STATEMENT OF AGREEMENT

 

                                                                  EXECUTION COPY
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                   AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
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    This Agreement and Plan of Merger and Reorganization (this "Agreement") is
dated December 27, 1996, among DentalCo Inc., a Maryland corporation
("DentalCo"), DentalCo/Southeast, Inc., a Maryland corporation, which is a
wholly owned subsidiary of DentalCo ("Subcorp"), Nanston, Inc., a Georgia
corporation ("Nanston"), and the shareholders of Nanston, as identified on
Exhibit A attached to this Agreement (the "Nanston Shareholders"). Collectively,
DentalCo, Subcorp, Nanston, and the Nanston Shareholders are referred to herein
as the "Parties" to this Agreement.

                               BACKGROUND INFORMATION
                               ----------------------

    A.   DentalCo desires to acquire the business operations of Nanston through
the merger of Nanston with and into Subcorp (the "Merger"), pursuant to which
all of the Nanston Shares (defined in Section 4.2, below) outstanding at the
Effective Time (defined in Section 1.2, below) will be converted into the right
to receive, in the aggregate, the following: (i) cash in the amount of Seven
Million Ninety-Five Thousand, Five Hundred Ninety-Six Dollars and Thirty-Five
Cents ($7,095,596.35)(the "Cash Consideration"), and (ii) 2,000,000 shares of
non voting common stock, $0.0001 par value per share, of DentalCo (the "DentalCo
Shares"), plus such additional number of DentalCo Shares (if any) as shall be
necessary so that the aggregate number of DentalCo Shares issued in the Merger
shall not constitute less than 22.7% of the number of DentalCo capital shares on
a fully diluted basis outstanding after giving effect to the Merger (with the
number of DentalCo capital shares then outstanding being computed as set forth
on Exhibit J hereto). Subcorp will be the surviving entity resulting from the
Merger. The business of Nanston includes, without limitation, providing
non-clinical administration and related services to Nanston Dental Group, P.C.,
a Georgia professional corporation ("Nanston Dental"), and through Nanston's
wholly owned subsidiary, Nanston-North Carolina, Inc., a North Carolina
corporation ("NC"), providing consulting services to Nathan Bell, D.D.S., P.A.,
a North Carolina professional association ("Bell").

    B.   The respective boards of directors of DentalCo, Subcorp, and Nanston
have determined that, on the terms and conditions set forth herein, the Merger
and the other transactions described in this Agreement are advisable and in the
best interests of their respective shareholders and have duly approved and
adopted this Agreement and the Merger.

                              STATEMENT OF AGREEMENT
                              ----------------------

    The Parties hereby acknowledge the accuracy of the above Background
Information, which is incorporated herein by reference and deemed a part hereof,
and agree as follows:

                                      ARTICLE I
                                      THE MERGER
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    1.1.  The Merger.  Upon the terms and subject to the conditions described 
in this Agreement, and in accordance with the provisions of applicable 
Maryland and Georgia law, Nanston shall be merged with and into Subcorp. The 
Merger shall be consummated by filing with each of the Secretary of State of 
the States of Maryland and Georgia (the "Secretaries of State") a separate 
Certificate of Merger substantially in the form to be attached to this 
Agreement as Exhibit B (the "Certificates of Merger"). Following the Merger, 
the separate corporate existence of Nanston shall cease and Subcorp shall 
continue as the surviving corporation and shall continue its existence under 
the laws of the State of Maryland. Subcorp, in its capacity as the 
corporation surviving the Merger, is sometimes referred to in this Agreement 
as the "Surviving Corporation."

    1.2  Closing; Effective Time.  The closing of the transactions 
contemplated by this Agreement (the "Closing") shall be held at the offices 
of Thomas S. Fisher, P.C., Suite 100, 1590 Oakbrook Drive, Norcross, Georgia 
30093, commencing at 10:00 a.m. Georgia time on January 15, 1997 (the 
"Closing Date") or such other date as may be reasonably agreed upon by 
Nanston and DentalCo. In conjunction with the Closing, Nanston and Subcorp 
shall cause the Certificates of Merger to be filed with the Secretaries of 
State, and the Merger shall become effective at the time specified in the 
Certificates of Merger, but not prior to the time that they are accepted for 
filing with the Secretaries of State (the "Effective Time").

    1.3  Effects of the Merger.  The Merger shall have the effects set forth 
under applicable Maryland and Georgia law.

    1.4  Certificate of Incorporation and Bylaws.  As provided in the 
Certificates of Merger, the Articles of Incorporation of Subcorp in effect 
immediately prior to the Effective Time shall be amended by the filing of the 
Certificate of Merger filed in Maryland to change the name of Subcorp to 
Nanston, Inc., and as so amended shall be the Articles of Incorporation of 
the Surviving Corporation. The Bylaws of Subcorp in effect immediately prior 
to the Effective Time shall be the Bylaws of the Surviving Corporation.

    1.5  Directors and Officers.  After the Effective Time, the directors and 
officers of Subcorp shall be the directors and officers of the Surviving 
Corporation until the earlier of their resignation or removal or until their 
respective successors are duly elected and qualified.  Schedule 1.5 sets 
forth the name of the persons who will be the directors and officers of 
Subcorp at the Effective Time.

    1.6  Tax Effect of the Merger. The Parties intend that the Merger 
constitute a "reorganization" within the meaning of Sections 368(a)(1)(A) and 
368 (a)(2)(D) of the Internal Revenue Code of 1986, as amended (the "Code").

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                                      ARTICLE II
                                    CAPITAL STOCK
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     2.1 Capital Stock.  At the Effective Time, by virtue of the Merger and 
without any further action on the part of the Parties:

              (a)  Outstanding Subcorp Shares. Each common share of
    Subcorp issued and outstanding immediately prior to the Effective Time
    shall be unchanged and shall remain issued and outstanding after the
    Effective Time, constituting one issued and outstanding common share,
    $0.0001 par value per share, of the Surviving Corporation.

              (b)  Conversion of Outstanding Nanston Shares; Nanston
    Options. Each Nanston Share (as defined in Section 4.2 hereof) which
    is issued and outstanding immediately prior to the Effective Time
    shall be automatically converted into the right to receive, subject to
    the provisions of this Section 2.1 and Section 2.2 below, that number
    of DentalCo Shares computed as set forth on Exhibit J hereto and the
    Cash Consideration simultaneously with the Effective Time (the
    DentalCo Shares and the Cash Consideration being collectively called,
    the "Merger Consideration"). The number of DentalCo Shares that would
    be issued to each Nanston Shareholder if the Closing occurred on the
    date hereof is set forth on Schedule 2.1(b) hereto.

              (c)  Nanston Treasury Shares.  All shares of Nanston capital
    stock, if any, which are owned by Nanston or any subsidiary of
    Nanston, or held in the treasury of Nanston shall be automatically
    canceled and retired, and no Merger Consideration shall be paid in
    respect of such shares.

    2.2  Exchange of Certificates; Issuance of DentalCo Shares.

              (a)  Surrender of Nanston Share Certificates.  From and
    after the Effective Time, the certificates representing the Nanston
    Shares (the "Nanston Share Certificates") shall represent for all
    purposes only the right to receive the Merger Consideration pursuant
    to the provisions of Section 2.1 above and this Section 2.2. Promptly
    after the Effective Time, in conjunction with the Closing, each
    Nanston Shareholder shall surrender to DentalCo Nanston Share
    Certificates evidencing all of the Nanston Shares owned by that
    Nanston Shareholder immediately prior to the Effective Time.

              (b)  Issuance of DentalCo Shares.  In consideration of the
    surrender of the Nanston Share Certificates evidencing the Nanston
    Shares owned by the Nanston Shareholders pursuant to Section 2.2(a)
    above and as part of the Merger Consideration, DentalCo shall, at the
    Closing, issue to each Nanston Shareholder that number of DentalCo
    Shares, and pay to each Nanston Shareholder that 

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    amount of cash, to which such Nanston Shareholder is entitled, 
    following the conversion described in Section 2.1(b) above. 
    The number of DentalCo Shares issuable to each Nanston Shareholder
    shall be rounded to the nearest 1/10,000, and the amount of cash
    payable to each Nanston Shareholder shall be rounded to the nearest
    cent.

              (c)  Distribution with Respect to Unexchanged Shares.  No
    dividends or other distributions, if any, with respect to DentalCo
    Shares having a record date after the Effective Time shall be paid to
    the holder of any unsurrendered Nanston Share Certificate for Nanston
    Shares until such holder surrenders such certificate.

              (d)  NonDilution.  Until the closing of an initial public
    offering by DentalCo of its capital stock, the percentage ownership of
    DentalCo's capital stock represented by the DentalCo Shares issued in
    the Merger, which shall constitute 22.7% on a fully diluted basis at
    the Effective Time, shall not be decreased, except on a proportionate
    basis with the holders of DentalCo Common (as defined in Section 3.3,
    below), and except for additional shares of DentalCo capital stock
    issued for acquisition purposes, financings with equity features, or
    the grant of employee stock options.

                                     ARTICLE III
                REPRESENTATIONS AND WARRANTIES OF DENTALCO AND SUBCORP

    In order to induce Nanston and the Nanston Shareholders to enter into 
this Agreement, DentalCo and Subcorp hereby represent and warrant to Nanston 
and the Nanston Shareholders that the statements contained in this Article 
III are true, correct and complete, except as disclosed in the schedules 
specifically referred to in this Article III and attached hereto 
(collectively, the "DentalCo Schedules"):     

    3.1  Organization and Standing. Each of DentalCo and Subcorp is a 
corporation duly organized, validly existing and in good standing under the 
laws of its state of incorporation with full corporate power and authority to 
own, lease, use and operate its properties and to conduct its business as and 
where now owned, leased, used, operated, and conducted.  Each of DentalCo and 
Subcorp is duly qualified to do business and is in good standing in each 
jurisdiction listed in Schedule 3.1, is not qualified to do business in any 
other jurisdiction, and neither the nature of the business conducted by 
either DentalCo or Subcorp, nor the properties it owns, leases or operates 
requires it to qualify to do business as a foreign corporation in any other 
jurisdiction, if the failure so to qualify would have a DentalCo Material 
Adverse Effect (as defined in Section 3.9(a) hereof).  Neither DentalCo nor 
Subcorp has received any written notice or assertion within the last three 
years from any Governmental Authority (as defined in Section 3.11(c) hereof) 
in any jurisdiction to the effect that either DentalCo or Subcorp is required 
to be qualified or authorized to do business in such jurisdiction if DentalCo 
or Subcorp was not so qualified or has not obtained such authorization. 

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    3.2  Corporate Power and Authority.  Each of DentalCo and Subcorp has all
requisite corporate power and authority to enter into this Agreement and to
perform its obligations under this Agreement.  This Agreement and the
transactions contemplated by this Agreement have been duly and validly
authorized by all necessary corporate action on the part of each of DentalCo and
Subcorp and constitutes the legal, valid and binding obligation of DentalCo and
Subcorp, enforceable against DentalCo and Subcorp in accordance with its terms.

    3.3  Capitalization of Each of DentalCo and Subcorp.  As of the date of
this Agreement, DentalCo's authorized capital stock consists solely of (a)
10,000,000 shares of $0.0001 par value common stock ("DentalCo Common"), of
which 2,403,120 shares are issued and outstanding; (b) 40,154 shares of $0.0001
par value 8% Class A Cumulative Convertible Preferred Stock, all of which are
issued and outstanding (the "Class A Preferred"), (c) 47,068 shares of $0.0001
par value Class B Convertible Preferred Stock, all of which are issued and
outstanding (the "Class B Preferred"), and (d) 816,038 shares of $0.0001 par
value 8% Class C Cumulative Convertible Preferred Stock, all of which are issued
and outstanding (the "Class C Preferred", and together with the Class A
Preferred and the Class B Preferred, the "Preferred"). Prior to the Effective
Time, DentalCo will amend its Articles of Incorporation to provide for the
authorization of 2,500,000 DentalCo Shares, none of which will be issued and
outstanding. At the Effective Time, 2,000,000 DentalCo Shares will be issued and
outstanding. The DentalCo Shares shall automatically convert on a one to one
basis to DentalCo Common immediately prior to the closing of an initial public
offering of DentalCo's capital stock. Except as set forth in Schedule 3.3, there
are no outstanding subscriptions, options, warrants, puts, calls, agreements,
understandings, claims or other commitments or rights of any type relating to
the issuance, sale or transfer of any shares of the capital stock of DentalCo or
Subcorp, nor are there outstanding any securities that are convertible into or
exchangeable for any shares of capital stock of DentalCo or Subcorp. The total
number of shares of DentalCo capital stock that would be issued if all of the
Preferred were converted into DentalCo Common is 3,694,364 (i.e., 1,325,082 upon
conversion of the Class A Preferred, 1,553,244 upon conversion of the Class B
Preferred, and 816,038 upon conversion of the Class C Preferred), and the total
number of shares of DentalCo Common issuable under all of the commitments and
rights set forth on Schedule 3.3 is 702,801. Each outstanding share of capital
stock of DentalCo is duly authorized, validly issued, fully paid and
nonassessable; all DentalCo Shares to be issued in connection with the Merger
are, or will prior to the Effective Time be, duly authorized and, when issued in
accordance with this Agreement, will be validly issued, fully paid and
nonassessable and none of such shares have been or will be issued in violation
of any preemptive or similar rights. The authorized capital stock of Subcorp
consists of 5,000 shares of common stock, $1.00 par value per share, of which
100 will be issued and outstanding prior to the Effective Time. All of the
outstanding capital stock of Subcorp, when issued, will be owned by DentalCo.

    3.4  Conflicts; Consents and Approvals.  Except as would not have a
DentalCo Material Adverse Effect, neither the execution and delivery of this
Agreement by DentalCo and Subcorp nor the consummation of the transactions
contemplated in this Agreement will:

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              (a)   Violate or conflict with, or result in a breach of any
    provision of, or constitute a default (or an event which, with the
    giving of notice, the passage of time or otherwise, would constitute a
    default) under, or entitle any third party with the giving of notice,
    the passage of time or otherwise to terminate, accelerate or call a
    default under, or result in the creation of any Lien (as defined in
    Section 4.2(i) hereof) upon any of the properties or assets of
    DentalCo or Subcorp under any of the terms, conditions or provisions
    of the articles of incorporation or bylaws, each as amended to date,
    of DentalCo or Subcorp, or any note, bond, mortgage, indenture, deed
    of trust, license, contract, undertaking, agreement, lease or other
    instrument or obligation to which DentalCo or Subcorp is a party;

              (b)  Violate any order, writ, injunction, decree, statute,
    rule or regulation, applicable to DentalCo or Subcorp or their 
    respective properties or assets; or 

              (c)  Require any action or consent or approval of, or review
    by, or registration with any third party, court or governmental body 
    or other agency, instrumentality or authority, other than (i) such 
    actions taken in respect of federal and state securities laws as are 
    contemplated by this Agreement, and (ii) the filing of the Certificate 
    of Merger with the Secretary of State.

    3.5  Litigation.  There is no suit, claim, action, proceeding or 
investigation pending or, to the best knowledge of DentalCo, threatened 
against DentalCo or Subcorp or any of their respective officers or directors 
in connection with the business or affairs of either DentalCo or Subcorp 
which, individually or in the aggregate, is reasonably likely to have a 
DentalCo Material Adverse Effect or materially delay or prevent DentalCo or 
Subcorp from consummating the transactions contemplated by this Agreement.  
Neither DentalCo nor Subcorp is subject to any outstanding order, writ, 
injunction or decree which, insofar as can be reasonably foreseen, 
individually or in the aggregate, would have a DentalCo Material Adverse 
Effect or would materially delay or prevent DentalCo or Subcorp from 
consummating the transactions contemplated by this Agreement.                

    3.6  Subsidiaries. Set forth in Schedule 3.6 is a correct and complete list
of all subsidiary corporations of DentalCo, the number and class of shares of 
capital stock of each such subsidiary owned by DentalCo, the percentage of 
all capital stock of that subsidiary which is represented by the shares owned 
by DentalCo, and the existence of any Liens (as defined in Section 4.2(i) 
hereof) on any such stock (to the extent not disclosed elsewhere in this 
Agreement or the Schedules hereto). Except as set forth in Schedule 3.6, 
DentalCo does not own, directly or indirectly, any investment, equity or 
other ownership interest or any outstanding loan or advance to or from, any 
person (including, without limitation, any officer, director or shareholder) 
or any corporation, partnership, joint venture or other entity or enterprise 
(hereinafter, "entity"). DentalCo is not subject to any obligation or 
requirement to provide funds to or make any investment (in the form of a 
loan, capital contribution or otherwise) in any entity.  

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    3.7  Financial Statements.

         (a)  DentalCo has furnished to Nanston and the Nanston Shareholders its
    audited consolidated balance sheets as at December 31, 1995, and the related
    audited statements of income and retained earnings and cash flows for the 
    fiscal year then ended, including, the related notes, all of which have been
    examined by, and are accompanied by the unqualified audit report of KPMG 
    Peat Marwick, Certified Public Accountants (collectively, the "DentalCo 
    Financial Statements"). The DentalCo Financial Statements have been prepared
    in accordance with generally accepted accounting principles ("GAAP") and 
    fairly present the consolidated financial position of DentalCo and its 
    consolidated subsidiaries as of the dates stated and the consolidated 
    results of their operations for the periods then ended.

         (b)  When delivered in accordance with Section 6.3(b) of this 
    Agreement, the consolidated unaudited balance sheets of DentalCo as at the 
    most recent fiscal month-end of DentalCo prior to the Closing Date, and the
    related statements of income and retained earnings and cash flows for the 
    period beginning on the first day of DentalCo's then current fiscal year 
    and ending on such most recent fiscal month end, as the case may be 
    (collectively, the "DentalCo Interim Statements"), shall have been prepared 
    in conformity with GAAP applied on a basis consistent with that used in the 
    DentalCo Financial Statements, and shall fairly present (subject, in the 
    case of unaudited statements, to normal, recurring audit adjustments) the
    consolidated unaudited financial position of DentalCo and its consolidated 
    subsidiaries as at such date and the consolidated results of their 
    operations for such period then ended.

    3.8  Undisclosed Liabilities.  Except as disclosed in Schedule 3.8, or in 
another Schedule to this Agreement, or in any other document provided to Nanston
or the Nanston Shareholders pursuant to this Agreement, to the best knowledge of
DentalCo, at the date of this Agreement, DentalCo has no liability or obligation
of any nature (whether liquidated, unliquidated, accrued, absolute, contingent
or otherwise and whether due or to become due) that would be required by GAAP to
be reflected on a consolidated balance sheet of DentalCo and its subsidiaries
(including the notes thereto) except:

         (a)  Those set forth in the DentalCo Financial Statements which 
    have not been paid or discharged since the date thereof;

         (b)  Current liabilities (determined in accordance with GAAP) 
    incurred since December 31, 1995, in transactions in the ordinary 
    course of business consistent with past practices which are properly
    reflected on its books and will be properly reflected in the 
    DentalCo Interim Statements; and

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         (c)  Liabilities or obligations that have not and could not reasonably 
    be expected to have a DentalCo Material Adverse Effect.

    3.9  Absence of Certain Changes.  Except as contemplated by or otherwise 
described in this Agreement or as set forth in Schedule 3.9, during the period
commencing on December 31, 1995 and ending on the date hereof, DentalCo has
conducted its business only in the ordinary course, and there has not been:

         (a)  Any change in the business operations, assets, properties, 
    or financial condition of DentalCo that, individually or in the 
    aggregate, has a material adverse effect on the financial condition 
    of DentalCo and its subsidiaries taken as a whole (a "DentalCo Material 
    Adverse Effect") or any such change that DentalCo reasonably expects 
    would have a DentalCo Material Adverse Effect;

         (b)  Any declaration, setting aside or payment of any 
    dividend or any distribution (in cash or in kind) to any shareholder 
    of DentalCo, or any direct or indirect redemption, purchase or other 
    acquisition by DentalCo of any of its capital stock or any options, 
    warrants, rights or agreements to purchase or acquire such stock;

         (c)  Any transaction entered into or carried out by DentalCo 
    other than in the ordinary and usual course of its business; 

         (d)  Any borrowing or agreement to borrow funds by DentalCo 
    or incurring by DentalCo of any other obligation or liability 
    (contingent or otherwise), except (i) current liabilities incurred 
    in the usual and ordinary course of business (consistent with past 
    practices), and (ii) borrowings from NationsCredit Commercial 
    Corporation ("NationsCredit") or any other lending institutions in 
    connection with acquisitions;

         (e)  Any material change in DentalCo's method of doing business 
    or any material change in its accounting principles or practices or 
    its method of application of such principles or practices;

         (f)  Any material Lien imposed or agreed to be imposed on or 
    with respect to the property or assets of DentalCo; 

         (g)  Any sale, lease or other disposition of, or any agreement 
    to sell, lease or otherwise dispose of any of the properties or assets 
    of DentalCo, other than in the usual and ordinary course of business;

         (h)  Any purchase of or any agreement to purchase assets (other 
    than inventory purchased in the ordinary course of business consistent 
    with past practices) for an amount in excess of $50,000 for any one 
    purchase or $500,000 for all such purchases made by DentalCo or any 
    lease or any agreement to lease, 

                                     -8-

    as lessee, any capital assets with payments over the term thereof to be 
    made by DentalCo exceeding an aggregate of $100,000;

         (i)  Any material loan or advance made by DentalCo to any
    individual, firm, corporation or other entity;

         (j)  Any modification, waiver, change, amendment, release,
    rescission or termination of, or accord and satisfaction with respect 
    to, any material term, condition or provision of any material contract,
    agreement, license or other instrument to which DentalCo is a party, 
    other than any satisfaction by performance in accordance with the terms 
    thereof in the usual and ordinary course of business; or 

         (k)  Any labor dispute or disturbance having a DentalCo Material 
    Adverse Effect, including without limitation the filing of any petition 
    or charge of unfair labor practice with any governmental or regulatory 
    authority, efforts to effect a union representation election, actual or 
    threatened employee strike, work stoppage or slow down.

