MANAGEMENT AGREEMENT

This  Management  Agreement is entered into as of this 1st day of May,  1998 by
and between Jack A. Hill,  D.D.S.  Inc.,  ("Dr.  Hill") who is duly  licensed to
practice orthodontics in the state of Texas (the "State") through a professional
corporation   and  Omega   Orthodontics   Incorporated,   ("OMEGA")   and  Omega
Orthodontics of Austin, Inc., a Delaware corporation ("MSO").

                                    RECITALS

         A. OMEGA, through its operating  subsidiaries such as the MSO, provides
professional   management  and  marketing  services  to  orthodontic  and  other
specialty  practices in the United  States,  which  services  include  providing
practice management  systems,  office space,  equipment,  furnishings and active
administrative  personnel  necessary  for the operation of such  practices,  and
which services are provided directly or indirectly  through  management  service
organizations.

         B. Dr. Hill owns and operates an orthodontic practice (the "Orthodontic
Practice") with offices located at 4701 Westgate Blvd., Austin, Texas 78745 (the
"Orthodontic Offices") and furnishes orthodontic care to the general public.

         C. OMEGA's  services  are  designed  to  improve  the  efficiency  and
profitability of the Dr. Hill's practice while enhancing the ability of Dr. Hill
to render quality orthodontic care to his patients.

         D. Dr. Hill  wishes to retain  OMEGA to perform  the  functions  and to
provide the services  described  in this  Agreement to assist him to achieve the
above goals.

      NOW, THEREFORE,  in consideration of the foregoing recitals and the mutual
promises  contained herein, and for other good and valuable  consideration,  the
receipt  and   sufficiency  of  which  are  hereby   acknowledged  to  the  full
satisfaction of the parties hereto, the parties hereto agree as follows:
<PAGE>
1.0 Term of the Agreement

1.1  Appointment  as  Business  Manager.  Effective  as  of  May  1,  1998  (the
"Commencement  Date"),  Dr. Hill hereby appoints OMEGA as the sole and exclusive
business  manager of the  Orthodontic  Practice and agrees that OMEGA shall have
all power and  authority  reasonably  necessary  to manage  the  non-orthodontic
business affairs of the Orthodontic Practice, subject to the requirements of the
applicable provisions of State law relating to the practice of orthodontics.

1.2 Term.  This Agreement shall take effect on the  Commencement  Date and shall
remain in full force and effect for a period of two (2) years,  unless such term
is extended in accordance with Clause 6.2 hereof.

2.0 Duties and Compensation

2.1 Duties of OMEGA.  The duties of OMEGA and the MSO under this  Agreement  are
set  forth in  Schedule  1  attached  hereto  and  incorporated  herein  by this
reference.

2.2 Duties of Dr.  Hill.  The duties of Dr.  Hill under this  Agreement  are set
forth in Schedule 2 attached hereto and incorporated herein by this reference.

2.3 Compensation.  The terms of the compensation to be paid under this Agreement
are set forth in  Schedule 3 attached  hereto  and  incorporated  herein by this
reference.

3.0 Limitations on Scope of Services

3.1 Professional  Services.  A  fundamental  understanding  between the parties
hereto is that the  rendering  of  orthodontic  services  shall be separate  and
independent  from  the  provision  of  administrative,  management  and  support
services by OMEGA.  Thus,  Dr. Hill shall have sole and absolute  control of the
delivery of all professional  services and treatment rendered to patients at the
Orthodontic Offices.

3.2 Solicitation.  No employee or other representative of OMEGA or the MSO shall
be engaged in, or allowed to solicit  patients on behalf of, Dr. Hill, nor shall
OMEGA have any control over Dr. Hill's patients.

3.3 Advertising.  No advertising or promotional materials, or other materials of
any  nature,  including  billing  and  collection  forms,  reports,  agreements,
correspondence,  or similar  materials,  used in connection with the Orthodontic
Practice shall be used or distributed  without having first been approved by Dr.
Hill.

