies for Breach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

ARTICLE 15 ARBITRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

15.1 Arbitration Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
(a) Step One . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
(b) Step Two . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
(c) Step Three . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
15.2 Self-Execution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
15.3 Arbitrator's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
15.4 Rules Governing Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
15.5 Entry of Award . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
15.6 Injunctive Relief . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
15.7 Non-Applicability to Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

</TABLE>

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<TABLE>
<S> <C> <C>
ARTICLE 16 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

16.1 Further Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
16.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
16.3 Entire Agreement; Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
16.4 Binding Effect/Assignability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
16.5 Exhibits/Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
16.6 Invalid Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
16.7 Headings/Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
16.8 Waiver; Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
16.9 Attorney's Fees and Costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
16.10 Coordination with OraCare DPO Agreement and OraCare PA Agreement . . . . . . . . . . . . . . . . 47
16.11 Time. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
16.12 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
16.13 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

</TABLE>

LIST OF EXHIBITS

Exhibit A - Share Ownership of Sellers
Exhibit B - Combined Earnings Statement
Exhibit C - Earnest Money Escrow Agreement
Exhibit D - Release
Exhibit E-1 - Costa Employment Agreement
Exhibit E-2 - Mazzone Employment Agreement
Exhibit F - Post-Closing Escrow Agreement

LIST OF SCHEDULES

Schedule 2.3 - Combined Earnings Statements
Schedule 4.5 - Licenses, Etc.
Schedule 4.8 - Undisclosed Liabilities
Schedule 4.9 - Title Encumbrances
Schedule 4.10 - Litigation
Schedule 4.11 - Real Property Leases
Schedule 4.12 - Intellectual Property
Schedule 4.13A - Material Contracts
Schedule 4.13B - Dental Provider Contracts
Schedule 4.13C - Other Provider Contracts
Schedule 4.13D - Employer Group Contracts
Schedule 4.13E - Management Contracts
Schedule 4.14 - Employees, Etc.

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Schedule 4.15 - Employee Benefit Plans
Schedule 4.16 - Receivables
Schedule 4.17 - Payables
Schedule 4.20 - Insurance
Schedule 4.21 - Consents
Schedule 4.22 - Environmental Matters
Schedule 4.23 - Taxes
Schedule 4.24 - Transactions with Affiliates
Schedule 8.1 - Debt

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<PAGE> 8
STOCK PURCHASE AGREEMENT

This Stock Purchase Agreement (this "Agreement") is made as of the 5th
day of September, 1996 (the "Effective Date") by and among United Dental Care,
Inc., a Delaware corporation ("Purchaser"), Frank A. Pettisani, D.D.S., Lisa M.
Mazzone, Frank A. Pettisani, Jr., D.D.S., Charles A. Costa, and Donna Costa
(collectively referred to herein as the "Sellers" and individually as a
"Seller"), and OraCare Consultants, Inc., a New Jersey Corporation (the
"Company").

WHEREAS, the Sellers each own the respective number of shares of
Common Stock of the Company set forth opposite the name of each respective
Seller in Exhibit A attached hereto (all of such shares being collectively
referred to herein as the "Shares"); and

WHEREAS, the Shares represent all of the issued and outstanding shares
of capital stock of the Company; and

WHEREAS, the Sellers represent all the stockholders of the Company; and

WHEREAS, simultaneously with the execution and delivery of this
Agreement, the Purchaser and Frank A. Pettisani, D.D.S. have entered into (a)
that certain Stock Purchase Agreement (the "Oracare DPO Agreement") relating to
the acquisition by Purchaser of all the issued and outstanding capital stock of
Oracare DPO, Inc., a New Jersey corporation ("Oracare DPO") and (b) that
certain Stock Purchase Agreement (the "Oracare PA Agreement") relating to the
acquisition by Purchaser of all the issued and outstanding capital stock of
Oracare Dental Associates, P.A., a New Jersey professional association
("Oracare PA"); and

WHEREAS, Oracare DPO and Oracare PA are affiliates of the Company and
Frank A. Pettisani, D.D.S. is the sole shareholder of Oracare DPO and Oracare
PA; and

WHEREAS, the parties intend that each of this Agreement, the Oracare
DPO Agreement and the Oracare PA Agreement shall be consummated subject to and
simultaneously with the consummation of all of such agreements; and

WHEREAS, subject to the terms and conditions hereinafter set forth,
the Sellers desire to sell to the Purchaser, and the Purchaser desires to
purchase from the Sellers, the Shares;

NOW, THEREFORE, in consideration of the premises and the mutual terms
and conditions herein contained, the parties hereby agree as follows:

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<PAGE> 9
ARTICLE 1
DEFINED TERMS/SCHEDULES

1.2 Schedules. References to a Schedule shall include any
applicable disclosure expressly set forth on the face of any other Schedule
even if not specifically cross-referenced to such other Schedule. It is
specifically acknowledged by the parties hereto that certain agreements and
documents listed on the Schedules are not to be delivered herewith, but were
previously or will be delivered or made available to Purchaser or its
representatives in connection with the due diligence investigation of the
Company conducted by Purchaser and its representatives prior to Closing
(hereinafter defined). All such agreements and documents made available or
delivered to Purchaser by the Company and the Sellers shall be originals or
true and correct copies of the originals of all such agreements and documents.
Each Schedule and the agreements and documents expressly listed in each
Schedule shall be considered a part hereof as if set forth herein in full;
provided, however, that the representations and warranties of Sellers set forth
in this Agreement shall not be affected or deemed modified, waived or limited
in any respect by the information contained in any agreement or document listed
or referenced in the Schedules unless and only to the extent that the
qualification, modification, exception or limitation to any representation and
warranty of the Sellers is expressly set forth on the face of a Schedule.

ARTICLE 2
PURCHASE AND SALE

2.2 Purchase Price. Subject to the terms and conditions of this
Agreement and in reliance on the representations, warranties and covenants
herein set forth, the Purchaser shall pay as consideration for the Shares an
aggregate purchase price in an amount equal to Twenty-Eight Million Five
Hundred Ninety-Three Thousand Seven Hundred Fifty and No/100ths Million Dollars
($28,593,750.00) less, however, the reduction to such amount applicable
pursuant to the provisions of Section 8.1(g) of this Agreement (as so adjusted,
the "Purchase Price") as follows:

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<PAGE> 10
(a) That portion of the Purchase Price as indicated in
Exhibit A in respect of each Seller (or, if less, the Purchase Price) of the
Purchase Price shall be paid at Closing by certified or cashier's check (or by
wire transfer in accordance with Sellers' directions given to Purchaser not
less than two (2) business days prior to the Closing Date); and

(b) The balance of the Purchase Price, if any, shall be
paid by the execution and delivery by Purchaser of a promissory note (the
"Note") in such principal amount with the following provisions:

(i) each Note shall be payable on January 2, 1997;

(ii) the payment obligation under each Note shall be
absolute and unconditional and shall not be subject to any defenses,
set-off or counterclaims by Purchaser, including, without limitation,
any set-off or counterclaim from any breach of warranty of the Sellers
under this Agreement;

(iii) each Note shall bear interest at a rate one-quarter
percent (.25%) less than the interest rate at which Purchaser can invest
such funds on the Closing Date, which interest shall be payable on the
maturity date of the Note;

(iv) Sellers shall be entitled to their reasonable costs
of collection under the Note (including counsel fees) in the event of
default by Purchaser and the Note shall not be subject to any provision
for arbitration;

(v) each Note shall be secured by an irrevocable standby
letter of credit issued by NationsBank of Texas, N.A. in an amount equal
to the principal amount of the Note, all costs and expenses of such
letter of credit to be paid at or prior to Closing by Sellers; and

(vi) each Note shall contain such other usual and
customary provisions of a note of similar type and purpose.

2.3 Additional Payments. Subject to the terms and conditions of
this Agreement and in reliance on the representations, warranties and covenants
herein set forth, the Purchaser shall also, in addition to the payment of the
Purchase Price at the Closing, pay to the Sellers the following (the
"Additional Payments"), to-wit:

(a) On or before March 31, 1998, the Purchaser shall pay
to the Sellers an amount equal to the product of five (5) times the Combined
Earnings of the Company (as defined in Exhibit B) for the calendar year ended
December 31, 1997, in excess of $3,478,000; provided, however, that such
payment shall be limited to and not exceed a maximum payment of $4,000,000.

(b) On or before March 31, 1999, the Purchaser shall pay
to the Sellers an amount equal to the product of four (4) times the Combined
Earnings of the Company for the

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<PAGE> 11
calendar year ended December 31, 1998 in excess of the greater of $3,478,000 or
the actual Combined Earnings of the Company for the calendar year ended
December 31, 1997; provided, however, that such payment shall be limited to and
not exceed a maximum payment equal to the lesser of either $4,000,000 or an
amount equal to $6,000,000 less the Additional Payment made with respect to the
Combined Earnings of the Company for the 1997 calendar year under Section
2.3(a) above. In no event shall the total of the Additional Payments with
respect to the Combined Earnings for both the 1997 and 1998 calendar years
exceed $6,000,000 in the aggregate.

(c) With each Additional Payment, the Purchaser shall
deliver to the Sellers a statement (the "Combined Earnings Statement") setting
forth the Combined Earnings of the Company for the respective calendar year to
which the Additional Payment relates. The Combined Earnings Statement shall be
calculated and prepared in accordance with the definitions, principles and
procedures set forth in Exhibit B.

(d) Within thirty (30) business days after delivery of
the Combined Earnings Statement by Purchaser, Sellers may deliver written
notice (the "Protest Notice") to Purchaser of any objections, and the basis
therefor, which the Sellers may have to the Combined Earnings Statement. The
failure of Sellers to deliver such Protest Notice within the prescribed time
period will constitute the acceptance of the Combined Earnings Statement as
delivered by Purchaser to the Sellers, unless such acceptance is induced by
fraud of the Purchaser. Upon request, Purchaser shall provide to Sellers all
information reasonably necessary to explain and support the calculations
performed by Purchaser in the Combined Earnings Statement (including, without
limitation, all its work and other papers relative to the preparation of such
Combined Earnings Statement). Sellers shall also have the right at their
expense to audit the records of the Company upon which such Combined Earnings
Statement was based during normal business hours at the premises of the Company
and to conduct interviews of employees with knowledge of such matters at the
Company premises in the presence of a representative of Purchaser. During the
thirty (30) days following receipt of a Protest Notice by Purchaser, Purchaser
and Sellers shall attempt to resolve any disagreement with respect to the
Combined Earnings Statement. If, at the end of such thirty (30) day period,
Purchaser and Sellers shall have failed to resolve the disagreement specified
in the Protest Notice, the items in dispute shall be referred to an accounting
firm of national reputation as may be agreed to by the parties (the
"Arbitrator") for final determination on an expedited basis, but not exceeding
forty-five (45) days. This provision for arbitration shall be specifically
enforceable by the parties and the determination of the Arbitrator in
accordance with the provisions hereof shall be final and binding upon Purchaser
and Sellers with no right of appeal therefrom, other than as permitted under
applicable statutory or common law regarding the appealability of arbitration.
No court shall have jurisdiction over this dispute, other than to (i) enforce
the appointment of an arbitrator should the parties be unable to agree, (ii)
resolve disputes concerning the exchange or access to information under this
provision arising prior to the appointment of an arbitrator (the filing of such
an action shall toll the deadlines set forth herein) and (iii) confirmation of
any arbitration award. The fees and expenses of the Arbitrator shall be paid
by the party whose last proposed offer for settlement of the items in dispute,
taken as a whole, was farther away from the final determination of the
Arbitrator. Purchaser and Sellers agree that within five (5) days after the

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<PAGE> 12
final determination of the Combined Earnings Statement and the Additional
Payment as provided in this Section 2.3, the Purchaser shall pay any
underpayment to Sellers, or Sellers shall refund any overpayment to Purchaser,
as the case may be.

2.4 Allocation of Purchase Price. Purchase Price and the
Additional Payments shall be allocated and payable to each Seller in accordance
with the respective percentage of the Shares owned by each Seller as shown on
Exhibit A.

2.5 Earnest Money. Simultaneously with the execution and delivery
of this Agreement, Purchaser shall deposit the sum of Three Hundred Thousand
Dollars ($300,000.00) as earnest money (the "Earnest Money") with Prudential
Securities (the "Escrow Agent") to be held in trust pursuant to the terms and
conditions of that certain Earnest Money Escrow Agreement, a copy of which is
attached hereto as Exhibit C (the "Escrow Agreement"). The Escrow Agreement
shall be executed and delivered by the parties thereto simultaneously with the
execution and delivery of this Agreement. It is expressly agreed that the
Earnest Money shall be applied strictly in accordance with the terms of the
Escrow Agreement.

2.6 Covenants During Earn-Out. Purchaser and the Company agree
that, until December 31, 1998, the Purchaser and the Company shall not:

(i) divert to any significant extent the attention of or
use the efforts of, any of the officers or key employees of the Company
(including Ronald Mazzone) to or for matters unrelated to the Company;
or

(ii) use to any significant extent the assets, offices,
facilities or personnel of the Company for matters unrelated to the
Company.

ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF EACH SELLER

Each Seller, severally and not jointly, represents and warrants to
Purchaser that, as of the Effective Date and as of the Closing Date:

3.1 Authority Relative to This Agreement. This Agreement has been
duly and validly executed and delivered by the Seller and constitutes a valid
and binding agreement of the Seller enforceable in accordance with its terms.
The other agreements to be executed and delivered by the Seller pursuant to
this Agreement will be valid and binding agreements of the Seller enforceable
in accordance with their respective terms when so executed and delivered by the
Seller.

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<PAGE> 13
3.3 Absence of Breach; No Consent. The execution, delivery, and
performance of this Agreement and the other agreements to be executed and
delivered pursuant to this Agreement by the Seller does not and will not: (i)
contravene any order, writ, judgment, injunction, decree, determination, or
award of any court or other authority which affects or binds the Seller or the
Shares owned by such Seller, (ii) conflict with or result in a breach of or
default under any indenture, loan or credit agreement or any other agreement or
instrument to which the Seller is a party or by which the Seller or the Shares
are bound, or (iii) except for the consents reflected in Schedule 4.21, require
the authorization, consent, approval or license of any third party or entity.

ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLERS

In addition to the representations and warranties made in Article 3, the
Sellers, jointly and severally, represent and warrant to Purchaser that, as of
the Effective Date and as of the Closing Date:

4.1 Due Organization of the Company. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of New Jersey with all requisite corporate power and authority to conduct
its respective business operations as now being conducted. The Company is duly
qualified and in good standing as a foreign corporation authorized to do
business in the State of Pennsylvania. There are no other jurisdictions where
the nature of the business operations of the Company require the Company to so
qualify and where the failure to be so authorized would have a material adverse
effect on the business or operations of the Company. Sellers have delivered to
Purchaser complete and correct copies of the articles of incorporation and
bylaws of the Company as amended to and in effect on the Effective Date. The
Company is not in violation of any term or provision of its articles of
incorporation or bylaws.

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<PAGE> 14
result in the creation of any encumbrance upon, any of the Shares or any of the
assets of the Company under any of the terms, conditions, or provisions of any
contract, lease, sales order, purchase order, indenture, mortgage, note, bond,
instrument, license or other agreement to which the Company is a party, or by
which the Company or its assets is bound; (iv) permit the acceleration of the
maturity of any indebtedness of the Company; (v) violate or conflict with any
provision of the articles of incorporation or bylaws of the Company and (vi)
has been duly authorized by all requisite corporate action of the Company.

4.4 Capitalization of the Company. The authorized capital stock
of the Company consists of Two Thousand Five Hundred (2,500) shares of Common
Stock, no par value per share, of which One Thousand (1,000) shares are validly
issued and outstanding, fully paid, and nonassessable. All of the outstanding
shares of common stock of the Company are owned beneficially and of record by
the Sellers as set forth in Exhibit A. The Company has provided to the
Purchaser a correct and complete copy of the stock registry of the Company
listing all stockholders of the Company and the outstanding share certificates
and total number of shares issued to each stockholder of the Company. The
Company has no other capital stock authorized for issuance and has no treasury
shares. There are no outstanding options, warrants, convertible instruments,
or other rights, agreements, or commitments to issue or acquire any shares of
common stock or any other security constituting, or convertible or exchangeable
into, capital stock of the Company. Since the date of the Company Balance
Sheet (as defined in Section 4.6 below), no shares of the Company's capital
stock, no options, warrants, or other rights, agreements, or commitments
(contingent or otherwise) obligating the Company to issue shares of capital
stock, and no other securities or instruments convertible or exchangeable into
shares of capital stock, have been executed or issued by the Company. The
Company has not granted and is not a party to any agreement granting preemptive
rights, rights of first refusal, or registration rights with respect to its
outstanding capital stock or any capital stock of the Company to be issued in
the future. The Company is not bound by any exclusive agency or indemnity
agreement applicable to the issuance of shares of its capital stock after the
Effective Date.

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<PAGE> 15
presently conducted by the Company. The Company has made all filings with
governmental agencies required for the conduct of its respective business.
There are no judgments against the Company, and no orders, rules, consent
decrees or injunctions of any court, governmental department, commission,
agency or instrumentality by which the Company is bound or to which the Company
is subject. The Company has not entered into or is subject to any judgment,
consent decree, compliance order or administrative order with respect to any
insurance or other similar law or received any request for information, notice,
demand letter, administrative inquiry or formal or informal complaint or claim
with respect to any insurance or other similar law or the enforcement of any
such law. Neither the Company's operations nor any of the assets owned,
leased, occupied or used by the Company in the operation of its business
materially violates or fails to comply in any material respect with any
applicable federal, state or local insurance, health maintenance organization,
or prepaid dental plan codes, laws, rules or regulations or, to the knowledge
of Sellers, federal, state or local health, fire, environmental, safety,
zoning, building or other codes, laws, rules or regulations, and the Company
has not received any notice of alleged violations thereof.

4.6 Financial Statements. The Company has delivered to Purchaser
a copy of (i) the unaudited combined financial statements of the Company (and
Oracare DPO, Oracare PA, Oracare Investors and Oracare Dental Labs, Inc.) as of
December 31, 1993 and the audited combined financial statements of the Company
and the other entities collectively included in such financial statements with
the Company as of December 31, 1994 and 1995 consisting in each case of a
combined balance sheet at each such respective date, and the related combined
statements of income, changes in stockholders' deficiency and cash flows for
the applicable twelve (12) month period then ended; (ii) unaudited combined
financial statements of the Company as of June 30, 1996 (the "Balance Sheet
Date") consisting of a combined balance sheet at such date (the "Company
Balance Sheet") and the related combined statements of income, changes in
stockholders' equity and cash flows for the applicable month and year-to-date
period then ended; (iii) unaudited financial statements of the Company as of
December 31, 1993, 1994 and 1995 consisting in each case of a balance sheet at
each such respective date and the related statements of income, changes in
stockholder's equity and cash flows for the applicable twelve (12) month period
then ended; and (iv) unaudited financial statements of the Company as of June
30, 1996 consisting of a balance sheet at such date and the related statements
of income changes in stockholder's equity and cash flows for the applicable
month and year-to-date period then ended. Complete and accurate copies of all
such financial statements (the "Financial Statements") have been delivered to
Purchaser. The combined Financial Statements include the assets and results of
operations of all businesses engaged in the dental benefits industry in which
the Sellers individually or in the aggregate own any interest except solely for
the business conducted as an individual licensed professional dental provider
personally rendering dental services.

The Financial Statements present fairly in all material respects the
combined financial position of the Company and the other entities collectively
included in such combined financial statements with the Company, and the
combined results of the operations, changes in stockholders' equity and cash
flows of the Company and the other entities collectively included in such
financial statements with the Company, as of the respective dates thereof and
for the

8
<PAGE> 16
respective periods covered thereby, in conformity with generally accepted
accounting principles ("GAAP"). Except as set forth in the Company Balance
Sheet included in the Financial Statements, as of the Balance Sheet Date there
were no liabilities, debts, claims or obligations, whether accrued, absolute,
contingent or otherwise, whether due or to become due, which are required by
GAAP to be set forth in a combined balance sheet of the Company and the other
entities collectively included in such financial statements with the Company
which have not been so set forth in the Company Balance Sheet. The Financial
Statements were prepared from the books and records of the Company and the
other entities collectively included in such financial statements with the
Company. There are no assets shown on the Company Balance Sheet which are
valued thereon at an amount materially in excess of their fair value as of the
Balance Sheet Date. At the Balance Sheet Date, the Company or the other
entities (other than Oracare Investors) included therein owned each of the
assets included in the Company Balance Sheet. From the date hereof through the
Closing Date, the Company will continue to prepare monthly and year-to-date
unaudited financial statements on the same basis and will promptly deliver the
same to Purchaser. The foregoing representations will be applicable to all
such monthly unaudited financial statements so prepared and delivered;
provided, however, that such unaudited financial statements shall be subject to
normal year-end adjustments, none of which will be material.

4.7 No Adverse Change. Except as otherwise expressly contemplated
by this Agreement, since the Balance Sheet Date, the business of the Company
has been conducted only in the ordinary course and there has not been (i) any
material adverse change in the financial condition, business, properties,
assets, or results of operations of the Company (financial or otherwise)
exclusive of any general economic factors affecting the prepaid dental plan
industry in general; (ii) any material loss or damage (whether or not covered
by insurance) to any of the assets of the Company which materially affects or
impairs the ability of the Company to conduct its business as previously
conducted or any other event or condition of any character which has materially
and adversely affected the business or operations of the Company; (iii) the
attaching, placing or granting of, or the agreement to attach, place or grant,
any encumbrance on any of the assets of the Company; (iv) any sale or transfer
of any material portion of the assets of the Company; (v) any material changes
in the terms of any material contract of the Company; (vi) any material change
in the accounting systems, policies or practices of the Company; (vii) any
waiver by or on behalf of the Company of any rights which have any material
value; (viii) no taking under condemnation or right of eminent domain of any of
the assets of the Company; (ix) any entry into or termination of any material
commitment, contract, agreement, or transaction (including, without limitation,
any material borrowing or capital expenditure or sale or other disposition of
any material assets) by the Company; (x) any redemption, repurchase, or other
acquisition of any of its capital stock by the Company, or any issuance of
capital stock of the Company or of securities convertible into or rights to
acquire any such capital stock; (xi) any dividend or distribution declared, set
aside or paid on capital stock of the Company; (xii) any transfer or right
granted by the Company of or under any material lease, license, agreement,
patent, trademark, trade name, service mark or copyright; (xiii) any sale or
other disposition of any material asset of the Company, or any mortgage,
pledge, or imposition of any lien or other encumbrance on any material asset of
the Company, or any agreement relating to or contemplating any of the foregoing
not in the ordinary and usual course of business; (xiv) any

9
<PAGE> 17
default or breach by the Company in any material respect under any contract,
license, or permit; or (xv) any material increase in the statutory reserves
required to be maintained by the Company. Except as set forth on Schedule 4.7,
since the Balance Sheet Date, the Company has conducted its business only in
the ordinary and usual course of business and, without limiting the foregoing,
no changes have been made in (i) employee compensation levels other than usual
and customary annual adjustments, (ii) the manner in which employees of the
Company are compensated, (iii) supplemental benefits provided to any employees,
or (iv) the employment of any employees of the Company.

4.9 Title to and Condition of Properties. Except as disclosed in
Schedule 4.9 hereto, the Company has good, marketable, and insurable title, or
valid, effective and continuing leasehold rights in the case of leased
property, to all of the assets reflected on the Company Balance Sheet and all
personal property owned or leased by it or used by it in the conduct of its
business in such a manner as to create the appearance or reasonable expectation
that the same is owned or leased by it, free and clear of all liens, security
interests, restrictions, claims, encumbrances, and charges except as disclosed
in Schedule 4.9. The Sellers do not know of any potential action or assertion
of rights, including condemnation, by any party, governmental or other, and no
proceedings with respect thereto have been instituted of which any Seller or
the Company has notice, that would materially affect the ability of the Company
to utilize each of such assets in its business. The Company has not received
any notices of default or other violations from any mortgagee regarding any
properties leased by the Company which defaults or violations have not been
cured prior to the Effective Date. Schedule 4.9 hereto also contains a copy of
the asset depreciation schedules of the Company. The assets now owned by the
Company constitute all assets reasonably necessary to enable Purchaser to
conduct the business and operations of the Company on substantially the same
terms as such business has been conducted historically. Except as disclosed in
Schedule 4.9, all such assets are well maintained and in good operating
condition, except for normal wear and tear.

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<PAGE> 18
against or affecting the Company to which the Company is a party, at law or in
equity, before any federal, state, or municipal court or other governmental
department, commission, board, bureau, agency, or instrumentality. The Company
is not now, and has not been, a party to any injunction, order or decree
restricting the method of the conduct of its business or the marketing of any
of its products or services.

4.12 Intellectual Property. Schedule 4.12 is an accurate and
complete list of all tradenames that the Company uses in its business
operations. Such tradenames are owned by Frank A. Pettisani, D.D.S. and
licensed by him to the Company for its use. Except as reflected on Schedule
4.12, the Company has no United States and foreign patents, patent
applications, patent licenses, trademarks, and service mark registrations (and
applications therefor), and has no copyrights and copyright registrations (and
applications therefor), trade secrets, inventions, processes, designs, know-
how and formula which are owned or licensed for use by the Company and utilized
by the Company in the business or operations of the Company as presently
conducted. There is no adverse claim against the Company, or to the knowledge
of the Sellers, any threatened litigation or claim of infringement. Except as
set forth on Schedule 4.12, to the knowledge of the Sellers, the Company does
not utilize any intellectual or proprietary trade secret information which
infringes any trademark, tradename, service mark, copyright or patent of
another, and the Company has not received any notice contesting its right to
use any trade name now used by it in connection with its business or the
operation thereof. The Company has not granted any license to a third party in
respect of any intellectual property.

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<PAGE> 19
4.13 Contracts.

(a) Material Contracts. Schedule 4.13A lists all
material contracts or agreements of the following types to which the Company is
a party or by which the Company is bound:

(iii) any contract or agreement for the maintenance,
purchase or sale of equipment or capital assets having a value in excess
of $25,000;

(iv) any power of attorney (other than routine powers
given to governmental officials authorizing service of process);

(v) any lease of personal property;

(vi) any guaranty, suretyship agreement or other agreement
relating to any contingent liability.

(vii) any contract with an independent agent or broker who
sells the prepaid dental plans of the Company;

(viii) any contract or agreement with independent
consultants;

(ix) any contract or agreement among the stockholders of
the Company;

(x) any contract or agreement restricting the method by
which the Company conducts its business or the marketing of any of its
products or services; and

(xi) any contract or agreement between the Company or any
stockholder or between the Company and any affiliate of the Company or a
stockholder of the Company.

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<PAGE> 20
the agreements listed in Schedule 4.13B are in all material respects in the
same form as one of the representative forms of such agreements provided as a
part of Schedule 4.13B.

(c) Other Provider Contracts. Schedule 4.13C (i)
includes copies of representative forms of all other health provider agreements
to which the Company is a party and (ii) lists all other health provider
agreements executed by the Company. Except for any agreement as to which a
copy thereof is specifically included as a part of Schedule 4.13C, all of the
agreements listed in Schedule 4.13C are in all material respects in the same
form as one of the representative forms of such agreements provided as a part
of Schedule 4.13C.

(d) Employer Group Contracts. Schedule 4.13D (i)
includes copies of representative forms of all employer group agreements to
which the Company is a party and (ii) lists the top 25 employer group
agreements to which the Company is a party and the number of participants for
each such employer. Except for any agreement as to which a copy thereof is
specifically included as a part of Schedule 4.13D, all of the agreements listed
in Schedule 4.13D are in all material respects in the same form as one of the
representative forms and such agreements provided as a part of Schedule 4.13D.
Schedule 4.13D also sets forth the premium rates for the largest twenty (20) in
revenues of the employer group agreements in each state in which the Company
conduct business operations and the monthly premium revenues of each employer
group agreement listed in Schedule 4.13D.

(e) Management Contracts. Schedule 4.13E sets forth all
management, marketing, administrative services, data processing and third party
administration contracts to which the Company is a party.

(f) Copies. True and correct copies of all such
contracts referred to in Schedules 4.13A, 4.13B, 4.13C 4.13D, and 4.13E have
been made available for inspection by Purchaser and, except to the extent
disclosed on Schedules 4.13A, 4.13B, 4.13C, 4.13D, and 4.13E, as of the date of
this Agreement, (i) all of the contracts listed on such Schedules are in full
force and effect, (ii) the Company has not received any notice of cancellation
with respect to any such contract or been advised that the other party thereto
intends to cancel any such agreement, (iii) there are no material outstanding
disputes under such contracts, (iv) each such contract is with an unrelated
third party entered into on an arms-length basis in the ordinary course of
business, (v) there are no material defaults under any of such contracts, and
(vi), to the knowledge of the Sellers, to the extent required by any law or
regulation have been filed with and approved by all governmental regulatory
agencies.

4.14 Employees, Et Cetera. Schedule 4.14 hereto lists in accurate
and complete detail all employees of the Company as of the Effective Date,
their job titles, annual rates of compensation, a description of any severance
pay arrangements, if any. Except as shown on Schedule 4.14, the Company is not
bound by any written contract of employment with any of its employees and all
oral employment contracts are terminable at will, subject to applicable law, or
by any consulting or similar agreements. The Company is not a party to any
employment or other agreement, whether written or oral, pursuant to which the
Company has agreed to make a loan to, or guarantee any loan of, any employee or
relating to any bonus, deferred

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<PAGE> 21
compensation, severance pay or similar plan, agreement, arrangement or
understanding except as reflected in Schedule 4.14. Except as listed on
Schedule 4.14 or Schedule 4.15 hereof, the Company has no Welfare Plan, Pension
Plan, or any other type of pension, profit sharing, deferred compensation,
retirement, stock option, bonus, severance, medical, dental, life insurance,
accident, or other employee benefit or compensation plan, agreement,
arrangement, practice or policy with respect to employees. The Company has
complied with all requirements of Sections 6001 through 6008 of the ERISA and
Section 4980B of the Code with respect to itself and its employees. The
Company is not bound, and following the Closing will not be bound, by any
express or implied contract or agreement to employ, directly or as a consultant
or otherwise, any person for any specific period of time or until any specific
age except as specified in the written agreements identified in Schedule 4.15.