    3.10 Taxes. Except as could not reasonably be expected to have a DentalCo 
Material Adverse Effect or as set forth on Schedule 3.10:

         (a)  DentalCo has duly, properly, and timely filed all federal, state,
    local and foreign tax returns and tax reports required to be filed by it, 
    all such returns and reports are true, correct and complete, none of such 
    returns and reports have been amended, and all taxes, assessments, fees and 
    other governmental charges due from DentalCo, including without limitation 
    those arising under such returns and reports, have been fully paid or are 
    fully accrued as liabilities in the DentalCo Financial Statements or the 
    DentalCo Interim Statements and will be timely paid if due prior to the 
    Closing.  No written claim has been made to DentalCo by authorities in 
    any jurisdiction where DentalCo did not file tax returns that it is or 
    may be subject to taxation therein.

         (b)  DentalCo has delivered to Nanston and the Nanston Shareholders 
    copies of all federal, state, local, and foreign income tax returns filed 
    with respect to it for the taxable period ended on or after December 31, 
    1995. Schedule 3.10 sets forth the dates and results of any and all audits 
    conducted by taxing authorities within the last five years or otherwise 
    with respect to any tax year for which assessment is not barred by any 
    applicable statute of limitations.  No waivers of any applicable statute of
    limitations for the filing of any tax returns or payment of any taxes or 
    assessments of any deficient or unpaid taxes are outstanding.  Except as set
    forth in Schedule 3.10, all deficiencies proposed as a result of any audits
    have been paid or settled. There are no pending or, to the best knowledge 
    of DentalCo, threatened federal, state, local or foreign tax audits or 

                                     -9-

         assessments of DentalCo and no agreement with any federal, state, 
         local or foreign taxing authority that may affect the subsequent 
         tax liabilities of DentalCo.

         (c)  There exists no tax-sharing agreement or arrangement pursuant to 
    which DentalCo is obligated to pay the tax liability of any other person or 
    entity, or to indemnify any other person or entity with respect to any tax.

    3.11 Compliance with Applicable Law.  To the best knowledge of DentalCo, 
except as set forth on Schedule 3.11: 

         (a)  DentalCo holds and is in compliance with the terms of, all 
    permits, licenses, variances, exemptions, orders and approvals of any 
    Governmental Authority, (as defined below) necessary for the lawful 
    conduct of its business as currently conducted (collectively, the "Permits")
    except for failures to hold or be in compliance with the terms of such 
    Permits that would not have a DentalCo Material Adverse Effect.

         (b)  DentalCo is not in violation of nor has it been given notice or 
    been charged with any violation of any Applicable Law (as defined below), 
    except for possible violations that would not have a DentalCo Material 
    Adverse Effect.  No investigation or review by any Governmental Authority 
    with respect to DentalCo is pending or, to the best knowledge of DentalCo, 
    threatened, nor has any Governmental Authority indicated an intention to 
    conduct any such investigation or review, other than, in each case, those 
    the outcome of which could not be reasonably expected to have a DentalCo 
    Material Adverse Effect.

         (c)  "Governmental Authority" means (i) any nation or government, 
    (ii) any federal, state, county, province, city, town, municipality or 
    other political subdivision thereof or thereto, (iii) any court, tribunal,
    department, commission, board, bureau, instrumentality, agency, council, 
    arbitrator or other entity exercising executive, legislative, regulatory 
    or administrative functions or pertaining to government and (iv) any other 
    governmental entity, agency or authority having or exercising jurisdiction 
    over any relevant person, entity, item or matter.

         (d)  "Applicable Law" means (i) any applicable laws, statutes, rules,
    requirements, ordinances, orders, writs, injunctions, decisions, 
    determinations, directives or decrees and other pronouncements having the 
    effect of law and (ii) all contracts or agreements with any Governmental 
    Authority relating to compliance with the matters described in clause (i) 
    above. 

                                     -10-

    3.12 Proprietary Rights.  Schedule 3.12 sets forth:

         (a)  All names, patents, inventions, trade secrets, proprietary 
    rights, computer software, trademarks, trade names, service marks, logos, 
    copyrights and franchises and all applications therefor, registrations 
    therefor and licenses, sublicenses or agreements in respect thereof which 
    DentalCo owns or has the right to use or to which DentalCo is a party, and 
    that are material to the business operation of DentalCo taken as a whole; 
    and

         (b)  All filings, registrations or issuances of any of the foregoing 
    with or by any federal, state, local or foreign regulatory, administrative 
    or governmental office or offices (all items in (a) and (b) of this section,
    being sometimes hereinafter referred to collectively as the "DentalCo 
    Proprietary Rights").

         Except as would not have a DentalCo Material Adverse Effect or as 
set forth in Schedule 3.12, DentalCo is the sole and exclusive owner of all 
right, title and interest in and to all DentalCo Proprietary Rights free and 
clear of all Liens, and there is no pending or, to the best knowledge of 
DentalCo, threatened investigation, proceeding, inquiry or other review by 
any Governmental Authority with respect to DentalCo's rights, title or 
interest in any DentalCo Proprietary Right.

    3.13 Insurance.  Set forth in Schedule 3.13 is a true, correct and complete
list of all insurance policies and bonds, if any, in force for which DentalCo is
named as an insured party, or for which DentalCo has paid any premiums since
January 1, 1996, and DentalCo has supplied to Nanston or the Nanston
Shareholders correct and complete copies of each policy and bond so listed. 
Except as disclosed in Schedule 3.13, all such policies or bonds are currently
in full force and effect and no notice of cancellation or termination has been
received by DentalCo with respect to any such policy or bond.  All premiums due
and payable on such policies and bonds have been paid.  Except as disclosed in
Schedule 3.13, DentalCo is not a co-insurer under any term of any insurance
policy.

    3.14 Title to and Condition of Properties and Leasehold Interests.  Except
as would not have a DentalCo Material Adverse Effect or as set forth in Schedule
3.14, DentalCo has title to all of its assets and properties of every kind,
nature and description, tangible or intangible, wherever located, which
constitute all of the property now used in and necessary for the conduct of its
business as presently conducted (including, without limitation, all property and
assets shown or reflected on the balance sheet included in the DentalCo
Financial Statements); provided, however, that this Section 3.14 does not apply
to DentalCo Proprietary Rights, which are addressed in Section 3.12.  Except as
set forth in Schedule 3.14 and except for (a) statutory liens for taxes not yet
due, (b) such imperfections in title, easements and Liens (as defined in Section
4.2(i)), if any, as are not substantial in character, amount or extent and do
not materially detract from the value or interfere with the present use of the
property subject thereto or affected thereby or otherwise materially impair the
business operations of DentalCo as presently carried on, (c) Liens existing on
the date hereof securing indebtedness for borrowed money reflected in 

                                     -11-

the balance sheet included in the DentalCo Financial Statements and (d) other
matters which, singly or in the aggregate, could not reasonably be expected to
have a DentalCo Material Adverse Effect, all such properties are owned free and
clear of all Liens, including, without limitation, (i) rights or claims of
parties in possession; (ii) easements or claims of easements; (iii)
encroachments, overlaps, boundary lines or water drainage disputes or any other
matters; (iv) any Lien or right to a Lien for services, labor or material
furnished; (v) special tax or other assessments; (vi) options to purchase,
leases, tenancies, or land contracts; and (vii) contracts, covenants, or
reservations which restrict the use of such properties.  Except as set forth in
Schedule 3.14, to the best knowledge of DentalCo, no financing statement under
the Uniform Commercial Code or similar law naming DentalCo as debtor has been
filed in any jurisdiction, and DentalCo is not a party to or bound under any
agreement or legal obligation authorizing any party to file any such financing
statement.  Schedule 3.14 contains copies of all leases of real property to
which DentalCo is a party.  DentalCo owns or leases no other real property.

    Except as would not have a DentalCo Material Adverse Effect or as set forth
in Schedule 3.14, all real property and structures and all machinery, equipment,
and other tangible personal property owned, leased or used by DentalCo which are
material to the operation of its business, are suitable for the purpose or
purposes for which they are being used. The utilities servicing the real
properties owned or used by DentalCo are adequate to permit the continued
operation of the business of DentalCo, and there are no pending or, to the best
knowledge of DentalCo, threatened zoning, condemnation or eminent domain
proceedings, building, utility or other moratoria, or injunctions or court
orders which would materially affect such continued operation. Each lease or
agreement to which DentalCo is a party under which it is a lessee of any
property, real or personal, is a valid and subsisting agreement without any
material default of DentalCo thereunder and, to the best of DentalCo's
knowledge, without any material default thereunder of any other party thereto. 
No event has occurred and is continuing which, with due notice or lapse of time
or both, would constitute a default or event of default by DentalCo under any
such lease or agreement or, to the best of DentalCo's knowledge, by any other
party thereto.  Possession of such property by DentalCo has not been disturbed
and, to the best of DentalCo's knowledge, no claim has been asserted against
DentalCo adverse to its rights in such leasehold interests.

    3.15 Brokers, Finders.  The transactions contemplated by this Agreement 
were not submitted to DentalCo by any broker or other person and none of the
actions of DentalCo has given rise to any valid claim by any person for a
commission, finder's fee or like payment from any of the Parties.

    3.16 ERISA.
         -----

         (a)  Schedule 3.16 identifies each "employee benefit plan,"
    as defined in Section 3(3) of the Employee Retirement Income Security
    Act of 1974, as amended ("ERISA") which (i) is subject to any 
    provision of ERISA and (ii) is or was at any time during the last five
    years maintained, administered or contributed to by DentalCo or any
    affiliate (as defined below) and covers any employee or former
    employee of DentalCo or any affiliate or under which DentalCo or any

                                     -12-

    affiliate has any liability.  Copies of such plans (and, if
    applicable, related trust agreements) and all amendments thereto and
    written interpretations thereof have been furnished to Nanston or the
    Nanston Shareholders, together with the three most recent annual
    reports (Form 5500) prepared in connection with any such plan. Such
    plans are referred to collectively herein as the "DentalCo Employee
    Plans."  For purposes of this section, "affiliate" of any person or
    entity means any other person or entity which, together with such
    person or entity, would be treated as a single employer under Section
    414 of the Code or is an "affiliate," whether or not incorporated, as
    defined in Section 407(d) (7) of ERISA of such person or entity.  The
    only DentalCo Employee Plans, which individually or collectively would
    constitute an "employee pension benefit plan" as defined in Section
    3(2) of ERISA (the "DentalCo Pension Plans"), are identified as such
    on Schedule 3.16.

         (b)  No DentalCo Employee Plan constitutes a "multi employer 
    plan," as defined in Section 3(37) of ERISA, or a "defined benefit
    plan, " as defined in Section 3(35) and subject to Title IV of ERISA,
    and no DentalCo Employee Plan is maintained in connection with any
    trust described in Section 501(c) of the Code.  Except as would not
    have a DentalCo Material Adverse Effect, no "accumulated funding
    deficiency, " as defined in Section 412 of the Code, has been incurred
    with respect to any DentalCo Pension Plan, whether or not waived. 
    Full payment has been made of all amounts which DentalCo or any
    affiliate is required to have paid as contributions to or benefits
    under any DentalCo Employee Plan as of the end of the most recent
    fiscal year thereof and there are no unfunded obligations under any
    DentalCo Employee Plan that have not been disclosed to Nanston or the
    Nanston Shareholders in writing prior to the date hereof.  Except as
    would not have a DentalCo Material Adverse Effect, or as set forth in
    Schedule 3.16 or as expressly contemplated by this Agreement, DentalCo
    knows of no "reportable events," within the meaning of Section 4043 of
    ERISA, and no event described in Section 4041, 4042 4062 or 4063 of
    ERISA has occurred in connection with any DentalCo Employee Plan.
    Except as would not have a DentalCo Material Adverse Effect or as set
    forth in Schedule 3.16 or as expressly contemplated by this Agreement,
    no condition exists and no event has occurred that could constitute
    grounds for termination of any Employee Plan, and neither DentalCo,
    nor any of its affiliates has incurred any material liability under
    Title IV of ERISA arising in connection with the termination of , or
    complete or partial withdrawal from, any plan covered or previously
    covered by Title IV of ERISA.  Nothing done or omitted to be done and
    no transaction or holding of any asset under or in connection with any
    DentalCo Employee Plan has or will make either DentalCo or any officer
    or director of DentalCo, subject to any liability under Title I of
    ERISA or liable for any tax pursuant to Section 4975 of the Code.
    There is no pending or, to the best knowledge of DentalCo, threatened
    litigation, arbitration, disputed claim, adjudication, audit,
    examination or other proceeding 

                                     -13-

    with respect to any DentalCo Employee Plan or any fiduciary or
    administrator thereof in their capacities as such.

         (c)  Each DentalCo Employee Plan which is intended to be 
    qualified under Section 401(a) of the Code is so qualified and has
    been so qualified during the period from its adoption to date, and
    each trust forming a part thereof is exempt from tax pursuant to
    Section 501(a) of the Code.  DentalCo has furnished to Nanston or the
    Nanston Shareholders copies of the most recent Internal Revenue
    Service determination letters with respect to each such DentalCo
    Employee Plan.  Except as would not have a DentalCo Material Adverse
    Effect, each DentalCo Employee Plan has been maintained, from the time
    of such Plan's inception up to and including the performance of any or
    all transactions contemplated in this Agreement, in compliance with
    its terms and the requirements and fiduciary standards prescribed by
    any and all statutes, orders, rules, and regulations, including but
    not limited to ERISA and the Code, which are applicable to such
    DentalCo Employee Plan.

         (d)  Except as would not have a DentalCo Material Adverse
    Effect, to the best knowledge of DentalCo, there is no contract,
    agreement, plan, or arrangement covering any employee or former
    employee of DentalCo, or any affiliate that, individually or
    collectively, could give rise to the payment of any amount that would
    not be deductible pursuant to the terms of the Code.

         (e)  Schedule 3.16 identifies each written employment,
    severance or other similar contract, arrangement or policy and each
    plan or arrangement (written or oral) providing for insurance coverage
    (including any self-insured arrangements), workers' compensation,
    disability benefits, supplemental unemployment benefits, vacation
    benefits, retirement benefits or for deferred compensation,
    profit-sharing, bonuses, stock options, stock appreciation or other
    forms of incentive compensation or post-retirement insurance,
    compensation or benefits which (i) is not an DentalCo Employee Plan,
    (ii) is entered into, maintained or contributed to, as the case may
    be, by DentalCo, or any of its affiliates, and (iii) covers any
    employee or former employee of DentalCo, or any of its affiliates. 
    Such contracts, arrangements as are described above, copies or
    descriptions of all of which have been furnished previously to Nanston
    or the Nanston Shareholders, are referred to collectively herein as
    the "DentalCo Benefit Arrangements".  Except as would not have a
    DentalCo Material Adverse Effect, each DentalCo Benefit Arrangement
    has been maintained in substantial compliance with its terms and with
    requirements prescribed by any and all statutes, orders, rules, and
    regulations that are applicable to such DentalCo Benefit Arrangement.

         (f)  Except as would not have a DentalCo Material Adverse
    Effect or at as set forth in Schedule 3.16, there is no liability in
    respect of post-retirement 

                                     -14-

    health and medical benefits for retired employees of DentalCo, or any
    of its affiliates, determined using assumptions that are reasonable in
    the aggregate, over the fair market value of any fund, reserve or
    other assets segregated for the purpose of satisfying such liability
    (including for such purposes any fund established pursuant to Section
    401(h) of the Code).  Except as would not have a DentalCo Material
    Adverse Effect, with respect to any DentalCo Employee Plans which are
    "group health plans" under Section 4980B of the Code and Section
    607(1) of ERISA, to the best knowledge of DentalCo, there has been
    timely compliance in all material respects with all requirements
    imposed thereunder so that DentalCo, and its affiliates have no (and
    will not incur any) loss, assessment, tax penalty, or other sanction
    with respect to any such plan.

         (g)  Except as set forth in Schedule 3.16, there has been no
    amendment to, written interpretation or announcement (whether or not
    written) by DentalCo, or any of its affiliates relating to, or change
    in employee participation or coverage under, any DentalCo Employee
    Plan or DentalCo Benefit Arrangement which would increase the expense
    of maintaining such DentalCo Employee Plan or DentalCo Benefit
    Arrangement above the level of the expense incurred in respect thereof
    for the fiscal year ended immediately prior to the Effective Time.

         (h)  Except as set forth in Schedule 3.16, DentalCo is not
    party or subject to any union contract or any employment contract or
    arrangement providing for annual future compensation to any officer,
    consultant, director or employee.
 
         (i)  Any reference to ERISA or the Code or any section
    thereof shall be construed to include all amendments thereto and
    applicable regulations and administrative rulings issued thereunder.

    3.17 Contracts.  Schedule 3.17 lists all contracts, purchase orders,
agreements, leases, executory commitments, and arrangements to which DentalCo is
a party (a) which, including all amendments and supplements thereto, are
material to the condition, operations, assets or business of DentalCo, (b) which
(i) involve payments or commitments in excess of $50,000 for any purchase order
or $50,000 for any other contract, agreement, lease, commitment, arrangement, or
understanding, or (ii) extend beyond three years (or both), unless cancelable on
60 or fewer days' notice without any liability, penalty or premium, (c) with any
present or former stockholder, director or officer of DentalCo, or any person
related by blood or marriage to any such person or any person or entity
controlling, controlled by or under common control with any such person, or with
any employee, agent or consultant of DentalCo not terminable at will, (d) which
provide for the future purchase by DentalCo of any materials, equipment,
services or supplies, which continue for a period of more than 24 months
(including periods covered by any option to renew by either party), or (e) which
involve any of the following:  (i) any borrowings or guarantees; (ii) any
contracts containing covenants purporting to limit the freedom of DentalCo to
compete in any line of business or provide any of their services in any
geographic area; (iii) any obligation or commitment which limits the freedom of
DentalCo to sell, lease, license or otherwise provide 

                                     -15-

its services; (iv) any obligation or commitment providing for indemnification or
responsibility for the obligations or losses of any person.

    Except as set forth in Schedule 3.17, DentalCo has not received any notice
from any third party payer, patient, or supplier to the effect that such third
party payer, patient, or supplier will terminate its relationship or
unilaterally modify any terms of that relationship, where applicable, with
DentalCo as a result of any transaction contemplated by this Agreement or
otherwise.

    Also attached to Schedule 3.17 is a correct and complete list of all
dentists employed or retained by DentalCo or its affiliates.  Except as set
forth in such list, DentalCo or its affiliates has a written employment
agreement with each dentist employed by it and a written independent contractor
or similar agreement with each dentist retained by it as an independent
contractor.  DentalCo has provided a copy of each such agreement to Nanston or
the Nanston Shareholders, and all such agreements are currently in full force
and effect.

    3.18 Accounts Receivable.  DentalCo has delivered to Nanston or the Nanston
Shareholders a correct and complete schedule of its accounts receivable and
notes receivable as at November 30, 1996.  Except as would not have a DentalCo
Material Adverse Effect or as set forth in Schedule 3.18 or in the DentalCo
Interim Statements, all accounts and notes receivable of DentalCo as at such
date, and any accounts and notes receivable arising between such date and the
Effective Time are or will be bona fide and represent sales actually made or
services actually provided in the ordinary course of business consistent with
past practices.

    Schedule 3.18 includes a list of all amounts payable to DentalCo by any
Affiliate of DentalCo (the "DentalCo Related Party Receivables") and all amounts
payable by DentalCo to any Affiliate of DentalCo (the "DentalCo Related Party
Payables") as of November 30, 1996, specifying the payer, payee, and amount of
each DentalCo Related Party Receivable and DentalCo Related Party Payable.  For
purposes of this Agreement, other than for Section 3.16, above, an "Affiliate"
of DentalCo shall mean any shareholder, director, officer, employee,
representative, other agent of DentalCo, any person related by blood or marriage
to any such person, or any person or entity, which, directly or indirectly,
controls, is controlled by, or is under common control with such or any such
other person or entity.