3.4  Reciprocation.  The parties hereby  acknowledge and agree that the benefits
conferred  upon  each  of  them  hereunder  neither  require  nor are in any way
contingent  upon  the  admission,   recommendation,   referral,   or  any  other
arrangement  for the  provision  of any item or service  offered by OMEGA to any
patients  of Dr.  Hill or his  employees,  contractors  or agents,  nor are such
benefits in any way contingent  upon the  recommendation,  referral or any other
arrangement  for the provision of any item or service offered by Dr. Hill or any
of his employees, contractors or agents.

4.0 Independent Contractor Relationship Neither Dr. Hill nor his employees shall
have any claim under this  Agreement or otherwise  against  OMEGA or the MSO for
worker's  compensation,  unemployment  compensation,  sick leave,  vacation pay,
retirement benefits,  Social Security benefits,  or any other employee benefits,
all of which shall be the sole responsibility of Dr. Hill.

5.0  Insurance and Indemnity

5.1  Insurance  to Be  Maintained  by Dr.  Hill.  Throughout  the  term  of this
Agreement,  Dr.  Hill shall  maintain  in full  force and  effect  comprehensive
professional  liability  insurance  with  limits of not less than  $500,000  per
occurrence  and  $1,000,000  annual  aggregate  for  Dr.  Hill  and  each of the
orthodontists providing services for the Orthodontic Practice. Dr. Hill shall be
responsible  for all liabilities  within  deductibles and for all liabilities in
excess of the limits of such  policies.  OMEGA agrees to negotiate for and cause
premiums  to be paid on  behalf  of Dr.  Hill with  respect  to such  insurance.
Premiums  and  deductibles  with  respect  to such  policies  shall not be OMEGA
Expenses  (as defined in  Schedule  1). Dr. Hill also agrees to name OMEGA as an
additional  insured and provide for  appropriate  waivers of insurers  rights of
subrogation.  Dr. Hill  agrees to deliver to OMEGA a  certificate  of  insurance
indicating  such  coverage.  Dr. Hill will furnish the other  certificates  from
their insurance  carriers,  evidencing the insurance  coverages required in this
Article.

5.2 Insurance to Be Maintained by Omega.  Throughout the term of this Agreement,
OMEGA will pay as an OMEGA  Expense  (a)  comprehensive  professional  liability
insurance  for all  professional  employees  of OMEGA with limits as  determined
reasonable  by OMEGA;  and (b)  comprehensive  general  liability  and  property
insurance covering the Orthodontic Office premises and operations.

5.3 Tail Insurance  Coverage.  Dr. Hill and each orthodontist (if any) providing
services through the Orthodontic Practice that upon termination of Dr. Hill's or
such endodontist's  relationship with the Orthodontic Practice,  for any reason,
tail insurance coverage will be purchased by Dr. Hill or such orthodontist. Such
provisions  may be contained in an employment  agreement,  restrictive  covenant
agreement or other agreement entered into by Dr. Hill or the  orthodontist,  and
Dr. Hill hereby covenants with OMEGA to enforce such provisions  relating to the
tail  insurance  coverage or to provide such coverage at the expense of Dr. Hill
or each such orthodontist.

5.4 Additional Insureds. Dr. Hill and OMEGA agree to have each other named as an
additional  insured on the other's respective  liability  insurance policies and
such policies  shall also  contained  appropriate  waiver of insurers  rights of
subrogation in favor of the named insureds.

