STOCK PUT/CALL OPTION AND SUCCESSOR DESIGNATION AGREEMENT

             This Stock Put/Call Option and Successor Designation Agreement (the
"Agreement")  is made effective as of this 14th day of August, 1998 by and among
Clark E. Schneekluth,  D.D.S. M.S., Inc., a professional  corporation (the "PC")
incorporated  under the laws of the State of California (the "State");  Clark E.
Schneekluth,  D.D.S.  ("Dr.  Schneekluth")  who is  duly  licensed  to  practice
orthodontics  in the State;  Omega  Orthodontics,  Inc., a Delaware  corporation
("OMEGA");   and  Omega   Orthodontics  of  Woodland  Hills,  Inc.,  a  Delaware
corporation  (the "MSO"),  which is a  wholly-owned  subsidiary  of OMEGA,  with
reference to the following facts.

                                    RECITALS

         A.  OMEGA  is  an  orthodontic  and  other  dental  specialty  practice
management  company and has expertise in managing  orthodontic  and other dental
specialty  practices  including  practice  management  systems,   office  space,
equipment,  furnishings and active  administrative  personnel  necessary for the
operation of such  practices and providing  high quality  healthcare  management
services to such practices,  directly or indirectly  through  management service
organizations such as the MSO.

         B. OMEGA  acquired  certain assets of Dr. Schneekluth  pursuant to that
certain  Affiliation  Agreement and Asset Purchase  Agreement (the  "Affiliation
Agreement")  dated  as  of  August  14,  1998  by  and  between  OMEGA  and  Dr.
Schneekluth,  and the parties have  determined  that it would be to their mutual
advantage to increase Dr.  Schneekluth's  orthodontic practice by each acquiring
certain assets of Dr. Richard A. Levin's  orthodontic  practice  located at 5251
and 5253 Lampson Ave., Garden Grove,  California ("New Orthodontic Offices") and
merging the Original  Orthodontic  Offices and the New Orthodontic  Offices into
one signal  orthodontic  practices  with two  separate  and  distinct  locations
(hereinafter know as the "Orthodontic Practices"); and

         C. The PC now owns and operates an  orthodontic  practice  with offices
located in the facilities  identified in Exhibit A (the  "Orthodontic  Offices")
and furnishes orthodontic care to the general public through the services of Dr.
Schneekluth affiliated with the PC.

         D.  The PC and  the MSO  have  entered  into  that  certain  Management
Services Agreement (the "Management  Services  Agreement") dated as of even date
herewith for the management by the MSO of the  non-orthodontic  business affairs
of the PC.

         E. Dr.  Schneekluth owns all of the capital stock (the "Capital Stock")
of the PC and desires to provide for successor  ownership upon the occurrence of
certain events. When used in this Agreement, the term "Capital Stock" shall mean
all of Dr. Schneekluth's right, title,  interest and estate in and to all of the
issued and outstanding stock in the PC, including any stock hereafter issued and
any rights to any  additional  stock and any  preemptive  rights,  warrants  and
instruments of like effect, as set forth on Exhibit B.

         F.  As a  condition  of  entering  into  the  new  Management  Services
Agreement,  Dr.  Schneekluth has agreed to grant to the MSO, and the MSO desires
to acquire from Dr.  Schneekluth  certain rights,  including but not limited to,
the right to designate the successor  purchaser (the "Designated  Successor") of
all or any part of the issued and outstanding  Capital Stock upon the occurrence
of certain events. In addition,  under the Management Services  Agreement,  upon
termination  thereof,  each of the PC and the MSO were granted certain rights to
be set forth in this Agreement.

         G. The Parties  desire that this  Agreement  replace and  supercede the
Stock Put/Call Option and Successor  Designation  Agreement dated _____, 1997 by
and between the parties.

         NOW,  THEREFORE,  in  consideration  of the foregoing  premises and the
mutual promises contained herein, and for other good and valuable consideration,
the  receipt  and  sufficiency  of which are  hereby  acknowledged,  the PC, Dr.
Schneekluth, the MSO and OMEGA agree as follows:

         1. Defined Terms.  The capitalized  words and expressions  used in this
Agreement,  but which are not defined herein shall, unless the context otherwise
requires,  have the same  meaning as they are given in the  Management  Services
Agreement.

         2. Put  Option.  The MSO shall have the option  (the "Put  Option")  to
require the PC, upon termination of the Management Services Agreement by the MSO
under  Section 10.2  thereof or upon  expiration  of the Term of the  Management
Services Agreement, to:

                  (a) Purchase from the MSO at fair market  value,  but not less
         than book value all of the leasehold improvements, fixtures, furniture,
         furnishings  and  equipment  comprising  or located at the  Orthodontic
         Offices,  including all replacements and additions  thereto made by the
         MSO pursuant to the performance of its obligations under the Management
         Services  Agreement  and all  other  assets,  including  inventory  and
         supplies and intangibles,  set forth on the balance sheet as at the end
         of the month  immediately  preceding  the date of such  termination  or
         expiration  prepared in accordance  with GAAP (the "Balance  Sheet") to
         reflect  operations of the MSO in respect of the  Orthodontic  Offices,
         including  depreciation,  amortization  and other  adjustments  of such
         assets shown on such Balance Sheet; and

                  (b) Purchase, by obtaining an assignment from the MSO, at fair
         market  value,  but not less than  book  value,  the  right to  receive
         payments  for  breach  of the  restrictive  covenants  provided  for in
         Section 3.7 of the Management  Services Agreement and in the applicable
         Employment Agreement with Dr. Schneekluth contemplated thereunder,  and
         any  goodwill  and other  intangible  assets  set forth on the  Balance
         Sheet,  reflecting  amortization  or  depreciation  of the  restrictive
         covenants, and any goodwill and other intangible assets; and

                  (c) Assume  all debt and all  contracts,  payables  and leases
         which  are  obligations  of the  MSO and  which  relate  solely  to the
         performance of its obligations under the Management  Services Agreement
         or the properties subleased in respect of the Orthodontic Offices.