    3.19 No Conflict or Default.  Except as would not have a DentalCo Material
Adverse Effect or except for the consents described in Schedule 3.19, neither
the execution and delivery of this Agreement by DentalCo, nor compliance by
DentalCo with the terms and provisions of this Agreement, including without
limitation the consummation of the transactions contemplated by this Agreement,
will violate any Applicable Laws or Permits or conflict with or result in the
breach of any term, condition or provision of the of certificate of
incorporation or bylaws of DentalCo, or of any agreement, deed, contract,
undertaking, mortgage, indenture, writ, order, decree, restriction, legal
obligation or instrument to which DentalCo is a party or by which DentalCo or
any of its assets or properties are or may be bound or affected, or constitute a
default (or an event which, with the giving of notice, the passage of time, or
otherwise, would constitute a default) thereunder, or result in the creation or
imposition of any Lien with respect to any 

                                     -16-

properties or assets of DentalCo or give to others any interest or rights,
including rights of termination, acceleration or cancellation in or with respect
to any of the properties, assets, contracts or business of DentalCo.

    3.20 Books of Account; Records.  Except as would not have a DentalCo
Material Adverse Effect, DentalCo general ledgers, stock record books, minute
books and other corporate records relating to the material assets, properties,
contracts, and outstanding legal obligations of DentalCo, are, in all material
respects, complete and correct and the matters contained therein are reflected
in the DentalCo Financial Statements and the DentalCo Interim Statements to the
extent required to be so reflected therein by GAAP.

    3.21 Officers, Employees, and Compensation.  Schedule 3.21 sets forth the
names of all directors and officers of DentalCo, their respective terms of
office, the total salary, bonus, fringe benefits and perquisites each received
in the fiscal year ended December 31, 1995, and any changes to the foregoing
which have occurred subsequent thereto.  Schedule 3.22 also lists and describes
the current compensation of any other employee of DentalCo whose total current
salary and bonus exceeds $80,000 annually. Except as disclosed in Schedule 3.22,
there are no other forms of compensation paid to any such director, officer, or
employee of DentalCo. Except as set forth in Schedule 3.21, DentalCo has not
become obligated, directly or indirectly, with respect to compensation to any
stockholder, director, officer, of DentalCo or any person related to such person
by blood or marriage, except for current liability for such compensation.

    3.22 Labor Relations.  Except as set forth in Schedule 3.22, no employees 
of DentalCo are represented by any labor union or covered under any 
collective bargaining agreement, and there is no unfair labor practice 
complaint against DentalCo pending before the National Labor Relations Board. 
 No collective bargaining or other labor agreement is currently being 
negotiated by DentalCo and no union or collective bargaining unit represents 
DentalCo employees. DentalCo has not experienced any work stoppage or other 
material labor difficulty during the past five years.

    3.23 Suppliers and Third Party Payers.  Schedule 3.23 sets forth (a) a list
of all third party payers and suppliers who have terminated their relationships
with DentalCo since January 1, 1996, or have notified DentalCo since September
1, 1996, that they intend to terminate their relationships with DentalCo, and
(b) the gross receipts received from such third party payers and gross monies
paid to such third party suppliers for the 12-month period ending on August 31,
1996.

    3.24 Business of DentalCo.  DentalCo is and has been engaged in the
business of providing non-clinical administration and related services, and
similar services, to dentists and is engaged in no other business whatsoever,
except as may be incidental to the foregoing.

    3.25 Complete Disclosure. To the best knowledge of DentalCo, no
representation or warranty of DentalCo in this Agreement or in the DentalCo
Schedules contains any untrue 

                                     -17-

statement of a material fact or omits to state any material fact required to be
stated therein or necessary in order to make the statements therein not
misleading.

    3.26 Environmental.  DentalCo conducts its business and operations in
material compliance with all applicable environmental laws, ordinances and
regulations, and DentalCo has not received notice of any claim, action, suit,
proceeding, hearing or investigation, based on or related to the manufacture,
processing, distribution, use treatment, storage, disposal, transport, or
handling, or the emission, discharge, release or threatened release into the
environment, of any pollutant, contaminant, or hazardous or toxic material or
waste (collectively, an "Environmental Event") by DentalCo or with respect to
any premises owned or occupied by them.  To the best knowledge of DentalCo, no
notice of any Environmental Event was given to any person or entity that
occupied any of the premises owned or occupied by or used by DentalCo prior to
the date such premises were so occupied.  Without limiting the generality of the
foregoing, to the best knowledge of DentalCo, DentalCo has not disposed of or
placed on or in any property or facility used in its business any waste
materials, hazardous materials or hazardous substances in violation of law.  

    3.27 Fraud and Abuse.  To the best knowledge of DentalCo, neither DentalCo,
nor any of its officers and directors, has engaged in any activities which are
prohibited under federal Medicare and Medicaid statutes, 42 U.S.C. Sections
1320a-7, 1320a-7(a) and 1320a-7b, or the regulations promulgated pursuant to
such statutes or related state or local statutes or regulations or which are
prohibited by rules of professional conduct promulgated by the appropriate
licensing authority of the sate or states in which such entity does business,
including but not limited to the following:

         (a)  knowingly and willfully making or causing to be made a false 
statement or representation of a material fact in any application for any 
benefit or payment;

         (b)  knowingly and willfully making or causing to be made any false 
statement or representation of a material fact for use in determining rights 
to any benefit or payment;

         (c)  presenting or causing to be presented a claim for reimbursement 
for services under Medicare, Medicaid, or 
other state health care program that is for an item or service that is known 
or should be known to be (i) not provided as claimed, or (ii) false or 
fraudulent;

         (d)  failing to disclose knowledge by a claimant of the occurrence 
of any event affecting the initial or continued rights to any benefit or 
payment on its own behalf or on behalf of another, with intent to 
fraudulently secure such benefit or payment;

         (e)  knowingly and willfully offering, paying, soliciting or 
receiving any remuneration (including any kickback, bribe, or rebate), 
directly or indirectly, overtly or covertly, in cash or in kind (i) in return 
for referring an individual to a person for the furnishing or arranging for 
the furnishing of any item or service for which payment may be made in whole 
or in part by Medicare or Medicaid, or other state health care program, or 
(ii) in return for purchasing, leasing, or ordering or arranging for or 
recommending purchasing, leasing, 

                                     -18-

or ordering any good, facility, service, or item for which payment may be made
in whole or in party by Medicare or Medicaid or other state health care program;
or 

         (f)  knowingly and willfully making or causing to be made or 
inducing or seeking to induce the making of any false statement or 
representation (or omit to state a fact required to be stated therein or 
necessary to make the statements contained therein not misleading) of a 
material fact with respect to (i) the conditions or operations of a facility 
in order that the facility may qualify for Medicare, Medicaid or other state 
health care program certification, or (ii) information required to be 
provided under Section 1124A of the Social Security Act (42 U.S.C. Section 
1320a-3).

    Section 3.28.  Health Professional's Financial Relationships.  To the 
best knowledge of DentalCo, the operations of DentalCo are in compliance with 
and do not otherwise violate the federal Medicare and Medicaid statutes 
regarding health professional self-referrals, 42 U.S.C. Section 1395nn and 42 
U.S.C. Section 1396b, or the regulations promulgated pursuant to such 
statute, or similar state or local statutes or regulations.                 

    Section 3.29.  Professional Licenses.  There is no legal or regulatory 
requirement that the shareholders, or any of them, of DentalCo be a licensed 
dentist in order for DentalCo to conduct its business as currently conducted. 

    Section 3.30.  Medical Waste.  DentalCo is not in violation of, or the    
subject of any investigation, inquiry or enforcement action by any 
Governmental Authority under, the Medical Waste Tracking Act, 42 U.S.C. 
Section 6992 et seq., or any applicable state or local government statute, 
ordinance or regulation dealing with the disposal of medical wastes 
(collectively "Medical Waste Laws"). DentalCo has obtained and is in 
compliance with any permits required by the Medical Waste Laws relating to 
medical waste disposal, and all disposal of medical waste by DentalCo has 
been in compliance with the Medical Waste Laws.                  

                                     ARTICLE IV
                            REPRESENTATIONS AND WARRANTIES 
                          OF NANSTON AND THE JOHNSTON FAMILY 
                          ----------------------------------

    In order to induce DentalCo and Subcorp to enter into this Agreement, 
Nanston and John C. Johnston, D.D.S., individually ("Dr. Johnston"), Nancy 
Anderson ("Ms. Anderson"), as Trustee under The Johnston Family Stock Trust 
and The Johnston Family Education Trust (collectively, the "Trusts"), Chris 
D. Johnston ("C.D. Johnston"), Steve C. Johnston ("S.C. Johnston"), Ronnie L. 
Johnston ("R.L. Johnston"), and Kyle E. Anderson ("Mr. Anderson") (all of the 
foregoing, other than Nanston, being hereinafter referred to collectively as, 
the "Johnston Family"), hereby jointly and severally represent and warrant to 
DentalCo and Subcorp that the statements contained in this Article IV are 
true, correct and complete, except as disclosed in the schedules specifically 
referred to in this Article IV and attached hereto (collectively, the 
"Johnston Family Schedules"); provided, however, that with respect to 

                                     -19-

representations and warranties regarding the "Providers" set forth in Sections
4.1(g), 4.1(h) (i.e., with respect to the shares of Bell included in "Shares"),
4.3 through 4.5 inclusive, 4.7 through 4.12 inclusive, 4.14 through 4.18
inclusive, and 4.20 through 4.31 inclusive (the "Bell Representations"), the
Johnston Family makes no representations and warranties regarding the Bell
Representations and, provided, further, that Nathan Bell, D.D.S. ("N. Bell") has
joined in the execution of this Agreement solely for the purposes of (i) making
the Bell Representations (the Bell Representations are made with such changes,
if any, as the context unambiguously requires) and the representations and
warranties set forth in Section 5.5 hereof, (ii) agreeing to the covenants of N.
Bell set forth in Section 6 hereof, and (iii) indemnifying DentalCo as provided
in Section 9 hereof:

    4.1  Organization and Standing. Each of Nanston and NC (collectively the
"Companies") and each of Nanston Dental and Bell (collectively the "Providers")
is a corporation, professional corporation, or professional association duly
organized, validly existing and in good standing under the laws of its state of
incorporation with full corporate power and authority to own, lease, use and
operate its properties and to conduct its business as and where now owned,
leased, used, operated and conducted. Each Company and each of the Providers is
duly qualified to do business and is in good standing in each jurisdiction
listed in Schedule 4.1, is not qualified to do business in any other
jurisdiction, and neither the nature of the business conducted by either Company
or the Providers nor the properties it owns, leases or operates requires it to
qualify to do business as a foreign corporation in any other jurisdiction, if
the failure so to qualify would have a Nanston Material Adverse Effect (as
defined in Section 4.8(a) hereof).  Neither Company nor the Providers has
received any written notice or assertion within the last three years from any
Governmental Authority in any jurisdiction to the effect that either Company or
the Providers is required to be qualified or authorized to do business in such
jurisdiction if the Company or the Providers was not so qualified or has not
obtained such authorization. Neither Company nor the Providers is in default in
the performance, observation or fulfillment of any provision of its certificate
or articles of incorporation, bylaws, or other organizational documents, as
applicable, each as amended to date.

    4.2  Capitalization and Security Holders.

         (a)  Nanston Shares. The authorized capital stock of Nanston
    (collectively, the "Nanston Shares") consists solely of (i)
    100,000,000 shares of common stock, par value $.01 per share (the
    "Common Shares"), of which 12,080,439 are issued and outstanding, (ii)
    100,000,000 shares of ESOP common stock, par value $.01 per share (the
    "ESOP Shares"), of which 1,507,295 are issued and outstanding, and
    (iii) 50,000,000 shares of Class A Preferred Stock, par value $.01 per
    share, of which none are issued and outstanding. On or prior to the
    Closing, the Nanston Shareholders will hold of record all of the
    outstanding Nanston Shares. All of the outstanding Nanston Shares are
    entitled to vote with respect to the Merger.

                                     -20-

         (b)  NC Shares.  The authorized capital stock of NC consists
    solely of 1,000 common shares, par value $1.00 per share (the "NC
    Shares"), of which 100 shares are issued and outstanding.  Nanston
    holds beneficially and of record all of the outstanding NC Shares.

         (c)  Nanston Dental Shares.  The authorized capital stock of
    Nanston Dental consists solely of 100,000 shares of common stock,
    without par value (the "Nanston Dental Shares"), of which 501 shares
    are issued and outstanding. Dr. Johnston and Sam C. Grizzle ("Dr.
    Grizzle") hold of record all of the outstanding Nanston Dental Shares.
    Dr. Johnston holds beneficially the 500 Nanston Dental Shares he holds
    of record and Dr. Grizzle holds beneficially the 1 Nanston Dental
    Share he holds of record.

         (d)  Bell Shares.  The authorized capital stock of Bell
    consists solely of 1,000 common shares, par value $1.00 per share (the
    "Bell Shares"), of which 500 shares are issued and outstanding. N.
    Bell holds beneficially and of record all of the outstanding Bell
    Shares.

         (e)  Stock Ownership. Exhibit A attached to this Agreement
    constitutes a correct and complete list of the names and addresses of,
    and the number and class of shares of Nanston Shares held of record by
    each of the Nanston Shareholders, respectively.

         (f)  Due Authorization and Issuance.  Each outstanding
    Nanston Share and NC Share (collectively, the "Company Shares") and
    each Nanston Dental Share and each Bell Share has been duly authorized
    and validly issued and is fully paid and non-assessable and has not
    been issued in violation of and are free of any preemptive or similar
    rights.

         (g)  No Other Commitment. Except as set forth in Schedule
    4.2, there are no outstanding subscriptions, options, warrants, puts,
    calls, agreements, understandings, claims or other commitments or
    rights of any type relating to the issuance, sale or transfer of any
    shares of capital stock of either of the Companies or the Providers,
    nor are there outstanding any securities which are convertible into or
    exchangeable for any shares of capital stock of either of the
    Companies or the Providers; and neither of the Companies nor the
    Providers has any obligation of any kind to issue any additional
    securities or to pay for securities of either of the Companies or the
    Providers, as applicable, or any predecessor.

         (h)  Compliance with Laws; No Liens. To the best knowledge
    of Nanston and the Johnston Family, the issuance and sale of all of
    the shares referred to in Section 4.2(a), (b), (c), and (d) above
    (collectively, the "Shares") has been in full compliance with all
    applicable federal and state securities laws and other laws.  Except
    as set forth in Schedule 4.2, neither Company nor Nanston Dental has 

                                     -21-

    agreed to register any Shares or other securities under the Securities
    Act of 1933, as amended (the "Securities Act"), and the rules and
    regulations thereunder or under any state securities law. The Shares
    are free and clear of any and all Liens.

         (i)  "Liens" means (i) any lien, charge, mortgage, pledge,
    hypothecation, assignment, security interest, assessment, levy or
    encumbrance of any kind or nature whatsoever (whether voluntary or
    involuntary, affirmative or negative, and whether imposed or created
    by contract, operation of Applicable Laws or otherwise) in, on, or
    with respect to any properties or assets of the applicable person or
    entity, whether now owned or hereafter acquired, (ii) any contract to
    give any of the foregoing and (iii) any conditional sale of other
    title retention agreement and any financing lease having substantially
    the same effect as any of the foregoing.

    4.3  Subsidiaries. Set forth in Schedule 4.3 is a correct and complete list
of all subsidiary corporations of each Company, the number and class of shares
of capital stock of each such subsidiary owned by either Company, the percentage
of all capital stock of that subsidiary which is represented by the shares owned
by the Companies, and the existence of any Liens on any such stock (to the
extent not disclosed elsewhere in this Agreement or the Schedules hereto). The
Providers have no subsidiaries.  Except as set forth on Schedule 4.3, no Company
nor any Provider owns, directly or indirectly, any investment, equity or other
ownership interest or any outstanding loan or advance to or from, any person
(including, without limitation, any officer, director or shareholder) or any
entity. Neither any Company nor the Providers is subject to any obligation or
requirement to provide funds to or make any investment (in the form of a loan,
capital contribution or otherwise) in any entity.

    4.4  Corporate Power and Authority. Nanston has all requisite corporate
power and authority to enter into and perform this Agreement and to carry out
its obligations hereunder. Each member of the Johnston Family has the capacity
to enter into and carry out its obligations hereunder. This Agreement and the
transactions contemplated by this Agreement have been duly and validly
authorized by the board of directors and the shareholders of Nanston. To the
extent required by law, the transactions contemplated by this Agreement have
been authorized by the boards of directors and shareholders of NC and the
Providers. This Agreement has been duly executed and delivered by Nanston and
each member of the Johnston Family and constitutes their legal, valid and
binding obligation enforceable against each of them in accordance with its
terms. No other corporate action or proceeding by or in respect of either
Company or Provider is or was necessary to authorize this Agreement or the
consummation of the transactions contemplated by this Agreement.

    4.5  Conflicts, Consents and Approvals.  Except for the consents described
in Schedule 4.5 or as would not have a Nanston Material Adverse Effect, neither
the execution and delivery of this Agreement by the Companies and N. Bell nor
the consummation of the transactions contemplated in this Agreement will:

                                     -22-

          (a)  Violate or conflict with, or result in a breach of any 
     provision of, or constitute a default (or an event which, with the giving 
     of notice, the passage of time or otherwise, would constitute a default) 
     under, or entitle any third party with the giving of notice, the passage 
     of time or otherwise to terminate, accelerate or call a default under, or 
     result in the creation of any Lien, upon any of the properties or assets 
     of the Companies or the Providers under any of the terms, conditions or 
     provisions of the certificate or articles of incorporation or bylaws, 
     each as amended to date, of the Companies or the Providers, or any note, 
     bond, mortgage, indenture, deed of trust, license, contract, undertaking, 
     agreement, lease or other instrument or obligation to which the Companies 
     or the Providers is a party;

          (b)  Violate any order, writ, injunction, decree, statute, rule or 
     regulation, applicable to the Companies or the Providers or their 
     respective properties or assets; or

          (c)  Require any action or consent or approval of, or review by, or 
     registration with any third party or Governmental Authority, other than 
     (i) such actions taken in respect of federal and state securities laws as 
     are contemplated by this Agreement, and (ii) the filing of the 
     Certificate of Merger with the Secretary of State of Georgia.

     4.6  Financial Statements.

          (a)  Nanston has furnished to DentalCo the audited consolidated 
     balance sheets for the Companies as at August 31, 1996, August 31, 1995, 
     and August 31, 1994, and the related audited statements of income and 
     retained earnings and cash flows for the fiscal years then ended, 
     including, in each case, the related notes, all of which have been 
     prepared and examined by, and are accompanied by the unqualified audit 
     report of Smith & Radigan, Certified Public Accountants (collectively, 
     the "Company Financial Statements"). (The Company Financial Statements as 
     at and for the fiscal year ended August 31, 1996, are sometimes 
     hereinafter referred to separately as the "Company Fiscal 1996 
     Statements").  The Company Financial Statements have been prepared in 
     accordance with GAAP applied on a consistent basis, and fairly present the 
     consolidated financial position of the Companies as of the dates stated 
     and the consolidated results of operations of the Companies for the 
     periods then ended.

          (b)  When delivered in accordance with Section 6.2(a) of this 
     Agreement, the consolidated unaudited balance sheets of the Companies as 
     at the most recent fiscal month-end of Nanston prior to the Closing Date, 
     and the related statements of income and retained earnings and cash flows 
     for the period beginning on the first day of Nanston's then current 
     fiscal year and ending on such most recent fiscal month end, as the case 
     may be (collectively, the "Nanston Interim 

                                     -23-

     Statements"), shall have been prepared in conformity with GAAP applied on 
     a basis consistent with that used in the Company Financial Statements, 
     and shall fairly present (subject, in the case of unaudited statements, 
     to normal, recurring audit adjustments) the consolidated unaudited 
     financial condition of the Companies as at such date and the consolidated 
     results of operations of the Companies for such period then ended.

     4.7  Undisclosed Liabilities.  Except as disclosed in Schedule 4.7, in 
another Schedule to this Agreement, or in any other document provided to 
DentalCo pursuant to this Agreement, to the best knowledge of Nanston and the 
Johnston Family, as of the date of this Agreement, neither Company nor either 
of the Providers has any liability or obligation of any nature (whether 
liquidated, unliquidated, accrued, absolute, contingent or otherwise and 
whether due or to become due) except:

          (a)  Those set forth in the Fiscal 1996 Statements which have not 
     been paid or discharged since the date thereof;

          (b)  Current liabilities (determined in accordance GAAP) incurred 
     since August 31, 1996, in transactions in the ordinary course of business 
     consistent with past practices which are properly reflected on its books 
     and will be properly reflected in the Nanston Interim Statements; and

          (c)  Liabilities or obligations that have not and could not
     reasonably be expected to have a Nanston Material Adverse Effect.