5.5  Indemnification.  Dr. Hill shall indemnify,  hold harmless and defend OMEGA
and the MSO, its affiliates and its and their  respective  officers,  directors,
shareholders,  employees  and  representatives,  from  and  against  any and all
liabilities,  losses, damages,  claims, causes of action,  expenses,  judgments,
settlements,  lawsuits and obligations  (including  reasonable attorneys' fees),
whether or not covered by  insurance,  caused or  asserted to have been  caused,
directly or  indirectly,  by or as a result of the  performance  of  orthodontic
services or the performance of any intentional acts, negligent acts or omissions
by Dr. Hill and/or the other  orthodontic and dental  professionals  employed by
him and his employees  and/or his  subcontractors  (other than OMEGA) during the
term hereof.  OMEGA and the MSO shall  indemnify,  hold  harmless and defend Dr.
Hill, the other  orthodontic  and dental  professionals  employed by him and his
employees and/or his subcontractors up to the proceeds recovered from applicable
insurance  policies  provided  pursuant  to 5.2 hereof,  from and  against  such
liability,  loss,  damage,  claim,  causes of action,  and  expenses  (including
reasonable  attorneys' fees), to the extent caused directly by or as a result of
the performance of any intentional  acts,  negligent acts or omissions by OMEGA,
the MSO  and/or  their  affiliates  and its and their  respective  shareholders,
agents, employees and/or subcontractors during the term hereof.

5.6 Notwithstanding anything to the contrary contained in this Agreement, or any
Schedule  or  Exhibit  hereto,  in no event  shall the  OMEGA or the MSO,  their
officers,  directors or  employees be liable for any form of indirect,  special,
incidental or consequential damages, including but not limited to loss of profit
or loss of business reputation,  whether such damages arise in contract or tort,
irrespective of fault, negligence or strict liability.

6.0  General Provisions

6.1 Notices.  Any notice to be given pursuant to this Agreement  shall be deemed
effective if given personally, or by telephone, telegram, telecopy, facsimile or
other  electronic  transmission,  or by letter to an officer or administrator of
OMEGA or to Dr. Hill,  as the case may be.  Notice in person,  or by  telephone,
telegram or electronic transmission shall be deemed effective when given. Notice
by mail shall be deemed  effective  seventy-two  (72) hours after deposit in the
United States mails, and properly addressed with postage prepaid.

Notices to Dr. Hill shall be given as follows:

Jack A. Hill, D.D.S.
Jack A. Hill D.D.S. Inc.
4701 Westgate Blvd.
Austin, Texas 78745
Attn: Jack A. Hill, D.D.S.

or such other address as may be furnished by Dr. Hill to OMEGA from time to time
in writing.

Notices to OMEGA shall be given as follows:

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

or other such addresses as may be furnished by OMEGA or the MSO to Dr. Hill from
time to time in writing.

6.2  Contract  Modifications  for  Prospective  Legal  Events.  In the event any
Federal, state or local laws, rules, regulations or interpretations governing or
applicable to Dr. Hill or the Orthodontic Practice  (collectively,  "Laws"), now
existing or enacted or promulgated after the Commencement  Date, are interpreted
by judicial  decision,  a regulatory agency or legal counsel for both parties in
such a manner as to indicate  that the  structure  of this  Agreement  may be in
violation  of such  Laws,  Dr.  Hill and  OMEGA  and the MSO  shall  amend  this
Agreement as necessary. To the maximum extent possible, any such amendment shall
preserve the underlying economic and financial arrangements between Dr. Hill and
OMEGA and the MSO.

6.3  Remedies.  The  remedies  specified  in this  Agreement  are the  exclusive
remedies for any liabilities  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 the  fault,  negligence  (in  whole or in  part),  strict
liability,  or other basis of  liability,  and whether  liability  is founded in
contract, tort, or otherwise.

6.4 No Obligation to Third Parties.  None of the obligations and duties of OMEGA
or Dr. Hill under this Agreement  shall in any way or in any manner be deemed to
create any  obligation  of OMEGA or of Dr. Hill to, or any rights in, any person
or entity not a party to this Agreement.