If the MSO desires to exercise its Put Option, the MSO shall give written notice
of such  election to the PC and Dr.  Schneekluth  at least twenty (20)  calendar
days prior to the date  specified  in such notice as the date for the closing of
the Put  Option.  Any  exercise of the Put Option by the MSO shall be made by an
aggregate  payment of the  amounts  computed  under  Clauses (a) and (b) of this
Section 2 (collectively,  the "Put Price"). It is understood and agreed that Dr.
Schneekluth  will  continue  to be  bound by the  terms  of the  non-competition
agreement attached hereto as Exhibit C.

         3. Call  Option.  The PC shall have the option  (the "Call  Option") to
require the MSO, upon termination of the Management Services Agreement by the PC
under Section 10.1 thereof, to:

                  (a) Sell to the PC, at fair market value, all of the leasehold
         improvements, fixtures, furniture, furnishings and equipment comprising
         or located at the Orthodontic  Offices,  including all replacements and
         additions  thereto made by the MSO pursuant to the  performance  of its
         obligations  under  the  Management  Services  Agreement  and all other
         assets, including inventory and supplies and intangibles,  set forth on
         the Balance  Sheet to reflect  operations  of the MSO in respect of the
         Orthodontic  Offices,  including  depreciation,  amortization and other
         adjustments of such assets shown on such Balance Sheet; and

                  (b)  Assign  to,  or  grant a waiver  in favor of the PC,  the
         restrictive  covenants  provided  for in Section 3.7 of the  Management
         Services Agreement and in the applicable  Employment Agreement with Dr.
         Schneekluth  contemplated  thereunder,   and  any  goodwill  and  other
         intangible   assets  set  forth  on  the  Balance   Sheet,   reflecting
         amortization  or depreciation  of the  restrictive  covenants,  and any
         goodwill and other intangible assets, such; and

                  (c) Assign to the PC (which it shall  assume) all debt and all
         contracts,  payables  and leases which are  obligations  of the MSO and
         which relate solely to the  performance  of its  obligations  under the
         Management Services Agreement or the properties subleased in respect of
         the Orthodontic Offices.

If the PC desires to exercise its Call Option,  the PC shall give written notice
of such election to the MSO at least twenty (20) calendar days prior to the date
specified  in such  notice as the date for the closing of the Call  Option.  Any
exercise of the Call Option by the PC shall be made by an  aggregate  payment to
the MSO of an amount equal to the amortized  book value of the assets,  tangible
and   intangible,   described   in  Clauses  (a)  and  (b)  of  this  Section  3
(collectively,  the "Call  Price").  For  purposes of this  Section 3, the "fair
market  value" of such assets shall be determined  by an  independent  appraiser
acceptable  to, and  appointed by, the MSO and the PC. In the event that the MSO
and the PC cannot agree on an  independent  appraiser,  the fair market value of
such assets shall be determined  by three  independent  appraisers,  one of whom
shall be  appointed by the MSO, one of whom shall be appointed by the PC and the
third of whom  shall be  appointed  by  mutual  agreement  of the two  appointed
appraisers. Within sixty (60) days after the appointment of the third appraiser,
the three  appraisers  shall  each  submit in  writing  their  determination  of
amortized  book  value  of such  assets  to each of the MSO and the PC,  and the
amortized book value of such assets shall be  conclusively  determined by taking
the  numerical  average of the two fair market  value  determinations  which are
closest in amount. The cost of obtaining these appraisals shall be paid one-half
by the MSO and one-half by the PC.

         Notwithstanding the foregoing,  in the event that the PC terminates the
Management  Services  Agreement pursuant to Section 10.1(a)(1) of the Management
Services Agreement and the MSO is not paying the MSO Expenses (as defined in the
Management  Services  Agreement) as they become due such that the ability of the
PC to continue to practice  orthodontics is compromised,  the Call Option may be
exercised  by the  payment by the PC to the MSO of the sum of (i) the book value
of the assets described in Clause (a) of this Section 3 plus (ii) the book value
of the assets described in Clause (b) of this Section 3, less an amount equal to
two-thirds  (2/3) of the difference  between (y) all management fees paid by the
PC to the MSO pursuant to Schedule 3 of the Management  Services  Agreement less
(z) the  sum of all the MSO  Expenses  paid  by the  MSO  under  the  Management
Services Agreement plus the Rebates paid to the PC pursuant to Schedule 3 of the
Management  Services  Agreement;  provided,  however,  that the amount due under
clause (ii) of this sentence shall not be less than zero.

         4. Closing and Delivery.  At the closing ("Closing") of the exercise by
the MSO of the Put Option  under  Section 2 or of the  exercise by the PC of the
Call Option under  Section 3, as the case may be, the PC shall pay cash,  or, at
the option of the PC and with the consent of Dr.  Schneekluth,  a combination of
cash,  forgiveness  of amounts due to Dr.  Schneekluth  under the Purchase  Note
and/or  return of the shares of Omega Common Stock  received by Dr.  Schneekluth
under Section 1.1(a)(iii) of the Affiliation Agreement (the value of such shares
to be determined by multiplying such number of shares by the average of the last
sales (or  closing)  price for  Omega's  Common  Stock on Nasdaq  (or a national
securities  exchange)  for  each of the  sixty  (60)  trading  days  immediately
preceding  the date of the Put Option Notice or the Call Option  Notice,  as the
case may be) for the  repurchased  assets,  whether  the Put Price  pursuant  to
exercise by the MSO of the Put Option or the Call Price  pursuant to exercise by
the PC of the Call Option, as the case may be. The PC and Dr.  Schneekluth shall
execute such  documents as may be required by the MSO to assume the  liabilities
set  forth in  Section  2(c) or 3(c),  as the case may be,  and  shall use their
respective  best  efforts to remove the MSO from any  liability  with respect to
such repurchased  assets and with respect to any property leased or subleased by
the MSO. From and after any such Closing,  each party shall provide to the other
party  reasonable  access to books and  records  then owned by it to permit such
requesting party to satisfy  reporting and contractual  obligations which may be
required of it. In addition, following any such Closing, the MSO or its designee
shall have  reasonable  access during normal  business hours to the PCs records,
including  patient  records  regarding  records  of  collections,  expenses  and
disbursements  as  kept by the  MSO in  performing  its  obligations  under  the
Management Services Agreement, and the MSO may copy any or all such records.