     4.8  Absence of Certain Changes.  Except as contemplated by or otherwise 
described in this Agreement, or as set forth in Schedule 4.8, during the 
period commencing September 1, 1996 and ending on the date hereof, the 
Companies and the Providers have conducted their respective businesses in the 
ordinary course and there has not been:

          (a)  Any change in the business operations, assets, properties, or 
     financial condition of either Company or either of the Providers that, 
     individually or in the aggregate, has a material adverse effect on the 
     financial condition of the Companies and the Providers taken as a whole 
     (a "Nanston Material Adverse Effect"), or any such change that Nanston 
     or any member of the Johnston Family, reasonably expects would have a 
     Nanston Material Adverse Effect.

          (b)  Any declaration, setting aside or payment of any dividend or 
     any distribution (in cash or in kind) to any shareholder of either Company 
     or either of the Providers, or any direct or indirect redemption, purchase 
     or other acquisition by either Company or either of the Providers of any 
     of its capital stock or any options, warrants, rights or agreements to 
     purchase or acquire such stock;

                                     -24-

          (c)  Any increase of more than 20% in amounts payable by either 
     Company or either of the Providers to or for the benefit of, or committed 
     to be paid by either Company or either of the Providers to or for the 
     benefit of, any stockholder, director, or officer of either Company or 
     either of the Providers, or any other consultant, agent or employee of 
     either Company or either of the Providers, or any relatives of any such 
     person, or any increase in any benefits granted under any bonus, stock 
     option, profit-sharing, pension, retirement, deferred compensation, 
     insurance, or other direct or indirect benefit plan, payment or 
     arrangement made to, with or for the benefit of any such person, 
     excepting only reimbursement in the ordinary course of business, in a 
     manner consistent with past practices, of out-of-pocket expenses incurred 
     by employees of either Company or either of the Providers directly in 
     connection with the companies' respective businesses;

          (d)  Any transaction entered into or carried out by either Company or 
     either of the Providers other than in the ordinary and usual course of 
     their respective businesses;

          (e)  Any borrowing or agreement to borrow funds by either Company or 
     either of the Providers or, to the best knowledge of Nanston and the 
     Johnston Family, any incurring by either Company or either Provider of 
     any other obligation or liability (contingent or otherwise), except 
     (i) current liabilities incurred in the usual and ordinary course of 
     business (consistent with past practices), and (ii) borrowings from 
     SunTrust as replacement lender for BankSouth.

          (f)  Any material change in either Company's or either of the 
     Provider's method of doing business or any material change in its 
     accounting principles or practices or its method of application of
     such principles or practices;

          (g)  Any material Lien imposed or agreed to be imposed on or with 
     respect to the property or assets of either Company or either of the 
     Providers.

          (h)  Any sale, lease or other disposition of, or any agreement to 
     sell, lease or otherwise dispose of any of the properties or assets of 
     either Company or either Provider, other than in the usual and ordinary 
     course of business of that Company or that Provider;

          (i)  Any purchase of or any agreement to purchase assets (other than 
     inventory purchased in the ordinary course of business consistent with 
     past practices) for an amount in excess of $25,000 for any one purchase 
     or $250,000 for all such purchases made by either Company or either 
     Provider or any lease or any agreement to lease, as lessee, any capital 
     assets with payments over the term 

                                     -25-

     thereof to be made by either Company or either Provider exceeding an
     aggregate of $100,000;

          (j)  Any material loan or advance made by either Company or either 
     Provider to any individual, firm, corporation or other entity;

          (k)  Any modification, waiver, change, amendment, release, rescission 
     or termination of, or accord and satisfaction with respect to, any 
     material term, condition or provision of any material contract, agreement, 
     license or other instrument to which either Company or either Provider is 
     a party, other than any satisfaction by performance in accordance with 
     the terms thereof in the usual and ordinary course of business; or

          (l)  Any labor dispute or disturbance having a Nanston Material 
     Adverse Effect, including without limitation the filing of any petition 
     or charge of unfair labor practice with any governmental or regulatory 
     authority, efforts to effect a union representation election, actual or 
     threatened employee strike, work stoppage or slow down.

     4.9  Taxes.  Except as could not reasonably be expected to have a 
Nanston Material Adverse Effect or as set forth on Schedule 4.9,

          (a)  Each Company and each Provider has duly, properly, and timely 
     filed all federal, state, local and foreign tax returns and tax reports 
     required to be filed by it, all such returns and reports are true, 
     correct and complete, none of such returns and reports have been amended, 
     and all taxes, assessments, fees and other governmental charges due from 
     either Company or Provider, including without limitation those arising 
     under such returns and reports, have been fully paid or are fully accrued 
     as liabilities in the Company's Fiscal 1996 Statements or the Nanston 
     Interim Statements and will be timely paid if due prior to the Closing. 
     No written claim has been made to either Company or Provider or by 
     authorities in any jurisdiction where either Company or Provider did not 
     file tax returns that it is or may be subject to taxation therein.

          (b)  Each Company and each of the Providers has delivered to
     DentalCo Provider copies of all federal, state, local, and foreign income 
     tax returns filed with respect to such Company or such Provider for 
     taxable periods ended on or after August 31, 1992. Schedule 4.9 sets forth 
     the dates and results of any and all audits conducted by taxing 
     authorities within the last five years or otherwise with respect to any 
     tax year for which assessment is not barred by any applicable statute of 
     limitations.  No waivers of any applicable statute of limitations for the 
     filing of any tax returns or payment of any taxes or assessments of any 
     deficient or unpaid taxes are outstanding.  Except as set forth in 
     Schedule 4.9, all deficiencies proposed as a result of any audits have 
     been paid or settled.  There 

                                     -26-

     are no pending or, to the best knowledge of Nanston and the Johnston
     Family, threatened federal, state, local or foreign tax audits or 
     assessments of either Company or Provider and no agreement with any
     federal, state, local or foreign taxing authority that may affect the
     subsequent tax liabilities of either Company or Provider.

          (c)  There exists no tax-sharing agreement or arrangement pursuant 
     to which either Company or Provider is obligated to pay the tax liability 
     of any other person or entity, or to indemnify any other person or entity 
     with respect to any tax.

     4.10 Compliance with Applicable Law.  To the best knowledge of Nanston 
and the Johnston Family, except as set forth on Schedule 4.10:

          (a)  The Companies and the Providers hold and are in compliance with 
     the terms of, all Permits, (as defined in Section 3.11) except for 
     failures to hold or be in compliance with the terms of such Permits that 
     would not have a Nanston Material Adverse Effect.

          (b)  Neither the Companies nor the Providers are in violation of nor 
     has been given notice or been charged with any violation of any 
     Applicable Law (as defined in Section 3.11(d)) except for possible 
     violations that would not have a Nanston Material Adverse Effect.  No 
     investigation or review by any Governmental Authority (as defined in 
     Section 3.11(c)) with respect to either of the Companies or the Providers 
     is pending or, to the best knowledge of Nanston and the Johnston Family, 
     threatened, nor has any Governmental Authority indicated an intention to 
     conduct any such investigation or review, other than, in each case, the 
     outcome of which could not be reasonably expected to have a Nanston 
     Material Adverse Effect.

     4.11 Proprietary Rights.  Schedule 4.11 sets forth:

          (a)  All names, patents, inventions, trade secrets, proprietary 
     rights, computer software, trademarks, trade names, service marks, logos, 
     copyrights and franchises and all applications therefor, registrations 
     therefor and licenses, sublicenses or agreements in respect thereof which 
     either Company or Provider owns or has the right to use or to which 
     either Company or either Provider is a party, and that are material to the 
     business operation of the Companies taken as a whole; and

          (b)  All filings, registrations or issuances of any of the foregoing 
     with or by any federal, state, local or foreign regulatory, administrative 
     or governmental office or offices (all items in (a) and (b) of this 
     section, being sometimes hereinafter referred to collectively as the 
     "Nanston Proprietary Rights").

                                     -27-

     Except as would not have a Nanston Material Adverse Effect or as set 
forth in Schedule 4.11, the Companies and the Providers are the sole and 
exclusive owners of all right, title and interest in and to all Nanston 
Proprietary Rights free and clear of all Liens and there is no pending or, to 
the best knowledge of Nanston and the Johnston Family, threatened 
investigation, proceeding, inquiry or other review by any Governmental 
Authority with respect to either Company's or either Provider's rights, title 
or interest in any Nanston Proprietary Right.

     Except as set forth in Schedule 4.11, each Company and the Providers 
have the exclusive rights to own, use and license others to use the computer 
software used by such Company or such Provider (the "Software"). Schedule 
4.11 lists, and the Companies and the Providers have provided to DentalCo 
true, correct and complete copies of, all licenses and agreements relating to 
any of the Software that is material to the business operation of the 
Companies taken as a whole and to the rights of each Provider or Company 
therein.  Except as set forth in Schedule 4.11, neither Company nor Provider 
has licensed or otherwise authorized any other person to use or make use of 
all or any part of the Software listed on Schedule 4.11, nor has either 
Company or Provider granted, assigned or otherwise conveyed any right in or 
to the Software listed on Schedule 4.11.

     4.12 Insurance. Set forth in Schedule 4.12 is a true, correct and 
complete list of all insurance policies and bonds, if any, in force for which 
either Company or Provider is named as an insured party, or for which either 
Company or Provider has paid any premiums since August 31, 1996, and the 
Companies and the Providers have supplied to DentalCo correct and complete 
copies of each policy and bond so listed.  Except as disclosed in Schedule 
4.12, all such policies or bonds are currently in full force and effect and 
no notice of cancellation or termination has been received by either Company 
or Provider with respect to any such policy or bond. All premiums due and 
payable on such policies and bonds have been paid.  Except as disclosed in 
Schedule 4.12, neither any Company nor any Provider is a co-insurer under any 
term of any insurance policy.

     4.13 Bank Accounts, Depositories; Powers of Attorney.  Set forth in 
Schedule 4.13 is a true, correct and complete list of the names and locations 
of all banks or other depositories in which either Company or Nanston Dental 
has accounts or safe deposit boxes, and the names of the persons authorized 
to draw thereon, borrow therefrom or have access thereto.  Except as set 
forth in such Schedule 4.13, no person or entity has a power of attorney from 
either Company or Nanston Dental.

     4.14 Title to and Condition of Properties and Leasehold Interests.  
Except as would not have a Nanston Material Adverse Effect or as set forth in 
Schedule 4.14, each Company and each Provider has title to all of its assets 
and properties of every kind, nature and description, tangible or intangible, 
wherever located, which constitute all of the property now used in and 
necessary for the conduct of its business as presently conducted (including, 
without limitation, all property and assets shown or reflected on the balance 
sheet included in the Company Fiscal 1996 Statements); provided, however, 
that this Section 4.14 does not apply to Nanston Proprietary Rights, which 
are addressed in Section 4.11.  Except as set forth in Schedule 4.14 except 
for (a) 

                                     -28-

statutory liens for taxes not yet due, (b) such imperfections in title, 
easements and Liens (as defined in Section 4.2(i)), if any, as are not 
substantial in character, amount or extent and do not materially detract from 
the value or interfere with the present use of the property subject thereto 
or affected thereby or otherwise materially impair the business operations of 
either Company or either Provider as presently carried on, (c) Liens existing 
on the date hereof securing indebtedness for borrowed money reflected in the 
balance sheet included in the Company Fiscal 1996 Statements and (d) other 
matters which, singly or in the aggregate, could not reasonably be expected 
to have a Nanston Material Adverse Effect, all such properties are owned free 
and clear of all Liens, including without limitation, (i) rights or claims of 
parties in possession; (ii) easements or claims of easements; (iii) 
encroachments, overlaps, boundary lines or water drainage disputes or any 
other matters; (iv) any Lien or right to a Lien for services, labor or 
material furnished; (v) special tax or other assessments; (vi) options to 
purchase, leases, tenancies, or land contracts; and (vii) contracts, 
covenants, or reservations which restrict the use of such properties. Except 
as set forth in Schedule 4.14, to the best knowledge of Nanston and the 
Johnston Family, no financing statement under the Uniform Commercial Code or 
similar law naming either Company or either Provider as debtor has been filed 
in any jurisdiction, and no Company or Provider is a party to or bound under 
any agreement or legal obligation authorizing any party to file any such 
financing statement.  Schedule 4.14 contains copies of all leases of real 
property to which any Company or any Provider is a party.  No Company or 
Provider owns or leases any other real property.

     Except as would not have a Nanston Material Adverse Effect or as set 
forth in Schedule 4.14, all real property and structures and all machinery, 
equipment, and other tangible personal property owned, leased or used by 
either Company or either Provider which are material to the operation of its 
business, are suitable for the purpose or purposes for which they are being 
used.  The utilities servicing the real properties owned or used by either 
Company or either Provider are adequate to permit the continued operation of 
the business of such Company or such Provider, and there are no pending or, 
to the best knowledge of Nanston and the Johnston Family, threatened zoning, 
condemnation or eminent domain proceedings, building, utility or other 
moratoria, or injunctions or court orders which would materially affect such 
continued operation.  Each lease or agreement to which either Company or 
either Provider is a party under which it is a lessee of any property, real 
or personal, is a valid and subsisting agreement without any material default 
of either Company or either Provider thereunder and, to the best knowledge of 
Nanston and the Johnston Shareholders, without any material default 
thereunder of any other party thereto.  No event has occurred and is 
continuing which, with due notice or lapse of time or both, would constitute 
a default or event of default by either Company or either Provider under any 
such lease or agreement or, to the best knowledge of Nanston and the Johnston 
Shareholders, by any other party thereto. Possession of such property by 
either Company or either Provider has not been disturbed and, to the best 
knowledge of Nanston and the Johnston Shareholders, no claim has been 
asserted against either Company or either Provider adverse to its rights in 
such leasehold interests.

                                     -29-

     4.15 Brokers, Finders.  The transactions contemplated by this Agreement 
were not submitted to either Company or either Provider or the Johnston 
Family by any broker or other person and none of the actions of either 
Company or either Provider or the Johnston Family has given rise to any valid 
claim by any person for a commission, finder's fee or like payment against 
any of the Parties.

     4.16 Litigation.  There is no suit, claim, action, proceeding or 
investigation pending or, to the best knowledge of Nanston and the Johnston 
Family, threatened against either Company or Provider or any of their 
respective officers or directors in connection with the business or affairs 
of either Company or Provider, which, individually or in the aggregate, is 
reasonably likely to have a Nanston Material Adverse Effect or materially 
delay or prevent either Company or Provider from consummating the 
transactions contemplated by this Agreement.  Neither Company or Provider is 
subject to any outstanding order, writ, injunction or decree which, insofar 
as can be reasonably foreseen, individually or in the aggregate, would have a 
Nanston Material Adverse Effect or would materially delay or prevent either 
Company or Provider from consummating the transactions contemplated by this 
Agreement.

     4.17 ERISA.

          (a)  Schedule 4.17 identifies each "employee benefit plan," as 
     defined in Section 3(3) of ERISA, which (i) is subject to any provision 
     of ERISA and (ii) is or was at any time during the last five years 
     maintained, administered or contributed to by either Company or
     either Provider or any affiliate (as defined below) and covers any
     employee or former employee of either Company or either Provider or
     any affiliate or under which either Company or either Provider or any
     affiliate has any liability.  Copies of such plans (and, if applicable, 
     related trust agreements) and all amendments thereto and written 
     interpretations thereof have been furnished to DentalCo together with 
     the three most recent annual reports (Form 5500) prepared in connection 
     with any such plan. Such plans are referred to collectively herein as 
     the "Nanston Employee Plans."  For purposes of this section, "affiliate" 
     of any person or entity means any other person or entity which, together 
     with such person or entity, would be treated as a single employer under 
     Section 414 of the Code or is an "affiliate," whether or not incorporated, 
     as defined in Section 407(d) (7) of ERISA of such person or entity.  The 
     only Nanston Employee Plans, which individually or collectively would 
     constitute an "employee pension benefit plan" as defined in Section 3(2) 
     of ERISA (the "Nanston Pension Plans"), are identified as such on Schedule
     4.17.

          (b)  No Nanston Employee Plan constitutes a "multi employer plan," 
     as defined in Section 3(37) of ERISA, or a "defined benefit plan, " as 
     defined in Section 3(35) and subject to Title IV of ERISA, and no Nanston 
     Employee Plan is maintained in connection with any trust described in 
     Section 501(c) of the Code.  No "accumulated funding deficiency, " as 
     defined in Section 412 of the Code, has been incurred with respect to 
     any Nanston Pension Plan, whether or not 

                                     -30-

     waived.  Full payment has been made of all amounts which either Company, 
     either Provider or any affiliate is required to have paid as contributions 
     to or benefits under any Nanston Employee Plan as of the end of the most 
     recent fiscal year thereof and there are no unfunded obligations under 
     any Nanston Employee Plan that have not been disclosed to DentalCo in 
     writing prior to the date hereof.  Except as set forth in Schedule 4.18 
     or as expressly contemplated by this Agreement, neither the Companies, 
     nor the Providers, nor any member of the or either Provider or the 
     Johnston Family know of any "reportable events," within the meaning of 
     Section 4043 of ERISA, and no event described in Section 4041, 4042 4062 
     or 4063 of ERISA has occurred in connection with any Nanston Employee 
     Plan.  Except as set forth in Schedule 4.17 or as expressly contemplated 
     by this Agreement, no condition exists and no event has occurred that 
     could constitute grounds for termination of any Nanston Employee Plan, 
     and neither Company nor Provider, nor any of its affiliates has incurred 
     any material liability under Title IV of ERISA arising in connection with
     the termination of , or complete or partial withdrawal from, any plan
     covered or previously covered by Title IV of ERISA.  Nothing done or
     omitted to be done and no transaction or holding of any asset under or
     in connection with any Nanston Employee Plan has or will make either
     Company or either Provider or any officer or director of either Company 
     or either Provider, subject to any liability under Title I of ERISA or 
     liable for any tax pursuant to Section 4975 of the Code. There is no 
     pending or threatened litigation, arbitration, disputed claim, 
     adjudication, audit, examination or other proceeding with respect to any 
     Nanston Employee Plan or any fiduciary or administrator thereof in their 
     capacities as such.

          (c)  Each Nanston Employee Plan which is intended to be qualified 
     under Section 401(a) of the Code is so qualified and has been so qualified 
     during the period from its adoption to date, and each trust forming a 
     part thereof is exempt from tax pursuant to Section 501(a) of the Code. 
     The Companies and the Provider have furnished to DentalCo copies of the 
     most recent Internal Revenue Service determination letters with respect 
     to each such Nanston Employee Plan.  Each Nanston Employee Plan has been 
     maintained, from the time of such Plan's inception up to and including 
     the performance of any or all transactions contemplated in this Agreement, 
     in compliance with its terms and the requirements and fiduciary standards
     prescribed by any and all statutes, orders, rules, and regulations,
     including but not limited to ERISA and the Code, which are applicable
     to such Nanston Employee Plan.

          (d)  Except as would not have a Nanston Material Adverse Effect, to 
     the best knowledge of Nanston and the Johnston Family, there is no 
     contract, agreement, plan, or arrangement covering any employee or former 
     employee of either Company, either Provider, or any affiliate that, 
     individually or collectively, 

                                     -31-

     could give rise to the payment of any amount that would not be deductible 
     pursuant to the terms of the Code.

          (e)  Schedule 4.17 identifies each written employment, severance or 
     other similar contract, arrangement or policy and each plan or arrangement 
     (written or oral) providing for insurance coverage (including any 
     self-insured arrangements), workers' compensation, disability benefits, 
     supplemental unemployment benefits, vacation benefits, retirement benefits 
     or for deferred compensation, profit-sharing, bonuses, stock options, 
     stock appreciation or other forms of incentive compensation or 
     post-retirement insurance, compensation or benefits which (i) is not a 
     Nanston Employee Plan, (ii) is entered into, maintained or contributed 
     to, as the case may be, by either Company, either Provider, or any of its 
     affiliates, and (iii) covers any employee or former employee of  either 
     Company, either Provider, or any of its affiliates. Such contracts, loans 
     and arrangements as are described above, copies or descriptions of all of
     which have been furnished previously to DentalCo, are referred to
     collectively herein as the "Nanston Benefit Arrangements". Except as
     would not have a Nanston Material Adverse Effect, each Nanston Benefit
     Arrangement has been maintained in substantial compliance with its  terms 
     and with requirements prescribed by any and all statutes, orders, rules, 
     and regulations that are applicable to such Nanston Benefit Arrangement.