6.5 Entire Agreement.  This Agreement,  including the Schedules hereto,  and the
Agreement  in Principle  constitutes  the entire  agreement  between the parties
concerning  this subject  matter,  and supersede  all prior and  contemporaneous
agreements,  representations  and  understandings of the parties  concerning the
contents hereof and thereof. No supplement,  modification,  or amendment to this
Agreement  shall be binding  unless  executed  in writing by all of the  parties
hereto,  except as otherwise provided herein. No waiver of any of the provisions
of this Agreement shall be deemed to constitute a waiver of any other provision,
whether  similar or not  similar,  nor shall any waiver  constitute a continuing
waiver.  No waiver  shall be  binding  unless  executed  in writing by the party
making the waiver.

6.6 Assignment The rights and the 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 OMEGA  shall be  permitted  to assign its rights and  obligations
hereunder  without the consent of Dr.  Hill to any person,  firm or  corporation
controlled by OMEGA, controlling OMEGA or under common control with OMEGA.

6.7  Governing  Law.  This  Agreement  shall be  governed  by and  construed  in
accordance  with the laws of the State of Texas,  excluding its conflict of laws
rules.  The parties  acknowledge  that OMEGA is not  authorized  or qualified to
engage in any  activity  which may be  construed  or  deemed to  constitute  the
practice of dentistry or orthodontics. To the extent any act or service required
of OMEGA in this Agreement  should be construed or deemed,  by any  governmental
authority,   agency  or  court  to  constitute  the  practice  of  dentistry  or
orthodontics,  the  performance  of said act or service by OMEGA shall be deemed
waived and forever  unenforceable  and the  provisions  of Section 6.11 shall be
applicable.

6.8 Force Majeure.  Neither party shall be liable to the other party for failure
to  perform  any of the  services  required  herein  in the  event  of  strikes,
lock-outs,  calamities,  acts of God, unavailability of supplies or other events
over which  that  party has no  reasonable  control  for so long as such  events
continue, and for a reasonable period of time thereafter. The party claiming the
benefit of any such event of force  majeure  shall give the other  party  prompt
written  notice of the  occurrence  thereof  and shall use its best  efforts  to
terminate,  or  overcome  the effects  of,  such force  majeure at the  earliest
possible date.

6.9  Compliance  with  Applicable  Laws.  Both  parties  shall  comply  with all
applicable  Laws and  restrictions  imposed  thereunder  in the conduct of their
obligations under this Agreement.

6.10  Language  Construction.  The parties  acknowledge  that each party and its
counsel have  reviewed and revised  this  Agreement  and that the normal rule of
construction to the effect that any  ambiguities are to be resolved  against the
drafting party shall not be employed in the interpretation of this Agreement.

6.11  Severability  In the event any  provision  of this  Agreement is held by a
court of competent jurisdiction to be illegal 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 of this Agreement shall continue in full force and effect.

6.12 Captions. Captions to sections in this Agreement are for ease of reference,
and shall not be considered an interpretation of the section.

6.13 Counterparts.  This Agreement may be executed simultaneously in one or more
counterparts, each of which shall be deemed an original.

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

                                           Jack A. Hill, D.D.S.


                                           -------------------------------
                                           Jack A. Hill D.D.S.
                                           

                                           OMEGA ORTHODONTICS, INC.


                                           By:________________________
                                              Name:  Edward Mulherin
                                              Title: Chief Financial Officer
<PAGE>
                                   SCHEDULE 1

                                 DUTIES OF OMEGA

1.1 General.  OMEGA, through its operating subsidiary the MSO, shall provide the
Orthodontic  Practice  with  comprehensive  practice  management,  financial and
marketing services and manage such facilities,  equipment, and support personnel
as are currently  available to the Orthodontic  Practice and reasonably required
to operate the Orthodontic Practice at the Orthodontic Offices, as determined by
OMEGA in  consultation  with Dr.  Hill.  OMEGA  may  perform  some or all of its
services at a location other than at the Orthodontic Offices.