         5.       Successor Designation Option.

         (a) Upon  termination of the Management  Services  Agreement by the MSO
under  Section 10.2  thereof or upon  expiration  of the Term of the  Management
Services Agreement or upon the happening of any of the following events (each of
such  termination,  expiration  or  event  being  hereinafter  referred  to as a
"Transfer  Event"),  the MSO shall have the option  (the  "Designated  Successor
Option") to designate a  Designated  Successor to purchase all or any portion of
the Capital Stock then held by Dr. Schneekluth:

               (i) the death of Dr. Schneekluth;

               (ii) if Dr. Schneekluth is determined to be permanently  disabled
          so as to be unable to render any  professional  services  on behalf of
          the PC, as determined in accordance with paragraph (b) of this Section
          5 below;

               (iii) if Dr.  Schneekluth  voluntarily  terminates his employment
          without first proposing and obtaining the MSO's approval of a proposed
          qualified successor  orthodontist  reasonably acceptable to the MSO on
          behalf of the PC;

               (iv) if Dr. Schneekluth acts in a criminally or grossly negligent
          manner with respect to the  performance  of  professional  Orthodontic
          services rendered or to be rendered on behalf of the PC;

               (v) if Dr. Schneekluth  becomes  hospitalized for alcohol or drug
          abuse;

               (vi) if Dr. Schneekluth is convicted of a felony;

               (vii)  if Dr.  Schneekluth  loses  his  license  or is  otherwise
          determined  to  be   disqualified   from  rendering   services  as  an
          orthodontist  for the PC by the applicable  dental or other comparable
          regulatory board of the State;

               (viii) if Dr. Schneekluth's shares of Capital Stock are or are to
          be transferred voluntarily or by operation of law to any person who is
          a "disqualified  person," as defined in the  professional  corporation
          statute of the Laws of the State;

               (ix) if Dr.  Schneekluth  voluntarily  files a petition under any
          bankruptcy or insolvency  law or a petition for the  appointment  of a
          receiver, or makes an assignment for the benefit of creditors;

               (x) if Dr.  Schneekluth  is  subjected  involuntarily  to  such a
          petition or  assignment,  or any creditor or other persons  obtains an
          attachment  or other legal or equitable  interest in any shares of the
          Capital  Stock  of Dr.  Schneekluth  and  such  involuntary  petition,
          assignment  or attachment  is not  discharged  within ninety (90) days
          after creation;

               (xi) if Dr.  Schneekluth  is required  to transfer  any shares of
          Capital  Stock by reason of a  judgment,  court  order or decree or by
          operation of law;

               (xii) if Dr. Schneekluth  retires within the meaning of Paragraph
          (c) of this Section 5; or

               (xiii) if Dr.  Schneekluth  desires to sell more than twenty five
          (25%)   percent  any  of  his  shares  of  Capital  Stock  to  another
          orthodontist as contemplated under Section 8 hereof.

         (b) For  purposes  hereof,  "permanent  disability"  means any illness,
injury,  disease  or  condition,  whether  mental  or  physical,  which,  for  a
continuous  period of thirty  (90)  days,  (i)  prevents  Dr.  Schneekluth  from
performing  his duties  competently  and adequately as determined by the MSO, or
(ii)  substantially  impairs the PC's or Dr.  Schneekluth's  ability to practice
orthodontics.

         (c) For purposes hereof, "Retirement" of Dr. Schneekluth shall occur on
the date  when Dr.  Schneekluth  voluntarily  withdraws  from  the  practice  of
orthodontics  at whatever age or for whatever reason and notifies the PC that he
desires  to be  regarded  as  "Retired"  and fails to have  first  proposed  and
obtained the MSO's  approval of a qualified  successor  orthodontist  reasonably
acceptable to the MSO.

         6. Successor Designation Option Exercise.  Except as otherwise provided
herein,  upon  exercise of the  Successor  Designation  Option,  the  Designated
Successor  may purchase  all, but not less than all, of the Capital  Stock.  The
Successor Designation Option shall also be exercisable by the MSO as provided in
Section 8 below.

         7. Exercise Notice.  Any exercise of the Successor  Designation  Option
shall be accompanied by a written notice (the  "Successor  Designation  Exercise
Notice") to Dr. Schneekluth (or his successor or representative), specifying the
name, address and information  showing the qualifications and suitability of the
Designated  Successor to conduct or perform  professional  services on behalf of
the PC and number of shares of Capital Stock of Dr.  Schneekluth as to which the
Successor Designation Option is being exercised.  Upon the MSO's exercise of the
Successor  Designation  Option in  respect  of any event  described  in  Section
5(a)(iii)  or (x) as to all of the shares of Capital  Stock of Dr.  Schneekluth,
Dr.  Schneekluth shall execute a Non-Competition  Agreement in the form attached
hereto as Exhibit C. The MSO may, at any time, cancel any Successor  Designation
Exercise Notice sent by it hereunder.