4.15 Employee Benefit Plans. Except as disclosed in Schedule 4.15:

(c) There has been no termination of any Pension Plan or
Welfare Plan by the Company that has occurred during the five-year period
ending on the date hereof.

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<PAGE> 22
(e) No Welfare Plan listed on Schedule 4.15 is funded
with a trust or other funding vehicle, other than insurance policies.

(g) Each Pension Plan listed on Schedule 4.15 which is
intended to be qualified under Section 401(a) of the Code, has received a
favorable determination letter from the Internal Revenue Service as to the
qualification under the Code of each such Pension Plan as amended to comply
with the Tax Reform Act of 1986 and all applicable, subsequent legislation,
and, to the knowledge of the Sellers, no event has occurred since the date of
such favorable determination letter that would adversely affect such
qualification.

(h) No bonus, severance pay, or any other employee
benefit under any Welfare Plan, Pension Plan, or any other type of pension,
profit sharing, deferred compensation, retirement, stock option, bonus,
severance, or other employee benefit or compensation plan, agreement,
arrangement, practice, or policy with respect to employees maintained by or
contributed to by the Company is payable or exercisable as a result of the
transaction contemplated by this Agreement, and the payment, exercise, or
vesting of any such bonus, severance pay, or employee benefit will not be
accelerated or otherwise enhanced by such transaction.

4.17 Accounts Payable. The accounts payable reflected on the
Company Balance Sheet and those reflected on the books of the Company at the
time of the Closing will reflect all

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<PAGE> 23
material amounts owed by the Company in respect of trade accounts due and other
Payables as required by GAAP to be identified on such Company Balance Sheet or
in the books of the Company. Except as set forth on Schedule 4.17, to the
knowledge of the Sellers, no account payable of the Company is past due or
otherwise in default by the Company.

4.18 Broker's and Finder's Fees. No agent, broker, employee,
officer, stockholder or other person or entity acting on behalf of, or under
the authority of, the Sellers or the Company is or will be entitled to any
commission or broker's or finder's fee from any of the parties hereto in
connection with this Agreement or any of the transactions contemplated hereby
except for Ridge Capital Corporation. Sellers shall pay and be responsible for
all commissions or fees due to Ridge Capital Corporation as a result of the
consummation of the transactions contemplated by this Agreement.

4.19 Labor Practices. The Company has no collective bargaining or
other labor union agreements. There is no unfair labor practice complaint
against the Company pending before the National Labor Relations Board, there is
no pending or, to the knowledge of the Sellers, threatened labor dispute,
strike or work stoppage affecting the Company's business, nor has there been
any of the same or any labor union organizing activity relating to the Company
within the last three (3) years.

4.21 Consents. Except as set forth in Schedule 4.21 hereto, no
consents, approvals, or authorizations of any person, entity or governmental
agency are required in connection with the sale of the Shares and the
consummation of the transactions contemplated by this Agreement. Unless
Purchaser deems it inadvisable to seek any such consent, approval or
authorization (except with respect to any consent, approval or authorization
lawfully required to consummate this transaction) and so advises the Company in
writing, the Company will apply for or otherwise seek, and use their reasonable
best efforts to obtain, all consents, approvals and authorizations of all
governmental entities (other than applications for approval of a change of
control required to be filed in each state where the Company holds a certificate
of authority to operate a prepaid dental plan which shall be the responsibility
of Purchaser to prepare, file and obtain) and of all parties with whom the
Company has contractual or other relationships whose consent or approval are
necessary for the valid and effective consummation and completion of the
transactions contemplated hereby or are necessary in order that the Company may
validly, lawfully and effectively perform and carry out its obligations
hereunder without becoming in default under any agreement with any party or
subjecting the Company to any claim or penalty due to the failure to obtain such
consent which would have a materially adverse effect on the business or
operations of the Company. With respect to any such consents which Purchaser
requests the Company not to seek as provided above, the Company will cooperate
with Purchaser to provide for Purchaser the benefits under any such agreement
(including

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<PAGE> 24
enforcement thereof) at the sole cost and for the benefit of Purchaser, and
Purchaser will assume liabilities associated therewith. Following the
Effective Date, the Company will use its reasonable best efforts to obtain all
consents specifically identified by Purchaser as reasonably necessary to
continue the uninterrupted operation of the business of the Company.

4.23 Taxes. All federal, state and other tax returns and reports
of the Company required by law to be filed have been prepared and properly
filed or valid extensions have been obtained, and, except as set forth on
Schedule 4.23, all taxes, charges, fees, duties, levies or other assessments
which are imposed by the United States, or any state, local or foreign
government or subdivision or agency thereof, including any interest, penalties
or additions ("Taxes") imposed upon the Company or any Subsidiary or any of its
properties, assets or income which are due and payable or claimed by any taxing
authority to be due and payable have been paid or reserved for. The liability
for accrued taxes as shown in the Company Balance Sheet (net of amounts
reserved for deferred taxes) is sufficient for the payment of all unpaid Taxes
of the Company accrued for or applicable to the periods prior to the Balance
Sheet Date and all years and periods prior thereto and for which the Company
may at that date have been liable in its own right or by reason of its being a
member of any group of corporations filing consolidated tax returns (including
any such amounts payable as a result of an audit of any tax return for any such
period). The Company utilizes the cash method of accounting for tax purposes.

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<PAGE> 25
The Company has not filed a consent under Section 341(f) of the Internal
Revenue Code of 1986, as amended (the "Code") concerning collapsible
corporations. Except as disclosed in Schedule 4.23, the Company has not made
any payments, is obligated to make any payments, or is a party to any agreement
that under certain circumstances could obligate it to make any payments that
will not be deductible under Section 280G of the Code. The Company has not
been a United States real property holding corporation within the meaning of
Section 897(c)(2) of the Code during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code. The Company has disclosed on their federal
income tax returns all positions taken therein that could give rise to a
substantial understatement of federal income tax within the meaning of Section
6662 of the Code. The Company is not a party to any tax allocation or sharing
agreement. The Company (a) has not been a member of an affiliated group filing
a consolidated federal income tax return and (b) has no liability for the taxes
of any person (other than any of the Company) under Treas. Reg. Section
1.1502-6 (or any similar provision of state, local, or foreign law), as a
transferee or successor, by contract, or otherwise.

Since its inception, the Company has made an election to be an S
Corporation under Subchapter S of Subtitle A, Chapter 1 of the Code and has at
all times until the Closing Date satisfied all requirements for such election.

4.26 Oracare DPO Agreement and Oracare PA Agreement. Each of the
representations and warranties of the Sellers contained in the Oracare DPO
Agreement and the Oracare PA Agreement are true and correct in all respects.
Such representations and warranties are incorporated herein and shall
constitute a part of the representations and warranties of the Sellers under
this Article 4 of this Agreement.

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<PAGE> 26
4.27 Full Disclosure. To the knowledge of the Sellers, this
Agreement and the documents, certificates, and other writings furnished or to
be furnished by or on behalf of Sellers, the Company to Purchaser pursuant to
the provisions of this Agreement do not and will not contain any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements made, in the light of the circumstances under which they
are made, not misleading. To the knowledge of the Sellers, there is no
material liability or obligation which relates to the agreements and documents
identified in the Schedules which is not generic to the identified agreement or
document and readily ascertainable from a review of such agreement or document,
and not otherwise disclosed herein or identified on the face of the Schedules.

ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF PURCHASER

The Purchaser represents and warrants to the Sellers as follows:

5.3 Absence of Breach; No Consents. The execution and delivery of
this Agreement by the Purchaser, and the performance by Purchaser of its
obligations hereunder, do not (i) conflict with, and will not result in a
breach of, any of the provisions of the certificate of incorporation or bylaws
of Purchaser; (ii) contravene any law, rule, or regulation of any State or
Commonwealth or of the United States, or of any applicable foreign
jurisdiction, or any order, writ, judgment, injunction, decree, determination,
or award affecting or binding upon Purchaser; (iii) conflict with or result in
a material breach of or default under any material indenture or loan or credit
agreement or any other material agreement or instrument to which Purchaser is a
party or by which it or any of its material properties may be affected or
bound; or (iv) except as reflected on Schedule 4.21, require the authorization,
consent, approval, or license of any third party.

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<PAGE> 27
regulating the disposition thereof. Purchaser agrees that the certificates
representing the Shares may bear legends to the effect that such shares have
not been registered under the Securities Act or such other state securities
laws, and that no interest therein may be transferred or otherwise disposed of
in violation of the provisions thereof or of any rules and regulations issued
thereunder.

ARTICLE 6
COVENANTS OF THE SELLERS AND THE COMPANY

Pending the Closing, Sellers and the Company shall do the following:

6.2 Access and Information. Sellers shall cause the Company to
afford, and the Company shall afford, to Purchaser and its representatives
reasonable access during reasonable hours throughout the period prior to the
Closing to all properties, books, contracts, commitments, computer programs and
data, reports, manuals and records (including, but not limited to, tax
returns), and to all personnel of the Company and the Subsidiaries and, during
such period, shall promptly furnish to Purchaser all other information
concerning such business, properties, and personnel as Purchaser may reasonably
request. Purchaser shall maintain the confidentiality of all such information
as required by Section 7.5 hereof.

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<PAGE> 28
until the Closing or the termination of this Agreement pursuant to its terms,
neither the Company nor any of the Sellers will furnish, without the prior
written consent of Purchaser, to any person or entity (other than Purchaser)
any non- public information concerning the Company or its businesses, financial
affairs or prospects for the purpose of or with the intent of permitting such
person or entity to evaluate a possible acquisition of any capital stock or
(other than in the ordinary course of business) assets of the Company.
Notwithstanding the foregoing, the Sellers and the Company may disclose
information regarding the transactions contemplated by this Agreement to
Clifford Lisman, D.D.S. and discuss with Dr. Lisman the redemption of the
Lisman Debenture (defined in the Oracare DPO Agreement) as contemplated by
Section 6.5.

6.4 Conduct of Business Prior to Closing. Sellers and the Company
covenant and agree that, prior to the consummation of this Agreement or to the
termination of this Agreement pursuant to its terms, unless Purchaser shall
otherwise consent in writing, and, except as otherwise contemplated by Section
6.5 of this Agreement, each of the following shall be complied with:

(a) The business of the Company shall be conducted only
in the ordinary and usual course and the Company shall use reasonable efforts
to keep intact its business organization and good will, to keep available the
services of its and their respective officers and employees and to maintain a
good relationship with suppliers, lenders, creditors, distributors, employees,
customers, and others having business or financial relationship with them, and
the Sellers or the Company shall immediately notify Purchaser of any event or
occurrence or emergency known to them material to, and not in the ordinary and
usual course of business of, the Company.

21
<PAGE> 29
Company, or (iii) agree to any increase in the contractual term of employment
of any officer, director or employee of the Company; provided, however, that
the Company may (i) make usual and customary employee salary adjustments,
excluding, however, the Sellers (not in excess of 6%); (ii) may pay usual and
customary bonuses to employees; and (iii) may terminate and employ
non-management employees as needed to operate the business of the Company, in
each case consistent with past practices; and provided further, however, that
the Company may increase the compensation of officers and directors during the
period prior to Closing so long as the total compensation paid to directors and
officers in 1996 to Closing to the Sellers does not cause the Net Income of the
Company during the period from January 1, 1996 to the Closing Date to be a
negative number;

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<PAGE> 30
(k) The Company will continue properly and promptly to
file when due all federal, state and local, foreign, and other tax returns,
reports, and declarations required to be filed by it, and will pay, or make
full and adequate provision for the payment of, all taxes and governmental
charges due from or payable by it;

(l) The Company will comply with all laws and regulations
applicable to it and its operations;

(m) The Company will maintain in full force and effect
insurance coverage of a type and amount customary in its business, but not less
than that presently in effect;

(o) The Company will not make any change in any method of
reporting income or expenses for federal income tax purposes; and

(p) The Company shall not knowingly take any action which
would prevent compliance with any of the conditions in Articles 8 or 9 of this
Agreement.

6.5 Permitted Transactions Prior to Closing. Notwithstanding the
provisions of Section 6.4 above or any other provision of this Agreement to the
contrary, Purchaser expressly agrees that, prior to the Closing, Sellers and
the Company may do the following:

(a) Acquire the tradenames owned by Frank A. Pettisani,
D.D.S. listed on Schedule 4.12;

(b) Negotiate the prepayment of the indebtedness listed
in Schedule 4.8 in order to permit Purchaser or the Company to pay such
indebtedness in full on or before the Closing Date; and

(c) Declare and pay dividends and distributions to the
Sellers in an aggregate amount up to but not in excess of the Net Income of the
Company (as defined herein) for the period from January 1, 1996 to the Closing
Date.

6.6 Consents and Approvals. The Company shall use commercially
reasonable efforts to obtain all necessary consents and approvals required for
its performance of this Agreement and the transactions contemplated hereby,
including, without limitation, the consents listed on Schedule 4.21 other than
the regulatory change of control approvals to be obtained by Purchaser. The
Company shall make all filings, applications, statements and reports to all
governmental authorities which are required to be made prior to the Closing
Date by or on behalf of it pursuant to any applicable statute, rule or
regulation in connection with this Agreement and the transactions contemplated
hereby. As required in connection with the performance of this

23
<PAGE> 31
Agreement by the Company, the Company will promptly provide such other
information and communications to governmental and regulatory authorities,
including, without limitation, insurance regulatory authorities in any
jurisdiction in which the Company conducts business, as such regulatory
authorities or Purchaser may reasonably request. Between the date hereof and
the Closing Date, the Company shall promptly provide Purchaser with copies of
all correspondence and filings to or from all governmental and regulatory
bodies and officials relating to the Company.

6.7 Publicity. Prior to the Closing, any public statement or
announcement by the Sellers or Company, including but not limited to any
written news releases, pertaining to this Agreement or the transactions
contemplated thereby shall be submitted to Purchaser for review and approval
prior to the release by the Company, and shall be released only in a form
approved by Purchaser, provided, however, that (i) such approval shall not be
unreasonably withheld and (ii) such review and approval shall not be required
of statements and announcements if prior review and approval would prevent the
timely and accurate dissemination of such statements and announcements as
required to comply, in the judgement of counsel, with any applicable law, rule
or policy. Sellers and Purchaser shall issue a press release regarding the
execution of this Agreement within one day of the date hereof or such other
time as Sellers and Purchaser may mutually agree.

6.8 Financial Information. Sellers will cause the Company to, and
the Company will, deliver as soon as reasonably practicable to Purchaser
unaudited financial statements of the Company for each month from and after the
date hereof as and when such financial statements become available in the usual
course of business.

6.9 Expenses. The Company may pay prior to or at Closing the fees
and expenses of Counsel to Sellers and other advisors or financial consultants
to the Sellers incurred in connection with this Agreement and the consummation
of the transactions contemplated hereby; provided, however, that such costs and
expenses shall be included in determining the Net Income of the Company for the
purposes of Section 6.5(d) of this Agreement and provided further, however,
neither the Company nor the Purchaser shall pay any such costs and expenses
incurred by Sellers in connection with this Agreement after the Closing.

6.10 Breach of Representations and Warranties. Promptly upon any
Seller or the Company becoming aware of any breach of any of the
representations and warranties of the Sellers contained in this Agreement, or
any event which would cause the Sellers to be unable to deliver the
certificates contemplated by Section 9.1(e) hereof, the Sellers shall give
written notice thereof to the Purchaser in sufficient detail to permit the
Purchaser to ascertain the nature of the breach and shall use all commercially
reasonable efforts to prevent or promptly remedy the same.

6.11 No Transfer of Shares. Unless and until this Agreement is
terminated, each Seller shall not, directly or indirectly, exchange, transfer,
assign, pledge or encumber any of the Shares owned by the Seller, nor shall a
Seller grant, directly or indirectly, any right to acquire, dispose of, vote or
otherwise control in any manner such Shares.

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<PAGE> 32
6.12 Updating of Exhibits and Schedules. Sellers shall notify
Purchaser in writing of any changes, additions, or events which may cause any
change in or addition to the Schedules delivered by them under this Agreement
promptly after the occurrence of the same and again at the Closing by delivery
of appropriate updates to all such Schedules. No notification of a change or
addition to a Schedule made pursuant to this Section shall be deemed to cure
any breach of any representation or warranty resulting from such change or
addition unless Purchaser specifically agrees thereto in writing, nor shall any
such notification be considered to constitute or give rise to a waiver by
Purchaser of any condition set forth in this Agreement; provided, however,
that, in the event Purchaser has actual knowledge of any uncured
misrepresentation or breach of warranty at or prior to the Closing and
nevertheless proceeds with the Closing, then the Purchaser shall be deemed to
have waived such misrepresentation or breach of warranty. Nothing contained
herein shall be deemed to create or impose on Purchaser any duty to examine or
investigate any matter or thing for the purposes of verifying the
representations and warranties made by Sellers herein.

ARTICLE 7
COVENANTS OF PURCHASER

Purchaser agrees that from the date hereof through the Closing Date:

25
<PAGE> 33
pursuant to any applicable statute, rule or regulation in connection with this
Agreement and the transactions contemplated hereby and shall diligently and in
good faith pursue the taking of all action necessary to obtain approval of the
transactions contemplated herein by the insurance regulatory authorities of any
jurisdiction in which the Company conduct business. As required in connection
with the performance of this Agreement, Purchaser will promptly provide such
information and communications to governmental and regulatory bodies and
authorities, including, without limitation, insurance regulatory authorities in
any jurisdiction in which the Company conducts business, as such regulatory
authorities may reasonably request. Purchaser shall not be required to cure
any existing regulatory compliance requirements in order to obtain such
consents and approvals. Within five (5) business days after the written
request of the Sellers, the Purchaser shall provide to the Sellers a status
report as to all such filings and approvals.

7.5 Confidentiality. Prior to Closing, unless otherwise required
by law, Purchaser will hold in confidence all confidential information that has
been disclosed by the Sellers and the Company and will not use any such
confidential information except in connection with the transaction, until such
time as such information is otherwise publicly available through sources other
than Purchaser; provided, however, that this sentence will not apply to any
information that becomes generally available to the public, was available on a
non-confidential basis to Purchaser prior to its disclosure pursuant hereto, or
becomes available on a non-confidential basis from a third party who is not
bound to keep such information confidential. In the event of the termination
of this Agreement, Purchaser will, and will cause its representatives to,
deliver to the Company all documents and other written materials, and all
copies thereof, obtained by Purchaser or on its behalf from the Sellers or the
Company as a result of this Agreement or in connection herewith, whether so
obtained before or after the execution hereof. Purchaser agrees that the
Company shall have standing and may avail itself of any remedy at law or in
equity, including an action for injunctive relief, in the event of a breach or
threatened breach by Purchaser of any of the provisions of this Section 7.5.
The obligations of Purchaser under this Section 7.5 shall survive termination
of this Agreement for any reason whatsoever and shall remain in effect until
two (2) years from the Effective Date of this Agreement.

7.6 Publicity. Prior to the Closing, any public statement or
announcement by the Purchaser, including but not limited to any written news
releases by the Purchaser, pertaining to this Agreement or the transactions
contemplated hereby shall be submitted to the Company for review and approval
prior to the release by the Purchaser, and shall be released only in a form
reasonably approved by the Company provided however, that (i) such approval
shall not be unreasonably withheld and (ii) such review and approval shall not
be required of statements and announcements by the Purchaser if prior review
and approval would prevent the timely and accurate dissemination of such
statements and announcements as requested to comply, in the judgment of
counsel, with any applicable law, rule or policy. Sellers and Purchasers shall
issue a press release regarding the execution and delivery of this Agreement
within one day after the date hereof or such other time as Sellers and
Purchaser may mutually agree.

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<PAGE> 34
ARTICLE 8
CONDITIONS TO OBLIGATIONS OF SELLERS

(c) Purchaser shall have performed in all material
respects its agreements, covenants and obligations contained in this Agreement
required to be performed at or prior to the Closing;

(d) The representations and warranties of Purchaser set
forth in this Agreement shall be true in all material respects as of the
Effective Date and as of the Closing Date as if made as of such time;

(f) Sellers shall have received, on and as of the Closing
Date, an opinion of Counsel to Purchaser, subject to customary limitations,
reasonably satisfactory in form and substance to Counsel to Sellers, and such
other closing documents and instruments as Sellers shall reasonably request, in
each case reasonably satisfactory in form and substance to Sellers and Counsel
to Sellers.

(g) At and simultaneously with the Closing, all the
conditions precedent to the obligations of the parties to the Oracare DPO
Agreement and the Oracare PA Agreement shall have been satisfied and performed
and the transactions contemplated by the Oracare DPO

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Agreement and the Oracare PA Agreement shall be consummated simultaneously with
the consummation of the transactions contemplated by this Agreement.

(h) At or prior to the Closing, the Purchaser shall pay
or shall cause the Company to pay in full all the monetary debt obligations
owed by the Company under those certain agreements of the Company described in
Schedule 4.8. The amount of all payments paid to fully satisfy such monetary
obligations of the Company shall be credited against and reduce the $28,593,750
amount for the purpose of determining the Purchase Price as specified in
Section 2.2 of this Agreement.

(i) At or prior to the Closing, Purchaser shall perform
the respective obligations of and the actions to be taken by Purchaser at the
Closing as described in Section 10.3 of this Agreement.

ARTICLE 9
CONDITIONS TO OBLIGATIONS OF PURCHASER

(b) There shall not be in effect a restraining order, a
preliminary or permanent injunction or other order by any federal or state
authority which prohibits the consummation of this Agreement and no action or
proceeding shall have been instituted or remain pending seeking such relief or
seeking damages in respect of this Agreement or the consummation of the
transactions contemplated by the Agreement;

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(d) The representations and warranties of Sellers set
forth in this Agreement shall be true in all material respects as of the date
of this Agreement and, except in such respects as do not materially and
adversely affect the business, condition (financial or otherwise), operations,
or prospects of the Company and the Subsidiaries, as of the Closing Time as if
made as of such time;

(f) Purchaser shall have received, on and as of the
Closing Date, an opinion of Counsel to Sellers subject to customary
limitations, reasonably satisfactory in form and substance to Counsel to
Purchaser, and such other closing documents and instruments as Purchaser shall
reasonably request, in each case reasonably satisfactory in form and substance
to Purchaser and Counsel to Purchaser;

(i) A reduction in total monthly dental center and dental
plan operating revenues of the Company on an aggregate basis to an
amount less than $1,100,000;

(ii) A reduction in the total number of members of the
prepaid or A.S.O. dental plans of the Company to less than 150,000;

(iii) a reduction in the total number of general dentist
(primary care) providers which have contracts with the Company to be a
provider to members of its dental plans to an amount less than 300
determined on a net basis taking into account all new dental provider
agreements entered into after the date of this Agreement (as used herein
"general dental providers" refers to dental providers who are treating
as patients members of the prepaid dental plans of the Company);

(iv) a casualty loss which is not covered by insurance in
excess of $100,000;

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cannot mutually agree as to whether any such litigation or claim is
reasonably expected to have such potential liability to the Company,
then the parties shall seek the opinion of a mutually selected third
party qualified to make such assessment and the opinion of such third
party as to such potential liability shall be binding upon the parties
for the purposes hereof; and

(i) At the Closing, each of the Sellers shall execute a
release in favor of Purchaser and the Company in the form of Exhibit C attached
hereto; provided, however, that it is understood that the Sellers shall be paid
at Closing all salary due to the date of Closing and reimbursed for expenses
consistent with past practice of the Company to the date of Closing.

(j) None of the certificates of authority or licenses of
the Company listed on Schedule 4.5 shall have been canceled, revoked suspended
or limited in any respect and no governmental regulatory agency shall have
instituted any proceeding, or given notice to the Company or a Subsidiary that
it intends to institute any proceeding to take such action or to place the
Company or a Subsidiary in a conservatorship or receivership due to its
financial condition or failure to comply or satisfy any governmental law, rule
or regulation.

(k) At or prior to the Closing, Purchaser shall have, or
shall have caused the Company to have, paid in full all the monetary debt
obligations owed by the Company under those certain agreements described in
Schedule 4.8 of this Agreement and received the full and complete discharge,
terminating and release of all liens, security interests or other encumbrances
securing such debt obligations.

(l) At and simultaneously with the Closing, all the
conditions precedent to the obligations of the parties to the Oracare DPO
Agreement and the Oracare PA Agreement shall have been satisfied and performed
and the transactions contemplated by the Oracare DPO Agreement and the Oracare
PA Agreement shall be consummated simultaneously with the consummation of the
transactions contemplated by this Agreement.

(m) At the Closing, all the Sellers shall perform his or
her or its respective obligations of and actions to be taken by all the Sellers
at the Closing as described in Section 10.2 of this Agreement.

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ARTICLE 10
CLOSING

10.1 Date of Closing. The Closing shall take place at the offices
of Counsel to Sellers in Cherry Hill, New Jersey, or at such other location as
Purchaser and Sellers may mutually agree, within five (5) business days after
the date on which all governmental and third party consents necessary for the
consummation of the transactions contemplated by this Agreement are obtained
and all other conditions to Closing are satisfied but in no event later than
two hundred forty (240) days after the Effective Date unless extended by the
mutual agreement of the Purchasers and the Sellers, subject to earlier
termination pursuant to the provisions of Article 12 hereof. In the event that
the Closing does not timely occur as stated above, then a party not in default
may immediately terminate this Agreement upon written notice to the other
parties in accordance with Section 12.1 below; provided, however, that this
Agreement shall terminate automatically and without further notice if the
Closing has not occurred within two hundred forty (240) days of the Effective
Date.

10.2 Actions by Seller. At the Closing, each Seller shall:

(b) Post-Closing Escrow Account. Each Seller shall
execute and deliver the Post-Closing Escrow Account Agreement in the form
attached hereto as Exhibit F.

(c) Other Agreements. Perform or shall have performed
all of the covenants and agreements contained in this Agreement to be performed
or complied with by such Seller at or prior to the Closing hereunder.

10.3 Actions by Purchaser. At the Closing, Purchaser shall:

(a) Payment. Pay the Purchase Price to the Sellers by
wire transfer in accordance with the provisions of Section 2.2 of this
Agreement, less, however, the amount of the Earnest Money paid to the Sellers
and credited against the Purchase Price pursuant to the Escrow Agreement and
less the amount to be deposited in the Post- Closing Escrow Account.

(b) Post-Closing Escrow Account. Purchaser and the
Escrow Agent shall execute and deliver a Post- Closing Escrow Account Agreement
in the form attached hereto as Exhibit D. The Purchaser shall deposit the sum
of $500,000 representing a portion of the Purchase Price payable to the Sellers
in the Post-Closing Escrow Account to be maintained in accordance with the
Post-Closing Escrow Agreement.

(c) Employment Agreements. Cause the Company to execute
and deliver the Employment Agreements attached hereto as Exhibits E-1 and E-2.

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(d) Other Agreements. Perform or shall have performed
all of the covenants and agreements contained in this Agreement to be performed
or complied with by Purchaser at or prior to the Closing hereunder.

10.4 Post-Closing Escrow Account. The Sellers expressly agree that
the aggregate amount of Five Hundred Thousand Dollars ($500,000) shall be
retained out of the Purchase Price payable to the Sellers on a pro rata basis
according to the percentage of the total Purchase Price payable to each Seller
and such amount shall be deposited in an escrow account (the "Post-Closing
Escrow Account") to be maintained pursuant to the Post-Closing Escrow Agreement
among the Sellers, the Purchaser and the Escrow Agent named therein. The
Post-Closing Escrow Account shall be used solely for the satisfaction of
liabilities of the Sellers under Section 11.2(a) of this Agreement in
accordance with the Post- Closing Escrow Account Agreement. Nothing contained
herein shall be deemed or construed to limit the liability of a Seller under
Section 11.2(a) of this Agreement except to the extent expressly set forth in
Section 11.4 of this Agreement, and such liability shall expressly not be
limited only to the amount of the funds deposited in the Post- Closing Escrow
Account.

ARTICLE 11
SURVIVAL OF REPRESENTATIONS
AND WARRANTIES; INDEMNITY; POST-CLOSING MATTERS

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extent set forth herein, no investigation or examination made by any party
hereto shall constitute a waiver of any representation or warranty and no
representation or warranty shall be merged into the Closing hereunder.
However, to the extent information is apparent on the face of the Schedules or
is otherwise expressly set forth herein, such information shall be deemed to
amend, limit and/or restate any representation and warranties contained herein
to the extent such information is inconsistent with such representation or
warranty.

11.2 Indemnity. Subject to the provisions of Section 11.4 below,

(a) Sellers. Each Seller, jointly and severally (except
as to the representations and warranties contained in Article 3 which shall be
several and not joint), agrees to indemnify and hold harmless the Company, each
Subsidiary, and Purchaser, and their respective shareholders, partners,
directors, officers, employees and agents, from, against, and in respect of,
any loss, liability, claim, demand, or expense, including but not limited to
reasonable attorney, investigation and consultant fees and costs, and of any
other kind whatsoever arising out of or resulting from any of the following:

(ii) Any misrepresentation, breach of warranty, or failure
to fulfill any agreement or covenant of the Sellers under the Oracare
DPO Agreement or Frank A. Pettisani, D.D.S. under the Oracare PA
Agreement or under any other agreement or document delivered by Sellers
or Frank A. Pettisani, respectively, at the Closing thereunder; and

(iii) Any and all actions, suits, proceedings, demands,
assessments, judgments, costs and legal and other expenses incident to
any of the foregoing.