1.2 Orthodontic Office Services. OMEGA, through the MSO, shall manage the office
space and related leasehold  improvements to constitute the Orthodontic  Offices
and related fixtures,  furniture,  furnishings,  equipment and related services.
OMEGA shall be  responsible  for repairs,  maintenance  and  replacement  of the
Orthodontic  Offices,  except for repairs,  maintenance  and  replacement to the
extent  necessitated  by the  negligence of Dr. Hill,  his employees and agents.
OMEGA shall provide telephone, facsimile transmission, printing, duplicating and
transcribing services as needed, as well as all laundry, linen and uniforms.

1.3  Administrative  Services.   OMEGA  shall  manage  secretarial,   reception,
maintenance,  front office, skilled assistants and other personnel,  except duly
licensed  orthodontic  and dental  professionals,  during normal office hours as
reasonably  requested  by Dr.  Hill,  to enable Dr. Hill to perform  effectively
orthodontic  and  treatment  services.  OMEGA  shall be  responsible  for  staff
scheduling,  provided,  however,  that all orthodontic and dental professionals,
including  orthodontic  assistants  and  hygienists,  shall be under the  direct
supervision  of Dr.  Hill and Dr. Hill shall have sole  authority  to employ and
terminate  the  employment  of all  orthodontic  and dental  professionals.  All
personnel  placed in the  Orthodontic  Offices by OMEGA  shall be subject to the
approval of Dr. Hill, which approval shall not be unreasonably withheld, and Dr.
Hill shall have the authority to instruct  OMEGA to terminate the  employment of
such  personnel  for any  lawful  reason.  OMEGA  shall be  responsible  for all
personnel wages, withholding, fringe benefits, bonuses and workers' compensation
insurance in connection with its employees;  provided, however, that Dr. Hill is
in full compliance with the compensation provisions of this Agreement.

1.4 Business Systems, Procedures and Forms. In consultation with Dr. Hill, OMEGA
shall establish standardized business systems and procedures for the Orthodontic
Practice,  including, but not limited to, patient scheduling systems,  treatment
records  system,  financial  reporting and process  control  systems and patient
communication  management systems (the "OMEGA Patient  Scheduling  System") that
are designed to improve the Orthodontic  Practice  operating  efficiency.  OMEGA
shall  additionally   provide  the  Orthodontic  Practice  with  and  train  the
Orthodontic  Practice's  staff  in  the  use  of  standardized  clinical  forms,
including,  without  limitation,  forms for patient  evaluations  and  treatment
plans. Dr. Hill expressly acknowledges and agrees that he shall have no property
rights in the OMEGA Patient  Scheduling System and the other foregoing  systems,
procedures and clinical forms, and further agrees that such systems, procedures,
and forms  shall be deemed to  constitute  Confidential  Information  within the
meaning of Section 2.7 of Schedule 2 and be subject to the  restrictions  on the
use, appropriation,  and reproduction of such Confidential  Information provided
for in such Section 2.7.

1.5  Purchasing,  Accounts  Payable,  Supplies  and  Inventory.  OMEGA  shall be
responsible  for and shall  establish and maintain  systems for the handling and
processing of all purchasing and payment  activities and for the  performance of
all payroll and payroll accounting functions of the Orthodontic Practice.  OMEGA
shall order and purchase and maintain all inventory and orthodontic  supplies as
reasonably  required  by the  Orthodontic  Practice to enable Dr. Hill to render
orthodontic care to his patients including,  without limitation, all orthodontic
appliances and other supplies, laboratory supplies and sanitation supplies