         8. Right of First Refusal and Sale of Stock. If Dr. Schneekluth desires
to sell any of the Capital Stock to another  orthodontist  (a  "Purchaser"),  he
shall  first  give  notice to the MSO of his intent to sell such  Capital  Stock
("Notice of Sale"),  giving to the MSO such  information  as shall be reasonably
requested by it to ascertain the qualifications and suitability of the Purchaser
to conduct or to perform professional services on behalf of the PC and the terms
and  conditions  of such  proposed  sale to the  Purchaser.  If the sale of such
Capital Stock represents twenty five (25%) percent or less of the Capital Stock,
then,  unless  the  MSO  or  OMEGA  reasonably  believes  such  Purchaser  to be
unacceptable,  such transfer shall not constitute a Transfer Event. If such sale
is greater the twenty five (25%)  percent of the Capital Stock then upon receipt
of such  Notice,  the  Successor  Designation  Option  of the MSO  shall  become
exercisable  for a period  of  three  (3)  months,  provided  however,  that the
exercise  price and terms of  purchase  of the  Capital  Stock  shall be no less
favorable to Dr.  Schneekluth than those set forth in the Notice of Sale. In the
event the Successor  Designation  Option is not exercised  during such three (3)
month period,  Dr.  Schneekluth may sell the Capital Stock to the Purchaser upon
the terms and conditions set forth in the Notice of Sale, provided however, that
such sale shall be conditioned: (i) upon the Purchaser joining in this Agreement
and  entering  into  an  employment  agreement  with  the PC on such  terms  and
conditions  as may be  approved  by the  MSO,  and  (ii)  upon  Dr.  Schneekluth
executing a Non-Competition Agreement in the form attached hereto as Exhibit C.

         9.  Assignment  of  the  Successor  Designation  Option  The  Successor
Designation  Option may be  assigned  by the MSO or any  assignee  of the MSO to
OMEGA or to a duly licensed  orthodontist,  by a written  assignment,  signed by
both the MSO and the assignee.  When the context so requires in this  Agreement,
the term "MSO" shall be deemed to refer to an assignee  holding an assignment of
the Successor  Designation  Option with respect to such Capital  Stock,  and the
terms "party" and "parties" shall be deemed to include

         10.  Purchase Price of the Capital Stock.

                  (a) The purchase price  ("Purchase  Price") due and payable by
the Designated Successor upon exercise of the Successor Designation Option shall
be an amount equal to the product of (a) the  aggregate  net amount  received by
the PC pursuant to Article 6 and Schedule 3 of the Management Services Agreement
for the twelve (12) calendar months immediately preceding the month in which the
Successor  Designation  Exercise Notice is delivered to Dr.  Schneekluth (or his
successor or  representative)  multiplied  by (b) a fraction,  the  numerator of
which is the  number of  shares of the  Capital  Stock to be  purchased  and the
denominator  of which  is the  total  number  of  shares  of the  Capital  Stock
outstanding at the time of such purchase.

                  (b)  Payment  of  Purchase  Price.  The  Purchase  Price  upon
exercise of the  Successor  Designation  Option shall be paid by the  Designated
Successor  executing a negotiable  promissory note, secured by the Capital Stock
of Dr.  Schneekluth.  The note shall be for a term of five years,  with interest
payable  quarterly  in  arrears at the  mid-term  Applicable  Federal  Rate with
monthly compounding  published by the Internal Revenue Service from time to time
in  accordance  with Section  1274(d) of the Internal  Revenue Code of 1986,  as
amended (the "Code") or any successor  provision of the Code,  provided however,
that the  Designated  Successor  shall be  permitted  to prepay such note at any
time.  Principal shall be payable in five equal annual  installments  commencing
six months after the closing date.

                  (c)  Purchase From Dr. Schneekluth's Estate.

                         (i) Upon the death of Dr.  Schneekluth  and  receipt of
                    notice  of a  Successor  Designation  Exercise  Notice,  Dr.
                    Schneekluth's  personal  representative  shall apply for and
                    obtain any necessary  court approval or  confirmation of the
                    sale of Dr.  Schneekluth's  shares of Capital Stock pursuant
                    to this Agreement.  The  representative of the estate of Dr.
                    Schneekluth and the Designated Successor shall complete such
                    sale as soon after the date of death as practicable,  but no
                    later than 180 days after such event.

                         (ii) The  death of Dr.  Schneekluth's  spouse,  if any,
                    shall not be  considered  the death of Dr.  Schneekluth  for
                    purposes of this Agreement.

                         (iii) The estate of Dr.  Schneekluth  shall  bear,  and
                    hold the PC harmless from,  all costs and expenses  incurred
                    as a result of securing  any court  orders,  court  decrees,
                    court  approvals or inheritance  tax clearances  required to
                    enable  the estate of Dr.  Schneekluth  to  transfer  to the
                    Designated Successor full legal and equitable tax-free title
                    to the Capital Stock of Dr. Schneekluth.

                  (d) Other  Purchases.  Except for  purchases of Capital  Stock
upon exercise of the Successor  Designation  Option  pursuant to Section 5(a)(i)
hereof, all other purchases of Capital Stock pursuant to such Option shall close
thirty (30) days after the date of any Successor  Designation  Exercise  Notice,
unless extended by the parties.

         11.      Insurance.

                  (a) In order to insure the MSO's  interest  in the  Management
Services Agreement and under this Agreement,  Dr. Schneekluth hereby consents to
the acquisition and maintenance in force of a disability  insurance policy and a
life  insurance  policy  by the MSO and  OMEGA  on Dr.  Schneekluth  ("Insurance
Policies").  The life insurance  policy may be in an aggregate face amount of up
to three times Dr.  Schneekluth's  income,  as shown on the W-2 Form prepared by
the PC for the  most  recent  calendar  year.  Dr.  Schneekluth  agrees,  at the
election of the MSO and OMEGA, to take whatever  actions are necessary to assist
in the acquisition of any such Insurance Policy by the MSO and OMEGA.

                  (b) The  Insurance  Policies  shall  name the MSO and OMEGA as
sole owner and beneficiary of such policies.

                  (c) As long as the Insurance  Policies provided for herein are
in full force and effect,  the MSO and OMEGA shall pay all premiums  falling due
on all such policies.  Such payments shall be made by the MSO or OMEGA and shall
not be considered MSO expenses pursuant to this Agreement.

                  (d) No  insurance  company  that has issued or shall  issue an
Insurance  Policy or Policies to the MSO as permitted under this Agreement shall
be under  any  obligation  with  respect  to the  performance  of the  terms and
conditions of this Agreement.  Any such company shall be bound only by the terms
of the Insurance Policy or Policies which it has issued or shall hereafter issue
and shall have no liability except as set forth in its policies.