(b) Purchaser. Purchaser shall indemnify and hold each
Seller harmless from, against, and in respect of, any loss, liability, claim,
demand, or expense, including but not limited to reasonable attorney's fees and
costs, of any kind whatsoever, arising out of or resulting from any of the
following:

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(iii) Any and all actions, suits, proceedings, demands,
assessments, judgments, costs, and legal and other expenses incident to
any of the foregoing.

11.3 Indemnity Procedures. In case any claim, demand or action
shall be brought by any third party including, without limitation, any
governmental authority, against a party entitled to indemnity under Section
11.2(a) or 11.2(b) above, such party shall promptly notify the other party or
parties, as the case may be, from whom indemnity is or may validly be sought in
writing and the indemnifying party or parties shall assume the defense thereof,
including the employment of counsel. In addition, in case a party hereto shall
become aware of any facts which might reasonably be expected to result in any
such claim, demand or action, such party shall promptly notify the other party
or parties who would be obligated to provide indemnity hereunder with respect
to such claim, demand or action, and such other party or parties shall have the
right to take such action as it or they may deem appropriate to resolve such
matter. The indemnified party or parties shall have the right to employ
separate counsel in any such action and to participate in the defense thereof,
but the fees and expenses of such counsel shall be at the expense of such
indemnified party or parties, unless the employment of such counsel has been
specifically authorized by the indemnifying party or parties. Any settlement
of any action subject to indemnity hereunder shall require the consent of the
indemnified and the indemnifying party which consent shall not be unreasonably
withheld and shall be given within five (5) days following the giving of notice
thereof. The indemnifying party or parties shall not be liable for any
settlement of any action effected without its or their consent, but if settled
with the consent of the indemnifying party or parties or if there be a final
judgment for the plaintiff in any such action, the indemnifying party or
parties shall indemnify and hold harmless the indemnified party from and
against any loss or liability by reason of such settlement or judgment. If
requested by the indemnifying party, the indemnified party shall cooperate with
the indemnifying party and its counsel and use its best efforts in contesting
any such claim or, if appropriate, in making any counter-claim or
cross-complaint against the party asserting the claim, provided that the
indemnifying party will reimburse the indemnified party for reasonable
out-of-pocket expenses incurred in so cooperating upon presentation of receipts
or other evidence of such expense. The indemnifying party and its
representatives shall have full and complete access during reasonable hours to
all books, records and files of the indemnified party expressly related to the
defense of any claim for indemnification undertaken by the indemnifying party
pursuant to this Article 11, or for any other purpose in connection therewith;
provided that the indemnifying party shall safeguard and maintain the
confidentiality of all such books, records and files.

11.4 Limitations on Indemnification.

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any recovery is sought directly from a Seller; provided, however, that to the
extent the indemnification loss or losses exceed the funds in the Post-Closing
Escrow Account, then the Purchaser may seek recovery of the amount of such
indemnifiable loss in excess of such funds contemporaneously with the recovery
of any funds in the Post-Closing Escrow Account.

(b) Time Limits for Claims. No claim for indemnification
may be made by any indemnified party in respect of indemnifiable losses unless
written notice thereof shall have been received by the indemnifying party on or
prior to two years after the date hereof; provided, however, that the two-year
limitation set forth in Section 11.1 and this Section 11.4(b) shall not apply
to the matters described in Section 11.4(c) not reasonably discoverable by
Seller within the two-year indemnification period set forth in Section 11.1 as
to which the indemnification obligations hereunder shall expire six (6) months
after the termination of the applicable statute of limitations relating to the
subject matter covered by such provisions; and provided further, however, that
in each case if, prior to the applicable date of expiration, a specific state
of facts shall have become known which is reasonably likely to constitute or
give rise to any indemnifiable loss as to which indemnity may be payable and
the indemnified party shall have given notice of such facts to the indemnifying
party and made a claim for indemnification within such two-year period, then
the right to indemnification with respect thereto shall remain in effect until
such matter shall have been finally determined and disposed of and any
indemnification due in respect thereof shall have been paid.

(c) Certain Matters. The following are the matters
referred to in Section 11.4(a) and Section 11.4(b): losses arising from fraud
or an intentional misrepresentation on the part of any Seller or an intentional
breach of any covenant or agreement contained in this Agreement by a Seller.

11.6 Severance Benefits. The Purchaser shall not be obligated to,
or obligated to cause the Company to, extend any severance benefits to
employees of the Company who may be terminated after the Closing or who are
rendering services to the Company and are terminated prior to the Closing. In
the event that the Purchaser shall elect to pay or cause the Company to pay any
severance benefits to employees of the Company who may be terminated at or
after the Closing, it is expressly understood that the Sellers shall not be
entitled to receive such severance benefits.

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11.7 Change of Control Application. Purchaser hereby agrees to
file the applications for governmental approval of a change of control
described in Schedule 4.21 with the appropriate governmental or regulatory
agencies within five (5) business days of the Effective Date.

ARTICLE 12
TERMINATION; WAIVER

12.1 Termination. This Agreement may be terminated, and the
transaction may be abandoned, at any time prior to the Closing, as follows and
in no other manner:

(a) Mutual Consent. By the mutual consent of Purchaser
and the Sellers;

(c) By Purchaser or Sellers: Representations, Warranties
and Covenants. By Purchaser, on the one hand, or Sellers, on the other, if (i)
any representation or warranty of the other hereunder shall not have been true
and correct in all material respects at the time at which made, or (ii) default
shall be made by the other in the due and timely observance or performance of
any of its covenants and agreements herein contained, but in such event only if
such representation or warranty cannot be made true and correct or such default
cannot be cured on or prior to the earlier of (x) sixty (60) days after the
non-defaulting or non-breaching party notifies the other in writing of such
default or breach, specifying the nature thereof or (y) two hundred forty (240)
days after the date of this Agreement, unless such date is extended by mutual
agreement of Purchaser and Sellers.

No termination of this Agreement shall affect the liability of any party hereto
for any breach hereof arising at, prior to or out of such termination;
provided, however, that, in the event of a breach hereof by Purchaser, in
addition to any other remedies available at law or in equity to the Sellers,
Sellers shall be entitled to retain the Earnest Money. Any public announcement
of

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the termination of this Agreement shall be made only by means of a press
release issued jointly by Purchaser and the Company.

12.2 Waiver. At any time at or prior to the Closing, Purchaser, on
the one hand, or Sellers, on the other, may (i) extend the time for the
performance of any of the obligations or other acts of the other party hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto, or (iii) waive compliance
with any of the agreements or conditions contained herein. Any agreement on
the part of a party hereto to any such extension or waiver shall be valid only
if set forth in an instrument in writing signed on behalf of such party.

ARTICLE 13
CERTAIN DEFINED TERMS

13.1 Affiliate. When used with respect to a person, an "Affiliate"
of such person is a person controlling, controlled by, or under common control
with such person.

13.3 Closing. The completion of the transaction to take place as
described in Article 10.

13.4 Closing Date. The date on which the Closing actually occurs.

13.6 Code. The Internal Revenue Code of 1986, as amended and in
effect on the date of this Agreement.

13.7 Control. Generally, the power to direct the management or
affairs of an entity.

13.8 Counsel to Sellers. Hunt & Scaramella, P.C., 220 Lake Drive
East, Suite 105, Cherry Hill, New Jersey 08002, telephone number (609)
667-4900; facsimile number (609) 667-4933.

13.9 Counsel to Purchaser. Strasburger & Price, L.L.P., 901 Main
Street, Suite 4300, Dallas, Texas 75202, telephone number (214) 651-4300,
facsimile number (214) 651-4330.

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13.10 ERISA. The Employee Retirement Income Security Act of 1974,
as amended and in effect on the date of this Agreement.

13.12 Knowledge. As used in this Agreement, a person will be deemed
to have knowledge of fact (or the fact shall be deemed known to that person) if
said person has actual knowledge of, or has actual awareness of other facts
that would put a reasonable person on inquiry notice of, the fact; provided,
however, that no party shall be deemed to have performed, or be obligated to
perform, an independent investigation or inquiry with respect to the matter to
which such knowledge pertains.

13.14 Net Income of the Company. As used herein, the term "Net
Income of the Company" shall mean the net income of the Company determined on
an accrual basis in accordance with GAAP.

13.16 PBGC. The Pension Benefit Guaranty Corporation.

13.17 Pension Plan. A "pension plan" or "employee pension benefit
plan," as defined in Section 3(2) of ERISA or successor provisions to such
provision adopted by amendments to ERISA and including other provisions of
ERISA or of other law, and regulations adopted under ERISA or such other law,
modifying, amending, interpreting or otherwise affecting the application of
such provisions, either in general or as applied to the nature or circumstances
of a particular entity that is a party to, or is affected by or is involved in,
the Agreement and with respect to which entity the use of the term in this
Agreement, or in the particular location in this

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Agreement, is relevant. A reference to a Pension Plan shall include the trust,
if any, forming a part thereof.

ARTICLE 14
NON-COMPETITION

14.1 Covenant Not to Compete; Non-Solicitation. For and in
consideration of the purchase by the Purchaser of the Shares pursuant to this
Agreement, and the payments payable by the Purchaser pursuant to this
Agreement, each of Frank A. Pettisani, D.D.S. and Lisa M. Mazzone, severally
and not jointly covenants and agrees that such Seller shall not, directly or
indirectly, through any employees, agents or representatives or as an employer,
consultant, creditor, investor, owner, agent, principal, partner, shareholder,
or through any other kind of ownership (other than ownership of securities of
any publicly held entity in which the Seller, directly or indirectly, in the
aggregate beneficially owns less than two percent (2%) of any class of
outstanding securities), or in any other representative or individual capacity,
do any of the following:

(a) for a period of three (3) years from the date of this
Agreement, engage in (i) the operation of a dental health indemnity insurance
company, (ii) the operation of prepaid dental plans and dental preferred
provider organizations, and (iii) the provision of management, administrative
and related services to dental health indemnity insurance carriers, dental
preferred provider organizations, and prepaid dental plans (collectively the
"Dental Services Business") in the States of New Jersey and Pennsylvania (the
"Restricted Area");

(b) for a period of three (3) years from the date of this
Agreement, engage in any business which calls upon, solicits, diverts or takes
away any customer or customers of the Company in the Restricted Area for the
purpose of selling or attempting to sell to any of said customers any products
or services similar to any products or services heretofore sold or provided to
any of such customers by the Company excluding, however, life, health, annuity
and vision insurance products; and

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<PAGE> 47
(c) for a period of five (5) years from the date of this
Agreement, engage in any business which solicits any present or future employee
of the Company or initiates discussions with any such employee regarding his or
her termination or resignation from employment with the Company, so that such
employee may accept employment with, or engagement as a partner, investor,
shareholder, employee, agent or consultant with Seller, directly or indirectly,
as specified above; provided, however, that Seller shall not be prohibited by
this Agreement from employing or soliciting the employment of any employee that
the Company terminates after the date of such termination.

Notwithstanding the foregoing, it is expressly understood that such Sellers
shall be permitted (i) to provide their services to the Purchaser, the Company
and their affiliates in the Dental Services Business, (ii) to provide practice
management services for dental providers, and (iii) to provide dental services
as an individual licensed provider without violating or breaching any of the
foregoing provisions.

Purchaser shall have the right to extend the period of time for which the
provisions of Section 14.1 (a) and (b) above shall be applicable to Lisa M.
Mazzone for an additional two years subject to and upon the following terms (i)
the exercise of such right shall be at the sole election of Purchaser and
Purchaser shall have no obligations to exercise such right (ii) Purchaser shall
give Lisa M. Mazzone notice of the exercise of such right at least ninety (90)
days prior to the end of the three year period, (iii) if Purchaser does not
offer employment to Lisa M. Mazzone or offers employment to Lisa M. Mazzone and
Lisa M. Mazzone accepts such employment, Purchaser shall pay Lisa M. Mazzone
the sum of $200,000 per year for such two-year extension (it being understood
that such amount includes any salary for such employment), and (iv) if
Purchaser offers employment to Lisa M. Mazzone but Lisa M. Mazzone declines
such employment, the Purchaser shall pay Lisa M. Mazzone the amount of $50,000
per year for such two-year extension.

14.2 Non-Disclosure. Each Seller covenants and agrees
that all information concerning the Company, including without limitation (i)
information regarding prices or premiums charged for products and services,
(ii) the assets, liabilities and financial condition of the Company and its
subsidiaries, (iii) the names and identities of customers and analyses of the
amount and types of products and services purchased by each such customer, (iv)
the dental health providers utilized by the Company and its subsidiaries and
the financial arrangements with such providers, and (v) the amount of
compensation to employees, constitute trade secrets and confidential,
proprietary business information which is the property of the Company and that,
unless otherwise required by law, from and after the date of this Agreement:

(a) Each Seller shall use his or her best efforts and
exercise utmost diligence to protect and safeguard all of such trade secrets
and confidential, proprietary information;

(b) Each Seller shall not, directly or indirectly, use,
sell, license, publish, disclose or otherwise transfer or make available to
others any of such trade secrets or confidential, proprietary information;

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(c) Without the prior written consent of the Company,
each Seller shall not, directly or indirectly, disclose any of such trade
secrets or confidential, proprietary information; and

(d) Each Seller shall not, directly or indirectly, use
for his own benefit or for the benefit of another, any of such trade secrets or
confidential, proprietary information.

14.3 Nondisparagement. For a period of three (3) years and after
the date of this Agreement, each Seller further agrees that it shall not make
or publish any statement, written or oral, disparaging the reputation of the
Company or its subsidiaries, executive officers or any of its business services
or products or solicit or encourage any member of any prepaid dental plan of
the Company or its subsidiaries or any third party having a group agreement
with the Company or its subsidiaries to terminate the membership of such person
in the plan of the Company or its subsidiaries or to terminate such group
agreement.

14.4 Reasonableness; Reformation. Each Seller acknowledges and
agrees that (i) the provisions of this Article 14 are ancillary to the
transaction pursuant to which the Seller sold and the Purchaser acquired the
Shares, (ii) the provisions of this Agreement contain reasonable limitations as
to time, geographical area and scope of activities to be restrained and do not
impose a greater restraint than is necessary to protect goodwill and other
business interests of the Company and its subsidiaries, (iii) if any portion of
the covenants and agreements set forth in this Agreement are held to be
invalid, unreasonable, arbitrary or against public policy, then such portion of
such covenants shall be considered divisible as to time, scope of activities
covered, and geographical area, and (iv) if any court of competent jurisdiction
determines the specified time period, scope of activities covered, or the
specified geographical area applicable to any provision of this Agreement to be
invalid, unreasonable, arbitrary or against public policy, a lesser time
period, scope of activities covered, and/or geographical area which is
determined to be reasonable, non-arbitrary and not against public policy may be
enforced against each Seller.

14.5 Remedies for Breach. If a Seller has failed to satisfactorily
cure any breach or threatened breach of any covenant or agreement contained
herein within ten (10) days after written notice of such breach or threatened
breach given by the Purchaser to each Seller, any one or more of the following
remedies, as selected by the Purchaser in its sole discretion, shall be
available to the Purchaser in the event of a breach of this Agreement by the
Seller hereunder:

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and/or equitable relief shall be available to the Purchaser to specifically
enforce this Agreement and prevent such breach and any continued breach of any
covenant and agreement herein.

(b) Suit for Damages. In addition to the remedies stated
in Section 14.5(a) above, in the event of any breach of any covenant or
agreement of a Seller herein, Purchaser may sue for damages arising out of such
breach and otherwise enforce this Agreement and obtain all other remedies
available to the Seller under applicable law.

ARTICLE 15
ARBITRATION

15.1 Arbitration Procedure. Subject to the provisions of Section
15.7 below, in the event any matters in Dispute arising out of or relating to
this Agreement (including, but not limited to, actions for injunctive or
declaratory relief) (hereinafter collectively "arbitrable issues") cannot be
settled by agreement between the parties such controversy or dispute shall be
submitted for arbitration in Philadelphia, Pennsylvania, and for this purpose
each party hereby expressly consents to such arbitration in such forum. The
arbitration process shall proceed as follows:

(a) Step One. In the event of a Dispute, the disputing
party (herein so called) may at any time notify the other party or parties
("answering party") in writing that the disputing party demands to pursue
arbitration as provided in Step Two below, setting forth in specific terms the
disputing party's proposed statement of the matters in Dispute to be submitted
to arbitration and the name and address of the arbitrator selected by the
disputing party. Within five (5) business days following receipt of the
disputing party's written arbitration demand complying with the requirements of
this Step One, each answering party shall notify the disputing party in
writing, setting forth in specific terms the answering party's proposed
statement of the matter in Dispute and identifying the name and address of the
arbitrator selected by such answering party. For purposes of this Section
15.1, all persons constituting the Sellers shall act as one party in selecting
an arbitrator, whether as a disputing party or as an answering party.

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arbitrator selected by the AAA, shall be disinterested individuals
knowledgeable in commercial transactions. Upon selection of the additional
arbitrator, all arbitrators shall within ten (10) business days thereafter
convene an arbitration proceeding at a date, time and place (in metropolitan
Philadelphia, Pennsylvania) designated by said arbitrators by a majority vote,
written notice of which shall be given to the parties not later than seven (7)
calendar days prior to said hearing date. At the hearing, each party may be
represented by counsel and present testimony and evidence. If at the
commencement of the hearing the parties cannot agree on a joint statement of
the matters in Dispute to be submitted to the arbitrators, the arbitrators
shall be empowered to frame the submission issue(s). A Certified Court
Reporter's transcript may be demanded by any party or by the arbitrators and
said official transcript shall be prepared, completed, and delivered to the
arbitrators with copies to each party within ten (10) business days following
the conclusion of the hearing. Arbitration sessions following the initial
session, if necessary, shall be scheduled by the arbitrators so that the
arbitration proceedings (i.e., presentation of evidence and/or oral arguments)
are completed within twenty (20) days of the initial session. Each party shall
be given the opportunity to file with the arbitrators simultaneous written
briefs five (5) business days following receipt by the arbitrators of the
official transcript but, if no transcript is demanded as provided in this
Agreement, said briefs shall be filed simultaneously five (5) business days
following conclusion of the hearing. Copies of any such briefs shall be
provided to the other party concurrently upon filing with the arbitrators.

(c) Step Three. Within ten (10) business days following
the receipt by the arbitrators of the brief(s) (or within ten (10) business
days following conclusion of the hearing if all parties waive briefs), the
arbitrators shall make and deliver to the parties their decision and award in
writing. The arbitrators shall have the authority to enter any award or to
grant any relief which could be obtained in a court of competent jurisdiction
and reasonable attorneys', arbitrators' and experts' fees and expenses of
arbitration may be awarded as the arbitrators see fit, consistent with the
provisions of this Agreement. The arbitrators shall have no authority to
modify, amend or alter the provisions of this Agreement and shall base their
decision and award on applicable law, the language contained in this Agreement
and the facts giving rise to the Dispute as presented on the record at the
hearing. The arbitrators shall issue a written opinion explaining the basis
for their findings.

15.2 Self-Execution. It is expressly understood between the
parties that this Article 15 is a self- executing arbitration provision and
that any party may unilaterally select an arbitrator if the other party refuses
to arbitrate. It is further expressly agreed that said unilaterally-selected
arbitrator may proceed to arbitrate the issue(s) and the arbitration and
decision shall be self-executing and therefore shall not require the order of
any Court to proceed. The parties may, however, mutually stipulate in writing
to extend or to shorten the prescribed time periods (including a stipulation to
expedite the referral and submission to arbitration). All provisions of this
Agreement not in dispute shall be observed and performed without interruption
during the pendency of any proceeding called for under this Article 15.

15.3 Arbitrator's Fees. If an additional arbitrator is required
pursuant to Step Two under Section 15.1, each party shall pay its pr rata share
of any required retainer or other payments required by such arbitrator upon
such arbitrator's demand, with the ultimate

43
<PAGE> 51
responsibility for the arbitrators' fees to be determined by the arbitrators in
the final arbitration award pursuant to Step Three of Section 15; otherwise,
each party shall bear its own costs and expenses in connection with any
proceedings under this Article 15 and, in any event, each party shall pay the
fees of the arbitrator it selects.

15.4 Rules Governing Arbitration. In all other respects, the
arbitration shall be conducted pursuant to the then-existing Commercial Rules
of the AAA to the extent such rules are not inconsistent with any provision of
this Agreement. Subject to the foregoing, the arbitrators shall determine the
scope and extent of permissible discovery, if any.

15.5 Entry of Award. The award of the arbitrators may be entered
as a final judgment by any court of competent jurisdiction.

15.6 Injunctive Relief. Notwithstanding the provisions of this
Article 15 to the contrary, each party shall be entitled to seek temporary or
preliminary injunctive relief from a court of competent jurisdiction if the
failure to immediately obtain injunctive relief will result in irreparable harm
to that party. The jurisdiction of the court shall extend only to such relief
and any request for permanent injunctive relief shall remain subject to the
arbitration provisions of this Agreement.

15.7 Non-Applicability to Note. Notwithstanding any provision of
this Article 15 to the contrary, the provisions of this Article 15 shall
expressly not apply to any dispute arising out or relating to the Note.

ARTICLE 16
MISCELLANEOUS

16.1 Further Instruments. The parties hereto agree to execute and
deliver such instruments and take such other action as shall be reasonably
necessary, or as shall be reasonably requested by any other party, in order to
carry out the transactions, agreements and covenants contemplated in this
Agreement at or prior to the Closing Date.

16.2 Notices. Any notices, claims or demands which any party is
required or may desire to give to another under or in conjunction with this
Agreement shall be in writing, and shall be given by addressing the same to
such other party(ies) at the address set forth below, and by (i) depositing the
same so addressed, postage prepaid, first class, certified or registered, in
the United States mail (herein referred to as "Mailing"), (ii) overnight
delivery by a nationally recognized overnight courier service (e.g. UPS,
Federal Express), (iii) delivering the same personally to such other
party(ies), or (iv) transmitting by facsimile and Mailing the original. Any
notice shall be deemed to have been given five (5) U.S. Post Office delivery
days following the date of Mailing; one day after timely delivery to an
overnight courier; if by personal delivery, upon such delivery; or if by
facsimile, the day of transmission if made within customary business hours, or
if not transmitted within customary business hours, the following business day.

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<PAGE> 52
(a) If to Sellers:

To the respective address of such Seller set forth on
the signature page hereto executed by such Seller

With a copy to Counsel to Sellers:

Hunt & Scaramella, P.C.
220 Lake Drive East, Suite 105
Cherry Hill, New Jersey 08002
Attn: H. Thomas Hunt, Esq.
Facsimile: (609) 667-4933

(b) If to Purchaser:

United Dental Care, Inc.
14755 Preston Road
Suite 300
Dallas, Texas 75240
Attn: William H. Wilcox, President
Facsimile: (214) 458-7963

With a copy to Counsel to Purchaser:

Strasburger & Price, L.L.P.
901 Main Street, Suite 4300
Dallas, Texas 75202
Attn: David K. Meyercord, Esq.
Facsimile: (214) 651-4330

Any party may change the address or facsimile telephone number for notices to
be sent to it by written notice delivered pursuant to the terms of this Section
14.2.

16.3 Entire Agreement; Amendments. This Agreement and the
documents to be delivered at Closing hereunder set forth the entire
understanding of the parties and supersede all prior agreements or
understandings, whether written or oral, with respect to the subject matter
hereof. This Agreement may be amended, modified or supplemented only by a
written agreement executed by Purchaser and Sellers.

16.4 Binding Effect/Assignability. This Agreement shall extend to
and be binding upon and inure to the benefit of the parties hereto, their
respective heirs, legal representatives, successors and assigns. Purchaser
shall have the right at any time to assign this Agreement to any affiliate of
Purchaser without the necessity of seeking the consent of the Sellers;
provided, however, that Purchaser shall not be relieved of any obligations as a
result of such assignment and that, in addition to Purchaser remaining liable,
any such assignee shall assume and become

45
<PAGE> 53
liable for any and all of Purchaser's obligations under this Agreement. None
of the Sellers shall be entitled to assign any of their respective rights or
obligations under this Agreement; provided, however, that the rights and
obligations of a Seller may be assigned by operation of law or may be assigned
to an individual retirement account, pension plan, trust or other entity under
the control of such Seller but any such assignment shall not relieve or release
such Seller of any obligations hereunder as a result of such assignment and
that, in addition to such Seller remaining liable, any such assignee shall
assume and become liable for any and all of such Seller's obligations under
this Agreement. In connection with any such assignment, a Seller may transfer
all or any portion of the Shares owned by the Seller and thereby effect an
assignment on the basis specified above.

16.5 Exhibits/Schedules. All Exhibits and Schedules referenced in
this Agreement are incorporated herein by reference and shall constitute a part
of this Agreement.

16.6 Invalid Provisions. If any provision of this Agreement is
held to be illegal, invalid or unenforceable under present or future laws
effective during the term hereof, such provisions shall be fully severable and
this Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part hereof with the remaining
provisions remaining in full force and effect and not affected by the illegal,
invalid or unenforceable provision or by severance herefrom. Furthermore, in
lieu of such illegal, invalid or unenforceable provision there shall be added
automatically as part of this Agreement a provision similar in terms to such
illegal, invalid, or unenforceable provision as may be possible and still be
legal, valid and enforceable.

16.7 Headings/Captions. The captions to sections and subsections
of this Agreement have been inserted solely for convenience and reference, and
shall not control or affect the meaning or construction of any of the
provisions of this Agreement.

16.8 Waiver; Remedies. Waiver by any party hereto of any breach of
or exercise of any rights under this Agreement shall not be deemed to be a
waiver of similar or other breaches or rights or a future breach of the same
duty. The failure of a party to take any action by reason of any such breach
or to exercise any such right shall not deprive any party of the right to take
any action at any time while such breach or condition giving rise to such right
continues. Except as expressly limited by this Agreement, the parties shall
have all remedies permitted to them by this Agreement or law, and all such
remedies shall be cumulative.

16.9 Attorney's Fees and Costs. In the event of a breach by any
party to this Agreement and commencement of a subsequent legal action in a
court of law or forum of arbitration, or in the event legal counsel is
consulted in the event of any such breach or in anticipation of any such
prospective legal action, the prevailing party in any such dispute shall be
entitled to reimbursement of reasonable attorney's fees and court costs,
including, but not limited to, the costs of expert witnesses, transportation,
lodging and meal costs of the parties and witnesses, costs of transcript
preparation and other reasonable and necessary direct and incidental costs of
such dispute. A party shall be deemed to be a "prevailing party" under this
Section only if:

46
<PAGE> 54
(a) the judgment or award against it is equal to or less
than eighty percent (80%) of that party's written settlement offer; or,

(b) the judgment or award in its favor is equal to or
greater than one hundred and twenty percent (120%) of that party's written
settlement demand.

The party responsible for attorneys' fees and costs under this provision shall
only be responsible for those attorney's fees and costs incurred from a point
in time commencing twenty (20) days after receipt of the offer or demand of
settlement under (a) or (b) above. Adjudication of a party's entitlement to
counsel fees shall be by way of a non-jury proceeding following adjudication of
the underlying action.

16.10 Coordination with OraCare DPO Agreement and OraCare PA
Agreement. Purchaser and Sellers agree that the consummation of the
transactions contemplated by this Agreement shall constitute a condition
precedent to the obligations of the Sellers and the Purchaser under the OraCare
DPO Agreement and the OraCare PA Agreement. For such purpose, the Sellers as
the Sellers and Purchaser as the Purchaser under the OraCare DPO Agreement and
the OraCare PA Agreement agree that such agreements shall be deemed to be
amended and supplemented to add the provisions of to Section 15.10 as an
additional condition precedent to the obligations of the parties thereto
notwithstanding any provision of such agreements to the contrary.

16.11 Time. Time is of the essence under this Agreement.

16.12 Governing Law. This Agreement shall be construed under and
governed by the internal laws, and not the law of conflicts, of the State of
New Jersey.

16.13 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but which together
shall constitute one and the same agreement.

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<PAGE> 55
IN WITNESS WHEREOF, the parties have executed this Stock Purchase
Agreement as of the day and year first set forth above.

PURCHASER: SELLERS:

UNITED DENTAL CARE, INC.
/s/ FRANK A. PETTISANI
------------------------------------
By: /s/ WILLIAM H. WILCOX Frank A. Pettisani, D.D.S.
---------------------------------- Address:2720 Landis Avenue
William H. Wilcox, President Vineland, N.J. 08360

COMPANY:
/s/ LISA M. MAZZONE
------------------------------------
OraCare Consultants, Inc. Lisa M. Mazzone
By: /s/ LISA M. MAZZONE Address:4 Bromlen Ct
---------------------------------- Sturbridge Woods
Its: President Vorhees, N.J. 08043
---------------------------------
Address: 8000 Sagemore Drive
Suite 8302
Marlton, N.J. 08053

/s/ FRANK A. PETTISANI, JR.
------------------------------------
Frank A. Pettisani, Jr., D.D.S.
Address:2203 East Drive
Crown Key
Ventor, N.J. 08406

/s/ CHARLES A. COSTA
------------------------------------
Charles A. Costa
Address:121 Poplar Street
Hammonton, N.J. 08037

/s/ DONNA COSTA
------------------------------------
Donna Costa
Address:121 Poplar Street
Hammonton, N.J. 08037

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<PAGE> 56

EXHIBIT A

SHARE OF OWNERSHIP OF SELLERS

<TABLE>
<CAPTION>
Number of
Shares Percentage
---------- ----------
<S> <C> <C>
Frank A. Pettisani, D.D.S. 440 44%
Lisa M. Mazzone 250 25
Frank A. Pettisani, Jr., D.D.S. 150 15
Charles A. Costa 130 13
Donna Costa 30 3

----- ---
TOTAL: 1,000 100
</TABLE>

<TABLE>
<CAPTION>
Shareholder Cash Portion of the Purchase Price
-----------
<S> <C>
Frank A. Pettisani, Sr. $
------
Lisa M. Mazzone
------
Frank A. Pettisani, Jr.
------
Charles A. Costa
------
Donna Costs
------

</TABLE>

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<PAGE> 57
EXHIBIT B

For the purposes of Section 2.3 of the Stock Purchase Agreement, the
following definitions shall apply in determining the Combined Earnings of the
Company. The overall intent of the following definitions is to define the
Combined Earnings of the Company as the earnings before interest, income taxes,
depreciation and amortization for all Dental Business conducted by the
Purchaser and its direct and indirect subsidiaries, including, without
limitation, Oracare Consultants, Inc., Oracare DPO, Inc. and Oracare Dental
Associates, P.A. (collectively "Oracare") in the States of New Jersey and
Pennsylvania.