          (f)  Except as would not have a Nanston Material Adverse Effect, or 
     as set forth in Schedule 4.17, there is no liability in respect of 
     post-retirement health and medical benefits for retired employees of 
     either Company, either Provider, or any of its affiliates, determined 
     using assumptions that are reasonable in the aggregate, over the fair 
     market value of any fund, reserve or other assets segregated for the 
     purpose of satisfying such liability (including for such purposes any 
     fund established pursuant to Section 401(h) of the Code).  The Companies 
     and the Providers have reserved their right to amend or terminate any 
     Nanston Employee Plan or Nanston Benefit Arrangement providing health 
     or medical benefits in respect of any active employee of the Companies 
     or the Providers, as applicable, under the terms of any such plan and 
     descriptions thereof given to employees. Except as would not have a 
     Nanston Material Adverse Effect, with respect to any of the Companies' 
     and any Provider's Employee Plans which are "group health plans" under 
     Section 4980B of the Code and Section 607(1) of ERISA, To the best 
     knowledge of Nanston and the Johnston Family, there has been timely 
     compliance in all material respects with all requirements imposed 
     thereunder so that the Companies, the Providers, and their affiliates 
     have no (and will not incur any) loss, assessment, tax penalty, or 
     other sanction with respect to any such plan.

          (g)  Except as set forth in Schedule 4.17, there has been no
     amendment to, written interpretation or announcement (whether or not
     written) by either 

                                     -32-

     Company, either Provider, or any of its affiliates relating to, or
     change in employee participation or coverage under, any Nanston
     Employee Plan or Nanston Benefit Arrangement which would increase the
     expense of maintaining such Nanston Employee Plan or Nanston Benefit
     Arrangement above the level of the expense incurred in respect thereof
     for the fiscal year ended immediately prior to the Effective Time.

          (h)  Except as set forth in Schedule 4.17, none of the Companies or 
     the Providers is a party or subject to any union contract or any 
     employment contract or arrangement providing for annual future 
     compensation to any officer, consultant, director or employee.

          (i)  The execution and consummation of the transactions
     contemplated by this Agreement will not constitute a triggering event
     under any Nanston Employee Plan, whether or not legally enforceable,
     which (either alone or upon the occurrence of any additional or
     subsequent event) will or may result in any payment (of severance pay
     or otherwise), acceleration, increase in vesting, or increase in
     benefits to any current or former participant, employee or director of
     either Company or either Provider that has not been specifically
     disclosed on Schedule 4.17 except for such as would not have a Nanston
     Material Adverse Effect.

          (j)  Any reference to ERISA or the Code or any section thereof 
     shall be construed to include all amendments thereto and applicable 
     regulations and administrative rulings issued thereunder.

     4.18 Contracts.  Schedule 4.18 lists all contracts, purchase orders, 
agreements, leases, executor commitments, and arrangements to which either 
Company or either of the Providers is a party (a) which, including all 
amendments and supplements thereto, are material to the condition, 
operations, assets or business of either Company or either Provider, (b) 
which (i) involve payments or commitments in excess of $50,000 for any 
purchase order or $50,000 for any other contract, agreement, lease, 
commitment, arrangement, or understanding, or (ii) extend beyond one year (or 
both), unless cancelable on 60 or fewer days' notice without any liability, 
penalty or premium, (c) with any present or former stockholder, director or 
officer of either Company or either of the Providers, or any person related 
by blood or marriage to any such person or any person or entity controlling, 
controlled by or under common control with any such person, or with any 
employee, agent or consultant of either Company or either of the Providers 
not terminable at will, (d) which provide for a discount from either 
Company's or either of the Provider's standard fee schedules, (e) which 
provide for the future purchase by either Company or either of the Providers 
of any materials, equipment, services or supplies, which continue for a 
period of more than 24 months (including periods covered by any option to 
renew by either party) or which provide for a price materially in excess of 
current market prices or is in excess of normal operating requirements over 
its remaining term, or (f) which involve any of the following: (i) any 
borrowings or guarantees; (ii) any contracts containing covenants purporting 
to 

                                     -33-

limit the freedom of either Company or either of the Providers to compete in 
any line of business or provide any of their services in any geographic area; 
(iii) any obligation or commitment which limits the freedom of either Company 
or either of the Providers to sell, lease, license or otherwise provide its 
services; (iv) any contract or agreement the performance of which is expected 
by either Company or either Provider or any member of the or either Provider 
or the Johnston Family to result in a loss to either Company or either of the 
Providers; (v) any obligation or commitment providing for indemnification or 
responsibility for the obligations or losses of any person; (vi) any 
agreement between either Company and either Provider; (vii) any agreement 
relating to payment or reimbursement for services performed or to be 
performed by the Providers.

     Except as set forth in Schedule 4.18, neither any Company nor any 
Provider has received any notice from any third party payer, patient, or 
supplier to the effect that such third party payer, patient, or supplier will 
terminate its relationship or unilaterally modify any terms of that 
relationship, where applicable, with either Company or either of the 
Providers as a result of any transaction contemplated by this Agreement or 
otherwise.

     Attached to Schedule 4.18 is a correct and complete copy of the fee 
schedule which is currently in effect under each agreement with a third party 
payer to which either Company or either of the Providers is a party.

     Also attached to Schedule 4.18 is a correct an complete list of all 
dentists employed or retained by the Providers.  Except as set forth in such 
list, the Providers has a written employment agreement with each dentist 
employed by it and a written independent contractor or similar agreement with 
each dentist retained by it as an independent contractor.  Nanston and the 
Providers provided a copy of each such agreement to DentalCo, and all such 
agreements are currently in full force and effect.

     4.19 Accounts Receivable.  Each Company has delivered to DentalCo a 
correct and complete schedule of its accounts receivable and notes receivable 
as at November 30, 1996.  Except as would not have a Nanston Material Adverse 
Effect, or as set forth in Schedule 4.19 or in the Nanston Interim 
Statements, all accounts and notes receivable of the Companies as of such 
date, and any accounts and notes receivable arising between such date and the 
Effective Time are or will be bona fide and represent sales actually made or 
services actually provided in the ordinary course of business consistent with 
past practices.

     From August 31, 1996, to the date of this Agreement there have been no 
accounts receivable of either Company converted to notes receivable or 
otherwise extended, except as listed in Schedule 4.19.

     Schedule 4.19 includes a list of all amounts payable to either Company 
by any Affiliate of either Company (the "Nanston Related Party Receivables") 
and all amounts payable by either Company to any Affiliate of either Company 
(the "Nanston Related Party Payables") as of November 30, 1996, specifying 
the payer, payee, and amount of each Nanston Related Party 

                                     -34-

Receivable and Nanston Related Party Payable.  For purposes of this 
Agreement, other than for Section 4.17, above, an "Affiliate" of either 
Company or either Provider shall mean any shareholder, director, officer, 
employee, representative, other agent of such Company or such Provider, any 
person related by blood or marriage to any such person, or any person or 
entity, which, directly or indirectly, controls, is controlled by, or is 
under common control with such Company or such Provider or any such other 
person or entity.

     4.20 No Conflict or Default.  Except as would not have a Nanston 
Material Adverse Effect or except for the consents described in Schedule 
4.20, neither the execution and delivery of this Agreement by the Companies 
and the Johnston Family, nor compliance by such persons with the terms and 
provisions of this Agreement, including without limitation the consummation 
of the transactions contemplated by this Agreement, will violate any 
Applicable Laws or Permits or conflict with or result in the breach of any 
term, condition or provision of the certificate of incorporation or bylaws of 
either Company, or either of the Providers or of any agreement, deed, 
contract, undertaking, mortgage, indenture, writ, order, decree, restriction, 
legal obligation or instrument to which either Company or either of the 
Providers is a party or by which either Company or either of the Providers or 
any of their respective assets or properties are or may be bound or affected, 
or constitute a default (or an event which, with the giving of notice, the 
passage of time, or otherwise, would constitute a default) thereunder, or 
result in the creation or imposition of any Lien with respect to any 
properties or assets of either Company or either of the Providers or give to 
others any interest or rights, including rights of termination, acceleration 
or cancellation in or with respect to any of the properties, assets, 
contracts or business of either Company or either of the Providers.

     4.21 Books of Account; Records.  Except as would not have a Nanston 
Material Adverse Effect, the Companies' and the Providers' general ledgers, 
stock record books, minute books and other corporate records relating to the 
material assets, properties, contracts, and outstanding legal obligations of 
the Companies and the Providers, respectively, are, in all material respects, 
complete and correct and the matters contained therein are reflected in the 
1996 Fiscal Statements and the Nanston Interim Statements to the extent 
required to be so reflected therein by GAAP.

     4.22 Officers, Employees, and Compensation.  Schedule 4.22 sets forth 
the names of all directors and officers of the Companies and the Providers, 
their respective terms of office, the total salary, bonus, fringe benefits 
and perquisites each received in the fiscal year ended August 31, 1996, and 
any changes to the foregoing which have occurred subsequent thereto; Schedule 
4.22 also lists and describes the current compensation of any other employee 
of either Company or either of the Providers whose total current salary and 
bonus exceeds $80,000 annually.  Except as disclosed in Schedule 4.22, there 
are no other forms of compensation paid to any such director, officer, or 
employee of either Company or either of the Providers. Except as set forth in 
Schedule 4.22, none of the Companies or the Providers has become obligated, 
directly or indirectly, with respect to compensation to any stockholder, 
director, officer, of either Company or the Providers or any person related 
to such person by blood or marriage except for current liability for such 
compensation.

                                     -35-

     4.23 Labor Relations.  Except as set forth in Schedule 4.23, no 
employees of either Company or either of the Providers are represented by any 
labor union or covered under any collective bargaining agreement, and there 
is no unfair labor practice complaint against either Company or either of the 
Providers pending before the National Labor Relations Board.  No collective 
bargaining or other labor agreement is currently being negotiated by either 
Company or either Provider and no union or collective bargaining unit 
represents either of the Companies' or the Providers' employees. Neither 
Company nor either Provider has experienced any work stoppage or other 
material labor difficulty during the past five years.

     4.24 Suppliers and Third Party Payers.  Except as set forth in Schedule 
4.24, no supplier of products or services to either Company or either of the 
Providers has indicated that it shall stop, or decrease the rate of, or 
substantially increase its fees for, supplying products or services to either 
Company or either of the Providers either prior to, or following the 
consummation of, the Merger.  Schedule 4.24 sets forth (a) a list of all 
third party payers who have terminated their relationships with either of the 
Companies, or either of the Providers since September 1, 1996, or have 
notified either Company, or the either of Providers, or any member of the 
Johnston Family since September 1, 1996, that they intend to terminate their 
relationships with either of the Companies or the either of Providers, and 
(b) the gross receipts received from such third party payers for the 12-month 
period ending on August 31, 1996. Except as set forth in Schedule 4.24, to 
the best knowledge of the Companies and the Johnston Family, there has been 
no loss of any relationship with any third party payer that alone or in the 
aggregate comprises more than 1% of fiscal 1996 actual revenues of either 
Company or either Provider as shown in the Fiscal 1996 Statements or of any 
third party payer that has indicated that it is considering or plans to 
discontinue using the Providers as its provider of dental services as a 
result of the Merger or otherwise.

     4.25 Business of the Companies and the Providers.  The Companies are and 
have been engaged in the business of providing non-clinical administration 
and related services, and similar services, to the Providers and are engaged 
in no other business whatsoever except as may be incidental to the foregoing. 
The Providers have been engaged in the business of providing dental services 
to its patients and is engaged in no other business whatsoever, except as may 
be incidental to the foregoing.

     4.26 Complete Disclosure.  To the best knowledge of Nanston and the 
Johnston Family, no representation or warranty of Nanston and/or the Johnston 
Family in this Agreement or in the Johnston Family Schedules contains any 
untrue statement of a material fact or omits to state any material fact 
required to be stated therein or necessary in order to make the statements 
therein not misleading. To the best knowledge of N. Bell, no representation 
or warranty made by him herein or in any schedule provided by him hereunder 
contains any untrue statement of a material fact or omits to state any 
material fact required to be stated therein or necessary in order to make the 
statements therein not misleading.

     4.27 Environmental.  The Companies and the Providers conduct their 
respective businesses and operations in material compliance with all 
applicable environmental laws, 

                                     -36-

ordinances and regulations, and the Companies have not received notice of any 
Environmental Event by the Companies or the Providers or with respect to any 
premises owned or occupied by them. To the best knowledge of Nanston and the 
Johnston Family, no notice of any Environmental Event was given to any person 
or entity that occupied any of the premises owned or occupied by or used by 
Nanston or the Providers prior to the date such premises were so occupied.  
Without limiting the generality of the foregoing, to the best knowledge of 
Nanston, neither the Companies nor the Providers has not disposed of or 
placed on or in any property or facility used in its business any waste 
materials, hazardous materials or hazardous substances in violation of law.  

     4.28 Fraud and Abuse.  To the best knowledge of Nanston and the Johnston 
Family, neither the Companies nor the Providers, nor any of their respective 
officers and directors, has engaged in any activities which are prohibited 
under federal Medicare and Medicaid statutes, 42 U.S.C. Sections 1320a-7, 
1320a-7(a) and 1320a-7b, or the regulations promulgated pursuant to such 
statutes or related state or local statutes or regulations or which are 
prohibited by rules of professional conduct promulgated by the appropriate 
licensing authority of the sate or states in which such entity does business, 
including but not limited to the following:

          (a)  knowingly and willfully making or causing to be made a false 
     statement or representation of a material fact in any application for 
     any benefit or payment; 

          (b)  knowingly and willfully making or causing to be made any false
     statement or representation of a material fact for use in determining 
     rights to any benefit or payment; 

          (c)  presenting or causing to be presented a claim for reimbursement 
     for services under Medicare, Medicaid, or other state health care program 
     that is for an item or service that is known or should be known to be 
     (i) not provided as claimed, or (ii) false or fraudulent;

          (d)  failing to disclose knowledge by a claimant of the occurrence 
     of any event affecting the initial or continued rights to any benefit or 
     payment on its own behalf or on behalf of another, with intent to 
     fraudulently secure such benefit or payment; 

          (e)  knowingly and willfully offering, paying, soliciting or 
     receiving any remuneration (including any kickback, bribe, or rebate), 
     directly or indirectly, overtly or covertly, in cash or in kind (i) in 
     return for referring an individual to a person for the furnishing or 
     arranging for the furnishing of any item or service for which payment 
     may be made in whole or in part by Medicare or Medicaid, or other state 
     health care program, or (ii) in return for purchasing, leasing, or 
     ordering or arranging for or recommending purchasing, leasing, or ordering 
     any good, facility, service, or item for which payment may be made in
     whole or in party by Medicare or Medicaid or other state health care 
     program; or 

          (f)  knowingly and willfully making or causing to be made or 
     inducing or seeking to induce the making of any false statement or 
     representation (or omit to state a fact required to be stated therein 
     or necessary to make the statements contained therein not misleading) 
     of a material 

                                     -37-

fact with respect to (i) the conditions or operations of a facility in 
order that the facility may qualify for Medicare, Medicaid or other 
state health care program certification, or (ii) information required 
to be provided under Section 1124A of the Social Security Act (42 U.S.C. 
Section 1320a-3).  

     Section 4.29.  Health Professional's Financial Relationships.  To the 
best knowledge of Nanston and the Johnston Family, the operations of the 
Companies and the Providers are in compliance with and do not otherwise 
violate the federal Medicare and Medicaid statutes regarding health 
professional self-referrals, 42 U.S.C. Section 1395nn and 42 U.S.C. Section 
1396b, or the regulations promulgated pursuant to such statute, or similar 
state or local statutes or regulations.  

     Section 4.30.  Professional Licenses. There is no legal or regulatory 
requirement that the shareholders, or any of them, of the Companies be a 
licensed dentist in order for the Companies to conduct their business as 
currently conducted.  In the case of the Providers, all of the shareholders 
thereof are dentists licensed to practice under the laws of each jurisdiction 
in which such Provider operates, and such Provider currently satisfies the 
shareholder licensing requirement, if any, of each jurisdiction in which such 
Provider operates, except where failure to do so would not have a Nanston 
Material Adverse Effect.

     Section 4.31.  Medical Waste.  The Companies and the Providers are not 
in violation of, or the subject of any investigation, inquiry or enforcement 
action by any Governmental Authority under any Medical Waste Laws. The 
Companies and the Providers have obtained and are in compliance with any 
permits required by the Medical Waste Laws relating to medical waste 
disposal, and all disposal of medical waste by the Companies and the 
Providers have been in compliance with the Medical Waste Laws.

                                      ARTICLE V
                            REPRESENTATIONS AND WARRANTIES
                             OF THE NANSTON SHAREHOLDERS

     In order to induce DentalCo and Subcorp to enter into this Agreement, 
each Nanston Shareholder (severally, and not jointly with any other Nanston 
Shareholder) hereby represents and warrants to DentalCo and Subcorp that the 
statements contained in this Article V, with respect to such Nanston 
Shareholder are true, correct, and complete, except as disclosed in the 
Schedules specifically referred to in this Article V and attached hereto 
(collectively, the "Nanston Shareholder Schedules").

     5.1  Stock Ownership and Authority. Each Nanston Shareholder owns 
beneficially and of record all of the Nanston Shares disclosed as being owned 
by him in Exhibit A attached to this Agreement. Each Nanston Shareholder has 
the full and unrestricted right, power and capacity to transfer and deliver 
the Nanston Shares owned by him and to execute this Agreement and consummate 
the transactions contemplated by this Agreement. No agreement restricts the 
transfer of any of such Nanston Shares, requires any consent or approval 
prior to any such transfer.  This Agreement has been duly executed and 
delivered by such Nanston Shareholder 

                                     -38-

and constitutes the legal, valid and binding obligation of such Nanston 
Shareholder, enforceable against such Nanston Shareholder in accordance with 
its terms.

     5.2  Consents and Approvals.  Except for the consents described in 
Schedule 5.2, the execution and delivery of this Agreement by such Nanston 
Shareholder do not require any action, consent, or approval of, or review by, 
or registration with, any third party, court or governmental body or other 
agency, instrumentality or authority.

     5.3  Brokers, Finders.  The transactions contemplated by this Agreement 
were not submitted to such Nanston Shareholder by any broker or other person, 
and none of the actions of such Nanston Shareholder has given rise to any 
valid claim by any person for a commission, finder's fee or like payment 
against any of the Parties.

     5.4  No Conflict or Default.  Except for the consents described in 
Schedule 5.4, neither the execution and delivery of this Agreement by such 
Nanston Shareholder, nor compliance by such Nanston Shareholder with the 
terms and provisions of this Agreement, will (to the best knowledge of such 
Nanston Shareholder) violate in any manner any Applicable Laws or Permits or 
conflict with or result in the breach of any term, condition or provision of 
any agreement, deed, contract, undertaking, mortgage, indenture, writ, order, 
decree, restriction, legal obligation or instrument to which such Nanston 
Shareholder or any of his assets or properties are or may be bound or 
affected, or constitute a default (or an event which, with the giving of 
notice, the passage of time, or otherwise, would constitute a default) 
thereunder, or result in the creation or imposition of any Lien with respect 
to any properties or assets of such Nanston Shareholder, or give to other any 
interest or rights, including rights or termination, acceleration or 
cancellation in or with respect to any of the properties, assets, contracts 
or business of such Nanston Shareholder.

     5.5  Investment Intent. Such Nanston Shareholder and N. Bell: (a) has 
received, prior to the Effective Time, copies of the documents identified in 
the attached Exhibit C; (b) is either (i) an "accredited investor," as that 
term is defined in Regulation D promulgated under the Securities Act, or (ii) 
by reason of his business and financial experience, and the business and 
financial experience of those persons advising him with respect to his 
investment in the DentalCo Shares, he, together with such advisors, has such 
knowledge, sophistication, and experience in business and financial matters 
so as to be able to evaluate the merits and risks of his prospective 
investment in the DentalCo Shares; (c) to his satisfaction, has been provided 
the opportunity to ask questions and receive answers from DentalCo concerning 
the terms and conditions of the DentalCo Shares to be received in the Merger, 
has had all such questions answered, and has been supplied all additional 
information deemed necessary by him to verify the accuracy of all information 
provided; (d) is acquiring the DentalCo Shares to be acquired by him for his 
own account for investment purposes only and without any view towards resale 
or other distribution; (e) except for the representations and warranties of 
DentalCo expressly set forth in 

                                     -39-

Article III hereof, no representations or warranties have been made to him by 
or on behalf of DentalCo in connection with this transaction, and in making 
his investment in the DentalCo Shares, he is relying on the representations 
and warranties of DentalCo set forth in Article III hereof and on the results 
of his own independent investigation; (f) can bear the economic risks of his 
investment in the DentalCo Shares, can afford a complete loss of such 
investment, and is not relying upon any representation or warranty made by 
DentalCo, or any officer, director, shareholder, employee, agent, or 
representative of DentalCo regarding the value of the DentalCo Shares; (g) 
understands that the issuance of the DentalCo Shares as a result of this 
Agreement is intended to be exempt from registration under the Securities Act 
and applicable state law and that the DentalCo Shares are not and will not 
(except as provided in the Registration Rights Agreement to be attached 
hereto as Exhibit K and to be reasonably satisfactory to the Parties (the 
"Registration Rights Agreement")) be registered under the Securities Act, the 
Securities Exchange Act of 1934, as amended, or any state securities laws, 
and that there will be no public market for the DentalCo Shares; (h) 
understands that the DentalCo Shares will be subject to additional 
restrictions on transfer pursuant to the Shareholders' Agreement to be 
attached as Exhibit D hereto and to be reasonably satisfactory to the 
Parties; (i) agrees that any certificates evidencing the DentalCo Shares 
acquired by him shall contain a legend to the effect that such shares have 
not been registered under the Securities Act or any state securities laws and 
may not be sold without registration as required by the Securities Act and 
applicable state securities laws or exemptions therefrom, and in the case of 
such an exemption, requiring delivery to DentalCo of a legal opinion of or 
satisfactory to its legal counsel that such exemption is applicable, and (j) 
agrees that DentalCo can issue stop transfer instructions to its transfer 
agent prohibiting transfer of the DentalCo Shares to be acquired by him, 
except in compliance with the provisions of the Securities Act, applicable 
state securities laws, this Agreement, and the Shareholders' Agreement.