         12.  Representations.  The PC and Dr.  Schneekluth  each  represent and
warrant to the MSO and OMEGA that as of the day and year first above written and
during the term of this Agreement,  Exhibit A is a true and complete  listing of
the Capital Stock, as revised from time to time pursuant to this Agreement.

         13.      Restriction on Transfer.

                  (a) Except to the extent  and in the manner  provided  in this
Agreement  or with the  express  prior  written  consent of the MSO which may be
granted or withheld in its absolute discretion,  Dr. Schneekluth shall not sell,
assign,  transfer,  pledge or otherwise dispose (including by gift or otherwise)
of any of his shares of the Capital Stock.

                  (b)  Issuance  of Stock;  Change  in  Ownership;  Mergers  and
Consolidation.  Without the prior  written  consent of the MSO, Dr.  Schneekluth
shall  not  permit  the PC to,  and the PC shall  not,  during  the term of this
Agreement,  issue any stock,  other equity, or debt of the PC; permit any change
in  the  composition  or  respective  percentage  ownership  of the  PC;  merge,
consolidate  or  otherwise  reorganize  with  or  into  any  other  corporation,
partnership,  trade,  business,  or the  like;  amend or  otherwise  modify  its
articles of incorporation or bylaws;  dissolve; or enter into any agreement with
any person to do any of the foregoing  without the prior written  consent of the
MSO.

         14.  Delivery of Stock Power.  Upon  execution of this  Agreement,  Dr.
Schneekluth  shall  execute and deliver to Richard M/  Rosenthal,  Esq.,  Encino
Office Park,  Building II, 6345 Balboa Blvd.,  Suite 330, Encino, CA 91316-1524,
as escrow  agent  (the  "Escrow  Agent"),  a  sufficient  number of  assignments
separate  from  certificates,  endorsed  in blank to cover all of the Stock (the
"Stock Power") held of record or  beneficially  owned by Dr.  Schneekluth,  with
copies provid3ed to the MSO. Upon execution of this Agreement,  Dr.  Schneekluth
shall  deliver  to  the  Escrow  Agent  all   certificates   heretofore   issued
representing  all of the shares of Capital Stock held of record or  beneficially
owned by Dr.  Schneekluth.  Each such certificate shall have affixed to the back
of the certificate a legend substantially as follows:

         "The rights of any holder of any share  evidenced by this  certificate,
         including the right to dispose of the  securities  represented  by this
         certificate or any interest therein, are subject to and restricted by a
         certain  Stock  Put/Call  Option and Successor  Designation  Agreement,
         dated as of August,  ___, 1998, among the PC, the holder hereof and the
         MSO and OMEGA (as defined therein).  The PC will mail without charge to
         any holder of these  shares a copy of such  agreement  within  five (5)
         days of receipt by the PC of a written request therefor."

         Upon any exercise of the Successor  Designation  Option by the MSO, the
Escrow Agent shall  deliver the Stock Powers and the  certificates  representing
all of the shares of Capital Stock held of record or  beneficially  owned by Dr.
Schneekluth  to the MSO and the MSO (and/or the Designated  Successor)  shall be
authorized to complete the Stock  Powers,  attach them to the  certificates  and
tender the same to the transfer  agent for the PC for  reissuance in the name of
the  Designated  Successor.  Upon  any  termination  of this  Agreement  without
exercise of the Successor  Designation Option, the Escrow Agent shall return all
such Stock Powers and certificates to Dr. Schneekluth.

         15.  Confidentiality.  The parties  shall use all good faith efforts to
keep the contents of this  Agreement and all other  aspects of the  negotiations
preceding execution of this Agreement confidential.  Unless required by law, the
PC, Dr.  Schneekluth,  and the MSO and OMEGA shall not  disclose the contents of
this  Agreement or the  negotiations  leading to this Agreement to third parties
without the prior  written  consent of the other  parties.  The MSO shall ensure
that  all  of  the   assignees   likewise   comply  with  the   obligations   of
confidentiality  imposed by this Section,  except that the MSO and the assignees
may disclose the contents of such to the extent  required by law or otherwise to
their  respective  agents,  representatives,  contractors,  and employees to the
extent necessary to exercise their respective rights or perform their respective
obligations hereunder.

         16. Term. The term of this  Agreement  shall commence as of the day and
year  first  above  written  and shall  terminate  upon the  termination  of the
Management   Services  Agreement  or  the  exercise  (and  consummation  of  the
transaction  provided for upon such exercise) of the Put Option, the Call Option
or the Successor  Designation Option as to all of the Capital Stock, as the case
may be (the "Term").

         17.      General

                  (a)  Compliance  with Law.  The PC and Dr.  Schneekluth  shall
comply with all applicable requirements of applicable state law and regulations,
and other licensing and accreditation authorities.

                  (b)  Relationship  of  Parties.   In  the  exercise  of  their
respective rights and the performance of their respective obligations under this
Agreement,  the PC and Dr. Schneekluth on the one hand and OMEGA and the MSO (or
any  assignee  of the MSO) on the other hand are acting in the  capacity  of the
grantor and grantee of an option to purchase  or to  designate  the  purchase of
shares of Capital  Stock and nothing in this  Agreement is intended nor shall be
construed  to create  an  employer/employee,  partnership,  joint  venture  or a
landlord/tenant relationship between or among the parties.

                  (c)  Assignment.  The rights and duties of the  parties  under
this  Agreement  may not be assigned or  transferred  without the prior  written
consent of the  non-assigning  party,  which consent  shall not be  unreasonably
withheld; provided, however, that the MSO and OMEGA shall be permitted to assign
its and their respective  rights and duties hereunder without the consent of Dr.
Schneekluth or the PC to any person,  firm or corporation  controlled by the MSO
or OMEGA,  controlling  the MSO or OMEGA or under common control with the MSO or
OMEGA or to such  financing  institutions  as may be  required  by the  terms of
credit  agreements  which may be entered into from time to time by Omega for the
obtaining of addition financing for Omega.

                  (d) Counterparts.  This Agreement, and any amendments thereto,
may be executed in  counterparts,  each of which  shall  constitute  an original
document, but which together shall constitute one and the same instrument.