A. "Combined Earnings of the Company" shall mean the Revenues
less Dental Expenses and less Selling, General and Administrative Costs, but
before any reduction for interest expense, depreciation, amortization or income
taxes.

B. "Revenues" shall mean the sum of all revenues received with
respect to Dental Business conducted by the Purchaser and its direct or
indirect subsidiaries, including, without limitation, Oracare, in the States of
New Jersey and Pennsylvania.

C. "Dental Expenses" shall mean the dental service expenses paid
to dental providers with respect to the Dental Business of the Purchaser and
its direct or indirect subsidiaries, including, without limitation, Oracare,
conducted in the States of New Jersey and Pennsylvania (less the dental service
expenses actually paid to the dental practices managed by the Purchaser and its
subsidiaries, i.e., the usual elimination entry for consolidation purposes)
plus all operating costs of the dental practices managed by the Purchasers and
its subsidiaries in the States of New Jersey and Pennsylvania.

D. "Selling, General and Administrative Costs" shall mean all
direct costs of the Dental Business conducted by the Purchaser and its direct
or indirect subsidiaries, including, without limitation, Oracare, in the States
of New Jersey and Pennsylvania and all of the direct costs of the dental
practice business managed by the Purchaser and its subsidiaries in the States
of New Jersey and Pennsylvania including, without limitation, premium, excise
and franchise (but not income) taxes, brokerage commissions, employee
compensation, rent and telephone expense. In the event that certain existing
operations of Oracare are relocated from New Jersey to Dallas (such as
accounting and accounts payable) the costs to be counted as part of the
Selling, General and Administrative Costs shall be the year-to- date actual
cost of such activities before relocation plus, for each month thereafter of
the applicable measurement period, a fixed amount per month equal to the
average of the actual cost of such activities in the last twelve months prior
to such change as performed in New Jersey or Pennsylvania prior to such
relocation.

E. "Dental Business" shall mean all business relating to the
ownership and operation of prepaid dental plans, the management of dental
practices, the dental indemnity insurance business, the operation of a dental
preferred provider organization or any other business related in any way to the
provision of dental health care benefits or services in the States of New
Jersey or Pennsylvania.

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<PAGE> 58
F. All determination relating to the Combined Earnings of the
Company shall be made on an accrual basis in accordance with generally accepted
accounting principles.

G. In the event that any goods and services are rendered or sold
by an affiliate of the Purchaser in relation to the Dental Business conducted
in the States of New Jersey and Pennsylvania, such goods and services shall be
for consideration equivalent to that which could be obtained from an
unaffiliated third party in an arms-length transaction and the costs of such
goods and services will be included in Selling, General and Administration
Costs. Purchaser agrees that the expenses utilized for the purposes of the
calculation of the Combined Earnings of the Company shall not include any
management, consulting or similar fee paid to the Purchaser, or any affiliate
of the Purchaser, other than expenses relating to certain existing operations
relocated from New Jersey to Dallas to be accounted for as specified in
Paragraph D above.

H. Purchaser shall not make any charge for a cost or expense to
the Dental Business in the States of New Jersey and Pennsylvania for (a) any
expenses incurred by Purchaser in connection with the acquisition of Oracare,
(b) any cost unrelated to the operation of the Dental Business in the States of
New Jersey and Pennsylvania, (c) any component of general or administrative
overhead calculated on the basis of costs incurred by the Purchaser and its
affiliates.

I. Dental Expenses and Selling, General and Administrative Costs
shall be accounted for on the basis of the categories/item as shown on Exhibit
A attached hereto.

J. In the event that Purchaser, directly or indirectly, acquires
any other entity engaged in the Dental Business in the States of New Jersey and
Pennsylvania (or the assets of any such business) it is agreed and understood
that the earnings of such entity determined for a twelve month period ending as
of the month preceding the month in which such acquisition occurs shall be
added to the "base" earnings amount which must be exceeded for the respective
year relating to each Additional Payment; and the actual results of the
operations of such entity (or assets) from the beginning of the respective year
shall be included in determining the Combined Earnings of the Company for the
year in which the acquisition occurs and each year thereafter with respect to
which an Additional Payment is payable. Notwithstanding the foregoing, in the
event the Purchaser acquires any entity or the assets thereof engaged in the
Dental Business in the States of New Jersey and Pennsylvania, which has
negative earnings for the twelve month period prior to the date of the
acquisition, then no adjustment shall be made for the purposes of determining
the base earnings used in calculating an additional payment and the results of
operations for such entity shall not be included in determining the Combined
Earnings of the Company until and including the first calendar month as such
entity (or as such) has positive earnings.

K. In the event that the Purchaser disposes of all or
substantially all of any line of business constituting a part of the Dental
Business engaged in the States of New Jersey and Pennsylvania of Oracare (or
the assets thereof) prior to consummation of the Stock Purchase Agreement at
any time prior to December 31, 1998, it is agreed and understood that the
earnings

2
<PAGE> 59
of such line of business for the twelve month period ending as of the end of
month preceding the month in which such disposition occurs shall be deducted
from the base earnings used for determining the Additional Payment; and the
actual results of operations of such line of business from the beginning of the
respective year in which the disposition occurs shall not be included in
determining the Combined Earnings of the Company for the year in which the
disposition occurs and each year thereafter with respect to which an Additional
Payment is made.

L. Purchaser agrees that, until all Additional Payments have been
made, the Purchaser and the Company shall provide each Seller with the
following information at the same time such information becomes available to
Purchaser: (i) quarterly financial statements of Oracare; (ii) annual financial
statements of Oracare; (iii) notice of any material claims or allegations
against Oracare; (iv) notice of any events, conditions, acts, facts or
omissions which might be reasonably expected to have a material adverse effect
on the assets, properties, conditions (financial or otherwise), operating
results or prospects of Oracare.

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<PAGE> 60
EXHIBIT D

RELEASE/RESIGNATION AGREEMENT

This Release Agreement (the "Release") is executed as of
_______________, 1996, by Frank A. Pettisani, D.D.S., Lisa M. Mazzone, Frank A.
Pettisani, Jr., D.D.S., Charles A. Costa and Donna Costa.

RECITALS

WHEREAS, Frank A. Pettisani, D.D.S., Lisa M. Mazzone, Frank A.
Pettisani, Jr., D.D.S., Charles A. Costa, and Donna Costa (collectively, the
"Sellers") are parties to that certain Stock Purchase Agreement dated as of
September __, 1996 (the "Stock Purchase Agreements"), pursuant to which United
Dental Care, Inc., a Delaware corporation (the "Company"), purchased all of the
issued and outstanding shares of capital stock of OraCare Consultants, Inc., a
New Jersey corporation ("OraCare") and OraCare DPO, Inc., a New Jersey
corporation ("OraCare DPO"); and

WHEREAS, the Sellers were the owners of all the capital stock of
OraCare and OraCare DPO and are executing this Release pursuant to the Stock
Purchase Agreement as a part of the consideration thereunder;

NOW, THEREFORE, IN CONSIDERATION OF THE PREMISES and the terms and
conditions hereof and other good and valuable consideration, the parties hereto
hereby agree as follows:

1. Release. Subject to the provisions of Section 2 hereof, each Seller
hereby unconditionally and irrevocably releases and forever discharges the
Company, OraCare, Oracare DPO, OraCare Dental Associates, Inc., a New Jersey
professional association ("OraCare PA"), their respective direct or indirect
subsidiaries (the "Subsidiaries") and their respective stockholders, directors,
officers, employees, successors and assigns of and from any and all rights,
claims, demands, judgments, obligations, liabilities, damages, losses,
attorney's fees, costs, expenses, actions, causes of action, and controversies
of any kind whatsoever, whether at law or in equity, statutory or common law,
accrued or unaccrued, fixed or contingent, asserted or unasserted, known or
unknown, relating to the Company or OraCare or OraCare DPO or OraCare PA which
ever existed, now exist or may hereafter exist, by reason of any tort, breach
of contract, violation of law, act or failure to act, or any other matter or
thing which shall have occurred at or prior to the date of this Release
including, without limitation, any contractual or other obligation, loan, debt
or liability of any kind owed to the Seller by the Company or OraCare on the
date of this Release. The parties hereto expressly intend that the

1
<PAGE> 61

foregoing release shall be effective regardless of whether the basis for any
claim or right released hereby shall have been known or anticipated by the
parties hereto. Notwithstanding the foregoing or anything herein to the
contrary, however, nothing herein is intended to release or limit in any manner
the rights or obligations of any party with respect to the exceptions stated in
Paragraph 2 hereof.

2. Exception. Notwithstanding anything herein to the contrary, the
release stated in Section 1 hereof shall not apply to any rights which a Seller
holds, or to any obligations which the Company or OraCare has to a Seller
arising under, by reason of, or incident to (i) the Stock Purchase Agreements,
(ii) the Stock Purchase Agreement between Purchaser and Frank A. Pettisani,
D.D.S. regarding the purchase of all the capital stock of OraCare PA and (iii)
any employment or other agreements between a Seller and the Purchaser or
OraCare or Oracare PA in connection with the transactions contemplated by the
Stock Purchase Agreement.

3. Resignations. Each Seller hereby resigns his position as a director
of OraCare, Oracare DPO and Oracare PA effective immediately as of the date of
this Release.

4. Miscellaneous Provisions.

(b) Survival. The provisions of this Release shall survive the
consummation of the transactions contemplated by the Stock Purchase Agreement,
and shall continue in full force and effect thereafter.

(c) Binding Effect. The provisions of this Release shall apply to
and be binding upon the Sellers and their respective successors, assigns,
heirs, executors and legal representatives.

(d) Number and Gender. Whenever the singular number is used herein,
the same shall include the plural where appropriate, and words of any gender
shall include each other gender where appropriate.

(e) Waivers. No waiver of any provision hereof shall be valid or
enforceable unless such waiver is in writing and signed by the party hereto
giving such waiver.

(f) Intent of the Parties. The purpose and intent of this Release
is the termination and discharge of all disputes, controversies, claims, debts
and causes of action which

2
<PAGE> 62

exist or could exist as of the date hereof between the Company and/or OraCare
and/or the Subsidiaries and a Seller, except as otherwise specifically provided
in Section 2 hereof, and this Release shall be interpreted and construed
broadly so as to accomplish such purpose and intent.

(g) Acknowledgment. The Sellers acknowledge that each of them has
read and fully understands all of the provisions of the Release, and recognize
and acknowledge that such Release is a general release by each such party of
all claims against the Company, OraCare, Oracare DPO and Oracare PA and the
Subsidiaries subject only to the exception stated in Section 2 hereof.

(h) Counterparts. This Release may be executed in two or more
counterparts, each of which shall be an original, but which together shall
constitute one with the same agreement.

IN WITNESS WHEREOF, the Sellers have executed this Release as of the
day and year first above written.

- ------------------------------ ------------------------------
FRANK A. PETTISANI, D.D.S. LISA M. MAZZONE

- ------------------------------ ------------------------------
FRANK A. PETTISANI, JR., D.D.S. CHARLES A. COSTA

- ------------------------------
DONNA COSTA

3
<PAGE> 63
EXHIBIT E-1

EMPLOYMENT AGREEMENT

This Employment Agreement (this "Agreement") is made as of __________,
1996 (the "Effective Date"), by and between OraCare Consultants, Inc., a New
Jersey corporation acting by and through its hereunto duly authorized officer
(the "Company"), and Charles A. Costa (the "Executive").

NOW, THEREFORE, in consideration of premises and the mutual terms and
conditions hereof, the Company and the Executive hereby agree as follows:

1. Employment. The Company hereby employs the Executive and the
Executive hereby accepts employment with the Company upon the terms and
conditions hereinafter set forth.

3. Duties. The Executive is hereby employed by the Company as Vice
President of Operations, New Jersey with responsibilities as the manager of its
dental practice management business and shall render his services at the
principal business offices of the Company located in the State of New Jersey,
as such may be located from time to time, unless otherwise agreed between the
Board of Directors of the Company (the "Board") and the Executive. The
Executive shall have such authority and shall perform such duties as are
specified by the President of the Company; subject, however, to such
limitations, instructions, directions, and control as the Board may specify
from time to time in its sole discretion.

4. Term. This Agreement shall have a term commencing as of the
Effective Date and ending December 31, 1998, subject to earlier termination as
hereinafter provided.

5. Compensation. As compensation for his services rendered under this
Agreement, the Executive shall be entitled to receive the following:

1
<PAGE> 64

(a) Basic Salary. The Executive shall initially be paid a
base annual salary of One Hundred Forty Thousand and No/100 Dollars
($140,000) per year, payable in installments on the regular payroll
dates of the Company during the term of this Agreement, prorated for
any partial employment month. Such basic annual salary shall be
subject to increase from time to time as authorized by the Board in
its sole discretion.

(b) Incentive Bonus. It is understood that the contemplated
primary area of responsibility of the Executive shall be to supervise
the dental practice management business of the Company. Executive
shall be entitled to earn an incentive bonus with respect to such
business on the following basis:

(i) In the event that the net income (before any
reduction for interest expense depreciation amortization or
income taxes) of the Company relating to its dental practice
management business in the State of New Jersey for the
calendar year ended December 31, 1997 is equal to or in
excess of $2,925,000 then the Executive shall be entitled to
a bonus of $35,000 and, in the event such net income of the
Company is equal to or in excess of $3,158,000, the Executive
shall be entitled to an additional bonus of $35,000; and

(ii) Such bonus, if any, shall be payable on or
before March 31, 1988 in a lump-sum cash payment.

On or before January 1 of each year thereafter, the Company shall
determine the basis on which the Executive shall be entitled to
receive an incentive bonus with respect to such calendar year
permitting the Executive to receive a maximum incentive bonus of up to
$70,000 based on improved financial results of its dental practice
management business over the prior calendar year.

(c) Additional Compensation. The Executive shall be paid such
additional compensation and bonuses, if any, as may be determined in
the sole discretion of the Board.

6. Benefits. In addition to the compensation to be paid to the
Executive pursuant to Paragraph 4 hereof, the Executive shall further be
included in any hospital, surgical, and medical benefit plan, any group term
life insurance policy, any pension or profit sharing plan, and all other
benefits which may be extended from time to time to employees of the Company
generally by the Board in its sole discretion. The Executive shall be entitled
to a car allowance of not less than $250 per month.

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<PAGE> 65

(b) that he shall not disclose any of such trade secrets and
confidential and proprietary information, except as may be required in
the course of his employment; and

(c) that he shall not use, directly or indirectly, for his
own benefit or for the benefit of another, any of such trade secrets
and confidential and proprietary information.

All files, records, documents, drawings, specifications, memoranda,
notes, or other documents relating to the business of the Company, whether
prepared by the Executive or otherwise coming into his possession, shall be the
exclusive property of the Company and shall be delivered to the Company and not
retained by the Executive upon termination of his employment for any reason
whatsoever or at any other time upon request of the Board.

Provided, however, that "confidential information" shall not include
information regarding customers, suppliers, technical data, processes and
specifications which are generally known in the industry or are already in the
public domain other than through a breach of this provision by Executive or
another person in violation of a duty of confidentiality owed to the Company.

9. Non-Competition. The Executive covenants and agrees that, during
the period of his employment, and so long as any severance payments are being
made hereunder, he shall not, without the prior written consent of the Board,
directly or indirectly, as an employee, employer, consultant, agent, principal,
partner, shareholder, corporate officer, director, or through any other kind of
ownership (other than ownership of securities of publicly held corporations of
which the Executive owns less than two percent (2%) of any class of outstanding
securities) or in any other representative or individual capacity, engage in
any business or render any services to any business that is in competition in
any manner whatsoever with the business of the Company.

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<PAGE> 66

provisions of this Agreement and any other agreement between the Company and
the Executive. The existence of any claim or cause of action by the Executive
against the Company, whether predicated on this Agreement or otherwise, shall
not constitute a defense to the enforcement by the Company of any or all of
such covenants. It is expressly agreed that the remedy at law for the breach of
any such covenant is inadequate and the injunctive relief shall be available to
prevent to the breach or any threatened breach thereof.

11. Termination. This Agreement may be terminated upon the occurrence
of any one of the following events:

(a) Voluntary. The Executive may terminate this Agreement and
his employment at any time during the term of this Agreement by giving
ninety (90) days prior written notice of termination to the Board.

(b) Involuntary Without Cause. The Board, without cause, may
terminate this Agreement at any time during the term of this Agreement
upon ninety (90) days prior written notice to the Executive.

(1) If the Executive becomes disabled for a period
of more than thirty (30) consecutive days;

(2) If the Executive for reasons other than illness
or injury absents himself from his duties without the consent
of the Board for more than ten (10) consecutive days;

(3) If the Executive should die (effective on the
date of death);

(4) If the Executive should be convicted of a crime
punishable by imprisonment; and

In the event of the termination of this Agreement by either party prior to the
expiration of the term of this Agreement, the Executive shall be entitled to
compensation earned by him prior to the date of termination as provided herein
with any incentive bonus computed on a pro rata basis to and including such
date of termination. In addition, in the event the Company terminates this
Agreement without cause pursuant to Paragraph 11(b) above, the Executive shall
be entitled to receive a severance payment as liquidated damages for, and in
lieu of, any and all damages

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<PAGE> 67

which he may incur as a result of such termination in an amount equal to his
base salary then in effect which otherwise would have been payable over the
remaining term of this Agreement (payable in installments on the regular
payroll dates of the Company). In addition, the Company shall continue the
health benefits of the Executive during the period such severance payments are
being made. The Executive shall be entitled to no further compensation as of
the date of termination under this Agreement. Any termination of this Agreement
shall be without prejudice to any right or remedy to which the terminating
party may be entitled either at law, in equity, or under this Agreement.

12. Notices. Any notices, claims or demands which any party is
required or may desire to give to another under or in conjunction with this
Agreement shall be in writing, and shall be given by addressing the same to
such other party(ies) at the address set forth below, and by (i) depositing the
same so addressed, postage prepaid, first class, certified or registered, in
the United States mail (herein referred to as "Mailing"), (ii) overnight
delivery by a nationally recognized overnight courier service (e.g. UPS,
Federal Express) or (iii) delivery the same personally to such other
party(ies). Any notice shall be deemed to have been given five (5) U.S. Post
Office delivery days following the date of Mailing; one day after timely
delivery to an overnight courier; if by personal delivery, upon such delivery.

(a) If to the Company:

OraCare Consultants, Inc.
14755 Preston Road
Suite 300
Dallas, Texas 75240
Attention: President
Facsimile: (214) 458-7963

(b) If to the Executive:

Charles A. Costa
121 Poplar St.
Hammonton, New Jersey 08037

Either party may change its address for notice by giving notice in accordance
with the terms of this Paragraph 12.

13. General Provisions.

(a) Law Governing. This Agreement shall be governed by and
construed in accordance with the laws of the State of New Jersey.

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<PAGE> 68

enforced as if such illegal, invalid, or unenforceable provision had
never comprised a part hereof; and the remaining provisions hereof
shall remain in full force and effect and shall not be affected by the
illegal, invalid, or unenforceable provision or by its severance
hereof. Furthermore, in lieu of such illegal, invalid, or
unenforceable provision there shall be added automatically as a part
of this Agreement a provision as similar in terms to such illegal,
invalid, or unenforceable provision as may be possible and still be
legal, valid or enforceable.

(f) Titles. Titles of the paragraphs herein are used solely
for convenience and shall not be used for interpretation or construing
any work, clause, paragraph, or provision of this Agreement.

(g) Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but
which together shall constitute one and the same instrument.

IN WITNESS WHEREOF, the Company and the Executive have executed this
Agreement as of the date and year first written above.

COMPANY: EXECUTIVE:

OraCare Consultants, Inc.
A New Jersey Corporation

By:
------------------------------ ------------------------------
Its Charles A. Costa
---------------------------

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<PAGE> 69

GUARANTEE OF PERFORMANCE

UNITED DENTAL CARE, INC.
A Delaware Corporation

By:
------------------------------
Mark E. Pape
Senior Vice President

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<PAGE> 70
Exhibit E-2

EMPLOYMENT AGREEMENT

NOW, THEREFORE, in consideration of premises and the mutual terms and
conditions hereof, the Company and the Executive hereby agree as follows:

1. Employment. The Company hereby employs the Executive and the
Executive hereby accepts employment with the Company upon the terms and
conditions hereinafter set forth.

3. Duties. The Executive is hereby employed by the Company as the
Sales Director of the Company with responsibility for the marketing of its
prepaid dental plan business. The Executive shall render his services at the
principal business offices of the Company located in the State of New Jersey,
as such may be located from time to time, unless otherwise agreed between the
Board of Directors of the Company (the "Board") and the Executive. It is
understood that, unless otherwise agreed between the Company and the Executive,
the Executive is not responsible for the marketing of the Medicate/Medicare
business of the Company unless otherwise agreed between the Company and the
Executive. The Executive shall have such authority and shall perform such
duties as are specified by the President of the Company; subject, however, to
such limitations, instructions, directions, and control as the Board may
specify from time to time in its sole discretion.

4. Term. This Agreement shall have a term commencing as of the
Effective Date and ending December 31, 1998, subject to earlier termination as
hereinafter provided.

<PAGE> 71

5. Compensation. As compensation for his services rendered under this
Agreement, the Executive shall be entitled to receive the following:

(a) Basic Salary. The Executive shall initially be paid a
base annual salary of Sixty-One Thousand and No/100 Dollars ($61,000)
per year, payable in semi-monthly installments on the regular payroll
dates of each month for the Company during the term of this Agreement,
prorated for any partial employment month. Such basic annual salary
shall be subject to increase from time to time as authorized by the
Board in its sole discretion.

(b) Incentive Compensation. In addition to his base annual
salary, the Executive shall be entitled to receive incentive
compensation as follows:

(i) Commissions. The Executive shall be entitled to
receive a commission equal to four percent (4%) of the
premiums actually paid and received by the Company on
commercial prepaid dental plan accounts (excluding Medicaid
and Medicare) which were originated by the Executive;
provided, however, that the maximum amount of such
commissions payable with respect to a single calendar year
shall be limited to and not exceed $200,000 in the aggregate.
Such commissions shall include all new and renewed business.
Such commissions shall be payable on a monthly basis within
ten (10) days after the end of each calendar month based on
premiums paid to and received by the Company in such calendar
month.

(ii) Additional Bonus. The Executive shall also be
entitled to receive a bonus in the amount of $150.00 for each
dentist which the Executive successfully recruits at the
request of the Company as a dental provider for the prepaid
dental plans of the Company and its affiliates. Such bonus
shall be payable within ten (10) days after the end of the
calendar month in which the contract between the respective
dental provider and the Company is executed.

(c) Additional Compensation. The Executive shall be paid such
additional compensation and bonuses, if any, as may be determined in
the sole discretion of the Board.

6. Benefits. In addition to the compensation to be paid to the
Executive pursuant to Paragraph 5 hereof, the Executive shall further be
included in any hospital, surgical, and medical benefit plan, any group term
life insurance policy, any pension or profit sharing plan, and all other
benefits which may be extended from time to time to employees of the Company
generally by the Board in its sole discretion. The Executive shall be entitled
to a car allowance of not less than $250 per month.

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<PAGE> 72

(b) that he shall not disclose any of such trade secrets and
confidential and proprietary information, except as may be required in
the course of his employment; and

(c) that he shall not use, directly or indirectly, for his
own benefit or for the benefit of another, any of such trade secrets
and confidential and proprietary information.

All files, records, documents, drawings, specifications, memoranda,
notes, or other documents relating to the business of the Company, whether
prepared by the Executive or otherwise coming into his possession, shall be the
exclusive property of the Company and shall be delivered to the Company and not
retained by the Executive upon termination of his employment for any reason
whatsoever or at any other time upon request of the Board.

9. Non-Competition.

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<PAGE> 73
which the Executive owns less than two percent (2%) of any class of
outstanding securities) or in any other representative or individual
capacity, engage in any business or render any services to any
business that is in competition in any manner whatsoever with the
business of the Company.

(b) In addition, after termination of this Agreement, the
Executive covenants and agrees that, for a period of one year, he
shall not, directly or indirectly, as an employee, agent, consultant,
owner, principal, partner, shareholder or officer engage in any
business which calls upon, solicits, diverts or takes away any customer
or customers of the Company in the State of New Jersey for the purpose
of selling or attempting to sell any of such customers any prepaid
dental plan products or any other products or services similar to the
products and services then being sold by the Company and its
affiliates.

10. Remedies for Breach of Covenants of the Executive. The covenants
set forth in Paragraphs 8 and 9 of this Agreement shall continue to be binding
upon the Executive, notwithstanding the termination of his employment with the
Company for any reason whatsoever. Such covenants shall be deemed and construed
as separate agreements independent of any other provisions of this Agreement
and any other agreement between the Company and the Executive. The existence of
any claim or cause of action by the Executive against the Company, whether
predicated on this Agreement or otherwise, shall not constitute a defense to
the enforcement by the Company of any or all of such covenants. It is expressly
agreed that the remedy at law for the breach of any such covenant is inadequate
and the injunctive relief shall be available to prevent to the breach or any
threatened breach thereof.

11. Termination. This Agreement may be terminated upon the occurrence
of any one of the following events:

(a) Voluntary. The Executive may terminate this Agreement and
his employment at any time during the term of this Agreement by giving
ninety (90) days prior written notice of termination to the Board.

(b) Involuntary Without Cause. The Board, without cause, may
terminate this Agreement at any time during the term of this Agreement
upon ninety (90) days prior written notice to the Executive.

(i) If the Executive becomes disabled for a period
of more than thirty (30) consecutive days;

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<PAGE> 74

(ii) If the Executive for reasons other than illness
or injury absents himself from his duties without the consent
of the Board for more than ten (10) consecutive days;

(iii) If the Executive should die (effective on the
date of death);

(iv) If the Executive should be convicted of a crime
punishable by imprisonment; and

(v) If the Executive should willfully breach or
habitually neglect his duties which he is required to perform
under this Agreement or otherwise fail to comply with the
terms and conditions of this Agreement specifically
including, but not limited to, the covenants set forth in
Paragraphs 8 and 9 hereof.

In the event of the termination of this Agreement by either party prior to the
expiration of the term of this Agreement, the Executive shall be entitled to
compensation earned by him prior to the date of termination as provided herein
to and including such date of termination. In addition to the foregoing, so
long as the Executive complies with the provisions of Section 9(b) of this
Agreement and the termination of this Agreement was "without cause," under
Section 11(b) of this Agreement, then the Executive shall be entitled to be
paid as a severance payment for liquidated damages for, and in lieu of, any and
all damages which he may incur as a result of such termination (i) an amount
equal to his base salary which otherwise would have been payable over the
greater of: (a) one year after the date of termination or (b) the remaining
term of this Agreement (payable in installments on the regular payroll dates of
the Company) and (ii) all commission income to which the Executive would have
been entitled under Section 4(b) above if his employment had not been
terminated with respect to premiums paid to and received by the Company during
the same period. In addition, the Company shall continue the health benefits of
the Executive during the period such severance payments are being made. The
Executive shall be entitled to no further compensation as of the date of
termination under this Agreement. Any termination of this Agreement shall be
without prejudice to any right or remedy to which the terminating party may be
entitled either at law, in equity, or under this Agreement.

12. Notices. Any notices, claims or demands which any party is
required or may desire to give to another under or in conjunction with this
Agreement shall be in writing, and shall be given by addressing the same to
such other party(ies) at the address set forth below, and by (i) depositing the
same so addressed, postage prepaid, first class, certified or registered, in
the United States mail (herein referred to as "Mailing"), (ii) overnight
delivery by a nationally recognized overnight courier service (e.g. UPS,
Federal Express), or (iii) delivery the same personally to such other
party(ies). Any notice shall be deemed to have been given five (5) U.S. Post
Office delivery days following the date of Mailing; one day after timely
delivery to an overnight courier; or if by personal delivery, upon such
delivery.

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<PAGE> 75

(a) If to the Company:

OraCare Consultants, Inc.
14755 Preston Road
Suite 300
Dallas, Texas 75240
Attention: President
Facsimile: (214) 458-7963

(b) If to the Executive:

Ron Mazzone
4 Bromley Ct.
Sturbridge Woods
Vorhees, N.J. 08043

Either party may change its address for notice by giving notice in accordance
with the terms of this Paragraph 12.

13. General Provisions.

(a) Law Governing. This Agreement shall be governed by and
construed in accordance with the laws of the State of New Jersey.

(f) Titles. Titles of the paragraphs herein are used solely
for convenience and shall not be used for interpretation or construing
any work, clause, paragraph, or provision of this Agreement.

(g) Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but
which together shall constitute one and the same instrument.

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<PAGE> 76

IN WITNESS WHEREOF, the Company and the Executive have executed this
Agreement as of the date and year first written above.