     5.6  Complete Disclosure.  To the best knowledge of the Nanston 
Shareholders, no representation or warranty of the Nanston Shareholders in 
this Agreement or in the Nanston Shareholder Schedules contains any untrue 
statement of a material fact or omit to state any material fact required to 
be stated therein or necessary in order to make the statements therein not 
misleading.

                                      ARTICLE VI
                                COVENANTS OF THE PARTIES

     6.1 Mutual Covenants.

          (a)  General.  Each Party shall use its reasonable best efforts to 
     take all actions and do all things necessary, proper or advisable (and 
     consistent with the other terms and provisions of this Agreement) to 
     consummate the Merger and the other transactions contemplated by this 
     Agreement, including without limitation using all reasonable efforts 
     to cause the conditions set forth in Article VI of this Agreement for 
     which such Party is responsible to be satisfied as soon as reasonably 
     practicable and to prepare, execute, acknowledge or verify, deliver, 
     and file such additional documents, and take or cause to be taken such 
     additional 

                                     -40-

     actions, as any other Party may reasonably request that are not 
     inconsistent with the other terms and provisions of this Agreement.

          (b)  Governmental Matters.  Each Party shall use all reasonable 
     efforts to take any action that may be necessary, proper or advisable 
     in connection with any notices to, filings with, and authorizations, 
     consents and approvals of any court, administrative agency or commission, 
     or other governmental authority or instrumentality that it may be 
     required to give, make or obtain.

          (c)  Registration Rights.  At the Closing, the Nanston Shareholders 
     shall have registration rights in accordance with the terms of the 
     Registration Rights Agreement.

          (d)  Securities Law Compliance.  DentalCo shall have the right to 
     revise and update the attached Exhibit C and the disclosure documents 
     described in that Exhibit prior to the Closing in such manner as DentalCo 
     deems necessary to comply with any federal or state securities laws, 
     but no such revision to or updating of the attached Exhibit C or the 
     disclosure documents described in Exhibit C shall constitute a 
     modification of any of the representations and warranties made by 
     DentalCo in this Agreement or affect the condition set forth in Section 
     7.2(a) hereof.

     6.2  Covenants of Nanston, the Johnston Family, and N. Bell. Nanston and 
the Johnston Family jointly and severally agree as provided below with 
respect to Nanston, the Companies and Nanston Dental, and N. Bell, severally 
and not jointly with Nanston and the Johnston Family agrees as provided below 
with respect to Bell, that:

          (a)  Delivery of Nanston Interim Statements. The Nanston Interim 
     Statements shall be delivered to DentalCo as soon as is reasonable 
     practicable.

          (b)  Conduct of Business.  Except as otherwise expressly contemplated 
     by this Agreement, from the date of this Agreement until the Effective 
     Time (the "Pre-Merger Period"): Nanston and the Johnston Family shall 
     (i) cause the businesses of the Companies and the Providers to be operated 
     in (A) the ordinary course, consistent with past practice, (B) a manner 
     that is not contrary to or in breach of any of the provisions of this 
     Agreement, and (C) a manner which will not cause any of the 
     representations and warranties contained in this Agreement made by the 
     Companies, the Providers, or the Johnston Family to be or become untrue 
     in any material respect (or, with respect to any representations or 
     warranties already qualified as to materiality, to become untrue in any 
     respect); (ii) use all reasonable efforts to preserve the Companies' and 
     the Providers' business organizations intact, keep available to the 
     Companies and the Providers and DentalCo the present service of the 
     Companies' and the Providers' employees, and preserve for the Companies 
     and the Providers and DentalCo the 

                                     -41-

     goodwill and all agreements with the Providers and others with whom
     business relationships exist, and (iii) use all reasonable efforts to
     ensure that none of the Companies, the Providers, nor the Johnston
     Family will engage in any action with the intent to adversely impact
     the transactions contemplated by this Agreement. Without limiting the
     generality of the foregoing, during the Pre-Merger Period, except as
     otherwise expressly contemplated by this Agreement or with the prior
     written consent of DentalCo, the Companies and the Johnston Family
     shall use all reasonable efforts to ensure that neither of the
     Companies nor the Providers, nor any of their subsidiaries, shall:

               (I)  Adopt or propose any change in its or any of its
          subsidiaries articles or certificate of incorporation or
          bylaws; adjust, split, combine, or reclassify any of its or
          any of its subsidiaries' capital stock (or any other equity
          interest); or make any other changes in its  or any of its
          subsidiaries' authorized or issued capital stock;

               (II) Redeem, purchase, or otherwise acquire any
          shares of its or any of its subsidiaries' capital stock (or
          any other equity interest) or agree, offer or propose to
          redeem, purchase or otherwise acquire any shares of its or
          any of its subsidiaries' capital stock (or any other equity
          interest); grant any person or entity any right to acquire
          any shares of its or any of its subsidiaries' capital stock
          (or any other equity interest); issue, deliver, dispose of,
          sell, or agree, offer or propose to issue, deliver, dispose
          of, or sell, any additional shares of its or any of its
          subsidiaries capital stock (or any other equity interest) or
          any other securities, or enter into any agreement or
          arrangement with respect to the sale or voting of its or any
          of its subsidiaries' capital stock;

               (III)  Acquire or agree to acquire (by merger,
          consolidation, acquisition of stock or assets or by any
          other manner) any business or any corporation, partnership,
          association or other business organization or division
          thereof or, except in the ordinary course of business, make
          or agree to make any investment (by purchase of stock,
          contribution to capital, property transfer or purchase of
          property or otherwise) in any other person or entity;

               (IV)  Sell, lease, license, pledge, encumber, or
          otherwise dispose of any assets or property other than in
          the ordinary course of business consistent with past
          practices;

               (V)  Incur, create, assume, guarantee or otherwise
          become liable for any indebtedness other than indebtedness
          incurred in the 

                                     -42-

          ordinary course of business consistent with past practices, 
          provided, however, that without the consent of DentalCo,
          the total amount of the foregoing may not exceed $25,000;

               (VI) Other than in the ordinary course of business
          consistent with past practices, enter into or modify any
          employment, severance, termination, or similar agreement or
          arrangement with, or grant any bonuses, compensation
          increases, severance or termination pay to, any past or
          present officer, director, consultant, or employee;

               (VII)  Adopt, amend or terminate any employee
          benefit plan, except in accordance with Section 4.17, above,
          or increase, amend, or terminate any benefits to past or
          present officers, directors, consultants, or employees,
          including but not limited to the granting of stock options,
          stock appreciation rights, performance awards or restricted
          stock awards or the amendment or acceleration of vesting of
          any existing stock options, stock appreciation rights,
          performance awards or restricted stock awards;

               (VIII)  Modify, amend or terminate or waive,
          release or assign any material right under any of the
          contracts listed or required to be listed in Schedule 4.18
          except in the ordinary course of business consistent with
          past practices;

               (IX)  Settle, pay, discharge or satisfy any claims,
          litigation, or actions, whether now pending, threatened or
          hereafter made or brought, unless in the ordinary course of
          business consistent with past practice and as does not and
          could not reasonably be expected have a Nanston Material
          Adverse Effect;

               (X)  Engage in any transaction, or enter into any
          material agreement, contract, lease, or other arrangement or
          understanding, with any Affiliate of either Company or
          Provider, except for any transactions agreed to in writing
          by DentalCo;

               (XI) Except in the ordinary course of business,
          make or commit to make any capital expenditure in an amount
          which, when added to the aggregate amount of all other
          capital expenditures made or committed to be made after the
          date hereof, exceeds $25,000, except if approved by
          DentalCo;

               (XII)  Except as required by GAAP or Applicable
          Law, make or commit to make any material changes in
          accounting procedures;

                                     -43-

                     (XIII)    Take or agree to take any action that
           (i) would result in any of its representations and
           warranties contained in this Agreement that are qualified as
           to materiality becoming untrue, (ii) would result in any of
           such representations and warranties that are not so
           qualified becoming untrue in any material respect or 
           (iii) to its best knowledge, could reasonably be expected 
           to have a Nanston Material Adverse Effect; or

                     (XIV)     Agree or commit to do any of the
           foregoing.

                (c)  Access to Records and Other Due Diligence.  During the
      Pre- Merger Period, each of the Companies shall: (i) make or cause to
      be made available to DentalCo and its representatives, attorneys,
      accountants and agents, for examination, inspection, and review, the
      assets and property of the Companies and all books, contracts,
      agreements, commitments, records and documents of every kind relating
      to the Companies' respective businesses, and shall permit DentalCo and
      its representatives, attorneys, accountants and agents to have access
      to the same at all reasonable times, including without limitation
      access to all tax returns filed and in preparation and all audit and
      other work papers of Smith & Radigan, Certified Public Accountants and
      all reports to management, attorney, and related responses; and (ii)
      permit representatives of DentalCo to interview suppliers, customers,
      and personnel of the Companies subject to coordinating with Nanston's
      President.

                (d)  Disclosures.  After the date of this Agreement, none of
      the Companies, the Johnston Family, the other Nanston Shareholders, or
      N. Bell shall: (i) disclose to any person, association, firm,
      corporation or other entity (other than DentalCo or those designated
      in writing by DentalCo) in any manner, directly or indirectly, any
      proprietary information or data relevant to the business of either
      Company or either of the Providers, whether of a technical or
      commercial nature, or (ii) use, or permit or assist, by acquiescence
      or otherwise, any person, association, firm, corporation or other
      entity (other than DentalCo or those designated in writing by
      DentalCo) to use, in any manner, directly or indirectly, any such
      information or data, excepting only (A) use of such data or
      information as is at the time generally known to the public and which
      did not become generally known through any breach of any provision of
      this section by either Company or either of the Providers or any
      Nanston Shareholder, (B) disclosure of information to employees of
      either Company or either of the Providers who need to know such
      information and use of such information by employees of either Company
      or either of the Providers who need to use such information, in each
      use only to the extent necessary for the benefit of the Companies or
      the Providers or DentalCo and (C) disclosures required under existing
      agreements disclosed to DentalCo.  The obligations of the Nanston
      Shareholders (other than the members of the Johnston Family) under
      this Section 

                                      -44-

      6.2(d) are several and not joint. To the extent that this Agreement is
      terminated, the provisions of this subsection (e) shall terminate on
      the second anniversary of the date of this Agreement.

                (e)  Inter-Company Indebtedness.  During the Pre-Merger
      Period, neither Company, nor the Johnston Family, the other Nanston
      Shareholders, nor N. Bell, as applicable, shall cause or permit either
      Company or the Providers to, make any advances, loans, or extensions
      of credit to any Affiliate of either Company or the Providers, or
      otherwise increase the Nanston Related Party Receivables owed to
      either Company or the Providers by any Affiliate of such Company or
      the Providers, exception in the ordinary course of business consistent
      with past practices.

                (f)  Dividends and Distributions.  During the Pre-Merger
      Period, the Companies shall not and the Companies and the Johnston
      Family, the other Nanston Shareholders, and N. Bell shall use all
      reasonable efforts to ensure that neither of the Providers, nor any of
      their subsidiaries, will, declare, set aside or pay any dividend or
      any distribution (in cash or in kind) on their capital stock (or any
      other equity interest).

                (g)  Shareholders' Agreements.  At the Closing, the Nanston
      Shareholders shall execute a Shareholder's Agreement in the form to be
      attached hereto as Exhibit D and to be reasonably satisfactory to the
      Parties.

                (h)  Notices of Certain Events. The Companies, the Johnston
      Family, each other Nanston Shareholder, and N. Bell shall promptly
      notify DentalCo of any of the following matters of which it, he, or
      she has actual knowledge:

                     (i)  Any notice or other communication from any
           person or entity alleging that the consent of such person or
           entity is or may be required in connection with the
           transactions contemplated by this Agreement;

                     (ii) Any notice or other communication from any
           governmental or regulatory agency or authority in connection
           with the transactions contemplated by this Agreement;

                     (iii) Any actions, suits, claims,
           investigations or proceedings commenced or threatened which,
           if in existence on the date of this  Agreement would have
           been required to have been disclosed pursuant to Section
           4.16 or which relates to the consummation of the
           transactions contemplated by this Agreement; and

                                      -45-

                     (iv) Any circumstances or events which, if in
           existence on the date of  this Agreement, would make any of
           their representations or warranties incorrect in any
           material respect or may result in a Nanston Material Adverse
           Effect.

                (i)  Repurchase of ESOP Shares.  Nanston shall repurchase
      the ESOP Shares for cash in the amount not to exceed Two Million Nine
      Hundred Four Thousand Four Hundred Three Dollars and Sixty-Five Cents
      ($2,904,403.65) in the aggregate (the "ESOP Amount") not later than
      one day prior to the Closing with proceeds from the ESOP Loan (as
      defined in Section 6.3(i) hereof).

      6.3  Covenants of DentalCo. DentalCo agrees that:

                (a)  Dr. Johnston's Guaranties. DentalCo will exercise
      reasonable efforts to cause the release of Dr. Johnston as of the
      Closing from the personal guaranties delivered by Dr. Johnston on
      behalf of Nanston described in Schedule 6.3(a) (collectively, the
      "Guaranties") or, if such releases are not obtained, provide such
      assurances of indemnification as may be reasonably acceptable to Dr.
      Johnston.

                (b)  Delivery of DentalCo Interim Statements.  DentalCo
      shall cause the DentalCo Interim Statements to be delivered to Nanston
      as soon as is reasonable practicable.

                (c)  Conduct of Business. Except as otherwise expressly
      contemplated by this Agreement, during the Pre-Merger Period, DentalCo
      shall (i) cause its business to be operated in (A) the ordinary
      course, consistent with past practice, (B) a manner that is not
      contrary to or in breach of any of the provisions of this Agreement,
      and (C) a manner which will not cause any of the representations and
      warranties contained in this Agreement made by DentalCo to be or
      become untrue in any material respect (or, with respect to any
      representations or warranties already qualified as to materiality, to
      become untrue in any respect); (ii) use all reasonable efforts to
      preserve its business organization intact, keep available to it the
      present service of its employees, and preserve for it the goodwill of
      its business, and (iii) use all reasonable efforts to ensure that it
      will not engage in any action with the intent to adversely impact the
      transactions contemplated by this Agreement. Without limiting the
      generality of the foregoing, during the Pre-Merger Period, except as
      otherwise expressly contemplated by this Agreement or with the prior
      written consent of Nanston and the Johnston Family, neither DentalCo
      nor any of its subsidiaries shall:

                     (I)  Adopt or propose any change in its or any of
           its subsidiaries' articles or certificate of incorporation
           or bylaws; adjust, split, combine, or reclassify any of its
           or any of its subsidiaries' capital stock (or any other
           equity interest); or make any 

                                      -46-

           other changes in its or any of its subsidiaries' authorized
           or issued capital stock;

                     (II) Redeem, purchase, or otherwise acquire any
           shares of its or any of its subsidiaries' capital stock (or
           any other equity interest) or agree, offer or propose to
           redeem, purchase or otherwise acquire any shares of its or
           any of its subsidiaries' capital stock (or any other equity
           interest); grant any person or entity any right to acquire
           any shares of its or any of its subsidiaries' capital stock;
           issue, deliver, dispose of, sell, or agree, offer or propose
           to issue, deliver, dispose of, or sell, any additional
           shares of its or any of its subsidiaries capital stock (or
           any other equity interest) or any other securities, or enter
           into any agreement or arrangement with respect to the sale
           or voting of its or any of its subsidiaries' of capital
           stock;

                     (III) Acquire or agree to acquire (by merger,
           consolidation, acquisition of stock or assets or by any
           other manner) any business or any corporation, partnership,
           association or other business organization or division
           thereof or, except in the ordinary course of business, make
           or agree to make any investment (by purchase of stock,
           contribution to capital, property transfer or purchase of
           property or otherwise) in any other person or entity;

                     (IV) Sell, lease, license, pledge, encumber, or
           otherwise dispose of any assets or property other than in
           the ordinary course of business consistent with past
           practices;

                     (V)  Incur, create, assume, guarantee or otherwise
           become liable for any indebtedness other than indebtedness
           incurred in the ordinary course of business consistent with
           past practices or in connection with acquisitions disclosed
           by DentalCo to Nanston;

                     (VI) Other than in the ordinary course of business
           consistent with past practices, enter into or modify any
           employment, severance, termination, or similar agreement or
           arrangement with, or grant any bonuses, compensation
           increases, severance or termination pay to, any past or
           present officer, director, consultant, or employee;

                     (VII) Adopt, amend or terminate any employee
           benefit plan, except in accordance with 3.17, above, or
           increase, amend, or terminate any benefits to past or
           present officers, directors, consultants, or employees,
           including but not limited to the granting of stock options,
           stock appreciation rights, performance awards or 

                                      -47-

           restricted stock awards or the amendment or acceleration of
           vesting of any existing stock options, stock appreciation
           rights, performance awards or restricted stock awards;

                     (VIII) Modify, amend in any material way or
           terminate  or waive, release or assign any material right
           under any of the contracts listed or required to be listed
           in Schedule 3.18 except in the ordinary course of business
           consistent with past practices;

                     (IX) Settle, pay, discharge or satisfy any claims,
           litigation, or actions, whether now pending, threatened or
           hereafter made or brought, unless in the ordinary course of
           business consistent with past practice and as does not and
           could not reasonably be expected have a DentalCo Material
           Adverse Effect;

                     (X) Engage in any transaction, or enter into any
           material agreement, contract, lease, or other arrangement or
           understanding, with any of their Affiliates, except for any
           transactions agreed to in writing by Nanston; or

                     (XI) Except in the ordinary course of business or
           in connection with acquisitions disclosed to Nanston, make
           or commit to make any capital expenditure in an amount
           which, when added to the aggregate amount of all other
           capital expenditures made or committed to be made after the
           date hereof, exceeds $100,000;

                     (XII) Except as required by GAAP or Applicable
           Law, make or commit to make any material changes in
           accounting procedures;

                     (XIII) Take or agree to take any action that
           (i) would result in any of its representations and
           warranties contained in this Agreement that are qualified as
           to materiality becoming untrue, (ii) would result in any of
           such representations and warranties that are not so
           qualified becoming untrue in any material respect or (iii)
           to its best knowledge, could reasonably be expected to have
           a DentalCo Material Adverse Effect; or

                     (XIV) Agree or commit to do any of the
           foregoing.

                (d)  Access to Records and Other Due Diligence.  During the
      Pre-Merger Period, DentalCo shall:  (i) make or cause to be made
      available to Nanston and its representatives, attorneys, accountants
      and agents, for examination, inspection, and review, the assets and
      property of DentalCo and all books, contracts, agreements,
      commitments, records and documents of every kind relating to 

                                      -48-

      DentalCo's businesses, and shall permit Nanston and its
      representatives, attorneys, accountants and agents to have access to
      the same at all reasonable times, including without limitation access
      to all tax returns filed and in preparation and all audit and other
      work papers of KPMG Peat Marwick, Certified Public Accountants and all
      reports to management, attorneys and related responses; and (ii)
      permit representatives of Nanston to interview suppliers, customers,
      and personnel of DentalCo subject to coordination with DentalCo's
      Chief Executive Officer or President.