1.6 Billing,  Collection.  OMEGA shall supervise the: (i) billing and collecting
payments for all orthodontic  and other  professional  services  rendered by Dr.
Hill and the other  orthodontic and dental  professionals  employed by Dr. Hill,
with all such billing and  collecting  to be done in the name of Dr. Hill;  (ii)
receiving payments from patients,  insurance companies and all other third party
payors;  (iii) taking  possession  of and  endorsing in the name of Dr. Hill any
notes, checks,  money orders,  insurance payments and other instruments received
in payment  for  services  or of  accounts  receivable;  and (iv)  settling  and
compromising  claims and,  where deemed  appropriate  by OMEGA and  consented to
(which  consent  shall not be  unreasonably  withheld or  delayed) by Dr.  Hill,
assigning such accounts  receivable to a collection  agency or the bringing of a
legal action against a patient or a payor on Dr. Hill 's behalf.  In supervising
the seeking of payments on behalf of Dr. Hill hereunder,  OMEGA shall act as Dr.
Hill 's agent in billing and  collecting  professional  fees,  charges and other
accounts owed to Dr. Hill and shall only bill under Dr. Hill 's provider number.
OMEGA does not guarantee  collection and is not  responsible for any loss to Dr.
Hill as a result of any inability to collect fees and charges.

1.7 Disbursement of Funds. Dr. Hill shall create and maintain an accurate, up to
date,  log of all monies  collected by Dr. Hill  commencing on the  Commencement
Date.  All such monies  shall be  deposited  into an account  (the  "Orthodontic
Practice  Account")  with a bank whose  deposits  are  insured  with the Federal
Deposit Insurance Corporation and which bank is acceptable to OMEGA and Dr. Hill
(the "Bank"). The Orthodontic Practice Account shall contain the name of the Dr.
Hill,  however,  the account shall  explicitly  specify that only Omega shall be
entitled to make all disbursements therefrom. Omega shall account for all monies
so disbursed from the Orthodontic Practice Account.

From the funds collected and deposited by Dr. Hill in the  Orthodontic  Practice
Account,  Omega  shall  make  for  and on  behalf  of  Dr.  Hill  the  following
disbursements promptly, when payable:

(1) Compensation and other direct costs payable to Dr. Hill pursuant to Schedule
3 of this Agreement; and

(2) All compensation payable to Omega pursuant to Schedule 3 of this Agreement.


1.8 OMEGA  Expenses.  OMEGA  shall be  responsible  for the payment of all OMEGA
Expenses, as defined below, during the term of this Agreement.

         (a)  "OMEGA  Expenses"  shall  mean  all  operating  and  non-operating
expenses  incurred in the  operation  of the  Orthodontic  Practice,  including,
without  limitation:  (1)  Salaries,  benefits  and  other  direct  costs of all
employees of OMEGA providing services to the Orthodontic Practice hereunder; (2)
Salaries,  benefits and other  direct costs of all  employees of Dr. Hill at the
Orthodontic  Practice (other than Dr. Hill and the other  orthodontic and dental
professionals  employed  by Dr.  Hill),  provided,  however,  that  any  and all
payments to such employees of Dr. Hill after the Commencement Date but which are
compensation  for services  rendered by such employees prior to the Commencement
Date shall not be OMEGA  Expenses  and,  to the  extent  they are paid by OMEGA,
OMEGA shall be entitled to offset such amounts against any amounts to be paid by
OMEGA to Dr. Hill pursuant to Schedule 3 of this Agreement;  (3) Direct costs of
all employees or  consultants of OMEGA who provide  services at the  Orthodontic
Offices or in connection  with the  Orthodontic  Practice  required for improved
clinic performance, such as work management,  materials management,  purchasing,
charge and coding  analysis,  and  business  office  consultation;  (4) Accounts
payable of the Orthodontic Practice (not including payroll,  "Accounts Payable")
which  have  accrued  not more than 30 days prior to the  Commencement  Date and
which remain  unpaid as of such time,  but only to the extent that such Accounts
Payable do not exceed  one-quarter (1/4) of one "Average" month of cash receipts
of the  Orthodontic  Practice (the term  "Average"  shall mean an average of the
cash receipts of the Orthodontic  Practice using the last 12 months prior to the
end of the month  immediately  preceding the Commencement  Date); (5) All direct
costs  associated  with operating the  Orthodontic  Offices,  including  without
limitation,  utilities, cleaning and maintenance; (6) Obligations of OMEGA under
leases  or  subleases  entered  into in  connection  with the  operation  of the
Orthodontic  Offices as well as utility  expenses  relating  to the  Orthodontic
Offices;  (7) Personal  property and intangible  taxes assessed  against OMEGA's
assets  used in  connection  with  the  operation  of the  Orthodontic  Offices,
commencing on the Commitment  Date;  (8) In the event an opportunity  arises for
additional  orthodontists  to become  employed  by Dr.  Hill at the  Orthodontic
Practice or other orthodontic  practices to merge with the Orthodontic Practice,
actual  out-of-pocket  expenses  of  OMEGA  personnel  working  on  a  specified
employment  arrangement or merger, whether or not such employment arrangement or
merger is consummated;  (9) All other expenses incurred by OMEGA in carrying out
its obligations under this Agreement, but excluding any corporate overhead costs
of OMEGA or any corporation affiliated with OMEGA not specifically listed above.