                  (e) Headings. The section headings contained in this Agreement
are inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.

                  (f) Notices.  Any notice or other  communication in connection
with this  Agreement  shall be deemed to be  delivered  if in writing (or in the
form of a telegram or facsimile transmission) addressed as provided below and if
either (a) actually  delivered at said address,  or (b) in the case of a letter,
three  business days shall have elapsed after the same shall have been deposited
in the United States mail,  postage prepaid and registered or certified,  return
receipt requested, or sent by reputable overnight courier:

                  If to Dr. Schneekluth, to:

                  CLARK E. Schneekluth, D.D.S., M.S., Inc.
                  Clark E. Schneekluth, D.D.S.
                  511 Warner Avenue, Suite 104
                  Huntington Beach, California 92649

                  If to the OMEGA, to:

                  Omega Orthodontics, Inc.
                  3621 Silver Spur Lane
                  Acton, California  93510
                  Attn:   Robert Schulhof

and in any case at such other address as the addressee  shall have  specified by
written  notice.  All  periods  of  notice  shall be  measured  from the date of
delivery thereof.

                  (g)  Governing  Law. This  Agreement  shall be governed by and
construed in accordance with the laws of the State of California.

                  (h)  Amendment.  This  Agreement may be amended at any time by
agreement of the parties,  provided that any  amendment  shall be in writing and
executed by the parties.

                  (i)  Severability.  If any provision of this Agreement is held
by a court of competent  jurisdiction  to be invalid or  unenforceable,  (i) the
parties  shall  amend  this  Agreement  in  order to carry  out the  intent  and
essential  business  purposes of this Agreement as closely  possible  within the
requirements of applicable  provisions of Law as determined by such a court, and
(ii) the  remaining  provisions  will  nevertheless  continue  in full force and
effect.

                  (j) Fees and Expenses. The PC, Dr. Schneekluth and the MSO and
OMEGA  each  shall  bear  their own  expenses,  including,  without  limitation,
attorneys' and accountants' fees, incurred in connection with the preparation of
this Agreement and the transactions contemplated hereby.

                  (k) Exhibits and  Schedules.  All  attachments  and  schedules
attached to this  Agreement are  incorporated  herein by this  reference and all
references  herein to "Agreement"  shall mean this  Agreement  together with all
such exhibits and schedules.

                  (l) Time of Essence.  Time is expressly made of the essence of
this Agreement in each and every  provision  hereof of which time of performance
is a factor.

                  (m)  Attorneys'  Fees.   Should  any  of  the  parties  hereto
institute any action or  proceeding  to enforce this  Agreement or any provision
hereof (including without limitation,  arbitration), or for damages by reason of
any  alleged  breach of this  Agreement  or of any  provision  hereof,  or for a
declaration of rights  hereunder  (including,  without  limitation,  by means of
arbitration),  the  prevailing  party in any such action or proceeding  shall be
entitled  to receive  from the other  party all costs and  expenses,  including,
without limitation, reasonable attorneys' fees, incurred by the prevailing party
in connection with such action or proceeding.

                  (n) Further  Assurances.  The parties  shall take such actions
and execute and deliver such further documentation as may reasonably be required
in order to give effect to the  transactions  contemplated by this Agreement and
the intentions of the parties hereto.

                  (o) Remedies. The remedies specified in this Agreement are the
exclusive  remedies for liabilities of the parties arising under this Agreement.
The limitations on liability,  releases from liability, and waiver and indemnity
provisions  expressed in this Agreement shall apply to the full extent permitted
by law, even in the event of a parties' fault, negligence (in whole or in part),
strict liability, or other basis of liability,  and whether liability is founded
in  contract,  tort,  or  otherwise,  and shall  extend to the  parties  and its
affiliated  companies and its and their  shareholders,  directors,  officers and
employees.

         18.  Notwithstanding   anything  to  the  contrary  contained  in  this
Agreement, or any Schedule or Exhibit hereto, in no event shall the MSO or OMEGA
or their  officers,  directors  or employees be liable for any form of indirect,
special,  incidental  or  consequential  damages,  whether such damages arise in
contract or tort, irrespective of fault, negligence or strict liability.

         19. Dispute Resolution.

         Any dispute which arises as a result of this Agreement shall be settled
in accordance with the terms set forth in Article 14 of the Management  Services
Agreement executed on even date herewith.

IN WITNESS WHEREOF,  the PC, Dr.  Schneekluth,  MSO and OMEGA have executed this
Agreement  as  of  the  date  first  above  written  by  their  duly  authorized
representatives as set forth below.

"PC"

CLARK E. SCHNEEKLUTH, D.D.S., M.S., Inc.
an California corporation


By: ______________________________
    Clark E. Schneekluth, D.D.S., President


DR. SCHNEEKLUTH

______________________________
Clark E. Schneekluth, D.D.S.,


"MSO"

OMEGA ORTHODONTICS OF WOODLAND HILLS, INC.
a Delaware corporation


By: ______________________________
    Robert J. Schulhof, President


"OMEGA"
OMEGA ORTHODONTICS, INC.,
a Delaware corporation

By:_______________________________
   Robert J. Schulhof, President and
    Chief Executive Officer

<PAGE>
                          SPOUSAL JOINDER AND CONSENT

         I am the spouse of Clark E. Schneekluth,  D.D.S.,  the sole Stockholder
of Clark E.  Schneekluth,  D.D.S.,  M.S.,  Inc.  To the  extent  that I have any
interest  in any of the  Capital  Stock  (as that term is  defined  in the Stock
Put/Call  Option and  Successor  Designation  Agreement),  I hereby join in such
Agreement  and agree to be bound by its terms and  conditions to the same extent
as my spouse.  I have read the Stock Put/Call  Option and Successor  Designation
Agreement,  understand its terms and  conditions,  and to the extent that I have
felt it  necessary,  I have  retained  independent  legal  counsel  to advise me
concerning  the legal effect of this Stock  Put/Call  Option  Agreement and this
Spousal Joinder and Consent.