                (e)  Disclosures.  After the date of this Agreement,
      DentalCo shall not: (i) disclose to any person, association, firm,
      corporation or other entity (other than Nanston or those designated in
      writing by Nanston) in any manner, directly or indirectly, any
      proprietary information or data relevant to the business of DentalCo,
      whether of a technical or commercial nature, or (ii) use, or permit or
      assist, by acquiescence or otherwise, any person, association, firm,
      corporation or other entity (other than Nanston or those designated in
      writing by Nanston) to use, in any manner, directly or indirectly, any
      such information or data, excepting only (A) use of such data or
      information as is at the time generally known to the public and which
      did not become generally known through any breach of any provision of
      this section by DentalCo, (B) disclosure of information to employees
      of DentalCo who need to know such information and use of such
      information by employees of either Company who need to use such
      information, in each case only to the extent necessary for the benefit
      of DentalCo and (C) disclosures required under existing agreements. To
      the extent that this Agreement is terminated, the provisions of this
      subsection (e) shall terminate on the second anniversary of the date
      of this Agreement. 

                (f)  Inter-Company Indebtedness. During the Pre-Merger
      Period, DentalCo shall not make any advances, loans, or extensions of
      credit to any Affiliate of DentalCo, or otherwise increase the
      DentalCo Related Party Receivables owed to DentalCo by any Affiliate,
      except in the ordinary course of business consistent with past
      practices.

                (g)  Dividends and Distributions. During the Pre-Merger
      Period, DentalCo and its subsidiaries shall not declare, set aside or
      pay any dividend or any distribution (in cash or in kind) on their
      capital stock (or any other equity interest).

                (h)  Notices of Certain Events. DentalCo shall promptly
      notify Nanston of any of the following matters of which it has actual
      knowledge:

                     (i)  Any notice or other communication from any
           person or entity alleging that the consent of such person or
           entity is or may 

                                      -49-

           be required in connection with the transactions contemplated
           by this Agreement;

                     (ii) Any notice or other communication from any
           governmental or regulatory agency or authority in connection
           with the transactions contemplated by this Agreement;

                     (iii) Any actions, suits, claims,
           investigations or proceedings commenced or threatened which,
           if in  existence on the date of this Agreement would have
           been required to have  been disclosed pursuant to 3.17 or
           which relates to the consummation of  the transactions
           contemplated by this Agreement; and

                     (iv) Any circumstances or events which, if in
           existence on the date of  this Agreement, would make any
           representation or warranty of DentalCo incorrect in any
           material respect or may result in a DentalCo Material
           Adverse Effect.

                (i)  ESOP Loan. DentalCo shall loan to Nanston (the "ESOP
      Loan") funds equal to the ESOP Amount pursuant to a loan agreement in
      form and substance reasonably satisfactory to Nanston and DentalCo, the
      proceeds of which shall be used solely to effect the redemption of the
      ESOP Shares by Nanston not later than one day prior to the Closing Date.
      The ESOP Loan shall bear interest at the Prime Rate of interest as
      provided in the Wall Street Journal under "Money Rates", shall be for a
      term not to exceed fifteen years, and the repayment of the ESOP Loan
      shall be guaranteed by Dr. Johnston, individually, such guarantee to be
      secured by a pledge of his Nanston Shares pursuant to agreements
      reasonably satisfactory to him and DentalCo; provided, however, that at
      the Effective Time, such guaranties and all pledges in connection
      therewith shall be released, and the ESOP Loan shall become, by
      operation and law and pursuant to the Merger, the obligation of the
      Surviving Corporation.

                                     ARTICLE VII
                                      CONDITIONS

               7.1   Mutual Conditions.  The obligations of the Parties to 
consummate the Merger and the other transactions contemplated by this 
Agreement shall be subject to the fulfillment of all of the following 
conditions unless waived by both Nanston and DentalCo:

                (a)  Legal Prohibition.  No temporary restraining order,
      preliminary or permanent injunction or other order or decree which
      prevents the consummation of the Merger or the other transactions
      contemplated by this Agreement having been issued and remaining in
      effect, and no statute, rule or regulation having been enacted by any
      state or federal government or governmental agency, which would 

                                      -50-

      prevent the consummation of the Merger or the other transactions
      contemplated by this Agreement; provided, however, that each of the
      Parties shall have used reasonable efforts to prevent the entry of any
      such injunction or other order or decree and to appeal as promptly as
      possible any injunction or other order or decree that may be entered.

                (b)  Management Services Agreements. Nanston and NC shall have
      entered into new long-term management services agreements with the
      Providers, containing terms and conditions which are in compliance with
      Applicable Law and are substantially in the form to be attached hereto
      as Exhibit M and to be reasonably satisfactory to the Parties.

                (c)  Provider Stock Restriction Agreements.  The shareholders
      of the Providers shall have entered into Stock Restriction Agreements
      with DentalCo containing terms and conditions which are in compliance
      with applicable law and satisfactory to DentalCo and Nanston.

                (d)  CIGNA. All existing agreements among Cigna Dental Health,
      Nanston, NC, and Bell concerning NC's business operations in North
      Carolina shall have been approved by DentalCo, and N. Bell, if requested
      by DentalCo or Nanston, shall have cooperated with DentalCo and Nanston
      to transfer the Bell provider agreements (and any agreements with N.
      Bell's other P.A. or P.C.) with Cigna Dental Health to Nanston (as
      successor by name change to Subcorp) pursuant to an assignment agreement
      reasonably acceptable to DentalCo, Nanston and N. Bell.

                (e)  IPO Delay.  DentalCo and the Nanston Shareholders shall
      have entered into a Redemption Agreement substantially in the form to be
      attached to this Agreement as Exhibit E and to be reasonably
      satisfactory to the Parties, providing for the redemption, in the sole
      discretion of the Nanston Shareholders, of their DentalCo Shares if
      DentalCo has not closed an initial public offering of its capital stock
      within four (4) calendar years and sixty days after the Effective Time.

                (f)  Third Party Consents and Governmental Approvals. DentalCo
      shall have received the third party consents and governmental approvals
      relating to this Agreement and the transactions contemplated by this
      Agreement listed on Schedule 7.1 and such consents and approvals shall
      be in effect as of the Closing Date.

                (g)  Board and Nanston Shareholder Approval.  The Merger and
      the transactions contemplated by this Agreement shall have been approved
      by Nanston's Board of Directors and Shareholders as required under
      Georgia Corporation Law.

                                      -51-

               7.2  Conditions to Obligations of Nanston and the Nanston 
Shareholders.  The obligations of Nanston and the Nanston Shareholders to 
consummate the Merger and the other transactions contemplated by this 
Agreement shall be subject to the fulfillment of all of the following 
conditions unless waived by Nanston and the Nanston Shareholders in writing:

                (a)  Representations and Warranties.  The representations and
      warranties of DentalCo and Subcorp set forth in Article III of this
      Agreement shall be true and correct in all material respects (except
      that they shall be true and correct in all respects to the extent they
      are already qualified as to materiality) as of the date of the this
      Agreement and as of the Effective Time as though made at and as of the
      Effective Time.

                (b)  Performance of Agreement.  Each of DentalCo and Subcorp
      shall have performed and observed in all material respects all
      obligations and conditions to be performed or observed by them under
      this Agreement at or prior to the Effective Time.

                (c)  Certificate.  Each of DentalCo and Subcorp shall have
      furnished Nanston and the Nanston Shareholders with a certificate dated
      the Closing Date signed by its president to the effect that the
      conditions set forth in Section 7.2(a) and (b) have been satisfied.

                (d)  Opinion of Counsel.  The Nanston Shareholders shall have
      received the legal opinion, dated the Closing Date, of Piper & Marbury
      L.L.P., counsel to DentalCo, in substantially the form to be attached to
      this Agreement as Exhibit F and to be reasonably satisfactory to the
      Parties.

                (e)  Release of the Guaranties.  At or prior to the Closing,
      DentalCo shall have caused the release of Dr. Johnston from all of his
      obligations under the Guaranties or provided such assurances of
      indemnification as may be reasonably acceptable to Dr. Johnston.

                (f)  ESOP Valuation.  The independent fiduciary of the ESOP
      shall have delivered to Nanston a written opinion to the effect that the
      transactions contemplated by this Agreement, including the price being
      paid by Nanston for the ESOP Shares pursuant to Section 6.2(i), are fair
      to the ESOP, which opinion is being obtained in connection with this
      Agreement; Nanston shall promptly deliver to DentalCo copies of all
      valuations, fairness opinions and other material reports or documents
      prepared in connection with such assessment and valuation.

                (g)  DentalCo and Subcorp shall have executed and delivered
      the agreements referred to in Sections 7.3(g) and (h).

                                      -52-

                (h)  No  change having occurred in DentalCo's or Subcorp's
      financial condition, operations, assets or business that results in, or
      may reasonably be expected to have, a DentalCo Material Adverse Effect.

                (i)  Nanston Shareholders shall have received commitments and
      assurances from DentalCo substantially in the form to be attached hereto
      as Exhibit L and to be reasonably satisfactory to the Parties obligating
      DentalCo, in the event it closes an initial public offering of it
      capital stock and the average trading price ("Average Price") for its
      stock during the first ten (10) trading days after the offering shall be
      less than $11.50 per share, to pay additional Merger Consideration to
      the Nanston Shareholders equal to the product of (i) 2,000,000 times
      (ii) the difference between $11.50 and the greater of (x) the Average
      Price or (y) $10.00. If such additional consideration is payable,
      DentalCo shall, at its sole discretion, have the option to deliver to
      the Nanston Shareholders either (a) cash equal to the amount of such
      additional consideration, or (b) such number of additional shares of its
      common stock as shall equal the additional Merger Consideration divided
      by the Average Price, such shares to be registrable securities as
      provided in the Registration Rights Agreement.

                (j)  Due Diligence. Nanston shall have favorably completed its
      due diligence review of DentalCo on or prior to January 14, 1996. To
      date, neither Nanston or the Nanston Shareholders have discovered
      anything in their due diligence review of DentalCo that would cause them
      not to proceed to Closing in accordance with the terms of this
      Agreement.

               7.3  Conditions to Obligations of DentalCo and Subcorp.  The 
obligations of DentalCo and Subcorp to consummate the Merger and the other 
transactions contemplated by this Agreement shall be subject to the 
fulfillment of all of the following conditions unless waived by DentalCo in 
writing:

                (a)  Representations and Warranties.  The representations and
      warranties set forth in Article IV of this Agreement and the
      representations and warranties of set forth in Article V of this
      Agreement shall be true and correct in all material respects (except
      that they shall be true and correct in all respects to the extent they
      are already qualified as to materiality) as of the date of this
      Agreement and as of the Effective Time as though made at and as of the
      Effective Time.

                (b)  Performance of Agreement.  The Companies, the Johnston
      Family, the other Nanston Shareholders, and N. Bell shall have performed
      and observed in all material respects (except that they shall be true
      and correct in all respects to the extent they are already qualified as
      to materiality) all obligations and conditions to be performed or
      observed by them under this Agreement at or prior to the Effective Time.

                                      -53-

                (c)  Certificate.  The Companies, the Johnston Family, the
      other Nanston Shareholders, and N. Bell shall have furnished DentalCo
      and Subcorp with a certificate dated the Closing Date signed by all of
      such parties to the effect that the conditions set forth in Section
      7.3(a) and (b) (as they apply to the respective signatory) have been
      satisfied.

                (d)  Opinion of Counsel.  DentalCo shall have received the
      legal opinion, dated the Closing Date, of Thomas S. Fisher, P.C.,
      counsel to Nanston and the Nanston Shareholders, in the form to be
      attached to this Agreement as Exhibit G and to be reasonably
      satisfactory to the Parties.

                (e)  Existing Employment and Deferred Compensation Agreements.
      At or prior to the Closing, Nanston shall have terminated all employment
      agreements or arrangements (including without limitation all disability
      and deferred compensation arrangements) between Nanston and NC and Dr.
      Johnston, and any of Messrs. C.D. Johnston, S.C. Johnston, R.L.
      Johnston, Andrews, and Anderson and Ms. Dreyer.

                (f)  Employment and Noncompetition Agreement with DentalCo. 
      Dr. Johnston shall have entered into an employment and noncompetition
      agreement substantially in the form to be attached to this Agreement as
      Exhibit H and to be reasonably satisfactory to the Parties.

                (g)  Employment and Noncompetition Agreements.  Each of
      Messrs. C.D. Johnston, S.C. Johnston, R.L. Johnston, Andrews and
      Anderson and Ms. Dreyer shall have entered into employment and
      noncompetition agreements substantially in the form to be attached to
      this Agreement as Exhibit I and to be reasonably satisfactory to the
      Parties.

                (h)  Shareholders' Agreements.  Each Nanston Shareholder shall
      have executed and delivered and thereby became parties to the
      Shareholders' Agreement to be attached hereto as Exhibit D and to be
      reasonably satisfactory to the Parties.

                (i)  Termination of Options.  Prior to the Closing, all
      outstanding options, warrants, or other rights to acquire any capital
      stock of either Company which have not been exercised prior to the
      execution of this Agreement shall have been terminated.

                (j)  Protech Spin-Off. Nanston's subsidiary, Protech Dental
      Services, Inc., a Georgia corporation, shall have been disposed of by
      Nanston.

                                      -54-

                (k)  ESOP. Not later than one day prior to the Closing, the
      ESOP Shares shall have been repurchased by Nanston for cash in an amount
      not to exceed  the ESOP Amount.

                (l)  Books and Records. Nanston shall have delivered to
      DentalCo all books and corporate records of each Company, including,
      without limitation, the stock books and ledgers, the corporate seal,
      minute books, books of account, bank account lists and tax returns and
      records.

                (m)  No Changes. No change shall have occurred in either of
      the Companies' or the Providers' financial condition, operations, assets
      or business that results in, or may reasonably be expected to have a
      Nanston Material Adverse Effect.

                (n)  Due Diligence. DentalCo shall have favorably completed
      its due diligence review of the Companies and the Providers on or prior
      to January 14, 1996. To date, DentalCo has discovered nothing in its due
      diligence review of the Companies and the Providers that would cause it
      not to proceed to Closing in accordance with the terms of this
      Agreement.

                (o)  NationsCredit Approval. On or prior to the time that
      DentalCo is required to make the ESOP Loan, NationsCredit shall have
      favorably completed its due diligence review of the transactions
      contemplated by this Agreement.

                (p)  Termination of Options. At or prior to the Effective
      Time, all options or other rights of persons or entities to acquire (i)
      Nanston Shares (except for Subcorp pursuant to the terms of this
      Agreement), or (ii) shares of NC, shall have been exercised or
      terminated (in the case of Nanston Shares) and shall have expired
      without the exercise thereof (in the case of NC).

                                     ARTICLE VIII
                              TERMINATION AND AMENDMENT

          8.1  Termination by Nanston and the Nanston Shareholders.  Except 
to the extent the Party seeking to terminate is itself in default of a 
material provision of this Agreement, this Agreement may be terminated and 
canceled at any time prior to the Effective Time by Nanston and the Nanston 
Shareholders:  (i) if (A) any of the representations or warranties of 
DentalCo or Subcorp contained in this Agreement or the DentalCo Schedules, if 
any, shall prove to be inaccurate in any material respect (except that they 
shall be true and correct in all respects to the extent they are already 
qualified as to materiality), or any obligation or condition to be performed 
or observed by DentalCo or Subcorp under this Agreement has not been 
performed or observed in any material respect at or prior to the time 
specified in this Agreement, and (B) such inaccuracy or failure shall not 
have been cured within 15 business days after receipt by DentalCo and Subcorp 
of written notice of such occurrence from Nanston and the Nanston 
Shareholders or 

                                      -55-

has not been waived in writing; (ii) if any permanent injunction or other 
order of a court or other competent authority preventing consummation of the 
Merger or any other transaction contemplated by this Agreement shall have 
become final and non-appealable; or (iii) if the Closing has not occurred on 
or before January 15, 1997.

               8.2  Termination by DentalCo.  Except to the extent the Party 
seeking to terminate is itself in default of a material provision of this 
Agreement, this Agreement may be terminated and canceled at any time prior to 
the Effective Time by DentalCo:  (i) if (A) any of the representations or 
warranties contained in Article IV or Article V of this Agreement or the 
Schedules thereto shall prove to be inaccurate in any material respect 
(except that they shall be true and correct in all respects to the extent 
they are already qualified as to materiality), or any obligation or condition 
to be performed or observed by either of the Companies, the Johnston Family, 
the other Nanston Shareholders, or N. Bell under this Agreement has not been 
performed or observed in any material respect at or prior to the time 
specified in this Agreement, and (B) such inaccuracy or failure shall not 
have been cured within 15 business days after receipt by Nanston of written 
notice of such occurrence from DentalCo or Subcorp and has not been waived in 
writing; (ii) if any permanent injunction or other order of a court or other 
competent authority preventing consummation of the Merger or any other 
transaction contemplated by this Agreement shall have become final and 
non-appealable; or (iii) if the Closing has not occurred on or before January 
15, 1997.

               8.3  Amendment.  This Agreement may not be amended except by 
an instrument in writing signed by all of the Parties.

               8.4  Extension; Waiver.  At any time prior to the Effective 
Time, DentalCo (with respect to the Companies, the Johnston Family and the 
other Nanston Shareholders) and Nanston (with respect to DentalCo and 
Subcorp) may, to the extent legally allowed:  (i) extend the time for the 
performance of any of the obligations or other acts of the other Party; (ii) 
waive any inaccuracies in the representations and warranties contained in 
this Agreement or in any document delivered pursuant hereto; or (iii) waive 
compliance with any of the agreements or conditions contained in this 
Agreement.  Any agreement on the part of a Party to any such extension or 
waiver shall be valid only if set forth in a written instrument signed by 
such Party.

                                      ARTICLE IX
                                   INDEMNIFICATION

          9.1  Survival of Representations, Warranties and Agreements.

                (a)  Subject to the limitations set forth in Section 9.3,
      below, and notwithstanding any investigation conducted at any time with
      regard thereto by or on behalf of DentalCo or Subcorp, all
      representations, warranties, covenants and agreements of the Companies,
      the Johnston Family, the other Nanston Shareholders, or N. Bell in this
      Agreement shall survive the execution, delivery 

                                      -56-

      and performance of this Agreement.  All such representations and
      warranties shall be deemed to have been made again at and as of the
      Effective Time.

                (b)  Subject to the limitations set forth in Section 9.3
      below, and notwithstanding any investigation conducted at any time with
      regard thereto by or on behalf of Nanston or the Nanston Shareholder,
      all representations, warranties, covenants, and agreements of DentalCo
      or Subcorp in this Agreement shall survive the execution, delivery, and
      performance of this Agreement.  All such representations and warranties
      shall be deemed to have been made again by DentalCo and Subcorp at and
      as of the Effective Time.

                (c)  As used in this Article IX, any reference to a
      representation, warranty, covenant, or agreement contained in any
      section of this Agreement shall include the Schedule relating to such
      section.

      9.2  Indemnification.

                (a)  Subject to the limitations set forth in Section 9.3,
      below, the Companies and the Johnston Family, jointly and severally, and
      N. Bell, severally but not jointly with the Johnston Family, on the one
      hand, and DentalCo, on the other hand, shall indemnify and hold harmless
      the other party and, in its discretion the other party's shareholders,
      officers, directors, affiliates, and agents from and against any and all
      losses, liabilities, damages, demands, claims, suits, actions, judgments
      or causes of action, assessments, costs and expenses, including without
      limitation interest, penalties, attorneys' fees, any and all expenses
      incurred in investigating, preparing or defending against any
      litigation, commenced or threatened, or any claim whatsoever, and any
      and all amounts paid in settlement of any claim or litigation
      (collectively, "Damages"), asserted against, resulting to, imposed upon,
      or incurred or suffered by said party, directly or indirectly, as a
      result of or arising from any inaccuracy in or breach or nonfulfillment
      of any of the representations, warranties, covenants or agreements made
      by such other party in this Agreement;

                (b)  Each Nanston Shareholder severally and not jointly, shall
      indemnify and hold harmless DentalCo from and against any and all
      Damages asserted against, resulting to, imposed upon, or incurred
      suffered by DentalCo, directly or indirectly, as a result of or arising
      from any inaccuracy in or breach or nonfulfillment of any of the
      representations, warranties, covenants, or agreements made by that
      Nanston Shareholder in this Agreement.

                (c)  DentalCo shall be deemed to have suffered Damages arising
      out of or resulting from the matters referred to in Section 9.2(a),
      above, if the same shall be suffered by any parent, subsidiary or
      affiliate (including Subcorp) of DentalCo, including without limitation
      Nanston after the Effective Time.

                                      -57-

          9.3  Limitation on Indemnification.  Rights to indemnification 
under this Article IX are subject to the following limitations:

                (a)  Neither party shall be entitled to indemnification
      hereunder with respect to a claim under Section 9.2(a) or (b) (the
      ("Indemnifiable Claim") arising out of a breach of a representation or
      warranty (or, if more than one such Indemnifiable Claim is asserted,
      with respect to all such Indemnifiable Claims) unless the aggregate
      amount of Damages with respect to such Indemnifiable Claim or Claims
      exceeds $10,000, and then only for the excess; provided however, that
      the foregoing limitation will not apply to a Indemnifiable Claim or
      Claims arising under the representations and warranties set forth in
      Sections 3.10, 3.16, 4.9 and 4.17 of this Agreement.