         (b) "OMEGA Expenses" shall not include: (1) Any Federal, state or local
income  taxes of Dr.  Hill and the other  orthodontic  and dental  professionals
employed by Dr.  Hill,  or the costs of  preparing  Federal,  state or local tax
returns thereof; (2) Salaries,  benefits and other direct costs of employing Dr.
Hill and the other  orthodontic and dental  professionals  employed by Dr. Hill;
(3) Physician  licensure fees, board  certification fees and costs of membership
in  professional   associations  and  societies  for  Dr.  Hill  and  the  other
orthodontic  and dental  professionals  employed by Dr. Hill;  (4)  Professional
liability   insurance  for  Dr.  Hill  and  the  other  orthodontic  and  dental
professionals employed by Dr. Hill as provided for under Section 2.6 of Schedule
2 to this Agreement; (5) Costs of continuing professional education for Dr. Hill
and  the  other  orthodontic  and  dental  professionals  employed  by Dr.  Hill
including  travel  and  related  expenses;  (6)  Costs  associated  with  legal,
accounting and professional  services  incurred by or on behalf of Dr. Hill; (7)
Liability  judgments  assessed  against  Dr. Hill or the other  orthodontic  and
dental  professionals  employed by Dr. Hill in excess of policy limits or within
the deductible  limits of any policy;  (8) Direct personal  expenses of Dr. Hill
and the other  orthodontic  and dental  professionals  employed by Dr. Hill of a
kind  which  Dr.  Hill  may  have  historically  provided  or  charged  to  such
professionals (including,  but not limited to, car allowances and other expenses
which are personal in nature);  (9)  Charitable  contributions  by Dr. Hill; and
(10) Any other  expenses  which are expressly  designated  herein as expenses or
responsibilities of Dr. Hill.

1.9 Accounting;  Bookkeeping and Reports. OMEGA shall provide for or arrange for
all accounting and bookkeeping  services  related to the Orthodontic  Practice's
operations,  provided that such services are incurred in the ordinary  course of
business.  In addition,  OMEGA shall provide Dr. Hill with an unaudited internal
monthly  statement  within  twenty  (20) days  after the end of each month and a
quarterly  review  within  thirty  (30)  days  after  the end of  each  quarter,
respectively,  of OMEGA's internal statements. Dr. Hill shall be responsible for
preparing and filing his own Federal,  state and local tax returns.  At Dr. Hill
's request, OMEGA shall prepare reports indicating the gross revenues, number of
patients,  type of  patients,  and the  activity  and  the  productivity  of the
Orthodontic  Practice.  OMEGA shall assist and advise Dr. Hill in the  financial
management of the Orthodontic Practice.

1.10  Maintenance  and  Cleaning  Services.  OMEGA shall  arrange for  security,
maintenance  and cleaning of the Orthodontic  Offices,  including the furniture,
fixtures and equipment therein.
<PAGE>
                                   SCHEDULE 2

                               DUTIES OF DR. HILL

2.1 General.  Dr. Hill shall be  responsible  for the management of his practice
and the Orthodontic  Office,  in accordance with the requirements of the Laws of
the State.