COMPANY: EXECUTIVE:

OraCare Consultants, Inc.
A New Jersey Corporation

By:
------------------------------ ------------------------------
Its Ronald Mazzone
-----------------------------

7
<PAGE> 77

GUARANTEE OF PERFORMANCE

UNITED DENTAL CARE, INC.
A Delaware Corporation

By:
------------------------------
Mark E. Pape
Senior Vice President

8
<PAGE> 78
EXHIBIT F

POST-CLOSING ESCROW AGREEMENT

This Post-Closing Escrow Agreement (the "Agreement") is made as of the
_______ day of ________, 1996 among Frank A. Pettisani, D.D.S., Lisa M.
Mazzone, Frank A. Pettisani, Jr., D.D.S., Charles A. Costa, and Donna Costa
(collectively referred to herein as the "Sellers"), United Dental Care, Inc., a
Delaware corporation ("Purchaser"), and Prudential Securities (the "Escrow
Agent").

WHEREAS, Purchaser, Sellers, OraCare Consultants, Inc., a New Jersey
corporation (the "Company") entered into a Stock Purchase Agreement, dated as
of September ___, 1996 (the "Stock Purchase Agreement"), providing for the sale
of all of the issued and outstanding shares of capital stock of the Company by
Sellers to Purchaser; and

WHEREAS, pursuant to the Stock Purchase Agreement, Sellers agreed to
place the sum of Five Hundred Thousand Dollars ($500,000) of the Purchase Price
paid to Sellers in escrow for the purposes hereinafter set forth upon the
consummation of the transactions contemplated by the Stock Purchase Agreement;
and

NOW, THEREFORE, in consideration of the premises and the mutual terms
and conditions of the Reorganization Agreement hereof, the parties hereby agree
as follows:

1. Escrow Money. Simultaneously with the execution of this Agreement,
Sellers have deposited with the Escrow Agent the sum of Five Hundred Thousand
Dollars ($500,000) (the "Escrow Money") which constitutes a portion of the
purchase price paid to the Sellers pursuant to the Stock Purchase Agreement.
The respective interests of the Sellers in the Escrow Money as of the date of
this Agreement shall be according to the same ownership percentages of the
outstanding shares of capital stock of the Company shown on Exhibit A to the
Stock Purchase Agreement. The receipt of the deposit of the Escrow Money is
hereby acknowledged by the Escrow Agent by its execution hereof.

2. Escrow Account. The Escrow Money shall be held in escrow by the
Escrow Agent pursuant to the terms and conditions of this Agreement. Upon
receipt of the Escrow Money, the Escrow Agent shall place the Escrow Money into
any money market mutual fund rated AAA or higher by Standard and Poor's or
Moody's, treasury bills or other instruments selected in writing by Sellers
with a maturity date not in excess of ninety (90) days under the

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<PAGE> 79

following terms and conditions: (i) under the names of Sellers in proportion to
their respective interests in the Escrow Money as set forth in Section 1 above
and (ii) under the social security numbers of Sellers. It is understood and
agreed that the Escrow Agent will be issuing a 1099 INT Statement to each
Seller and the Internal Revenue Service. Sellers shall have the responsibility
as to any 1099 INT reporting thereof. The Escrow Money shall at all times be
held in a separate account and shall only be delivered pursuant to the terms
and conditions of this Agreement.

3. Terms of Escrow. The Escrow Money shall be held as a fund available
to satisfy any obligations of Sellers to Purchaser which may arise under
Section 11.2(a) of the Stock Purchase Agreement in the manner set forth below:

(a) In the event that Purchaser shall assert a claim or
claims against Purchaser arising out of or relating to any matter with
respect to which Purchaser asserts that it is entitled to be
indemnified by Sellers pursuant to Section 11.2(a) of the Stock
Purchase Agreement (collectively, the "Claims"; singularly a "Claim"),
Purchaser shall furnish written notice of the Claim (the "Notice of
Claim") to Sellers and the Escrow Agent on or before the day preceding
the second anniversary of the Effective Date of the Merger (the
"Release Date"). The Notice of Claim: (i) shall state in reasonable
detail the nature of Sellers' alleged liability; (ii) shall state the
amount of the payment that Purchaser claims it is entitled to receive
from the Escrow Money based upon Purchaser's estimate of the potential
loss; and (iii) shall further provide a particularized statement
explaining the basis for such estimate. Sellers shall have thirty (30)
days after receipt of the Notice of Claim in which to advise the
Escrow Agent and Purchaser that it disputes the Claim by delivering
written notice of Sellers' dispute ("the Notice of Dispute") to the
Escrow Agent and Purchaser. The Notice of Dispute may contest all or
any portion of the Notice of Claim based on a dispute concerning the
existence of a Claim, Sellers' liability, the estimated amount of the
alleged loss or any other related matter.

(b) If Sellers fail to deliver a Notice of Dispute within
such thirty (30) day period, Sellers shall be deemed to have been
acknowledged that Purchaser is entitled to payment as set forth in the
Notice of Claim and shall be deemed to have directed the Escrow Agent
to disburse such payment (the "Claim Payment") to Purchaser. In the
event a Notice of Dispute is timely delivered, then the undisputed
portion of the Claim, if any (the "Undisputed Claim Payment"), shall
be promptly disbursed to Purchaser and only the sum that is subject to
a dispute shall be held by the Escrow Agent until the Claim is
resolved; provided, however, that any Claim which is based upon the
assertion or threat of a third party claim against Purchaser shall be
conclusively deemed to be resolved two (2) years after the Notice of
Claim is delivered unless litigation, arbitration, assessment or some
other formal proceeding is commenced against Purchaser within that two
(2) year period. If such a formal proceeding is not commenced within
such two (2) year period, then the Claim shall be deemed abandoned and
of no further force and effect for purposes of this Agreement. In the
event a formal proceeding is commenced within the two (2) year period,
then the resolution of the Claim will occur only upon the resolution
of such proceeding and any related appellate proceedings.

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<PAGE> 80

(c) Subject to Sellers' right to dispute a Claim, once a
Notice of Claim is delivered to the Escrow Agent, the Escrow Agent
shall not permit the Escrow Money to be reduced by disbursement to
Sellers to an amount which is less than the difference between the
aggregate dollar amount of each Claim for which a Notice of Claim was
delivered on or prior to the Release Date in accordance with the terms
of Section 3(a) above less the amount of $75,000 (unless such claim is
not subject to the Threshold limitation as specified in Section
11.4(a) of the Stock Purchase Agreement and such fact is so stated in
the Notice of Claim). Furthermore, if the amount of any Claim or the
aggregate amount of any Claims should ever exceed the sum of $75,000
plus the amount of the Escrow Money, then no portion of the Escrow
Money shall be disbursed pursuant to Section 3(d) below, during such
time that such a deficit exists.

(d) On the six (6) month anniversary after the Effective
Date, following the payment of all fees and expenses due to Escrow
Agent, the Escrow Agent shall unconditionally disburse to Sellers
fifty percent (50%) the Escrow Money (i.e. $250,000) to the extent it
exceeds the sum of: (i) the aggregate dollar amount of each Claim
previously paid pursuant to the terms of this Agreement and the Stock
Purchase Agreement; plus (ii) the aggregate dollar amount of any then
existing Claim or Claims for which a Notice of Claim was delivered on
or prior to the Release Date in accordance with the terms of Section
3(a) above less the amount of $75,000 (unless such claim is not
subject to the Threshold limitation as specified in Section 11.4(a) of
the Stock Purchase Agreement and such fact is so stated in the Notice
of Claim). The remaining portion of the fifty percent (50%) Escrow
Money not distributed, if any, shall continue to be held pursuant to
the terms of this Agreement. On the Release Date following payment of
all fees and expenses due to the Escrow Agent, the Escrow Agent shall
unconditionally disburse to Sellers the Escrow Monies to the extent it
exceeds the sum of (i) the aggregate dollar amount of each Claim
previously paid pursuant to the terms of this Agreement and the Stock
Purchase Agreement; plus (ii) the aggregate dollar amount of any then
existing Claim or Claims for which a Notice of Claim has delivered on
or prior to the Release Date in accordance with the terms of Section
3(a) above less the amount of $75,000 (unless such Claims not subject
to the Threshold limitation as specified in Section 11.4(a) of the
Stock Purchase Agreement and such fact is so stated in the Notice of
Claim). The remaining portion of the Escrow Money not distributed, if
any, shall continue to be held pursuant to the terms of this Agreement
and shall be unconditionally disbursed to Sellers (or Purchaser, if
appropriate), in one or more disbursements, from time to time, upon
final resolution of all Claims involving such funds.

(e) Unless delivery is made in person at the Escrow Agent's
office or unless the Escrow Agent is properly instructed in writing by
Purchaser or Sellers, as the case may be, to make delivery in such
other manner, the Escrow Agent shall be deemed to have properly
delivered to Purchaser or Sellers, as the case may be, such funds as
Purchaser or Sellers are entitled to receive, upon placing the same in
United States Mail in a suitable package or envelope, registered or
certified mail, return receipt requested, postage prepaid, addressed
to the address listed in Section 7 hereof or such other address as may
be furnished to the Escrow Agent in writing.

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<PAGE> 81

(f) Without any notice to or consent by Purchaser, interest,
dividends, distributions or other earnings on the Escrow Money shall
be released to Sellers by the Escrow Agent on a monthly basis pursuant
to the instructions of Sellers or the assigns of the Sellers, both
before and after the Release Date.

(g) Notwithstanding any other provision hereof which shall
direct the release of all or a part of the Escrow Money on a
particular date, without the prior written consent of Purchaser and
Sellers as to any withdrawal before the Release Date, and without the
prior written consent of Sellers as to any withdrawal on or after the
Release Date, the Escrow Agent shall not withdraw any investment of
the Escrow Money prior to the maturity date of such investment to make
a payment to Purchaser or Sellers hereunder if such withdrawal will
cause an early withdrawal penalty to be imposed or any loss of income
from such withdrawal to occur. If such a penalty would be imposed or
any loss of income would occur if the investment were to be withdrawn,
the payment of any amounts of the Escrow Money due to Sellers or to
Purchaser shall be made as soon as practicable after the maturity date
of the investment.

4. Liability of Escrow Agent. Sellers and Purchaser agree that the
following provisions shall control with respect to the rights, duties,
liabilities, privileges and amenities of the Escrow Agent:

(a) The Escrow Agent is not a party to, and is not bound by,
or charged with notice of, any agreement out of which this escrow may
arise.

(c) The Escrow Agent shall be protected in acting upon any
written notice, request, waiver, consent, certificate, receipt,
authorization, power of attorney, or other paper or document which the
Escrow Agent in good faith believes to be genuine and what it purports
to be.

(d) Sellers and Purchaser, jointly and severally, agree to
indemnify and hold the Escrow Agent harmless against any and all
losses, claims, demands, liabilities and expenses, including
attorney's fees and costs, which may be incurred by the Escrow Agent
in connection with the acceptance and performance or non-performance
of its duties hereunder, excluding, however, any such liability
resulting from its negligence, misconduct or breach of its
instructions under this Agreement. In the event the Escrow Agent
becomes involved in litigation in connection with this escrow, Sellers
and Purchaser, jointly and severally, agree to indemnify and save the
Escrow Agent harmless from any and all losses, claims, damages,
liabilities and expenses, including attorney's fees and costs, which
may be incurred or suffered by Escrow Agent as a result thereof,

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<PAGE> 82

excluding, however, any such liability resulting from its negligence,
misconduct, or breach of its instructions under this Agreement.

(e) In the event of any disagreement between any of the
parties to this Agreement resulting in adverse claims or demands being
made in connection with the Escrow Money, or in the event the Escrow
Agent in good faith is in doubt as to what action it should take
hereunder, the Escrow Agent may, at its option, refuse to comply
with any claims or demands on it, or refuse to take any other action
hereunder, so long as such disagreement continues or doubt exists, and
in such event, the Escrow Agent shall not be or become liable in any
way or to any person for its failure or refusal to act, and the Escrow
Agent shall be entitled to continue to so refrain from acting until
(i) the rights of all the parties shall have been fully and finally
adjudicated by a court of competent jurisdiction, or (ii) all
differences shall have been adjudicated and all doubt resolved by
agreement among all the interested parties and the Escrow Agent shall
have been notified thereof pursuant to written directions duly
executed by all such persons.

5. Compensation of Escrow Agent. The fee for the Escrow Agent in
connection with this Agreement shall be paid by Sellers out of interest earned
on the Escrow Money.

6. Non-Waiver. Nothing contained in this Agreement shall be deemed or
construed to release or waive any of the rights or obligations of Purchaser or
Sellers under the Stock Purchase Agreement, and all rights and remedies of
Sellers and Purchaser under this Agreement are cumulative of all other rights
which either of them may have under the Stock Purchase Agreement, by law or
otherwise.

7. Notices. Any notices, claims or demands which any party is required
or may desire to give to another under or in conjunction with this Agreement
shall be in writing, and shall be given by addressing the same to such other
party(ies) at the address set forth below, and by: (i) depositing the same so
addressed, postage prepaid, first class, certified or registered, in United
States mail, return receipt requested, (herein referred to as "Mailing"); (ii)
overnight delivery by a nationally recognized overnight courier service (e.g.
UPS, Federal Express); (iii) delivering the same personally to such other
party(ies); or (iv) except with respect to the Sellers, transmitting by
facsimile and Mailing the original. Any notice shall be deemed to have been
given five (5) U.S. Post Office delivery days following the date of Mailing;
one day after timely delivery to an overnight courier; if by personal delivery,
upon such delivery; or if by facsimile, the day of transmission if made within
customary business hours, or if not transmitted within customary business hours
the following business day.

(a) If to Sellers at their respective addresses as reflected
in the Stock Purchase Agreement.

5
<PAGE> 83

(b) If to Purchaser:

United Dental Care, Inc.
14755 Preston Road
Suite 300
Dallas, Texas 75240
Attn: Mr. William H. Wilcox, President

Prudential Securities
4 Greentree Center

Suite 400
Marlton, N.J. 08053
Attn: Rick Udine
Facsimile Number: __________________

Any of the parties hereto may change the address for notices to be sent to it
by written notice delivered pursuant to the terms of this section.

8. Entire Agreement; Amendments. This Agreement sets forth the entire
understanding of the parties and supersedes all prior agreements or
understandings, whether written or oral, with respect to the subject matter
hereof. No terms, conditions or agreements other than those contained herein,
and no amendments or modifications hereto shall be valid unless made in writing
and signed by the parties hereto.

9. Capitalized Terms. Capitalized terms in this Agreement which are
not otherwise defined herein shall have the same meanings as are provided for
such terms in the Stock Purchase Agreement.

10. Binding Effect. This Agreement shall extend to and be binding upon
and inure to the benefit of the parties hereto, their respective successors and
assigns.

12. Attorney's Fees and Costs. In the event of a breach by any party
to this Agreement and commencement of a subsequent legal action in a court of
law or forum of arbitration, the prevailing party in any such dispute shall be
entitled to reimbursement of

6
<PAGE> 84

reasonable attorney's fees and court costs, including, but not limited to, the
costs of expert witnesses, transportation, lodging and meal costs of the
parties and witnesses, costs of transcript preparation and other reasonable and
necessary direct and incidental costs of such dispute. A party shall be deemed
to be a "prevailing party" under this Section only if:

a. the judgment or award against it is equal to or less than
eighty percent (80%) of that party's written settlement offer; or

b. the judgment or award in its favor is equal to or greater
than one hundred and twenty percent (120%) of that party's written
settlement demand.

Adjudication of a party's entitlement to counsel fees shall
be by way of a non-jury proceeding following adjudication of the
underlying claim.

13. Termination. This Agreement shall terminate at such time as all of
the Escrow Money shall have been released in accordance with the terms and
conditions of this Agreement.

14. Notification. Escrow Agent by Escrow Agent's execution
acknowledges that Escrow Agent has received notification of Purchaser's
interest in the Escrow Money.

15. Resignation and Termination. The Escrow Agent may resign as such
by delivering written notice to that effect at least sixty (60) days prior to
the effective date of such resignation to Sellers and Purchaser. Upon
expiration of such sixty (60) day notice period, the Escrow Agent may deliver
the portion of the Escrow Money remaining in its possession to any successor
Escrow Agent appointed by Sellers and Purchaser pursuant to this Section 15 or,
if no successor Escrow Agent has been appointed, to any court of competent
jurisdiction in Phoenix, Arizona, or in accordance with the joint written
instructions of Purchaser and Sellers. Purchaser and Sellers, acting jointly,
may terminate the Escrow Agent from its position as such by delivering to the
Escrow Agent written notice to that effect executed by Purchaser and Sellers at
least thirty (30) days prior to the effective date of such termination. In the
event of such resignation or termination of the Escrow Agent, a successor
Escrow Agent shall be appointed by mutual agreement between Purchaser and
Sellers, and the Escrow Agent shall deliver the portion of the Escrow Money
remaining in its possession to such successor Escrow Agent. From and after the
appointment of a successor Escrow Agent pursuant to this Section 15, all
references herein to the Escrow Agent shall be deemed to be to such successor
Escrow Agent. The delivery by the Escrow Agent of the Escrow Money hereunder in
accordance with the provisions of this Section 15 shall constitute a full and
sufficient discharge and acquittance of the Escrow Agent in respect to such
sums delivered, and the Escrow Agent shall be entitled to receive releases and
discharges therefor. The indemnities in favor of the Escrow Agent

7
<PAGE> 85

contained in this Agreement and the obligations of Purchaser and Sellers under
Section 4 hereof shall survive for the benefit of the Escrow Agent after any
resignation or termination.

16. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but which together
shall constitute one and the same agreement.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day herein first written above.

PURCHASER: SELLERS:

UNITED DENTAL CARE, INC.
------------------------------
Frank A. Pettisani, D.D.S.

By:
------------------------------ ------------------------------
William H. Wilcox Lisa M. Mazzone
President

------------------------------
Frank A. Pettisani, Jr., D.D.S.

ESCROW AGENT: ------------------------------
Charles A. Costa
Prudential Securities

------------------------------
Donna Costa
By:
------------------------------
Its:
-----------------------------

<PAGE> 1

EXHIBIT 10.37

EARNEST MONEY ESCROW AGREEMENT

This Earnest Money Escrow Agreement (the "Agreement") is made as of
the 5th day of September, 1996 among Frank A. Pettisani, D.D.S., Lisa M.
Mazzone, Frank A. Pettisani, Jr., D.D.S., Charles A. Costa and Donna Costa
(referred to herein collectively as the "Sellers" and individually as a
"Seller"); United Dental Care, Inc., a Delaware corporation ("Purchaser"); and
Prudential Securities (the "Escrow Agent").

WHEREAS, Sellers and Purchaser have entered into that certain Stock
Purchase Agreement dated September ____, 1996 (the "Stock Purchase Agreement")
providing for the purchase of all the issued and outstanding shares of capital
stock of OraCare Consultants, Inc., a New Jersey corporation (the "Company")
(the "Shares") from the Sellers by Purchaser; and

WHEREAS, in connection with the execution of the Stock Purchase
Agreement, Purchaser has agreed to place the sum of Three Hundred Thousand and
no/100ths Dollars ($300,000.00) in escrow and for the purposes hereinafter set
forth. (Such initial and additional escrow deposit and any interest earned
thereon while such funds are in escrow are referred to herein as the "Escrow
Money"); and

WHEREAS, the parties desire to effectuate the provisions of the Stock
Purchase Agreement with respect to the Escrow Money;

NOW, THEREFORE, IN CONSIDERATION OF THE PREMISES and the mutual terms
and conditions hereof, the parties hereby agree as follows:

1. Escrow Money. Simultaneously with the execution of this
Agreement, Purchaser has deposited the sum of $300,000 with the Escrow Agent,
the receipt of which is hereby acknowledged by the Escrow Agent by its
execution hereof.

2. Escrow Account. The Escrow Money shall be held in escrow by
the Escrow Agent pursuant to the terms and conditions of this Agreement. Upon
receipt of the Escrow Money, the Escrow Agent shall place the Escrow Money
deposit into an interest bearing account under the following terms and
conditions: (i) at Prudential Securities; (ii) under the name of the
OraCare-UDCI Earnest Money Escrow Account and (iii) under the federal tax
identification (ID) number of the Purchaser (#75-2309712). It is understood
and agreed that the Escrow Agent will be issuing a 1099 INT statement to the
Purchaser and the Internal Revenue Service, even though the interest may be
payable eventually to either the Purchaser or the Sellers as the case may be.
In the event the interest is paid to the Purchaser, the Purchaser shall have
the responsibility as to any 1099 INT reporting thereof. The Escrow Money
shall at all times be held in a separate account and shall only be delivered
pursuant to the terms and conditions of this Agreement.

1
<PAGE> 2
3. Terms of Escrow. The Escrow Money shall be held as a trust
deposit and shall be applied by the Escrow Agent in accordance with the
following terms and directions:

(a) Application upon Closing. In the event that the
Sellers have not furnished written notice to Purchaser and the Escrow
Agent of the failure of Purchaser to consummate the Stock Purchase
Agreement in accordance with Section 3(b) below prior to Closing under
the Stock Purchase Agreement, then, upon the Closing, Escrow Agent
shall receive a notice executed by Purchaser and the Sellers directing
Escrow Agent to either (i) pay the Escrow Money to Sellers as the
notice shall direct in which case the initial $300,000 escrow deposit
and any interest earned thereon shall constitute a credit against the
Purchase Price or (ii) refund the Escrow Money to the Purchaser in
which case it shall not constitute a credit against the Purchase
Price.

(b) Application upon Termination. If Purchaser fails to
consummate the Stock Purchase Agreement for any reason other than (i)
a material breach of the Stock Purchase Agreement or this Agreement by
Sellers or (ii) the valid exercise of any right of termination by
Purchaser expressly set forth in the Stock Purchase Agreement, then
the Sellers shall furnish written notice to Purchaser and the Escrow
Agent of Purchaser's failure to consummate the Stock Purchase
Agreement and directing that the Escrow Money be paid to the Sellers.
Ten (10) days after such notice is received by Purchaser and the
Escrow Agent as proven by cancellation marks on registered or
certified mail return receipts, the Sellers shall be entitled to be
paid the Escrow Money on pro rata basis determined according to the
percentage of the Purchase Price under the Stock Purchase Agreement
that would have been payable to the Sellers and the Escrow Agent shall
release the Escrow Money to the Sellers on such pro rata basis.
Otherwise, ten (10) days after receipt of written notice/demand from
the Purchaser to the Sellers and the Escrow Agent that one of the
conditions stated in (i) or (ii) above has occurred and that the
Purchaser is entitled to receive a refund of the Escrow Money, as
proven by cancellation marks on registered or certified mail return
receipts, the Purchaser shall be entitled to be refunded the Escrow
Money and the Escrow Agent shall release the Escrow Money to the
Purchaser.

(c) Automatic Termination. In the event that the Escrow
Agent has not received instructions as to the release of the Escrow
Money before September 30, 1997, then this Escrow Agreement shall
automatically terminate on September 30, 1997 and the Escrow Agent
shall refund the Escrow Money to Purchaser without the necessity of
any further notice or instructions of any kind.

(d) Interest. Interest earned on the Escrow Money shall
be applied together with the Escrow Money and paid to the Sellers or
to Purchaser as the case may be as specified above.

2
<PAGE> 3
(a) The Escrow Agent is not a party to, and is not bound
by, or charged with notice of, any agreement out of which this escrow
may arise.

(d) Purchaser and the Sellers, jointly and severally,
agree to indemnify and hold the Escrow Agent harmless against any and
all losses, claims, demands, liabilities and expenses, including
attorney's fees and costs, which may be incurred by the Escrow Agent
in connection with the acceptance and performance or non- performance
of its duties hereunder whether such losses, claims, demands,
liabilities and expenses arise during or subsequent to performance of
this Agreement, directly or indirectly, excluding, however, any such
liability resulting from its negligence, misconduct, or breach of its
instructions under this Agreement. In the event the Escrow Agent
becomes involved in litigation in connection with this escrow,
Purchaser and the Sellers, jointly and severally, agree to indemnify
and save the Escrow Agent harmless from any and all losses, claims,
damages, liabilities and expenses, including attorney's fees and
costs, interpleader costs and judgments, which may be incurred or
suffered by Escrow Agent as a result thereof, excluding, however, any
such liability resulting from its negligence, misconduct, or breach of
its instructions under this Agreement.

(e) In the event of any disagreement between any of the
parties to this Agreement or with any third person resulting in
adverse claims or demands being made in connection with the Escrow
Money, or in the event the Escrow Agent in good faith is in doubt as
to what action it should take hereunder, the Escrow Agent may, at its
option, refuse to comply with any claims or demands on it, or refuse
to take any other action hereunder, so long as such disagreement
continues or doubt exists, and in such event, the Escrow Agent shall
not be or become liable in any way or to any person for its failure or
refusal to act, and the Escrow Agent shall be entitled to continue to
so refrain from acting until (i) the rights of all the parties shall
have been fully and finally adjudicated by a court of competent
jurisdiction, or (ii) all differences shall have adjusted and all
doubt resolved by agreement among all the interested parties and the
Escrow Agent shall have been notified thereof pursuant to written
directions duly executed by all such persons. In the event of
conflicting demands on the Escrow Agent by the principals, the Escrow
Agent may, at its option, deposit any and all funds in question with
the court that would have jurisdiction over the matter, and in such
event, the Escrow Agent is relieved of any further responsibility in
connection with this escrow.

3
<PAGE> 4
5. Compensation of Escrow Agent. All fees and expenses of the
Escrow Agent shall be paid equally by the Sellers and the Purchaser. The fee
for the Escrow Agent in connection with this Agreement shall be
____________________________________ and no/100ths Dollars ($________).

7. Notices. Any notices, claims or demands which any party is
required or may desire to give to another under or in conjunction with this
Agreement shall be in writing, and shall be given by addressing the same to
such other party(ies) at the address set forth below, and by (i) depositing the
same so addressed, postage prepaid, first class, certified or registered, in
the United States mail, return receipt requested, (herein referred to as
"Mailing"), (ii) overnight delivery by a nationally recognized overnight
courier service (e.g. UPS, Federal Express), (iii) delivery the same personally
to such other party(ies), or (iv) transmitting by facsimile and Mailing the
original. Any notice shall be deemed to have been given five (5) U.S. Post
Office delivery days following the date of Mailing; one day after timely
delivery to an overnight courier; if by personal delivery, upon such delivery;
or if by facsimile, the day of transmission if made within customary business
hours, or if not transmitted within customary business hours, the following
business day.

a. If to Purchaser:

United Dental Care, Inc.
14755 Preston Road
Dallas, Texas 75240
Attention: Mr. William H. Wilcox, President
Facsimile Number: (214) 458-7963

b. If to Sellers:

c/o OraCare Consultants, Inc.
8000 Sagemore Drive
Suite 8302
Marlton, N.J. 08053
Attention: Ms. Lisa M. Mazzone
Facsimile No.: (609) 983-3025

4
<PAGE> 5
c. If to Escrow Agent:

Prudential Securities
4 Greentree Center
Suite 400
Marlton, N.J. 08053
Attention: Rick Udine
Facsimile No.: _____________

Any of the parties hereto may change the address or facsimile telephone number
for notices to be sent to it by written notice delivered pursuant to the terms
of this section.

9. Capitalized Terms. Capitalized terms in this Agreement which
are not otherwise defined herein shall have the same meanings as are provided
for such terms in the Stock Purchase Agreement.

10. Binding Effect. This Agreement shall extend to and be binding
upon and inure to the benefit of the parties hereto, their respective
successors and assigns.

11. Termination. This Agreement shall terminate at such time as
all of the Escrow Money shall have been released in accordance with the terms
and conditions of this Agreement.

13. Waiver; Remedies. Waiver by either party hereto of any breach
of or exercise of any rights under this Agreement shall not be deemed to be a
waiver of similar or other breaches or rights or a future breach of the same
duty. The failure of a party to take any action by reason of any such breach
or to exercise any such right shall not deprive any party of the right to take
any action at any time while such breach or condition giving rise to such right
continues. The parties shall have all remedies permitted to them by this
Agreement or law, and all such remedies shall be cumulative.

5
<PAGE> 6
expenses thereof, including reasonable attorney's fees and costs. A party
shall be deemed to be a "prevailing party" under this Section only if:

a. the judgment or award against it is equal to or less
than eighty percent (80%) of that party's written settlement offer; or

b. the judgment or award in its favor is equal to or
greater than one hundred and twenty percent (120%) of that party's
written settlement demand.

Adjudication of a party's entitlement to counsel fees shall be
by way of a non-jury proceeding following adjudication of the
underlying claim.

15. Governing Law. This Agreement shall be construed under and
governed by the internal laws, and not the law of conflicts, of the State of
New Jersey.

16. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but which together
shall constitute one and the same agreement.

6
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have executed this Earnest
Money Escrow Agreement as of the day and year first written above.

PURCHASER: SELLERS:

UNITED DENTAL CARE, INC.

By: /s/ WILLIAM H. WILCOX /s/ FRANK A. PETTISANI
------------------------------- --------------------------------
William H. Wilcox, President Frank A. Pettisani, D.D.S.

/s/ LISA M. MAZZO
--------------------------------
Lisa M. Mazzone
ESCROW AGENT:
/s/ FRANK A. PETTISANI
PRUDENTIAL SECURITIES --------------------------------
Frank A. Pettisani, Jr., D.D.S.

By: /s/ [ILLEGIBLE] /s/ CHARLES A. COSTA
-------------------------------- --------------------------------
Its: V.P. Branch Manager Charles A. Costa
----------------------------
/s/ DONNA COSTA
--------------------------------
Donna Costa

<PAGE> 1
EXHIBIT 10.38

STOCK PURCHASE AGREEMENT

AMONG

UNITED DENTAL CARE, INC.,

AS PURCHASER

AND

FRANK A. PETTISANI, D.D.S.

AS SELLER,

AND

ORACARE DENTAL ASSOCIATES, P.A.