                (b)  The obligation of indemnity with respect to the
      representations and warranties set forth in Sections 3.10, 3.16, 4.9 and
      4.17 of this Agreement shall terminate on the expiration of the
      respective periods of limitations applicable to assessment and
      collection of taxes or ERISA liabilities under laws then applicable to
      such taxes or ERISA liabilities, as the case may be.

                (c)  The obligation of indemnity with respect to the
      representations and warranties set forth in Article III and IV of this
      Agreement other than those addressed in the immediately preceding
      subsection (b), shall terminate on the date which is the earlier of 90
      days after the second anniversary of the Effective Time or (ii) the
      closing of DentalCo's initial public offering of its capital stock.

                (d)  The foregoing provisions of this Section 9.3
      notwithstanding, if, prior to the termination of any obligation to
      indemnify, written notice of a claimed breach or other occurrence or
      matter giving rise to a claim of indemnification is given reasonably and
      in good faith by one party to the other party, or a suit or action based
      upon a claimed breach is commenced against any such other party, then
      such claiming party shall not be precluded from pursuing such claimed
      breach, occurrence, other matter, or suit or action, or from recovering
      from such other party (whether through the courts or otherwise) on the
      claim, suit or action, by reason of the termination otherwise provided
      for above.

      9.4  Procedure for Indemnification with Respect to Third Party Claims.

                (a)  If a party (hereinafter "Claiming Party") desires to seek
      indemnification under this Article IX with respect to Indemnification
      Claims resulting from the assertion of liability by third parties, it
      shall give notice to the other party against whom indemnification is
      sought (hereinafter "Indemnifying Party," whether one or more) within a
      reasonable period of time of Claiming Party becoming aware of any such
      Indemnifiable Claim, which notice shall set forth such material
      information with respect to such Indemnifiable Claim as is 

                                      -58-

      then reasonably available to the Claiming Party. The Indemnifying Party
      shall be entitled, if it so elects by written notice delivered to
      Claiming Party within a reasonable period of time (not to exceed 15 days
      in any event) after receiving Claiming Party notice (the "Response
      Period"), to assume the defense of such asserted liability with counsel
      reasonably satisfactory to Claiming Party.  With respect to any
      assertion of liability by a third party that results in an Indemnifiable
      Claim, the Parties shall make available to each other all relevant
      information in their possession which is material to any such assertion.

                (b)  In the event that the Indemnifying Party fails to assume
      the defense of Claiming Party against any such Indemnifiable Claim,
      within the Response Period, Claiming Party shall have the right to
      defend, compromise or settle such Indemnifiable Claim.

                (c)  Notwithstanding anything in this Section 9.4 to the
      contrary, (i) if there is a reasonable probability that an Indemnifiable
      Claim may materially and adversely affect Claiming Party, its
      subsidiaries or affiliates, including without limitation Subcorp after
      the Effective Time, other than as a result of money damages or other
      money payments, then Claiming Party shall have the right to defend,
      compromise or settle such Indemnifiable Claim; and (ii) the Indemnifying
      Party shall not, without Claiming Party prior written consent, settle or
      compromise any Indemnifiable Claim or consent to entry of any judgment
      in respect of any Indemnifiable Claim unless such settlement, compromise
      or consent includes as an unconditional term the giving by the claimant
      or the plaintiff to Claiming Party (and its subsidiaries and affiliates
      including without limitation Subcorp after the Effective Time) a release
      from all liability in respect of such Indemnification Claim.

          9.5  Procedure For Indemnification with Respect to Non-Third Party 
Claims. In the event that Claiming Party asserts the existence of an 
Indemnifiable Claim giving rise to Damages (but excluding Indemnifiable 
Claims resulting from the assertion of liability by third parties), it shall 
give written notice to the Indemnifying Party specifying the nature and 
amount of the Indemnifiable Claim asserted.  If the Indemnifying Party, 
within 45 days after the receipt of such notice by Claiming Party, has not 
given written notice to Claiming Party announcing its intent to contest such 
assertion by Claiming Party, such assertion shall be deemed accepted and the 
amount of the Indemnifiable Claim shall be deemed a valid Indemnifiable 
Claim. In the event, however, that the Indemnifying Party contests the 
assertion of an Indemnifiable Claim by giving such written notice to Claiming 
Party within such 45 day period, then if the Parties, acting in good faith, 
cannot reach agreement with respect to such Indemnifiable Claim within 10 
days after such notice, the contested assertion of the claim shall be 
referred to arbitration in Charlotte, North Carolina in accordance with the 
then current rules of the American Arbitration Association. The determination 
made in accordance with such rules shall be delivered in writing to the 
Parties and shall be final and binding and conclusive on the Parties and the 
amount of the Indemnifiable Claim, if any, determined to exist shall be a 
valid Indemnifiable Claim.  Each 

                                      -59-

party shall pay its own legal, accounting and other fees in connection with 
such a contest; provided that if the contested claim is referred to and 
ultimately determined by arbitration, the legal, auditing and other fees of 
the prevailing Party and the fees and expenses of any arbitrator shall be 
borne by the non-prevailing Party.

                                      ARTICLE X
                                    MISCELLANEOUS

    10.1 Attorney-In-Fact.  Each Nanston Shareholder hereby irrevocably 
appoints Dr. Johnston as such Nanston Shareholder's attorney-in-fact and 
agent, and grants Dr. Johnston full power and authority to take any and all 
actions, to perform and do any and all things, in such Nanston Shareholder's 
place and stead, which Dr. Johnston may deem necessary or appropriate in 
connection with this Agreement or the transactions contemplated by this 
Agreement, as fully as such Nanston Shareholder might or could do if 
personally present and acting, including, without limitation, execution, 
acknowledgment or verification, and delivery of any amendments, consents, 
acknowledgments or other documents relating to this Agreement or the 
transactions contemplated by this Agreement, receiving and giving notices 
under this Agreement, and taking any and all actions which are permitted or 
required to be taken by such Nanston Shareholder under Article VIII of this 
Agreement.  Dr. Johnston shall have no obligation to exercise the power and 
authority granted under this Section 10.1, and may decline to take action on 
behalf of any Nanston Shareholder unless expressly directed to do so by such 
Nanston Shareholder.

     10.2 Notices.  All notices and other communications under this Agreement 
to any Party shall be in writing and shall be deemed given when delivered 
personally, telecopied (which is confirmed) to that Party at the telecopy 
number for that Party set forth below, mailed by certified mail (return 
receipt requested) to that Party at the address for that Party (or at such 
other address for such Party as such Party shall have specified in notice to 
the other Parties), or delivered to Federal Express, UPS, or any similar 
express delivery service for delivery to that Party at that address:

                (a)  If to DentalCo or Subcorp:

                           DentalCo Inc.
                           6115 Falls Road
                           Baltimore, MD 21209
                           Attention: Carl Sardegna, President
                           Telecopy No.:  (410) 377-3231 

                                      -60-

                     with a copy to

                           Piper & Marbury L.L.P.
                           Charles Center South
                           36 South Charles Street
                           Baltimore, MD 21201
                           Attention:  Wilbert H. Sirota, Esq.
                           Telecopy No.: (410) 576-1700

                     (b)  If to Nanston:

                           Nanston, Inc.
                           Suite 200
                           1590 Oakbrook Drive
                           Norcross, Georgia 30093-2287
                           Attention:  John C. Johnston, D.D.S., Chief
                               Executive Officer
                           Telecopy No.: (770) 441-0299

                          with copies to

                            Thomas S. Fisher, Esq.
                            Nanston, Inc.
                            Suite 100
                            1590 Oakbrook Drive
                            Norcross, Georgia 30093-2287
                            Telecopy No.: (770) 449-4851

                     (c)  If to any Nanston Shareholder, to that Nanston
           Shareholder at the following address:

                            c/o John C. Johnston, D.D.S.
                            Suite 200
                            1590 Oakbrook Drive
                            Norcross, Georgia 30093-2287
                            Telecopy No.: (770) 441-0299

                          with copies to

                            Thomas S. Fisher, Esq.
                            Nanston, Inc.
                            Suite 100
                            1590 Oakbrook Drive
                            Norcross, Georgia 30093-2287
                            Telecopy No.: (770) 449-4851

                                      -61-

                (d)  If to N. Bell, to his address as listed on the records
           of NC.

          10.3 Non-Waiver.  No failure by any Party to insist upon strict 
compliance with any term or provision of this Agreement, to exercise any 
option, to enforce any right, or to seek any remedy upon any default of any 
other Party shall affect, or constitute a waiver of, any other Party's right 
to insist upon such strict compliance, exercise that option, enforce that 
right, or seek that remedy with respect to that default or any prior, 
contemporaneous, or subsequent default.  No custom or practice of the Parties 
at variance with any provision of this Agreement shall affect or constitute a 
waiver of, any Party's right to demand strict compliance with all provisions 
of this Agreement.

               10.4 Genders and Numbers.  Where permitted by the context, 
each pronoun used in this Agreement includes the same pronoun in other 
genders and numbers, and each noun used in this Agreement includes the same 
noun in other numbers.

               10.5 Headings.  The headings of the various articles and 
sections of this Agreement are not part of this Agreement, are merely labels 
to assist in locating such articles and sections, and shall be ignored in 
construing this Agreement.

               10.6 Counterparts.  This Agreement may be executed in multiple 
counterparts, each of which shall be deemed to be an original, but all of 
which taken together shall constitute one and the same Agreement.

               10.7 Entire Agreement.  This Agreement (including all 
exhibits, schedules, and other documents referred to in this Agreement) 
constitutes the entire agreement and supersedes all prior agreements and 
understandings, both written and oral, among the Parties with respect to the 
subject matter thereof, including without limitation the Letter Agreement 
dated November 1, 1996.

               10.8 No Third Party Beneficiaries.  Nothing contained in this 
Agreement, expressed or implied, is intended or shall be construed to confer 
upon or give to any person, firm, corporation or legal entity, other than the 
Parties, any rights, remedies or other benefits under or by reason of this 
Agreement.

               10.9 Governing Law.  This Agreement shall be governed by and 
construed in accordance with the laws of the State of Georgia without regard 
to principles of conflicts of law.

               10.10     Binding Effect; Assignment. This Agreement shall be 
binding upon, inure to the benefit of and be enforceable by and against the 
Parties and their respective heirs, personal representatives, successors, and 
assigns.  Neither this Agreement nor any of the rights, interests or 
obligations under this Agreement shall be transferred or assigned by any of 
the Parties without the prior written consent of the other Parties.

               10.11     Remedies.  Except as expressly provided herein, all 
rights and remedies of each Party under this Agreement shall be cumulative 
and in addition to all other rights and remedies 

                                      -62-

which may be available to that Party from time to time, whether under any 
other agreement, at law, or in equity.

               10.12     Expenses.  Except as otherwise specifically provided 
in this Agreement, DentalCo shall pay its costs and expenses associated with 
the transactions contemplated by this Agreement, including without limitation 
the fees and expense of its legal counsel (including any special legal 
counsel), certified public accountants, brokers and other financial advisors, 
and Nanston shall pay all costs and expenses incurred by the Companies and 
the Nanston Shareholders in connection with this Agreement or the 
transactions contemplated by this Agreement, including without limitation the 
fees and expense of its legal counsel (including any special legal counsel), 
certified public accountants, brokers and other financial advisors.

               10.13     Public Announcements.  This Agreement and the 
transactions contemplated herein shall be confidential and no Party shall 
disclose any information relating to this transaction without the prior 
written consent of Nanston and DentalCo, except for such disclosure to such 
professional advisors as may be necessary or appropriate in order to complete 
the Merger and related transactions.  Each Party and its representatives will 
exercise all reasonable efforts to maintain confidentiality with respect to 
this transaction at all times prior to the public announcement, if any, of 
this Agreement.  The provisions of this section will be subject to each 
Party's obligation to comply with applicable requirements of federal or state 
laws or any governmental order or regulation.

               10.14     Severability.  With respect to any provision of this 
Agreement finally determined by a court of competent jurisdiction to be 
unenforceable, such court shall have jurisdiction to reform such provision so 
that it is enforceable to the maximum extent permitted by applicable law, and 
the Parties shall abide by such court's determination.  In the event that any 
provision of this Agreement cannot be reformed, such provision shall be 
deemed to be severed from this Agreement, but every other provision of this 
Agreement shall remain in full force and effect.

               10.15     Schedules. Notwithstanding anything to the contrary 
set forth in this Agreement, DentalCo, on the one hand, and Nanston, the 
Nanston Shareholders and N. Bell, on the other hand, shall have the 
continuing obligation (which shall terminate on the Closing Date) promptly to 
supplement or amend the Schedules hereto with respect to any matter hereafter 
arising or discovered which, if existing or known at the date of this 
Agreement, would have been required to be set forth or described in such 
Schedules; provided, however, that for the purpose of the rights and 
obligations of the parties hereunder, any such supplemental or amended 
disclosure shall be deemed to have been disclosed as of the date of this 
Agreement if provided to the other party hereto not later than two (2) 
business days prior to the Closing Date and, provided, further, that to the 
extent that any such disclosure would or would likely have a (i) DentalCo 
Material Adverse Effect, then DentalCo shall have the option not to proceed 
to Closing, and (ii) Nanston Material Adverse Effect, then Nanston shall have 
the option not to proceed to Closing. 

                                      -63-

               IN WITNESS WHEREOF, this Agreement has been duly executed and 
delivered by the Parties as of the date first above written.

                              DENTALCO, INC.

                              By /s/ Lawrence F. Halpert
                                ---------------------------------
                                Lawrence F. Halpert, D.D.S., CEO

                              DENTALCO/SOUTHEAST, INC.

                              By /s/ Lawrence F. Halpert
                                ---------------------------------
                                Lawrence F. Halpert, D.D.S., CEO

                              NANSTON, INC.

                              By /s/ John C. Johnston
                                ---------------------------------
                                John C. Johnston, D.D.S.
                                Chief Executive Officer
                
                                /s/ John C. Johnston
                              -----------------------------------
                              JOHN C. JOHNSTON, D.D.S.
                
                               /s/ Nancy Anderson
                              -----------------------------------
                              NANCY ANDERSON, individually and as
                              Trustee under the Johnston Family
                              Stock Trust and Johnston Educational
                              Trust
                               
                               /s/ Chris D. Johnston
                              -----------------------------------
                              CHRIS D. JOHNSTON, Individually and
                              as Trustee under the Johnston Family
                              Stock Trust and Johnston Educational
                              Trust

               {signatures continued on following pages}

                                      -64-

                               /s/ Steve C. Johnston
                              -----------------------------------
                              STEVE C. JOHNSTON, Individually and
                              as Trustee under the Johnston Family
                              Stock Trust and Johnston Educational
                              Trust

                               /s/ Ronnie L. Johnston
                              -----------------------------------
                              RONNIE L. JOHNSTON, Individually and
                              as Trustee under the Johnston Family
                              Stock Trust and Johnston Educational
                              Trust

                               /s/ Kyle E. Anderson
                              -----------------------------------
                              KYLE E. ANDERSON
                
                               /s/ John E. Trapp
                              -----------------------------------
                              JOHN E. TRAPP

                              JOHN E. TRAPP, INC.

                              By /s/ John E. Trapp
                                ---------------------------------
                                John E. Trapp, President
                
                                /s/ Diana L. Liggett
                              -----------------------------------
                              DIANA L. LIGGETT

                               /s/ Sam C. Grizzle
                              -----------------------------------
                              SAM C. GRIZZLE

                       {signatures continued on following page} 

                                      -65-

                               /s/ Terri B. Dreyer
                              -----------------------------------
                              TERRI B. DREYER

                               /s/ Randall Little
                              -----------------------------------
                              RANDALL LITTLE

                               /s/ James Mason
                              -----------------------------------
                              JAMES MASON

                               /s/ Lisa Wagner
                              -----------------------------------
                              LISA WAGNER

                               /s/ Walter Reid
                              -----------------------------------
                              WALTER REID

                               /s/ George Quintero
                              -----------------------------------
                              GEORGE QUINTERO

                               /s/ Nathan Bell
                              -----------------------------------
                              NATHAN BELL, D.D.S., for the sole
                              purposes as set forth in the
                              provisos to the introductory
                              paragraph to Article IV hereof.

                                      -66- 

Basic Info X:

Name: STATEMENT OF AGREEMENT
Type: Statement of Agreement
Date: Sept. 10, 1997
Company: DENTALCO INC
State: Maryland

Other info:

Date:

  • December 27 , 1996
  • December 31 , 1995
  • January 1 , 1996
  • August 31 , 1995
  • August 31 , 1994
  • August 31 , 1992
  • November 30 , 1996
  • September 1 , 1996
  • August 31 , 1996
  • Fiscal 1996
  • January 14 , 1996
  • January 15 , 1997
  • earlier of 90 days after the second anniversary of the
  • November 1 , 1996

Organization:

  • DentalCoSoutheast , Inc.
  • Seven Million Ninety-Five Thousand
  • Five Hundred Ninety-Six Dollars
  • Nanston Dental Group
  • Nanston-North Carolina , Inc.
  • the State of Maryland
  • Secretaries of State
  • Certificate of Merger
  • Nanston Treasury Shares
  • Nanston Share Certificates
  • Nanston Share Certificate for Nanston Shares
  • Cumulative Convertible Preferred Stock
  • 3.7 Financial Statements
  • NationsCredit Commercial Corporation
  • DentalCo Related Party Payable
  • DentalCo Financial Statements
  • The Johnston Family Education Trust
  • Nanston Dental Shares
  • Corporate Power and Authority
  • Secretary of State of Georgia
  • The Company Financial Statements
  • Absence of Certain Changes
  • Depositories ; Powers of Attorney
  • Condition of Properties
  • Nanston Proprietary Rights
  • Nanston Employee Plans
  • Title IV of ERISA
  • Internal Revenue Service
  • Nanston Employee Plan or Nanston Benefit Arrangement
  • Nanston Related Party Payable
  • 4.23 Labor Relations
  • National Labor Relations Board
  • Third Party Payers
  • Health Professional 's Financial Relationships
  • Stock Ownership and Authority
  • Nanston Shareholder Schedules
  • Registration Rights Agreement
  • Securities Law Compliance
  • Nanston Interim Statements
  • c Access to Records and Other Due Diligence
  • Smith & Radigan
  • Nanston Related Party Receivables
  • Million Nine Hundred Four Thousand Four Hundred Three Dollars
  • DentalCo Related Party Receivables
  • Notices of Certain Events
  • b Management Services Agreements
  • Provider Stock Restriction Agreements
  • Cigna Dental Health to Nanston
  • Third Party Consents
  • Nanston Shareholder Approval
  • Nanston 's Board of Directors and Shareholders
  • Georgia Corporation Law
  • Obligations of Nanston
  • Piper & Marbury L.L.P.
  • DentalCo Material Adverse Effect
  • b Performance of Agreement
  • Deferred Compensation Agreements
  • Protech Dental Services , Inc.
  • l Books and Records
  • Effective Time by Nanston
  • Indemnifiable Claim or Claims
  • Respect to Third Party Claims
  • defense of Claiming Party
  • Non-Third Party Claims
  • American Arbitration Association
  • Nanston , Inc.
  • Oakbrook Drive Norcross
  • Third Party Beneficiaries
  • the State of Georgia
  • Nanston Material Adverse Effect
  • Johnston Family Stock Trust
  • Johnston Educational Trust

Location:

  • Subcorp
  • P.A.
  • Norcross
  • Maryland
  • P.C.
  • S.C. Johnston
  • Charlotte
  • North Carolina
  • South Charles Street Baltimore
  • D.D.S.
  • Esq
  • Georgia
  • NANSTON

Money:

  • Thirty-Five Cents
  • $ 7,095,596.35
  • $ 0.0001
  • $ 500,000
  • $ .01
  • $ 1.00
  • $ 250,000
  • $ 50,000
  • $ 80,000
  • $ 25,000
  • Sixty-Five Cents
  • $ 2,904,403.65
  • $ 100,000
  • $ 11.50
  • $ 10.00
  • $ 10,000

Person:

  • Subcorp
  • C.D
  • Andrews
  • Carl Sardegna
  • Wilbert H. Sirota
  • Thomas S. Fisher
  • N. Bell
  • Nanston
  • s Lawrence F. Halpert
  • JOHN C. JOHNSTON
  • NANCY ANDERSON
  • CHRIS D. JOHNSTON
  • STEVE C. JOHNSTON
  • RONNIE L. JOHNSTON
  • KYLE E. ANDERSON
  • JOHN E. TRAPP JOHN E. TRAPP
  • DIANA L. LIGGETT s Sam C. Grizzle
  • TERRI B. DREYER s Randall Little
  • JAMES MASON
  • LISA WAGNER
  • WALTER REID
  • GEORGE QUINTERO s Nathan Bell

Time:

  • 10:00 a.m.

Percent:

  • 22.7 %
  • 8 %
  • 20 %
  • 1 %