I understand  and  acknowledge  that each of the MSO and OMEGA is  significantly
relying on the  validity  and  accuracy of this  Spousal  Joinder and Consent in
entering  into this Stock  Put/Call  Option  and  Successor  Designation  Option
Agreement.

Executed this     day of August, 1998.



Signature:                                    


Printed or Typed Name: Sherilyn F. Schneekluth

<PAGE>
                                   EXHIBIT A
                              ORTHODONTIC OFFICES

The offices and related  leasehold  improvements  constituting  the  Orthodontic
Offices  are  located  at  511  Warner  Avenue,  Suite  104,  Huntington  Beach,
California  92649  ("Huntington  Beach") and 5251 and 5253 Lampson Ave.,  Garden
Grove, California ("Garden Grove").

<PAGE>
                                   EXHIBIT B
                                     STOCK

         The  authorized  capital  stock of the PC is  ______  shares  of common
stock,  $0.00 par value per share.  _______ shares of the common stock of the PC
are issued and are outstanding, all of which shares are evidenced by Certificate
No. 1 issued in the name of Clark E. Schneekluth, D.D.S.


<PAGE>

                                   EXHIBIT C
                           NON-COMPETITION AGREEMENT

THIS  NON-COMPETITION  AGREEMENT  ("Agreement")  is made as of this _____ day of
August, 1998 by and between Clark E. Schneekluth,  D.D.S., ("Dr.  Schneekluth"),
who is duly licensed to practice  orthodontics  in the state of California,  and
Clark E. Schneekluth,  D.D.S. M.S., Inc., a professional  corporation (the "PC")
incorporated  under the laws of the State and  Omega  Orthodontics  of  Woodland
Hills, Inc., a Delaware Corporation.

         All capitalized  terms used herein and not otherwise  expressly defined
shall have the same meanings set forth in that certain Stock Put/Call Option and
Successor  Designation  Agreement ("Stock  Agreement") dated August ___, 1998 by
and  among  Dr.  Schneekluth,  the PC,  Omega  Orthodontics,  Inc.,  a  Delaware
corporation  ("Omega") and Omega Orthodontics of Woodland Hills Inc., a Delaware
corporation (the "MSO") which is a wholly owned subsidiary of Omega.

                                    RECITALS

         A. Dr. Schneekluth is the sole owner of the Capital Stock of the PC and
desires to transfer all of his right,  title and interest in and to such Capital
Stock pursuant to Section 8 of the Stock Agreement to the Purchaser.

         B. The  Purchaser  has agreed to join the Stock  Agreement and to enter
into an employment  agreement with the PC on terms and conditions  acceptable to
and approved by the MSO.

         C. As a condition  to the  transfer by Dr.  Schneekluth  of his Capital
Stock to the  Purchaser  pursuant  to  Section  8 of the  Stock  Agreement,  Dr.
Schneekluth  has agreed to enter into an agreement in the form of this Agreement
to be delivered to the PC upon the closing of the transfer of his Capital  Stock
pursuant to Section 8 of the Stock Agreement.

         NOW,  THEREFORE,  in consideration of the foregoing  promises and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows.

         1. Dr.  Schneekluth's  Covenants.  During the term of this Agreement in
the  Service  Area  described  in  Section 4 below,  Dr.  Schneekluth  shall not
(directly or indirectly through any business, enterprise,  venture, partnership,
corporation  or any  other  entity  controlled  directly  or  indirectly  by Dr.
Schneekluth, whether alone or as a partner, stockholder, creditor or otherwise):

                  (a) Provide  orthodontic or other dental services,  or engage,
participate,  aid, assist, or hold any interest in any business or the provision
of  any  managed  care  plan  service  which  is,  or as of Dr.  Schneekluth  's
engagement or participation, would become, competitive with the PC's orthodontic
practice business;

                  (b) Engage or contract  (other than with the MSO or any of the
MSO's  affiliates)  for  the  provision  of  any  management  services  for  Dr.
Schneekluth  or any person  employed or under  contract to Dr.  Schneekluth  (as
applicable)  which  are  the  same  as or  substantially  similar  to any of the
services that the MSO or any of the MSO's affiliates furnishes;

                  (c) Solicit or assist any other person to solicit any business
relating  to a competing  line of business  (other than for the PC or any of its
affiliates) from any present or potential patient, customer (including all third
party payors) of Dr.
Schneekluth, the PC or any of their respective affiliates;

                  (d) Commit any other act or assist  others to commit any other
act  which  might  injure  the  business  of the  PC,  the  MSO or any of  their
respective affiliates;

                  (e)  Directly  or  indirectly  employ,  contract,  solicit  or
encourage  any employee or other person under  contract  with the PC, the MSO or
any of their respective affiliates to leave the employ of any such entity; and

                  (f)  Directly  or  indirectly  solicit,  request,  advise,  or
encourage any present or future supplier,  patient,  customer or employee of the
PC, the MSO or their  respective  affiliates to withdraw,  curtail or cancel its
business dealings with the PC, the MSO or their respective  affiliates,  or take
any actions that might  impair the  relations of the PC, the MSO or any of their
respective  affiliates  and their  respective  suppliers,  patients,  customers,
employees or others.

         2. Dr.  Schneekluth's  Representations.  Dr.  Schneekluth  specifically
acknowledges, represents, and warrants that: (i) his covenants set forth in this
Agreement  are being given in  connection  with the sale of the Capital Stock to
the Purchaser pursuant to Section 8 of the Stock Agreement;  (ii) such covenants
are reasonable and necessary to protect the legitimate  interests of the PC, the
MSO and Omega;  and (iii) the PC, the MSO and Omega would not have  consented to
such sale in the absence of such restrictions. Dr. Schneekluth acknowledges that
this  Agreement is subject to all  representations,  warranties and covenants of
Dr. Schneekluth in the Stock Agreement.

         3. Service Area. The Service Area to which Dr. Schneekluth 's covenants
in Section 1 apply is defined as the area within a fifteen  (15) mile radius (or
the maximum  radius  permitted  by law, if less) of each  orthodontic  office or
other facility owned,  operated or managed by Dr. Schneekluth,  the PC, the MSO,
Omega or their respective affiliates now existing or hereafter established.