AS OF
SEPTEMBER 5, 1996
<PAGE> 2
TABLE OF CONTENTS

<TABLE>
<S> <C> <C>
ARTICLE 1 DEFINED TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

ARTICLE 2 PURCHASE AND SALE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

2.1 Agreement to Sell and Purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF SELLER . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

3.1 Authority Relative to This Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.2 Title to Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.3 Absence of Breach; No Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.4 Due Organization of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.5 Subsidiaries/Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.6 Due Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.7 Capitalization of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.8 Licenses/Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.9 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.10 No Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.11 No Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.12 Title to and Condition of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.13 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.14 Real Property Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.15 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.16 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(a) Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(b) Dentists' Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(c) Other Provider Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(d) Employer Group Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(e) Management Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(f) Copies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.17 Employees, Et Cetera . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.18 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.19 Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.20 Accounts Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.21 Broker's and Finder's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.22 Labor Practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.23 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.24 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
</TABLE>

i
<PAGE> 3
<TABLE>
<S> <C> <C>
3.25 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.26 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.27 Transactions With Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.28 Improper Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.29 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF PURCHASER . . . . . . . . . . . . . . . . . . . . . . . . . . 16

4.1 Due Incorporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.2 Corporate Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.3 Absence of Breach; No Consents 16
4.4 Investment Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.5 Broker's or Finder's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

ARTICLE 5 COVENANTS OF THE SELLER AND THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

5.1 Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.2 Access and Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.3 No Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.4 Conduct of Business Prior to Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.5 Permitted Transactions Prior to Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.6 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.7 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.8 Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.9 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.10 Breach of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.11 No Transfer of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.12 Updating of Exhibits and Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

ARTICLE 6 COVENANTS OF PURCHASER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

6.1 Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.2 Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.3 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.4 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.5 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.6 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

ARTICLE 7 CONDITIONS TO OBLIGATIONS OF SELLER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

7.1 Conditions to Obligations of Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

ARTICLE 8 CONDITIONS TO OBLIGATIONS OF PURCHASER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

8.1 Conditions To Obligations of Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
</TABLE>

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ARTICLE 9 CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

9.1 Date of Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
9.2 Actions by Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(a) Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(b) Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
9.3 Actions by Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(a) Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(c) Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

ARTICLE 10 SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNITY; POST-CLOSING MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

10.1 Representations and Warranties to Survive . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
10.2 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(a) Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(b) Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.3 Indemnity Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.4 Limitations on Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(a) General Threshold 30
(b) Time Limits for Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(c) Certain Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.5 Remedies; Default; Notice and Cure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.6 Severance Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

ARTICLE 11 TERMINATION; WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

11.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(a) Mutual Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(b) By Purchaser or Seller: Condition Precedent . . . . . . . . . . . . . . . . . . . . . . 31
(c) By Purchaser or Seller: Representations, Warranties and Covenants . . . . . . . . . . . 32
11.2 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

ARTICLE 12 CERTAIN DEFINED TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

12.1 Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
12.2 Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
12.3 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
12.4 Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
12.5 Closing Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
12.6 Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
12.7 Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
12.8 Counsel to Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
12.9 Counsel to Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
</TABLE>

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<TABLE>
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12.10 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
12.11 GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
12.12 Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
12.13 Multiemployer Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
12.14 Net Income of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
12.15 Payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
12.16 PBGC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
12.17 Pension Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
12.18 Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
12.19 Welfare Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

ARTICLE 13 ARBITRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

13.1 Arbitration Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(a) Step One . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(b) Step Two . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(c) Step Three . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
13.2 Self-Execution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
13.3 Arbitrator's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
13.4 Rules Governing Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
13.5 Entry of Award . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
13.6 Injunctive Relief . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
13.7 Non-Applicability to Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

ARTICLE 14 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

14.1 Further Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
14.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
14.3 Entire Agreement; Amendments 38
14.4 Binding Effect/Assignability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
14.5 Exhibits/Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
14.6 Invalid Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
14.7 Headings/Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
14.8 Waiver; Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
14.9 Attorney's Fees and Costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
14.10 Time. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
14.11 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
14.12 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

LIST OF EXHIBITS

Exhibit A-1 Employment Agreement--Frank A. Pettisani, D.D.S.
Exhibit A-2 Employment Agreement--Frank A. Pettisani, Jr., D.D.S.
</TABLE>

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LIST OF SCHEDULES

Schedule 3.9 - States Where Company Qualified
Schedule 3.5 - Subsidiaries/Investments
Schedule 3.8 - Licenses, Etc.
Schedule 3.9 - Financial Statements
Schedule 3.10 - Adverse Changes
Schedule 3.11 - Undisclosed Liabilities
Schedule 3.12 - Title Encumbrances
Schedule 3.13 - Litigation
Schedule 3.14 - Real Property Leases
Schedule 3.15 - Intellectual Property
Schedule 3.16A - Material Contracts
Schedule 3.16B - Dental Provider Contracts
Schedule 3.16C - Other Provider Contracts
Schedule 3.16D - Employer Group Contracts
Schedule 3.16E - Management Contracts
Schedule 3.17 - Employees, Etc.
Schedule 3.18 - Employee Benefit Plans
Schedule 3.19 - Receivables
Schedule 3.20 - Payables
Schedule 3.23 - Insurance
Schedule 3.24 - Consents
Schedule 3.25 - Environmental Matters
Schedule 3.26 - Taxes
Schedule 3.27 - Transactions with Affiliates

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STOCK PURCHASE AGREEMENT

This Stock Purchase Agreement (this "Agreement") is made as of the 5th
day of September, 1996 (the "Effective Date") by and among United Dental Care,
Inc., a Delaware corporation ("Purchaser"), Frank A. Pettisani, D.D.S.
("Seller"), and OraCare Dental Associates, P.A., a New Jersey professional
association (the "Company").

WHEREAS, the Seller owns one hundred (100) shares of Common Stock, no
par value of the Company (the "Shares"); and

WHEREAS, the Shares represent all of the issued and outstanding shares
of capital stock of the Company; and

WHEREAS, the Seller is the sole stockholder of the Company; and

WHEREAS, subject to the terms and conditions hereinafter set forth,
the Seller desires to sell to the Purchaser, and the Purchaser desires to
purchase from the Seller, the Shares;

NOW, THEREFORE, in consideration of the premises and the mutual terms
and conditions herein contained, the parties hereby agree as follows:

ARTICLE 1
DEFINED TERMS/SCHEDULES

1.2 Schedules. References to a Schedule shall include any
applicable disclosure expressly set forth on the face of any other Schedule
even if not specifically cross-referenced to such other Schedule. It is
specifically acknowledged by the parties hereto that certain agreements and
documents listed on the Schedules are not to be delivered herewith, but were
previously or will be delivered or made available to Purchaser or its
representatives in connection with the due diligence investigation of the
Company conducted by Purchaser and its representatives prior to Closing
(hereinafter defined). All such agreements and documents made available or
delivered to Purchaser by the Company and the Seller shall be originals or true
and correct copies of the originals of all such agreements and documents. Each
Schedule and the agreements and documents expressly listed in each Schedule
shall be considered a part hereof as if set forth herein in full; provided,
however, that the representations and warranties of Seller set forth in this
Agreement shall not be affected or deemed modified, waived or limited in any
respect by the information provided in the Schedules or contained in any
agreement or document

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<PAGE> 8
listed or referenced in the Schedules unless and only to the extent that any
qualification, modification, exception or limitation to any representation and
warranty of the Seller is expressly set forth on the face of a Schedule.

ARTICLE 2
PURCHASE AND SALE

2.1 Agreement to Sell and Purchase. Subject to the terms and
conditions of this Agreement and in reliance on the representations, warranties
and covenants herein set forth, at the Closing the Seller shall sell to
Purchaser or its designee, and Purchaser or its designee shall purchase from
the Seller, the Shares, free and clear of any and all liens, claims, options,
charges, pledges, security interests, voting agreements or trusts, encumbrances
or other restrictions or interests of any kind or nature whatsoever
(collectively, "Claims").

2.2 Purchase Price. Subject to the terms and conditions of this
Agreement and in reliance on the representations, warranties and covenants
herein set forth, the Purchaser shall pay as consideration for the Shares, an
aggregate purchase price in an amount equal to Nine Hundred Fifty-Three
Thousand One Hundred Twenty-Five and No/100ths Dollars ($953,125.00) less,
however, the reduction to such amount applicable pursuant to the provisions of
Section 7.1(g) of this Agreement (as so adjusted, the "Purchase Price") as
follows:

(a) $__________ of the Purchase Price (or if less, the
Purchase Price) shall be paid at Closing by certified or cashier's check (or by
wire transfer in accordance with Sellers' directions given to Purchaser not
less than two (2) business days prior to the Closing Date; and

(b) The balance of the Purchase Price shall be paid by
the execution and delivery by Purchaser of a promissory note (the "Note") in
such principal amount with the following provisions:

(i) the Note shall be payable on January 30, 1997;

(ii) the payment obligation under the Note shall be
absolute and unconditional and shall not be subject to any defenses,
set-off or counterclaims by Purchaser, including, without limitation,
any set-off or counterclaim from any breach of warranty of the Sellers
under this Agreement;

(iii) the Note shall bear interest at a rate one-quarter
percentage (.25%) less than the interest rate at which Purchaser can
invest such funds at the time of the Closing, which interest shall be
payable on the maturity date of the Note;

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<PAGE> 9
(v) the Note shall be secured by an irrevocable letter of
credit issued by NationsBank of Texas, N.A. in an amount equal to the
principal amount of the Note, and costs and expenses of such letter of
credit to be paid at or prior to Closing by Sellers; and

(vi) the Note shall contain such other usual and customary
provisions of a note of similar type and purpose.

ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER

Seller represents and warrants to Purchaser that, as of the Effective
Date and as of the Closing Date:

3.1 Authority Relative to This Agreement. This Agreement has been
duly and validly executed and delivered by the Seller and constitutes a valid
and binding agreement of the Seller enforceable in accordance with its terms.
The other agreements to be executed and delivered by the Seller pursuant to
this Agreement will be valid and binding agreements of the Seller enforceable
in accordance with their respective terms when so executed and delivered by the
Seller.

3.2 Title to Stock. Seller is the unconditional sole legal,
beneficial, record and equitable owner of the Shares, free and clear of any and
all Claims. At the Closing, Seller will convey to Purchaser valid and
marketable title to the Shares, free and clear of any and all Claims.

3.3 Absence of Breach; No Consent. The execution, delivery, and
performance of this Agreement and the other agreements to be executed and
delivered pursuant to this Agreement by the Seller does not and will not: (i)
contravene any order, writ, judgment, injunction, decree, determination, or
award of any court or other authority which affects or binds the Seller or the
Shares, (ii) conflict with or result in a breach of or default under any
indenture, loan or credit agreement or any other agreement or instrument to
which the Seller is a party or by which the Seller or the Shares are bound, or
(iii) except for the consents reflected in Schedule 3.24, require the
authorization, consent, approval or license of any third party or entity.

3.4 Due Organization of the Company. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of New Jersey with all requisite corporate power and authority to conduct
its respective business operations as now being conducted. The Company is not
qualified as a foreign corporation authorized to do business in any other
jurisdiction. The Company does not do business in any jurisdiction other than
the stated New Jersey, where the failure to be so authorized would have a
material adverse effect on the business or operations of the Company. Seller
have delivered to Purchaser complete and correct copies of the articles of
incorporation and bylaws of the Company as

3
<PAGE> 10
amended to and in effect on the Effective Date. The Company is not in
violation of any term or provision of its articles of incorporation or bylaws.

3.5 Subsidiaries/Investments. The Company has no subsidiaries,
whether direct or indirect. The Company has no equity interest or investment
in, and does not possesses any other right or obligation to purchase any equity
or other investment in, and is not a partner of or joint venturer with, any
other person or entity.

3.6 Due Authorization. Except for the consents reflected on
Schedule 3.24, the execution and delivery of this Agreement and the performance
of the transactions contemplated by this Agreement and all other instruments,
agreements, certificates and documents contemplated hereby to which either the
Seller or the Company are or will be a party does not, on the date hereof, and
will not, on the Closing Date, (i) violate any decree or judgment of any court
or governmental authority which may be applicable to the Company or any
Subsidiary; (ii) to the knowledge of the Seller, violate any law, rule or
regulation, or any decree or judgment of any court or governmental authority
binding on the Company; (iii) violate or conflict with, or result in a breach
of, or constitute a default (or an event which, with or without notice or lapse
of time or both, would constitute a default) under, or permit cancellation of,
or result in the creation of any encumbrance upon, any of the Shares or any of
the assets of the Company under any of the terms, conditions, or provisions of
any contract, lease, sales order, purchase order, indenture, mortgage, note,
bond, instrument, license or other agreement to which the Company is a party,
or by which the Company or its assets is bound; (iv) permit the acceleration of
the maturity of any indebtedness of the Company; (v) violate or conflict with
any provision of the articles of incorporation or bylaws of the Company and
(vi) has been duly authorized by all requisite corporate action of the Company.

3.7 Capitalization of the Company. The authorized capital stock
of the Company consists of two thousand five hundred (2,500) shares of Common
Stock, no par value per share, of which one hundred (100) shares are validly
issued and outstanding, fully paid, and nonassessable. All of the outstanding
shares of common stock of the Company are owned beneficially and of record by
the Seller. The Company has provided to the Purchaser a correct and complete
copy of the stock registry of the Company listing all stockholders of the
Company and the outstanding share certificates and total number of shares
issued to each stockholder of the Company. The Company has no other capital
stock authorized for issuance and has no treasury shares. There are no
outstanding options, warrants, convertible instruments, or other rights,
agreements, or commitments to issue or acquire any shares of common stock or
any other security constituting, or convertible or exchangeable into, capital
stock of the Company. Since the date of the Company Balance Sheet (as defined
in Section 4.6 below), no shares of the Company's capital stock, no options,
warrants, or other rights, agreements, or commitments (contingent or otherwise)
obligating the Company to issue shares of capital stock, and no other
securities or instruments convertible or exchangeable into shares of capital
stock, have been executed or issued by the Company. The Company has not
granted and is not a party to any agreement granting preemptive rights, rights
of first refusal, or registration rights with respect to its outstanding
capital stock or any capital stock of the Company to be issued in the future.

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<PAGE> 11
The Company is not bound by any exclusive agency or indemnity agreement
applicable to the issuance of shares of its capital stock after the Effective
Date.

3.8 Licenses/Compliance with Law. The Company has the lawful
authority and all federal, state or local governmental authorizations,
certificates of authority, licenses or permits necessary for or required to
conduct its respective business as such is presently being conducted. Schedule
3.8 contains a list and description of all authorizations, certificates of
authority, licenses and permits, including those granted or derived from
governmental sources, issued or granted to the Company. For the proper conduct
of its business as presently conducted, the Company is not required to obtain
any additional certificates of authority, permits, licenses or similar
authorizations from any governmental authority other than has already obtained
as listed on Schedule 3.8. There are no pending or, to the knowledge of the
Seller, threatened legal, administrative, arbitration or other actions,
notices, or proceedings nor any pending or, to the knowledge of the Seller,
threatened governmental investigations by any federal, state or local
government or any subdivision thereof or by any public or private group which
assert or allege any violation of or non- compliance with any governmental
requirements or which would have the effect of limiting, prohibiting or
changing the business operations of the Company as authorized by the
authorizations, certificates of authority, licenses and permits set forth on
Schedule 3.8 and as presently conducted by the Company. There are no judgments
against the Company, and no orders, rules, consent decrees or injunctions of
any court, governmental department, commission, agency or instrumentality by
which the Company is bound or to which the Company is subject. The Company has
not entered into or is subject to any judgment, consent decree, compliance
order or administrative order with respect to any insurance or other similar
law or received any request for information, notice, demand letter,
administrative inquiry or formal or informal complaint or claim with respect to
any insurance or other similar law or the enforcement of any such law. Neither
the Company's operations nor any of the assets owned, leased, occupied or used
by the Company in the operation of its business materially violates or fails to
comply in any material respect with any applicable federal, state or local
health, fire, environmental, safety, zoning, building or other codes, laws,
rules or regulations, and the Company has not received any notice of alleged
violations thereof.

Seller has disclosed to Purchaser that, under New Jersey law, the
capital stock of the Company must be owned by a New Jersey dentist in order for
the operations of the Company to be conducted after the Closing as presently
conducted. Seller makes no representations regarding the Company being
properly licensed to conduct the operations as presently conducted after the
Closing.

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<PAGE> 12
accurate copies of all such financial statements (the "Financial Statements")
have been delivered to Purchaser. The Financial Statements present fairly in
all material respects the financial position of the Company, and the results of
the operations, changes in stockholders' equity and cash flows of the Company,
as of the respective dates thereof and for the respective periods covered
thereby, in conformity with generally accepted accounting principles ("GAAP").
Except as set forth in the Company Balance Sheet included in the Financial
Statements, as of the Balance Sheet Date there were no liabilities, debts,
claims or obligations, whether accrued, absolute, contingent or otherwise,
whether due or to become due, which are required by GAAP to be set forth in a
balance sheet of the Company which have not been so set forth in the Company
Balance Sheet. The Financial Statements were prepared from the books and
records of the Company. There are no assets shown on the Company Balance Sheet
which are valued thereon at an amount materially in excess of their fair value
as of the Balance Sheet Date. At the Balance Sheet Date, the Company owned
each of the assets included in the Company Balance Sheet. From the date hereof
through the Closing Date, the Company will continue to prepare monthly and
year-to-date unaudited financial statements on the same basis and will promptly
deliver the same to Purchaser. The foregoing representations will be
applicable to all such monthly unaudited financial statements so prepared and
delivered; provided, however, that such unaudited financial statements shall be
subject to normal year-end adjustments, none of which will be material.

3.10 No Adverse Change. Except as otherwise expressly contemplated
by this Agreement, since the Balance Sheet Date, the business of the Company
has been conducted only in the ordinary course and there has not been (i) any
material adverse change in the financial condition, business, properties,
assets, or results of operations of the Company (financial or otherwise)
exclusive of any general economic factors affecting the prepaid dental plan
industry in general; (ii) any material loss or damage (whether or not covered
by insurance) to any of the assets of the Company which materially affects or
impairs the ability of the Company to conduct its business as previously
conducted or any other event or condition of any character which has materially
and adversely affected the business or operations of the Company; (iii) the
attaching, placing or granting of, or the agreement to attach, place or grant,
any encumbrance on any of the assets of the Company; (iv) any sale or transfer
of any material portion of the assets of the Company; (v) any material changes
in the terms of any material contract of the Company; (vi) any material change
in the accounting systems, policies or practices of the Company; (vii) any
waiver by or on behalf of the Company of any rights which have any material
value; (viii) no taking under condemnation or right of eminent domain of any of
the assets of the Company; (ix) any entry into or termination of any material
commitment, contract, agreement, or transaction (including, without limitation,
any material borrowing or capital expenditure or sale or other disposition of
any material assets) by the Company; (x) any redemption, repurchase, or other
acquisition of any of its capital stock by the Company, or any issuance of
capital stock of the Company or of securities convertible into or rights to
acquire any such capital stock; (xi) any dividend or distribution declared, set
aside or paid on capital stock of the Company; (xii) any transfer or right
granted by the Company of or under any material lease, license, agreement,
patent, trademark, trade name, service mark or copyright; (xiii) any sale or
other disposition of any material asset of the Company, or any mortgage,
pledge, or imposition of any lien or other encumbrance on any material asset of
the Company, or any agreement relating to or

6
<PAGE> 13
contemplating any of the foregoing not in the ordinary and usual course of
business; (xiv) any default or breach by the Company in any material respect
under any contract, license, or permit; or (xv) any material increase in the
statutory reserves required to be maintained by the Company. Except as set
forth on Schedule 3.10, since the Balance Sheet Date, the Company has conducted
its business only in the ordinary and usual course of business and, without
limiting the foregoing, no changes have been made in (i) employee compensation
levels other than usual customary annual adjustments, (ii) the manner in which
employees of the Company are compensated, (iii) supplemental benefits provided
to any employees, or (iv) the employment of any employees of the Company.

3.11 No Undisclosed Liabilities. True and correct copies of all
notes, agreements or other documents evidencing the outstanding debt of the
Company, as amended to and in effect on the Effective Date, have been delivered
to Purchaser by the Company. The Company has no liabilities which are not
adequately reflected or reserved against on the face of the Company Balance
Sheet, except liabilities incurred since the Balance Sheet Date in the ordinary
course of business consistent with past practice which, in the aggregate, would
not have a material adverse effect on the condition (financial or otherwise),
assets or business of the Company. Schedule 3.11 hereto sets forth each
liability of the Company in an amount in excess of $10,000 and each person to
whom the aggregate amount of liabilities owed to such person by the Company
exceeds $10,000.

3.12 Title to and Condition of Properties. Except as disclosed in
Schedule 3.12 hereto, the Company has good, marketable, and insurable title, or
valid, effective and continuing leasehold rights in the case of leased
property, to all of the assets reflected on the Company Balance Sheet and all
personal property owned or leased by it or used by it in the conduct of its
business in such a manner as to create the appearance or reasonable expectation
that the same is owned or leased by it, free and clear of all liens, security
interests, restrictions, claims, encumbrances, and charges except as disclosed
in Schedule 3.12. The Seller do not know of any potential action or assertion
of rights, including condemnation, by any party, governmental or other, and no
proceedings with respect thereto have been instituted of which any Seller or
the Company has notice, that would materially affect the ability of the Company
to utilize each of such assets in its business. The Company has not received
any notices of default or other violations from any mortgagee regarding any
properties leased by the Company which defaults or violations have not been
cured prior to the Effective Date. Schedule 3.12 hereto contains a detailed
listing of all material assets of the Company. The assets now owned by the
Company constitute all assets reasonably necessary to enable Purchaser to
conduct the business and operations of the Company on substantially the same
terms as such business has been conducted historically. Except as disclosed in
Schedule 3.12, all such assets are well maintained and in good operating
condition, except for normal wear and tear.

3.13 Litigation. Except as set forth on Schedule 3.13 hereto, (i)
no material investigation or review by any governmental entity with respect to
the Company is pending or, to the knowledge of the Seller, threatened, nor has
any governmental entity indicated to the Company an intention to conduct the
same; and (ii) there is no action, suit, or administrative, condemnation,
arbitration or other proceeding (including proceedings concerning labor
disputes

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<PAGE> 14
or grievances or union recognition) pending or, to the knowledge of the Seller,
threatened against or affecting the Company to which the Company is a party, at
law or in equity, before any federal, state, or municipal court or other
governmental department, commission, board, bureau, agency, or instrumentality.
The Company is not now, and has not been, a party to any injunction, order or
decree restricting the method of the conduct of its business or the marketing
of any of its products or services.

3.15 Intellectual Property. Schedule 3.15 is an accurate and
complete list of all tradenames that the Company uses in its business
operations. Except as set forth on Schedule 3.15, the Company has no United
States and foreign patents, patent applications, patent licenses, trademarks,
and service mark registrations (and applications therefor), and has no
copyrights and copyright registrations (and applications therefor), trade
secrets, inventions, processes, designs, know-how and formula which are owned
or licensed for use by the Company and utilized by the Company in the business
or operations of the Company as presently conducted. There is no adverse claim
against the Company, or to the knowledge of the Seller, any threatened
litigation or claim of infringement except as set forth on Schedule 3.15, to
the knowledge of the Seller, the Company does not utilize any intellectual or
proprietary trade secret information which infringes any trademark, tradename,
service mark, copyright or patent of another, and the Company has not received
any notice contesting its right to use any trade name now used by it in
connection with its business or the operation thereof. The Company has not
granted any license to a third party in respect of any intellectual property.

8
<PAGE> 15
3.16 Contracts.

(a) Material Contracts. Schedule 3.16A lists all
material contracts or agreements of the following types to which the Company is
a party or by which the Company is bound:

(iii) any contract or agreement for the maintenance,
purchase or sale of equipment or capital assets having a value in excess
of $25,000;

(iv) any power of attorney (other than routine powers
given to governmental officials authorizing service of process);

(v) any lease of personal property;

(vi) any guaranty, suretyship agreement or other agreement
relating to any contingent liability.

(vii) any contract with an independent agent or broker who
sells the prepaid dental plans of the Company;

(viii) any contract or agreement with independent
consultants;

(ix) any contract or agreement among the stockholders of
the Company;

(x) any contract or agreement restricting the method by
which the Company conducts its business or the marketing of any of its
products or services; and

(xi) any contract or agreement between the Company or any
stockholder or affiliate of the Company or a stockholder of the Company.

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<PAGE> 16
the agreements listed in Schedule 3.16B are in all material respects in the
same form as one of the representative forms of such agreements provided as a
part of Schedule 3.16B.

(e) Management Contracts. Schedule 3.16E sets forth all
management, marketing, administrative services, data processing and third party
administration contracts to which the Company is a party.

(f) Copies. True and correct copies of all such
contracts referred to in Schedules 3.16A, 3.16B, 3.16C 3.16D, and 3.16E have
been made available for inspection by Purchaser and, except to the extent
disclosed on Schedules 3.16A, 3.16B, 3.16C, 3.16D, and 3.16E, as of the date of
this Agreement, (i) all of the contracts listed on such Schedules are in full
force and effect, (ii) the Company has not received any notice of cancellation
with respect to any such contract or been advised that the other party thereto
intends to cancel any such agreement, (iii) there are no material outstanding
disputes under such contracts, (iv) each such contract is with an unrelated
third party entered into on an arms-length basis in the ordinary course of
business, (v) there are no material defaults under any of such contracts, and
(vi), to the knowledge of the Seller, to the extent required by any law or
regulation have been filed with and approved by all governmental regulatory
agencies.

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<PAGE> 17
applicable law, or by any consulting or similar agreements. The Company is not
a party to any employment or other agreement, whether written or oral, pursuant
to which the Company has agreed to make a loan to, or guarantee any loan of,
any employee or relating to any bonus, deferred compensation, severance pay or
similar plan, agreement, arrangement or understanding except as reflected in
Schedule 3.17. Except as listed on Schedule 3.17 or Schedule 3.18 hereof, the
Company has no Welfare Plan, Pension Plan, or any other type of pension, profit
sharing, deferred compensation, retirement, stock option, bonus, severance,
medical, dental, life insurance, accident, or other employee benefit or
compensation plan, agreement, arrangement, practice or policy with respect to
employees. The Company has complied with all requirements of Sections 6001
through 6008 of the ERISA and Section 4980B of the Code with respect to itself
and its employees. The Company is not bound, and following the Closing will
not be bound, by any express or implied contract or agreement to employ,
directly or as a consultant or otherwise, any person for any specific period of
time or until any specific age except as specified in the written agreements
identified in Schedule 3.18.

3.18 Employee Benefit Plans. Except as disclosed in Schedule 3.18:

(c) There has been no termination of any Pension Plan or
Welfare Plan by the Company that has occurred during the five-year period
ending on the date hereof.

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<PAGE> 18
a controlled group of corporations with, the Company, within the meaning of
Sections 414(b) or (c) of the Code.

(e) No Welfare Plan listed on Schedule 3.18 is funded
with a trust or other funding vehicle, other than insurance policies.

3.19 Receivables. To the knowledge of the Seller, all Receivables
of the Company whether or not reflected in the Company Balance Sheet, represent
transactions in the ordinary course of business, and, except as disclosed on
Schedule 3.19, are current and collectible net of any reserves therefor shown
on the Company Balance Sheet (which reserves are adequate and were calculated
consistent with past practice). Schedule 3.19 consists of an aged accounts
receivable report of the Company on a summary basis as of June, 1996.

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<PAGE> 19
3.20 Accounts Payable. The accounts payable reflected on the
Company Balance Sheet and those reflected on the books of the Company at the
time of the Closing will reflect all material amounts owed by the Company in
respect of trade accounts due and other Payables as required by GAAP to be
identified on such Company Balance Sheet or in the books of the Company.
Except as set forth on Schedule 3.20, to the knowledge of the Seller, no
account payable of the Company is past due or otherwise in default by the
Company.

3.21 Broker's and Finder's Fees. No agent, broker, employee,
officer, stockholder or other person or entity acting on behalf of, or under
the authority of, the Seller or the Company is or will be entitled to any
commission or broker's or finder's fee from any of the parties hereto in
connection with this Agreement or any of the transactions contemplated hereby
except for Ridge Capital Corporation. Seller shall pay and be responsible for
all commissions or fees due to Ridge Capital Corporation as a result of the
consummation of the transactions contemplated by this Agreement.

3.23 Insurance. Schedule 3.23 lists all insurance policies and
coverages maintained by or for the Company including but not limited to real
and personal property insurance, workers' compensation insurance and medical
malpractice and professional liability insurance. Schedule 3.23 lists all
insurance claims submitted in connection with property damage or medical
malpractice involving the Company for the latest three (3) years.

3.24 Consents. Except as set forth in Schedule 3.24 hereto, no
consents, approvals, or authorizations of any person, entity or governmental
agency are required in connection with the sale of the Shares and the
consummation of the transactions contemplated by this Agreement. Unless
Purchaser deems it inadvisable to seek any such consent, approval or
authorization (except with respect to any consent, approval or authorization
lawfully required to consummate this transaction) and so advises the Company in
writing, the Company will apply for or otherwise seek, and use their reasonable
best efforts to obtain, all consents, approvals and authorizations of all
governmental entities (other than applications for approval of a change of
control required to be filed in each state where the Company holds a
certificate of authority to operate a prepaid dental plan which shall be the
responsibility of Purchaser to prepare, file and obtain) and of all parties
with whom the Company has contractual or other relationships whose consent or
approval are necessary for the valid and effective consummation and completion
of the transactions contemplated hereby or are necessary in order that the
Company may validly, lawfully and effectively perform and carry out its
obligations hereunder without becoming in default under any agreement with any
party or subjecting the Company to any claim or penalty due to the failure to
obtain such consent which would have a materially adverse effect on the
business or operations of the Company. With respect to any such consents which
Purchaser

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<PAGE> 20
requests the Company not to seek as provided above, the Company will cooperate
with Purchaser to provide for Purchaser the benefits under any such agreement
(including enforcement thereof) at the sole cost and for the benefit of
Purchaser, and Purchaser will assume liabilities associated therewith.
Following the Effective Date, the Company will use its reasonable best efforts
to obtain all consents specifically identified by Purchaser as reasonably
necessary to continue the uninterrupted operation of the business of the
Company.

3.26 Taxes. All federal, state and other tax returns and reports
of the Company required by law to be filed have been prepared and properly
filed or valid extensions have been obtained, and, except as set forth on
Schedule 3.26, all taxes, charges, fees, duties, levies or other assessments
which are imposed by the United States, or any state, local or foreign
government or subdivision or agency thereof, including any interest, penalties
or additions ("Taxes") imposed upon the Company or any Subsidiary or any of its
properties, assets or income which are due and payable or claimed by any taxing
authority to be due and payable have been paid or reserved for. The liability
for accrued taxes as shown in the Company Balance Sheet (net of amounts
reserved for deferred taxes) is sufficient for the payment of all unpaid Taxes
of the Company accrued for or applicable to the periods prior to the Balance
Sheet Date and all years and periods prior thereto and for which the Company
may at that date have been liable in its own right or by reason of its being a
member of any group of corporations filing consolidated tax returns (including
any such amounts payable as a result of an audit of any tax return for any such
period). The Company utilizes the cash method of accounting for tax purposes.

Except as set forth on Schedule 3.26, there are no claims for Taxes
pending against the Company, and the Seller do not know of any threatened claim
for tax deficiencies or any basis for such claims, and there are not now in
force any waivers or agreements by the Company for the extension of time for
the assessment of any tax, nor has any such waiver or agreement been requested
by the Internal Revenue Service (the "Service") or any other taxing authority.

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<PAGE> 21
The Company has not filed a consent under Section 341(f) of Code
concerning collapsible corporations. Except as disclosed in Schedule 3.26, the
Company has not made any payments, is obligated to make any payments, or is a
party to any agreement that under certain circumstances could obligate it to
make any payments that will not be deductible under Section 280G of the Code.
The Company has not been a United States real property holding corporation
within the meaning of Section 897(c)(2) of the Code during the applicable
period specified in Section 897(c)(1)(A)(ii) of the Code. The Company has
disclosed on their federal income tax returns all positions taken therein that
could give rise to a substantial understatement of federal income tax within
the meaning of Section 6662 of the Code. The Company is not a party to any tax
allocation or sharing agreement. The Company (a) has not been a member of an
affiliated group filing a consolidated federal income tax return and (b) has
no liability for the taxes of any person (other than any of the Company) under
Treas. Reg. Section 1.1502-6 (or any similar provision of state, local, or
foreign law), as a transferee or successor, by contract, or otherwise.

Since its inception, the Company has made an election to be an S
Corporation under Subchapter S of Subtitle A, Chapter of the Code and has at
all times until the Closing Date satisfied all requirements for such election.

3.29 Full Disclosure. To the knowledge of the Seller, this
Agreement and the documents, certificates, and other writings furnished or to
be furnished by or on behalf of Seller, the Company to Purchaser pursuant to
the provisions of this Agreement do not and will not contain any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements made, in the light of the circumstances under which they
are made, not

15
<PAGE> 22
misleading. To the knowledge of the Seller, there is no material liability or
obligation which relates to the agreements and documents identified in the
Schedules which is not generic to the identified agreement or document and
readily ascertainable from a review of such agreement or document, and not
otherwise disclosed herein or identified on the face of the Schedules.

ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PURCHASER

The Purchaser represents and warrants to the Seller as follows:

16
<PAGE> 23
4.5 Broker's or Finder's Fees. No agent, broker, employee,
officer, stockholder or other person or firm acting on behalf of, or under the
authority of, Purchaser is or will be entitled to any commission or broker's or
finder's fee from any of the parties hereto in connection with any of the
transactions contemplated herein.

ARTICLE 5
COVENANTS OF THE SELLER AND THE COMPANY

Pending the Closing, Seller and the Company shall do the following:

5.1 Affirmative Covenants. Subject to the terms and conditions
stated herein, Seller will take, and cause the Company to take, and the Company
will take, every action reasonably required of the Seller and the Company to
satisfy the conditions to Closing set forth in this Agreement on or before the
Closing Date and otherwise to ensure the prompt and expedient consummation of
the transactions substantially as contemplated by this Agreement, and will
exert all reasonable efforts to cause the transactions contemplated by this
Agreement to be consummated.

5.2 Access and Information. Seller shall cause the Company to
afford, and the Company shall afford, to Purchaser and its representatives
reasonable access during reasonable hours throughout the period prior to the
Closing to all properties, books, contracts, commitments, computer programs and
data, reports, manuals and records (including, but not limited to, tax
returns), and to all personnel of the Company and the Subsidiaries and, during
such period, shall promptly furnish to Purchaser all other information
concerning such business, properties, and personnel as Purchaser may reasonably
request. Purchaser shall maintain the confidentiality of all such information
as required by Section 6.5 hereof.

5.3 No Solicitation. From the date of this Agreement until the
Closing or the termination of this Agreement pursuant to its terms, the Company
and the Seller, and those acting on behalf of any of them, will not, and the
Company and Seller will use its and their best efforts to cause its and their
officers, employees, agents, and representatives (including any investment
banker) not, directly or indirectly, to solicit, encourage, or initiate any
discussion with, or negotiate or otherwise deal with, or provide any
information to, any person or entity other than Purchaser and its
representatives concerning any merger, sale of assets, or similar transaction
involving the Company, or sale of any capital stock of the Company, or any
interest therein. Seller will, or will cause the Company to, notify Purchaser
immediately upon receipt of any offer or proposal relating to any of the
foregoing and such notice shall describe in detail the terms thereof and
identify the party or parties thereto. From the date of this Agreement, until
the Closing or the termination of this Agreement pursuant to its terms, neither
the Company nor any of the Seller will furnish, without the prior written
consent of Purchaser, to any person or entity (other than Purchaser) any
non-public information concerning the Company or its businesses, financial
affairs or prospects for the purpose of or with the intent of permitting such
person or entity to evaluate a possible acquisition of any capital stock or
(other than in the ordinary course of business) assets of the Company.
Notwithstanding the foregoing, Seller and

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<PAGE> 24
the Company may disclose information regarding the transactions contemplated on
this Agreement to Clifford Lisman, D.D.S.

5.4 Conduct of Business Prior to Closing. Seller and the Company
covenant and agree that, prior to the consummation of this Agreement or to the
termination of this Agreement pursuant to its terms, unless Purchaser shall
otherwise consent in writing, and, except as otherwise contemplated by Section
5.5 of this Agreement, each of the following shall be complied with:

(a) The business of the Company shall be conducted only
in the ordinary and usual course and the Company shall use reasonable efforts
to keep intact its business organization and good will, to keep available the
services of its and their respective officers and employees and to maintain a
good relationship with suppliers, lenders, creditors, distributors, employees,
customers, and others having business or financial relationship with them, and
the Seller or the Company shall immediately notify Purchaser of any event or
occurrence or emergency known to Seller material to, and not in the ordinary
and usual course of business of, the Company.

(e) The Company shall not (i) adopt, enter into, or amend
any bonus, profit sharing, compensation, stock option, warrant, pension,
retirement, deferred compensation, employment, severance, termination, or other
employee benefit plan, agreement, trust fund, or arrangement for the benefit or
welfare of any officer, director, or employee of the Company or (ii) agree to
any increase in the compensation payable or to become payable to employees of
the Company, or (iii) agree to any increase in the contractual term of
employment of, any officer, director or employee of the Company; provided,
however, that the Company may (i) make usual and customary employee salary
adjustments, excluding, however, the Seller (not in excess of 6%); (ii) may pay
usual and customary bonuses to employees, excluding, however, the Seller; and
(iii) may terminate and employ non-management employees as needed to operate
the business of the Company, in each case consistent with past practices and
provided further, however, that the Company may increase the compensation of
officers and directors during the

18
<PAGE> 25
period prior to Closing so long as the total compensation paid to officers and
directors does cause the net income of the Company during the period from
January 1, 1996 to the Closing Date to be negative;

(i) The Company shall not prepay any loans, including,
without limitation, loans from its stockholders, officers, directors or
employees, and shall not make any principal payments on the outstanding loans
from the Seller or, except in the ordinary course of business consistent with
past practice, make any change in its borrowing arrangements or modify or amend
or terminate any material contract or release or assign any material rights or
claims;

(l) The Company will comply with all laws and regulations
applicable to it and its operations;

19
<PAGE> 26
(m) The Company will maintain in full force and effect
insurance coverage of a type and amount customary in its business, but not less
than that presently in effect;

(o) The Company will not make any change in any method of
reporting income or expenses for federal income tax purposes; and

(p) The Company shall not knowingly take any action which
would prevent compliance with any of the conditions in Articles 8 or 9 of this
Agreement.

5.5 Permitted Transactions Prior to Closing. Notwithstanding the
provisions of Section 5.4 above or any other provision of this Agreement to the
contrary, Purchaser expressly agrees that, prior to the Closing, Seller and the
Company may do the following:

(a) Negotiate and prepay agreement relating to payment of
the indebtedness listed in Schedule 7.1 in order to permit Purchaser or the
Company to pay such indebtedness in full on or before the Closing Date; and

(b) Declare and pay dividends and distributions to the
Seller in an amount up to but not in excess of the Net Income to the Company
(as defined herein) for the period from January 1, 1996 to the Closing Date.

5.6 Consents and Approvals. The Company shall use commercially
reasonable efforts to obtain all necessary consents and approvals required for
its performance of this Agreement and the transactions contemplated hereby,
including, without limitation, the consents listed on Schedule 3.24 other than
the regulatory change of control approvals to be obtained by Purchaser. The
Company shall make all filings, applications, statements and reports to all
governmental authorities which are required to be made prior to the Closing
Date by or on behalf of it pursuant to any applicable statute, rule or
regulation in connection with this Agreement and the transactions contemplated
hereby. As required in connection with the performance of this Agreement by
the Company, the Company will promptly provide such other information and
communications to governmental and regulatory authorities, including, without
limitation, insurance regulatory authorities in any jurisdiction in which the
Company conducts business, as such regulatory authorities or Purchaser may
reasonably request. Between the date hereof and the Closing Date, the Company
shall promptly provide Purchaser with copies of all correspondence and filings
to or from all governmental and regulatory bodies and officials relating to the
Company.

5.7 Publicity. Prior to the Closing, any public statement or
announcement by the Seller or Company, including but not limited to any written
news releases, pertaining to this Agreement or the transactions contemplated
thereby shall be submitted to Purchaser for review

20
<PAGE> 27
and approval prior to the release by the Company, and shall be released only in
a form approved by Purchaser, provided, however, that (i) such approval shall
not be unreasonably withheld and (ii) such review and approval shall not be
required of statements and announcements if prior review and approval would
prevent the timely and accurate dissemination of such statements and
announcements as required to comply, in the judgement of counsel, with any
applicable law, rule or policy. Seller and Purchaser shall issue a press
release regarding the execution of this Agreement within one day of the date
hereof or such other time as Seller and Purchaser may mutually agree.

5.8 Financial Information. Seller will cause the Company to, and
the Company will, deliver as soon as reasonably practicable to Purchaser
unaudited financial statements of the Company for each month from and after the
date hereof as and when such financial statements become available in the usual
course of business.

5.9 Expenses. The Company may pay prior to the Closing the fees
and expenses of Counsel to Seller and other advisors or financial consultants
to the Seller incurred in connection with this Agreement and the consummation
of the transactions contemplated hereby; provided, however, that such costs and
expenses shall be included in determining the Net Income of the Company for the
purposes of Section 5.5(c) of this Agreement and provided further, however,
that neither the Company nor the Purchaser shall pay any such costs and
expenses incurred by Seller in connection with this Agreement after the
Closing.

5.10 Breach of Representations and Warranties. Promptly upon any
Seller or the Company becoming aware of any breach of any of the
representations and warranties of the Seller contained in this Agreement, or
any event which would cause the Seller to be unable to deliver the certificates
contemplated by Section 8.1(e) hereof, the Seller shall give written notice
thereof to the Purchaser in sufficient detail to permit the Purchaser to
ascertain the nature of the breach and shall use all commercially reasonable
efforts to prevent or promptly remedy the same.

5.11 No Transfer of Shares. Unless and until this Agreement is
terminated, Seller shall not, directly or indirectly, exchange, transfer,
assign, pledge or encumber any of the Shares owned by the Seller, nor shall a
Seller grant, directly or indirectly, any right to acquire, dispose of, vote or
otherwise control in any manner such Shares.

5.12 Updating of Exhibits and Schedules. Seller shall notify
Purchaser in writing of any changes, additions, or events which may cause any
change in or addition to the Schedules delivered by them under this Agreement
promptly after the occurrence of the same and again at the Closing by delivery
of appropriate updates to all such Schedules. No notification of a change or
addition to a Schedule made pursuant to this Section shall be deemed to cure
any breach of any representation or warranty resulting from such change or
addition unless Purchaser specifically agrees thereto in writing, nor shall any
such notification be considered to constitute or give rise to a waiver by
Purchaser of any condition set forth in this Agreement; provided, however,
that, in the event Purchaser has actual knowledge of any misrepresentation or
breach of warranty at or prior to the Closing and nevertheless proceeds with
the Closing, then the

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<PAGE> 28
Purchaser shall be deemed to have waived such misrepresentation or breach of
warranty. Nothing contained herein shall be deemed to create or impose on
Purchaser any duty to examine or investigate any matter or thing for the
purposes of verifying the representations and warranties made by Seller herein.

ARTICLE 6
COVENANTS OF PURCHASER

Purchaser agrees that from the date hereof through the Closing Date:

6.2 Cooperation. Purchaser shall cooperate with Seller and
Counsel to Seller, their accountants and agents in carrying out the
transaction, and in delivering all documents and instruments deemed reasonably
necessary or useful by Counsel to Seller.

6.4 Consents and Approvals. Purchaser shall use commercially
reasonable efforts to obtain all necessary consents and approvals required for
its performance of this Agreement and the transactions contemplated hereby,
including, without limitation, the regulatory change of control approvals
listed on Schedule 3.24; provided, however, that Purchaser shall not be
required or obligated to pay any amounts necessary to satisfy conditions to or
in order to obtain such governmental regulatory consents other than normal and
customary filing fees and out-of-pocket costs and expenses of the Company
incurred in providing its assistance with respect thereto. Purchaser shall
diligently and promptly proceed immediately after the date of this Agreement to
make all filings, applications, statements and reports to all governmental
authorities which are required to be made prior to the Closing Date by or on
behalf of it pursuant to any applicable statute, rule or regulation in
connection with this Agreement and the transactions contemplated hereby and
shall diligently and in good faith pursue the taking of all action necessary to
obtain approval of the transactions contemplated herein by the insurance
regulatory authorities of any jurisdiction in which the Company conduct
business. As required in connection with the performance of this Agreement,
Purchaser will promptly provide such information and communications to
governmental and regulatory bodies and authorities, including, without
limitation, insurance regulatory authorities in any jurisdiction in which the
Company conducts business, as such regulatory authorities may reasonably
request. Purchaser shall not be required to cure any existing regulatory
compliance requirements in order to obtain such consents and approvals. Within
five (5) business days after the written request of the

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<PAGE> 29
Seller, the Purchaser shall provide to the Seller a status report as to all
such filings and approvals.

6.5 Confidentiality. Prior to Closing, unless otherwise required
by law, Purchaser will hold in confidence all confidential information that has
been disclosed by the Seller and the Company and will not use any such
confidential information except in connection with the transaction, until such
time as such information is otherwise publicly available through sources other
than Purchaser; provided, however, that this sentence will not apply to any
information that becomes generally available to the public, was available on a
non-confidential basis to Purchaser prior to its disclosure pursuant hereto, or
becomes available on a non-confidential basis from a third party who is not
bound to keep such information confidential. In the event of the termination
of this Agreement, Purchaser will, and will cause its representatives to,
deliver to the Company all documents and other written materials, and all
copies thereof, obtained by Purchaser or on its behalf from the Seller or the
Company as a result of this Agreement or in connection herewith, whether so
obtained before or after the execution hereof. Purchaser agrees that the
Company shall have standing and may avail itself of any remedy at law or in
equity, including an action for injunctive relief, in the event of a breach or
threatened breach by Purchaser of any of the provisions of this Section 7.5.
The obligations of Purchaser under this Section 7.5 shall survive termination
of this Agreement for any reason whatsoever and shall remain in effect until
two (2) years from the Effective Date of this Agreement.

6.6 Publicity. Prior to the Closing, any public statement or
announcement by the Purchaser, including but not limited to any written news
releases by the Purchaser, pertaining to this Agreement or the transactions
contemplated hereby shall be submitted to the Company for review and approval
prior to the release by the Purchaser, and shall be released only in a form
reasonably approved by the Company provided however, that (i) such approval
shall not be unreasonably withheld and (ii) such review and approval shall not
be required of statements and announcements by the Purchaser if prior review
and approval would prevent the timely and accurate dissemination of such
statements and announcements as requested to comply, in the judgment of
counsel, with any applicable law, rule or policy. Seller and Purchasers shall
issue a press release regarding the execution and delivery of this Agreement
within one day after the date hereof or such other time as Seller and Purchaser
may mutually agree.

ARTICLE 7
CONDITIONS TO OBLIGATIONS OF SELLER

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lessors) required by law or contract to consummate this Agreement and required
to keep all certificates of authority and licenses held by the Company and
Subsidiaries in full force and effect after the Closing;

(c) Purchaser shall have performed in all material
respects its agreements, covenants and obligations contained in this Agreement
required to be performed at or prior to the Closing;

(d) The representations and warranties of Purchaser set
forth in this Agreement shall be true in all material respects as of the
Effective Date and as of the Closing Date as if made as of such time;

(e) Seller shall have received from Purchaser an
officers' certificate, executed by an authorized officer of Purchaser (in his
capacity as such), dated the Closing Date, as to the satisfaction of the
conditions stated in Sections 8.1(c) and (d) above (to the best of his
knowledge where appropriate) and further certifying that Purchaser has received
the Schedules and received copies of, or had the opportunity to review, the
agreements and documents listed in the Schedules to this Agreement.

(g) At or prior to the Closing, the Purchaser shall pay
or shall cause the Company to pay in full all the monetary debt obligations
owed by the Company under those certain agreements described in Schedule 7.1.
The amount of all payments paid to fully satisfy such monetary obligations
shall be credited against and reduce the $_________ amount for the purpose of
determining the Purchase Price as specified in Section 2.2 of this Agreement.

(h) At or prior to Closing, Purchaser has designated an
assignee of its rights to acquire the Shares under this Agreement and such
assignee is a dentist duly licensed and in good standing in the State of New
Jersey;

(i) At or prior to the Closing, Purchaser shall perform
the respective obligations of and the actions to be taken by Purchaser at the
Closing as described in Section 9.3 of this Agreement.

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ARTICLE 8
CONDITIONS TO OBLIGATIONS OF PURCHASER

(b) There shall not be in effect a restraining order, a
preliminary or permanent injunction or other order by any federal or state
authority which prohibits the consummation of this Agreement and no action or
proceeding shall have been instituted or remain pending seeking such relief or
seeking damages in respect of this Agreement or the consummation of the
transactions contemplated by the Agreement;

(f) Purchaser shall have received, on and as of the
Closing Date, an opinion of Counsel to Seller subject to customary limitations
reasonably satisfied in form and substance to Counsel to Purchaser; and such
other closing documents and instruments as Purchaser shall

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reasonably request, in each case reasonably satisfactory in form and substance
to Purchaser and Counsel to Purchaser;

(i) a casualty loss which is not covered by insurance in
excess of $100,000; and

(ii) litigation or the assertion of a claim against the
Company which is reasonably expected not to have potential liability to
the Company, including costs and expenses of defense, in an amount more
than $100,000.00 (including attorneys' fees for defending such claim) in
excess of insurance coverage maintained by the Company which would be
applicable to such claim; provided, however, that, in the event that the
parties cannot mutually agree as to whether any such litigation or claim
is reasonably expected to have such potential liability to the Company,
then the parties shall seek the opinion of a mutually selected third
party qualified to make such assessment and the opinion of such third
party as to such potential liability shall be binding upon the parties
for the purposes hereof.

(i) At the Closing, the Seller shall execute a release in
favor of Purchaser and the Company in the form of Exhibit A attached hereto;
provided, however, that it is understood that the Seller shall be paid at
Closing all salary due to the date of Closing and reimbursed for expenses
consistent with past practice of the Company to the date of Closing.

(j) None of the certificates of authority or licenses of
the Company listed on Schedule 3.8 shall have been canceled, revoked suspended
or limited in any respect and no governmental regulatory agency shall have
instituted any proceeding, or given notice to the Company or a Subsidiary that
it intends to institute any proceeding to take such action or to place the
Company or a Subsidiary in a conservatorship or receivership due to its
financial condition or failure to comply or satisfy any governmental law, rule
or regulation.

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(k) At or prior to the Closing, Purchaser shall have or
shall have paid caused the Company to have paid in full all the monetary debt
obligations owed by the Company under those certain agreements described in
Schedule 7.1 of this Agreement and received the full and complete discharge,
terminating and release of all liens, security interests or other encumbrances
securing such debt obligations.

(l) At or prior to Closing, Frank A. Pettisani shall have
assigned to the Company the partnership interest held on the date hereof under
that certain partnership agreement with Kenneth Jagger, D.D.S.

(m) At the Closing, all the Seller shall perform his or
her or its respective obligations of and actions to be taken by all the Seller
at the Closing as described in Section 10.2 of this Agreement.

ARTICLE 9
CLOSING

9.1 Date of Closing. The Closing shall take place at the offices
of Counsel to Seller in Cherry Hill, New Jersey, or at such other location as
Purchaser and Seller may mutually agree, within five (5) business days after
the date on which all governmental and third party consents necessary for the
consummation of the transactions contemplated by this Agreement are obtained
and all other conditions to Closing are satisfied but in no event later than
two hundred forty (240) days after the Effective Date unless extended by the
mutual agreement of the Purchasers and the Seller, subject to earlier
termination pursuant to the provisions of Article 12 hereof. In the event that
the Closing does not timely occur as stated above, then a party not in default
may immediately terminate this Agreement upon written notice to the other
parties in accordance with Section 12.1 below; provided, however, that this
Agreement shall terminate automatically and without further notice if the
Closing has not occurred within two hundred forty (240) days of the Effective
Date.

9.2 Actions by Seller. At the Closing, Seller shall:

9.3 Actions by Purchaser. At the Closing, Purchaser shall:

(a) Payment. Pay the Purchase Price to the Seller in
accordance with the provisions of Section 2.2 of this Agreement;

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(b) Employment Agreement. Cause the Company to execute
and deliver the Employment Agreement attached hereto as Exhibits B-1 and B-2;
and

ARTICLE 10
SURVIVAL OF REPRESENTATIONS
AND WARRANTIES; INDEMNITY; POST-CLOSING MATTERS

10.1 Representations and Warranties to Survive. All statements
contained in any agreement, certificate, instrument, schedule, or document
delivered by or on behalf of any of the parties pursuant to this Agreement and
the transactions contemplated hereby shall be deemed representations and
warranties by the delivering party hereunder. All representations, warranties,
covenants and agreements made by the parties each to the other in this
Agreement shall be true at the Closing and shall survive the consummation of
this Agreement and the Closing hereunder for a period of two years, ending at
midnight on the second anniversary of the Closing Date; provided, however, that
if, prior to the expiration of such two year period, a state of facts shall
have become known which threatens to give rise to a liability against which any
party hereto would be entitled to indemnification hereunder and the indemnified
party shall have given notice of such facts to the indemnifying party, then the
rights of the indemnified party to indemnification with respect to such
liability shall continue until such liability shall have been finally
determined and disposed of (including and subject to disposition by the
expiration of the applicable statute of limitations with respect to such
liability); provided further, however, that if a claim for indemnification is
made pursuant to this Article 11, then such claim for indemnification or any
claim arising out of the wrongful failure to comply with the provisions of this
Article 10 shall survive until the expiration of the applicable period of
limitations with respect to such claim for indemnification; and provided
further, however, that such two year limitation specified above shall not apply
to the extent provided otherwise in Section 11.4(c) below. With respect to the
representations and warranties of the parties, such representations and
warranties shall be true as of and at the date of the Closing but nothing
contained herein shall be deemed to require or imply that the accuracy of such
representations and warranties shall apply on a continuing basis as to facts
existing after the date of the Closing. Except to the extent set forth herein,
no investigation or examination made by any party hereto shall constitute a
waiver of any representation or warranty and no representation or warranty
shall be merged into the Closing hereunder. However, to the extent information
is apparent on the face of the Schedules or is otherwise expressly set forth
herein, such information shall be deemed to amend, limit and/or restate any
representation and warranties contained herein to the extent such information
is inconsistent with such representation or warranty.

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10.2 Indemnity. Subject to the provisions of Section 10.4 below,

(a) Seller. Seller agrees to indemnify and hold harmless
the Company, each Subsidiary, and Purchaser, and their respective shareholders,
partners, directors, officers, employees and agents, from, against, and in
respect of, any loss, liability, claim, demand, or expense, including but not
limited to reasonable attorney, investigation and consultant fees and costs,
and of any other kind whatsoever arising out of or resulting from any of the
following:

(i) Any misrepresentation, breach of warranty, or failure
to fulfill any agreement or covenant of the Seller and the Company under
this Agreement or under any other agreement or document delivered by the
Seller at Closing hereunder; and

(ii) Any and all actions, suits, proceedings, demands,
assessments, judgments, costs and legal and other expenses incident to
any of the foregoing.

(b) Purchaser. Purchaser shall indemnify and hold Seller
harmless from, against, and in respect of, any loss, liability, claim, demand,
or expense, including but not limited to reasonable attorney's fees and costs,
of any kind whatsoever, arising out of or resulting from any of the following:

(ii) Any obligation or liability of the Company, whether
arising out of any set of facts in existence before, on or after the
Closing Date; excluding, however, any obligation or liability with
respect to which the Seller are obligated to indemnify and hold the
Purchaser harmless pursuant to Section 10.2(a) above; and

(iii) Any and all actions, suits, proceedings, demands,
assessments, judgments, costs, and legal and other expenses incident to
any of the foregoing.

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has been specifically authorized by the indemnifying party or parties. Any
settlement of any action subject to indemnity hereunder shall require the
consent of the indemnified and the indemnifying party which consent shall not
be unreasonably withheld and shall be given within five (5) days following the
giving of notice thereof. The indemnifying party or parties shall not be
liable for any settlement of any action effected without its or their consent,
but if settled with the consent of the indemnifying party or parties or if
there be a final judgment for the plaintiff in any such action, the
indemnifying party or parties shall indemnify and hold harmless the indemnified
party from and against any loss or liability by reason of such settlement or
judgment. If requested by the indemnifying party, the indemnified party shall
cooperate with the indemnifying party and its counsel and use its best efforts
in contesting any such claim or, if appropriate, in making any counter-claim or
cross-complaint against the party asserting the claim, provided that the
indemnifying party will reimburse the indemnified party for reasonable
out-of-pocket expenses incurred in so cooperating upon presentation of receipts
or other evidence of such expense. The indemnifying party and its
representatives shall have full and complete access during reasonable hours to
all books, records and files of the indemnified party expressly related to the
defense of any claim for indemnification undertaken by the indemnifying party
pursuant to this Article 10, or for any other purpose in connection therewith;
provided that the indemnifying party shall safeguard and maintain the
confidentiality of all such books, records and files.

10.4 Limitations on Indemnification.

(a) General Threshold. Neither the Seller nor the
Purchaser shall be obligated to indemnify the other party except to the extent
that the cumulative amount of all indemnifiable losses exceeds Seventy-Five
Thousand Dollars ($75,000.00) (the "Threshold"), which excess amount shall be
recoverable in accordance with the terms hereof; provided, however, that the
$75,000 limitation set forth in this Section 10.4(a) shall not apply to the
matters described in Section 10.4(c). With respect to any indemnifiable loss
payable by the Seller, the funds in the Post- Closing Escrow Account shall be
used for such purpose first before any recovery is sought directly from a
Seller; provided, however, that to the extent the indemnification loss or
losses exceed the funds in the Post-Closing Escrow Account, then the Purchaser
may seek recovery of the amount of such indemnifiable loss in excess of such
funds contemporaneously with the recovery of any funds in the Post-Closing
Escrow Account.

(b) Time Limits for Claims. No claim for indemnification
may be made by any indemnified party in respect of indemnifiable losses unless
written notice thereof shall have been received by the indemnifying party on or
prior to two years after the date hereof; provided, however, that the two-year
limitation set forth in Section 10.1 and this Section 10.4(b) shall not apply
to the matters described in Section 10.4(c) not reasonably discoverable by
Seller within the two-year indemnification period set forth in Section 11.1 as
to which the indemnification obligations hereunder shall expire six (6) months
after the termination of the applicable statute of limitations relating to the
subject matter covered by such provisions; and provided further, however, that
in each case if, prior to the applicable date of expiration, a specific state
of facts shall have become known which is reasonably likely to constitute or
give rise to any indemnifiable loss as to which indemnity may be payable and
the indemnified party

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shall have given notice of such facts to the indemnifying party and made a
claim for indemnification within such two-year period, then the right to
indemnification with respect thereto shall remain in effect until such matter
shall have been finally determined and disposed of and any indemnification due
in respect thereof shall have been paid.

(c) Certain Matters. The following are the matters
referred to in Section 10.4(a) and Section 10.4(b): Losses arising from fraud
or an intentional misrepresentation on the part of any Seller an intentional
breach of any covenant or agreement by a Seller contained in this Agreement.