         4. Term.  The term of this  Agreement  commences as of the day and year
first above written and continues for twenty-four (24) months.

         5. Payment.  As consideration  for Dr.  Schneekluth 's agreement not to
compete and other covenants  herein,  the PC shall pay Dr.  Schneekluth upon the
execution  of  this  Agreement  by the PC the  amount  of One  Thousand  Dollars
($1,000).

         6.  Remedies.  In the  event of a  breach  by Dr.  Schneekluth  of this
Agreement,  the PC shall be entitled to receive,  on behalf of the MSO, from Dr.
Schneekluth,  in  addition  to other  remedies  and not by way of an election of
remedies,  liquidated  damages  equal  in  amount  to the  greater  of  (a)  Dr.
Schneekluth 's income,  as shown on the W-2 form prepared by the PC for the most
recent calendar year or (b) $300,000. Any amounts received by the PC pursuant to
the  prior  sentence  shall be paid to the MSO by the PC  immediately  following
receipt  by the PC.  Should  a court  fail to  enforce  the  liquidated  damages
provision  set  forth in the  first  sentence  of this  Section  6, the  parties
acknowledge  and agree that,  absent such  liquidated  damages,  a breach by Dr.
Schneekluth of this Agreement will cause irreparable damage to the PC, the exact
amount of which will be difficult to ascertain, and that remedies at law for any
such breach will be inadequate. Accordingly, Dr. Schneekluth agrees that in such
case, the PC shall be entitled to injunctive relief and Dr.  Schneekluth  agrees
not to assert in any proceeding  that the PC has an adequate  remedy at law. Dr.
Schneekluth  shall pay the  reasonable  fees and expenses,  including  attorneys
fees, incurred by the PC or any successor or assign in enforcing this Agreement.

         7. Third Party  Beneficiaries.  The parties  expressly  understand  and
agree that the MSO and Omega are third party beneficiaries of this Agreement and
shall be entitled to all of the rights and  remedies  provided  herein to the PC
and shall be entitled to enforce the terms of this Agreement.

         8. Miscellaneous.

                  (a)  Successors and Assigns.  This Agreement  shall be binding
upon and shall inure to the benefit of the  parties and their  respective  heirs
(as applicable), legal representatives, and permitted successors and assigns. No
party  may  assign  this  Agreement  or the  rights,  interests  or  obligations
hereunder;  provided,  however, that the PC may assign its rights, interests and
obligations  to the MSO, Omega and their  affiliates  without the consent of Dr.
Schneekluth. Any assignment or delegation in contravention of this Section shall
be null and void.

                  (b) Counterparts.  This Agreement, and any amendments thereto,
may be executed in  counterparts,  each of which  shall  constitute  an original
document, but which together shall constitute one and the same instrument.

                  (c) Headings. The section headings contained in this Agreement
are inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.

                  (d)  Amendment.  This Agreement may not be amended except in a
writing executed by all parties.

                  (e) Time of Essence.  Time is expressly made of the essence of
this Agreement and each and every provision  hereof of which time of performance
is a factor.

                  (f)  Notices.  Any notices  required or  permitted to be given
hereunder  by any party to the  other  shall be in  writing  and shall be deemed
delivered upon personal delivery;  twenty-four (24) hours following deposit with
a courier for overnight delivery; or seventy-two (72) hours following deposit in
the U.S. Mail,  registered or certified mail,  postage  prepaid,  return-receipt
requested,  addressed to the parties at the following addresses or to such other
addresses as the parties may specify in writing:


If to Dr. Schneekluth:          Dr. Clark E. Schneekluth, D.D.S.
                                511 Warner Avenue, Suite 104
                                Huntington Beach, California 92649


If to the PC:                   Dr. CLARK E. Schneekluth, D.D.S., M.S., INC.
                                Dr. Clark E. Schneekluth, D.D.S.
                                511 Warner Avenue, Suite 104
                                Huntington Beach, California 92649

                  (g)  Governing  Law. This  Agreement  shall be governed by and
construed in accordance with the laws of the State of California.

                  (h)  Severability.   If  any  provision  or  portion  of  this
Agreement  is  held  by a court  of  competent  jurisdiction  to be  invalid  or
unenforceable,  the remainder of this  Agreement will  nevertheless  continue in
full force and effect and shall not be invalidated or rendered  unenforceable or
otherwise adversely affected,  unless such invalidity or unenforceability  would
defeat an essential  business  purpose of this Agreement.  Without  limiting the
generality of the foregoing, if the provisions of this Agreement shall be deemed
to  create a  restriction,  which  is  unreasonable  as to  either  duration  or
geographical  area or  both,  the  parties  agree  that the  provisions  of this
Agreement shall be enforced for such duration and in such geographic area as any
court of competent jurisdiction on may determine to be reasonable.

                  (i) Attorneys' Fees.  Should either the PC or Dr.  Schneekluth
institute  any action or procedure to enforce  this  Agreement or any  provision
hereof,  or for damages by reason of any alleged  breach of this Agreement or of
any  provision  hereof,  or for a  declaration  of rights  hereunder  (including
without  limitation  arbitration),  the  prevailing  party in any such action or
proceeding  shall be  entitled  to  receive  from the other  party all costs and
expenses,  including without limitation  reasonable attorneys' fees, incurred by
the prevailing party in connection with such action or proceeding.

IN WITNESS  WHEREOF,  the parties hereto have executed this Agreement of the day
and year first written above.


"PC"

Clark E.  Schneekluth, D.D.S., M.S., Inc.
an California corporation


By: ______________________________
    Clark E. Schneekluth, D.D.S., President


DR. SCHNEEKLUTH


______________________________
Clark E. Schneekluth, D.D.S.,


ACKNOWLEDGED BY:

"MSO"

OMEGA ORTHODONTICS OF WOODLAND HILLS, INC.
a Delaware corporation


By: ______________________________
    Robert J. Schulhof, President