10.5 Remedies; Default; Notice and Cure. In the event of a breach
of this Agreement prior to the Closing, the non-breaching party shall have all
rights and remedies available at law, in equity or under the terms of the
Agreement. If the Closing occurs, indemnification pursuant to this Article 11
is the sole and exclusive remedy of the parties after the Closing for matters
arising out of the representations, warranties, covenants and agreements of the
Seller and the Purchaser set forth in this Agreement (without limiting the
rights of the parties under any other agreement), except as otherwise expressly
provided in this Agreement. No party shall be deemed in breach of its
obligations hereunder unless it has received written notice from the other
party of noncompliance with a term or provision of this Agreement and has
failed to cure such noncompliance within ten (10) days after receipt of such
notice.

10.6 Severance Benefits. The Purchaser shall not be obligated to,
or obligated to cause the Company to, extend any severance benefits to
employees of the Company who may be terminated after the Closing or who are
rendering services to the Company and are terminated prior to the Closing. In
the event that the Purchaser shall elect to pay or cause the Company to pay any
severance benefits to employees of the Company who may be terminated at or
after the Closing, it is expressly understood that the Seller shall not be
entitled to receive such severance benefits.

ARTICLE 11
TERMINATION; WAIVER

11.1 Termination. This Agreement may be terminated, and the
transaction may be abandoned, at any time prior to the Closing, as follows and
in no other manner:

(a) Mutual Consent. By the mutual consent of Purchaser
and the Seller;

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condition with respect to obtaining all required consents, authorizations, and
approvals of governmental and regulatory agencies set forth in Sections 7.1(a)
and 8.1(a), respectively, and such failure is not due to a breach of this
Agreement by the non-terminating party, such date shall be automatically
extended for four (4) successive thirty (30) day periods so long as such
remains to be the case at the end of each respective thirty (30) day period
provided, however, that in no event shall such date be extended beyond an
aggregate of two hundred forty (240) days after the date of this Agreement
unless extended by the mutual agreement of the Purchaser and the Seller;

11.2 Waiver. At any time at or prior to the Closing, Purchaser, on
the one hand, or Seller, on the other, may (i) extend the time for the
performance of any of the obligations or other acts of the other party hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto, or (iii) waive compliance
with any of the agreements or conditions contained herein. Any agreement on
the part of a party hereto to any such extension or waiver shall be valid only
if set forth in an instrument in writing signed on behalf of such party.

ARTICLE 12
CERTAIN DEFINED TERMS

12.1 Affiliate. When used with respect to a person, an "Affiliate"
of such person is a person controlling, controlled by, or under common control
with such person.

12.2 Agreement. This Stock Purchase Agreement, including all
Schedules and Exhibits hereto, and all other documents specifically referred to
in this Agreement that have been or, are to be delivered by a party to this
Agreement to another such party in connection with this

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Agreement, and including all duly adopted amendments, modifications, and
supplements to or of this Agreement and such Schedules, Exhibits, and other
documents.

12.3 Closing. The completion of the transaction to take place as
described in Article 9.

12.4 Closing Date. The date on which the Closing actually occurs.

12.5 Closing Time. The time at which the Closing actually occurs.
All events that are to occur at the Closing Time shall, for all purposes, be
deemed to occur simultaneously, except to the extent, if at all, that a
specific order of occurrence is otherwise described.

12.6 Code. The Internal Revenue Code of 1986, as amended and in
effect on the date of this Agreement.

12.7 Control. Generally, the power to direct the management or
affairs of an entity.

12.8 Counsel to Seller. Hunt & Scaramella, P.C., 220 Lake Drive
East, Suite 105, Cherry Hill, New Jersey 08002, telephone number (609)
667-4900; facsimile number (609) 667-4933.

12.9 Counsel to Purchaser. Strasburger & Price, L.L.P., 901 Main
Street, Suite 4300, Dallas, Texas 75202, telephone number (214) 651-4300,
facsimile number (214) 651-4330.

12.10 ERISA. The Employee Retirement Income Security Act of 1974,
as amended and in effect on the date of this Agreement.

12.11 GAAP. Generally accepted accounting principles, as in effect
on the date of any statement, report, or determination that purports to be, or
is required to be, prepared or made in accordance with GAAP. All references
herein to financial statements prepared in accordance with GAAP shall mean in
accordance with GAAP consistently applied throughout the periods to which
reference is made.

12.12 Knowledge. As used in this Agreement, a person will be deemed
to have knowledge of fact (or the fact shall be deemed known to that person) if
said person has actual knowledge of, or has actual awareness of other facts
that would put a reasonable person on inquiry notice of, the fact; provided,
however, that no party shall be deemed to have performed, or be obligated to
perform, an independent investigation or inquiry with respect to the matter to
which such knowledge pertains.

12.13 Multiemployer Plan. A "multiemployer plan," as defined in
ERISA Section 3(37) or Section 414(f) of the Code, or, in either case,
successor provisions to such provisions adopted by amendments to ERISA or the
Code, as the case may be, and including, in each case, other provisions of
ERISA, of the Code, or of other law, and regulations adopted under ERISA or the
Code or such other law, modifying, amending, interpreting, or otherwise
affecting the application of such provisions, either in general or as applied
to the nature or circumstances of

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a particular entity that is a party to, or is affected by or is involved in,
the Agreement and with respect to which entity the use of the term in this
Agreement, or in particular location in this Agreement, is relevant.

12.14 Net Income of the Company. As used herein, the term "Net
Income of the Company" shall mean the net income of the Company determined on
an accrual basis in accordance with GAAP.

12.15 Payables. Liabilities of a party arising from the borrowing
of money or the incurring of obligations for merchandise, goods or services
purchased appearing as liabilities on the books of the Company or any
Subsidiary, or customarily required to be reflected as liabilities in the
balance sheets of the Company or any Subsidiary prepared in accordance with
GAAP, indicating monies owed by the Company or such Subsidiary.

12.16 PBGC. The Pension Benefit Guaranty Corporation.

12.17 Pension Plan. A "pension plan" or "employee pension benefit
plan," as defined in Section 3(2) of ERISA or successor provisions to such
provision adopted by amendments to ERISA and including other provisions of
ERISA or of other law, and regulations adopted under ERISA or such other law,
modifying, amending, interpreting or otherwise affecting the application of
such provisions, either in general or as applied to the nature or circumstances
of a particular entity that is a party to, or is affected by or is involved in,
the Agreement and with respect to which entity the use of the term in this
Agreement, or in the particular location in this Agreement, is relevant. A
reference to a Pension Plan shall include the trust, if any, forming a part
thereof.

12.18 Receivables. Accounts receivable, notes receivable, and other
obligations appearing as assets on the books of the Company or any Subsidiary,
or customarily required to be reflected as assets in balance sheets of the
Company or any Subsidiary prepared in accordance with GAAP, indicating moneys
owed to the Company or such Subsidiary.

12.19 Welfare Plan. A "welfare plan" or an "employee welfare
benefit plan," as defined in Section 3(1) of ERISA or successor provisions to
such provision adopted by amendments to ERISA and including other provisions of
ERISA or of other law, and regulations adopted under ERISA or such other law,
modifying, amending, interpreting or otherwise affecting the application of
such provision, either in general or as applied to the nature or circumstances
of a particular entity that is a party to, or is affected by or is involved in,
the Agreement and with respect to which entity the use of the term in this
Agreement, or in the particular location in this Agreement, is relevant.

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ARTICLE 13
ARBITRATION

13.1 Arbitration Procedure. Subject to the provisions of Section
13.7 below, in the event any matters in Dispute arising out of or relating to
this Agreement (including, but not limited to, actions for injunctive or
declaratory relief) (hereinafter collectively "arbitrable issues") cannot be
settled by agreement between the parties such controversy or dispute shall be
submitted for arbitration in Philadelphia, Pennsylvania, and for this purpose
each party hereby expressly consents to such arbitration in such forum. The
arbitration process shall proceed as follows:

(b) Step Two. The two (2) or more arbitrators so
selected shall meet and confer within twenty (20) business days after receipt
by the disputing party of all of the answering parties' written notices as
called for under Step One above, and if they are unable within said twenty (20)
day period to reach a decision on the matters in Dispute, they shall, at the
expiration of said twenty (20) day period, jointly select a neutral arbitrator.
If said arbitrators are unable to choose a neutral arbitrator, any party may
request the AAA to appoint an additional arbitrator from its National Panel of
Commercial Arbitrators. Any party to this Agreement may advise the AAA that
time is of the essence and that the parties to this Agreement would like such
selection as soon as is reasonably possible, it being expressly understood in
such AAA selection process that the selection is in the sole discretion of the
AAA, and that the AAA shall not be required by reason of this Agreement to
consult with the parties to this Agreement in said selection process; provided
that all arbitrators, including the additional arbitrator selected by the AAA,
shall be disinterested individuals knowledgeable in commercial transactions.
Upon selection of the additional arbitrator, all arbitrators shall within ten
(10) business days thereafter convene an arbitration proceeding at a date, time
and place (in metropolitan Philadelphia, Pennsylvania) designated by said
arbitrators by a majority vote, written notice of which shall be given to the
parties not later than seven (7) calendar days prior to said hearing date. At
the hearing, each party may be represented by counsel and present testimony and
evidence. If at the commencement of the hearing the parties cannot agree on a
joint statement of the matters in Dispute to be submitted to the arbitrators,
the arbitrators shall be empowered to frame the submission issue(s). A
Certified Court Reporter's transcript may

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be demanded by any party or by the arbitrators and said official transcript
shall be prepared, completed, and delivered to the arbitrators with copies to
each party within ten (10) business days following the conclusion of the
hearing. Arbitration sessions following the initial session, if necessary,
shall be scheduled by the arbitrators so that the arbitration proceedings
(i.e., presentation of evidence and/or oral arguments) are completed within
twenty (20) days of the initial session. Each party shall be given the
opportunity to file with the arbitrators simultaneous written briefs five (5)
business days following receipt by the arbitrators of the official transcript
but, if no transcript is demanded as provided in this Agreement, said briefs
shall be filed simultaneously five (5) business days following conclusion of
the hearing. Copies of any such briefs shall be provided to the other party
concurrently upon filing with the arbitrators.

13.2 Self-Execution. It is expressly understood between the
parties that this Article 13 is a self- executing arbitration provision and
that any party may unilaterally select an arbitrator if the other party refuses
to arbitrate. It is further expressly agreed that said unilaterally-selected
arbitrator may proceed to arbitrate the issue(s) and the arbitration and
decision shall be self-executing and therefore shall not require the order of
any Court to proceed. The parties may, however, mutually stipulate in writing
to extend or to shorten the prescribed time periods (including a stipulation to
expedite the referral and submission to arbitration). All provisions of this
Agreement not in dispute shall be observed and performed without interruption
during the pendency of any proceeding called for under this Article 14.

13.3 Arbitrator's Fees. If an additional arbitrator is required
pursuant to Step Two under Section 13.1, each party shall pay its pr rata share
of any required retainer or other payments required by such arbitrator upon
such arbitrator's demand, with the ultimate responsibility for the arbitrators'
fees to be determined by the arbitrators in the final arbitration award
pursuant to Step Three of Section 13; otherwise, each party shall bear its own
costs and expenses in connection with any proceedings under this Article 13
and, in any event, each party shall pay the fees of the arbitrator it selects.

13.4 Rules Governing Arbitration. In all other respects, the
arbitration shall be conducted pursuant to the then-existing Commercial Rules
of the AAA to the extent such rules are not inconsistent with any provision of
this Agreement. Subject to the foregoing, the arbitrators shall determine the
scope and extent of permissible discovery, if any.

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13.5 Entry of Award. The award of the arbitrators may be entered
as a final judgment by any court of competent jurisdiction.

13.6 Injunctive Relief. Notwithstanding the provisions of this
Article 13 to the contrary, each party shall be entitled to seek temporary or
preliminary injunctive relief from a court of competent jurisdiction if the
failure to immediately obtain injunctive relief will result in irreparable harm
to that party. The jurisdiction of the court shall extend only to such relief
and any request for permanent injunctive relief shall remain subject to the
arbitration provisions of this Agreement.

13.7 Non-Applicability to Note. Notwithstanding any provision of
this Article 13 to the contrary, the provisions of this Article 13 shall
expressly not apply to any dispute arising out or relating to the Note.

ARTICLE 14
MISCELLANEOUS

(a) If to Seller:

To the respective address of such Seller set forth on
the signature page hereto executed by such Seller

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With a copy to Counsel to Seller:

Hunt & Scaramella, P.C.
220 Lake Drive East, Suite 105
Cherry Hill, New Jersey 08002
Attn: H. Thomas Hunt, Esq.
Facsimile: (609) 667-4933

(b) If to Purchaser:

United Dental Care, Inc.
14755 Preston Road
Suite 300
Dallas, Texas 75240
Attn: William H. Wilcox, President
Facsimile: (214) 458-7963

With a copy to Counsel to Purchaser:

Strasburger & Price, L.L.P.
901 Main Street, Suite 4300
Dallas, Texas 75202
Attn: David K. Meyercord, Esq.
Facsimile: (214) 651-4330

Any party may change the address or facsimile telephone number for notices to
be sent to it by written notice delivered pursuant to the terms of this Section
13.2.

14.4 Binding Effect/Assignability. This Agreement shall extend to
and be binding upon and inure to the benefit of the parties hereto, their
respective heirs, legal representatives, successors and assigns. Purchaser
shall have the right at any time to assign this Agreement to any affiliate of
Purchaser without the necessity of seeking the consent of the Seller; provided,
however, that Purchaser shall not be relieved of any obligations as a result of
such assignment and that, in addition to Purchaser remaining liable, any such
assignee shall assume and become liable for any and all of Purchaser's
obligations under this Agreement. Seller acknowledges that Purchaser intends
to assign its rights under this Agreement to an individual licensed under New
York law to practice dentistry on or prior to the Closing. The Seller shall
not be entitled to assign any of his rights or obligations under this
Agreement; provided, however, that the rights and obligations of the Seller may
be assigned by operation of law or may be assigned to an

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individual retirement account, pension plan, trust or other entity under the
control of the Seller but any such assignment shall not relieve or release such
Seller of any obligations hereunder as a result of such assignment and that, in
addition to such Seller remaining liable, any such assignee shall assume and
become liable for any and all of such Seller's obligations under this
Agreement. In connection with any such assignment, a Seller may transfer all or
any portion of the Shares owned by the Seller and thereby effect an assignment
on the basis specified above.

14.5 Exhibits/Schedules. All Exhibits and Schedules referenced in
this Agreement are incorporated herein by reference and shall constitute a part
of this Agreement.

14.6 Invalid Provisions. If any provision of this Agreement is
held to be illegal, invalid or unenforceable under present or future laws
effective during the term hereof, such provisions shall be fully severable and
this Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part hereof with the remaining
provisions remaining in full force and effect and not affected by the illegal,
invalid or unenforceable provision or by severance here from. Furthermore, in
lieu of such illegal, invalid or unenforceable provision there shall be added
automatically as part of this Agreement a provision similar in terms to such
illegal, invalid, or unenforceable provision as may be possible and still be
legal, valid and enforceable.

14.9 Attorney's Fees and Costs. In the event of a breach by any
party to this Agreement and commencement of a subsequent legal action in a
court of law or forum of arbitration, or in the event legal counsel is
consulted in the event of any such breach or in anticipation of any such
prospective legal action, the prevailing party in any such dispute shall be
entitled to reimbursement of reasonable attorney's fees and court costs,
including, but not limited to, the costs of expert witnesses, transportation,
lodging and meal costs of the parties and witnesses, costs of transcript
preparation and other reasonable and necessary direct and incidental costs of
such dispute. A party shall be deemed to be a "prevailing party" under this
Section only if:

(a) the judgment or award against it is equal to or less
than eighty percent (80%) of that party's written settlement offer; or,

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<PAGE> 46
(b) the judgment or award in its favor is equal to or
greater than one hundred and twenty percent (120%) of that party's written
settlement demand.

14.10 Time. Time is of the essence under this Agreement.

14.11 Governing Law. This Agreement shall be construed under and
governed by the internal laws, and not the law of conflicts, of the State of
New Jersey.

14.12 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but which together
shall constitute one and the same agreement.

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IN WITNESS WHEREOF, the parties have executed this Stock Purchase
Agreement as of the date and year first written above.

PURCHASER: SELLER:

UNITED DENTAL CARE, INC.
/s/ FRANK A. PETTISANI
---------------------------------------
By: /s/ WILLIAM H. WILCOX Frank A. Pettisani, D.D.S.
------------------------------ Address: 2720 Landis Avenue
William H. Wilcox, President Vineland, N.J. 08360

COMPANY:

OraCare Dental Associates, P.A.
By: /s/ LISA M. MAZZONE
------------------------------
Its: Assistant Secretary
-----------------------------
Address: 8000 Sagemore Drive
Suite 8302
Marlton, N.J. 08053

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EXHIBIT A-1

EMPLOYMENT AGREEMENT

This Employment Agreement (this "Agreement") is made as of __________,
1996 (the "Effective Date"), by and between OraCare Dental Associates, P.A., a
New Jersey professional association, corporation acting by and through its
hereunto duly authorized officer (the "Company"), and Frank A. Pettisani,
D.D.S. (the "Dentist").

WHEREAS, the Company desires to employ the Dentist and the Dentist is
willing to render his services to the Company on the terms and conditions with
respect to such employment hereinafter set forth;

NOW, THEREFORE, in consideration of premises and the mutual terms and
conditions hereof, the Company and the Dentist hereby agree as follows:

1. Employment. The Company hereby employs the Dentist and the Dentist
hereby accepts employment as a general dentist with the Company upon the terms
and conditions hereinafter set forth.

2. Duties. The Dentist is hereby employed by the Company as a general
dentist and the Dental Director of the Vineland Dental Clinic of the Company.
The Dentist shall render his services at the Vineland Dental Clinic of the
Company as such may be located from time to time, unless otherwise agreed
between the Board of Directors of the Company (the "Board") and the Dentist.
The Dentist shall have such authority and shall perform such duties as are
specified by the President of the Company; subject, however, to such
limitations, instructions, directions, and control as the Board may specify
from time to time in its sole discretion.

3. Term. This Agreement shall have a term commencing as of the
Effective Date and ending December 31, 1998, subject to earlier termination as
hereinafter provided.

4. Compensation. The Dentist shall be paid by the Company for his
services on the following basis:

(a) Fee-For-Service Production. The Dentist shall be paid an
amount equal to forty percent (40%) of the usual, customary and
reasonable fees of the Company then in effect arising as a result of
services personally rendered by the Dentist to fee-for-service
patients.

(b) Capitated Production. The Dentist shall be paid an amount
equal to twenty four percent (24%) of the usual, customary and
reasonable fees of the Company then in effect for fee-for-services
patients for all procedures personally rendered by the Dentist

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to members of prepaid dental plans who utilize the Dentist for
treatment services with respect of members to which the Company is
paid on a capitated basis.

Such compensation shall be calculated in a manner consistent with the past
practices of the Company in effect on the date hereof and paid on the regular
payoff dates of the Company.

5. Benefits. In addition to the compensation to be paid to the Dentist
pursuant to Paragraph 4 hereof, the Dentist shall further be included in any
hospital, surgical, and medical benefit plan, any group term life insurance
policy, any pension or profit sharing plan, and all other benefits which may be
extended from time to time to employees of the Company generally by the Board
in its sole discretion.

6. Reimbursement of Expenses. Subject to such rules and procedures as
from time to time are specified by the Company acting by and through the
President of the Company and/or the Board, the Company shall reimburse the
Dentist on a monthly basis for reasonable business expenses necessarily
incurred in the performance of his duties under this Agreement.

7. Professional Liability Insurance. During the term of employment,
the Dentist shall maintain professional liability insurance having limits of
$1,000,000 per occurrence/$3,000,000 aggregate. The Dentist shall provide the
Company with a certificate of such insurance and all renewals thereof.

8. Confidentiality/Trade Secrets. The Dentist acknowledges that his
position with the Company is one of the highest trust and confidence both by
reason of his position and by reason of his access to and contact with the
trade secrets and confidential and proprietary business information of the
Company. Both during the term of this Agreement and thereafter, the Dentist
covenants and agrees as follows:

(b) that he shall not disclose any of such trade secrets and
confidential and proprietary information, except as may be required in
the course of his employment; and

(c) that he shall not use, directly or indirectly, for his
own benefit or for the benefit of another, any of such trade secrets
and confidential and proprietary information.

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<PAGE> 50

be delivered to the Company and not retained by the Dentist upon termination of
his employment for any reason whatsoever or at any other time upon request of
the Board.

9. Non-Competition. The Dentist covenants and agrees that, during the
period of his employment, and so long as any severance payments are being made
hereunder, he shall not, without the prior written consent of the Board,
directly or indirectly, as an employee, employer, consultant, agent, principal,
partner, shareholder, corporate officer, director, or through any other kind of
ownership (other than ownership of securities of publicly held corporations of
which the Dentist owns less than two percent (2%) of any class of outstanding
securities) or in any other representative or individual capacity, engage in
any business or render any services to any business that is in competition in
any manner whatsoever with the business of the Company.

10. Remedies for Breach of Covenants of the Dentist. The covenants set
forth in Paragraphs 8 and 9 of this Agreement shall continue to be binding upon
the Dentist, notwithstanding the termination of his employment with the Company
for any reason whatsoever. Such covenants shall be deemed and construed as
separate agreements independent of any other provisions of this Agreement and
any other agreement between the Company and the Dentist. The existence of any
claim or cause of action by the Dentist against the Company, whether predicated
on this Agreement or otherwise, shall not constitute a defense to the
enforcement by the Company of any or all of such covenants. It is expressly
agreed that the remedy at law for the breach of any such covenant is inadequate
and the injunctive relief shall be available to prevent to the breach or any
threatened breach thereof.

11. Termination. This Agreement may be terminated upon the occurrence
of any one of the following events:

(a) Voluntary. The Dentist may terminate this Agreement and
his employment at any time during the term of this Agreement by giving
ninety (90) days prior written notice of termination to the Board.

(b) Involuntary Without Cause. The Board, without cause, may
terminate this Agreement at any time during the term of this Agreement
upon ninety (90) days prior written notice to the Dentist.

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(1) If the Dentist becomes disabled for a period of
more than thirty (30) consecutive days;

(2) If the Dentist for reasons other than illness or
injury absents himself from his duties without the consent of
the Board for more than ten (10) consecutive days;

(3) If the Dentist should die (effective on the date
of death);

(4) If the Dentist should be convicted of a crime
punishable by imprisonment;

(5) If the Dentist should willfully breach or
habitually neglect his duties which he is required to perform
under this Agreement or otherwise fail to comply with the
terms and conditions of this Agreement specifically
including, but not limited to, the covenants set forth in
Paragraphs 8 and 9 hereof; and

(6) The license to practice dentistry of the Dentist
is limited, suspended or revoked; and

(7) The Dentist is subject to any final adverse
disciplinary action by any dental board or similar body
licensing the Dentist on any grounds, including, but not
limited to, improper dental practices or improper conduct.

In the event of the termination of this Agreement by either party prior to the
expiration of the term of this Agreement, the Dentist shall be entitled to
compensation earned by him prior to the date of termination as provided herein.
In addition, in the event that the Company terminates this Agreement without
cause under Section 11(b) above, then the Dentists shall be entitled to be paid
a severance payment as liquidated damages for, and in lieu of, any and all
damages which he may suffer as a result of such termination an amount equal to
the average of the amount of monthly compensation that the Dentist earned in
the three calendar months prior to the date of termination times the number of
months remaining on the term of this Agreement after the month in which
termination occurs. Such payment shall be paid in installments payable on the
same dates on which payments would otherwise have been paid under this
Agreement. In addition, the Company shall continue the health benefits of the
Dentist during the period such severance payments are being made. The Dentist
shall be entitled to no further compensation as of the date of termination
under this Agreement. Any termination of this Agreement shall be without
prejudice to any right or remedy to which the terminating party may be entitled
either at law, in equity, or under this Agreement.

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recognized overnight courier service (e.g. UPS, Federal Express) or (iii)
delivery the same personally to such other party(ies). Any notice shall be
deemed to have been given five (5) U.S. Post Office delivery days following the
date of Mailing; one day after timely delivery to an overnight courier; or if
by personal delivery, upon such delivery.

(a) If to the Company:

OraCare Dental Associates, P.A.
14755 Preston Road
Suite 300
Dallas, Texas 75240
Attention: President

(b) If to the Dentist:

Frank A. Pettisani, D.D.S.
2720 Landis Avenue
Vineland, New Jersey 08360

Either party may change its address for notice by giving notice in accordance
with the terms of this Paragraph 12.

13. General Provisions.

(a) Law Governing. This Agreement shall be governed by and
construed in accordance with the laws of the State of New Jersey.

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(f) Titles. Titles of the paragraphs herein are used solely
for convenience and shall not be used for interpretation or construing
any work, clause, paragraph, or provision of this Agreement.

(g) Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but
which together shall constitute one and the same instrument.

IN WITNESS WHEREOF, the Company and the Dentist have executed this
Agreement as of the date and year first written above.

COMPANY: DENTIST:

OraCare Dental Associates, P.A.
A New Jersey Professional
Corporation

By:
------------------------------ ------------------------------
Its Frank A. Pettisani, Sr.
------------------------------

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GUARANTEE OF PERFORMANCE

United Dental Care, Inc., a Delaware corporation, hereby absolutely
and unconditionally guarantees the performance by the Company of all its
obligations and responsibilities under the foregoing Employment Agreement.

UNITED DENTAL CARE, INC.
A Delaware Corporation

By:
------------------------------
Mark E. Pape
Senior Vice President

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Exhibit A-2

EMPLOYMENT AGREEMENT

This Employment Agreement (this "Agreement") is made as of __________,
1996 (the "Effective Date"), by and between OraCare Dental Associates, P.A., a
New Jersey professional association acting by and through its hereunto duly
authorized officer (the "Company"), and Frank A. Pettisani, Jr., D.D.S. (the
"Dentist").

WHEREAS, The Company desires to employ the Dentist and the Dentist is
willing to render his services to the Company on the terms and conditions with
respect to such employment hereinafter set forth;

NOW, THEREFORE, in consideration of premises and the mutual terms and
conditions hereof, the Company and the Dentist hereby agree as follows:

1. Employment. The Company hereby employs the Dentist and the Dentist
hereby accepts employment with the Company upon the terms and conditions
hereinafter set forth.

2. Exclusive Services. The Dentist shall devote his full working time,
ability and attention exclusively to the business of the Company during the
term of this Agreement and shall not, directly or indirectly, render any
services of a business, commercial or professional nature to any other person,
corporation or organization whether for compensation or otherwise, without the
prior knowledge and consent of the Board of Directors of the Company.

3. Duties. The Dentist is hereby employed as a general dentist and as
the Dental Director of the Atlantic City Dental Clinic operated by the Company.
The Dentist shall render his services at such dental clinic of the Company
unless otherwise agreed between the Board of Directors of the Company (the
"Board") and the Dentist.

4. Term. This Agreement shall have a term commencing as of the
Effective Date and ending December 31, 1998, subject to earlier termination as
hereinafter provided.

5. Compensation. As compensation for his services rendered under this
Agreement, the Dentist shall be entitled to receive the following:

(a) Basic Salary. The Dentist shall initially be paid a base
annual salary of One-Hundred Thousand and No/100 Dollars ($100,000)
per year, payable in installments on the regular payroll dates for the
Company during the term of this Agreement, prorated for any partial
employment month. Such base annual salary shall be subject to increase
from time to time as authorized by the Board in its sole discretion.

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(b) Incentive Bonus. The Executive shall also be entitled to
an incentive bonus on the following basis:

(i) The Dentist shall also be entitled to receive an
annual incentive bonus up to a maximum of $20,000 based on
the profits of the dental clinic of which the Dentist is the
dental director. In the event that the profits of such dental
clinic for a calendar year (as determined in accordance with
generally accepted accounting principles) exceed 125% of the
profits of such dental clinic for the prior calendar year,
then the incentive bonus shall be $20,000. If such profits
exceed 110% but less than 125% of the profits of such dental
clinic for the prior calendar year, then the incentive bonus
shall be prorated on the basis that $10,000 shall be paid at
a 110% increase and the balance up to an additional $10,000
based on the percentage over 110% that such profits exceeded
the profits for the prior year up to 125%. No incentive bonus
shall be payable if such profits do not exceed the profits
for the prior year by 110%.

(ii) Such bonus shall be payable on March 31 of the
year following the calendar year to which the bonus relates.

(c) Additional Compensation. The Dentist shall be paid such
additional compensation and bonuses, if any, as may be determined in
the sole discretion of the Board.

6. Benefits. In addition to the compensation to be paid to the Dentist
pursuant to Paragraph 5 hereof, the Dentist shall further be included in any
hospital, surgical, and medical benefit plan, any group term life insurance
policy, any pension or profit sharing plan, and all other benefits which may be
extended from time to time to dentist employees of the Company generally by the
Board in its sole discretion.

7. Reimbursement of Expenses. Subject to such rules and procedures as
from time to time are specified by the Company acting by and through the
President of the Company and/or the Board, the Company shall reimburse the
Dentist on a monthly basis for reasonable business expenses necessarily
incurred in the performance of his duties under this Agreement.

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technical data, records, compilations of information, processes, and
specifications relating to its customers, suppliers, products and
services;

(b) that he shall not disclose any of such trade secrets and
confidential and proprietary information, except as may be required in
the course of his employment; and

(c) that he shall not use, directly or indirectly, for his
own benefit or for the benefit of another, any of such trade secrets
and confidential and proprietary information.

All files, records, documents, drawings, specifications, memoranda,
notes, or other documents relating to the business of the Company, whether
prepared by the Dentist or otherwise coming into his possession, shall be the
exclusive property of the Company and shall be delivered to the Company and not
retained by the Dentist upon termination of his employment for any reason
whatsoever or at any other time upon request of the Board.

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11. Professional Liability Insurance. During the term of employment,
the Dentist shall maintain professional liability insurance having limits of
$1,000,000 per occurrence/$3,000,000 aggregate. The Dentist shall provide the
Company with a certificate of such insurance and all renewals thereof.