2.2  Employment of the  orthodontists  and  Rendering of Patient Care.  Dr. Hill
shall be responsible for the employment and professional supervision of Dr. Hill
and all other  orthodontic  and  dental  professionals  employed  by him and all
orthodontic  care  rendered to  patients  shall be rendered by Dr. Hill and such
professionals.

2.3  Professional  Services.  Dr. Hill shall comply with all applicable Laws and
all standards of orthodontic care. Dr. Hill shall provide professional  services
to patients hereunder in compliance at all times with ethical standards and Laws
applying to the orthodontic  profession.  Dr. Hill shall ensure that he and each
orthodontist  who provides  orthodontic  services to patients is licensed by the
State. In the event that any disciplinary,  medical malpractice or other actions
are  initiated  against  Dr.  Hill or any  orthodontic  or  dental  professional
employed by Dr. Hill. Dr. Hill shall immediately inform OMEGA of such action and
the underlying facts and circumstances subject to such confidentiality agreement
or  arrangements  as Dr. Hill and OMEGA shall mutually  determine at or prior to
the time of such  disclosure.  Dr. Hill agrees to cooperate with and participate
in  quality  assurance/utilization  review  programs  established  by  OMEGA  or
mandated by accreditation and licensure standards  applicable to the practice of
orthodontics.  Deficiencies discovered in the performance of any personnel or in
the quality of professional services shall be reported immediately to OMEGA, and
appropriate   steps  shall  be  taken  by  Dr.  Hill  at  once  to  remedy  such
deficiencies.

2.4  Records.  Dr.  Hill will keep or cause to be kept  accurate,  complete  and
timely dental and other records of all  patients.  The  management of all dental
and patient files and records shall comply with all  applicable  Laws  regarding
their  confidentiality  and retention and all files and records shall be located
so that they are readily  accessible for patient care,  consistent with ordinary
records management practices.  Such records shall be sufficient to enable OMEGA,
on behalf of Dr. Hill to obtain payments for services and related charges and to
facilitate the delivery of quality patient care by Dr. Hill. Notwithstanding the
foregoing,  patient  dental records shall be and remain the property of Dr. Hill
and the contents thereof shall be solely the responsibility of Dr. Hill.

2.5 Professional  Expenses. Dr. Hill shall be solely responsible for the cost of
professional   licensure  fees  and  board  certification  fees,  membership  in
professional  associations and continuing professional education incurred by Dr.
Hill and the other  orthodontic  and dental  professionals  employed by him. Dr.
Hill shall  ensure that he and the other  orthodontic  and dental  professionals
employed by him participate in such continuing education as is necessary for Dr.
Hill and such professionals to remain current.

2.6 Professional Liability Insurance. Dr. Hill shall provide, or arrange for the
provision of, and maintain  throughout the term of this Agreement,  professional
liability  insurance  coverage in accordance with the provisions of Section 6 of
this  Agreement.  Dr. Hill shall also  cooperate in any programs  recommended by
OMEGA to assure that each of the orthodontic and dental  professionals  employed
by him is insurable,  and that Dr. Hill and each such professional  participates
in an on-going risk management program.

2.7  Confidentiality.  Dr.  Hill  agrees  and  acknowledges  that all  materials
provided  by  OMEGA  to  Dr.  Hill  or  the  Orthodontic   Practice   constitute
"Confidential  Information"  and  are  disclosed  in  confidence  and  with  the
understanding  that it constitutes  valuable business  information  developed by
OMEGA with the  assistance of OMEGA at great  expenditures  of time,  effort and
money.  Dr.  Hill  further  agrees that he shall not,  directly  or  indirectly,
without  the  express  prior  written  consent of OMEGA,  use or  disclose  such
Confidential  Information  for any  purpose  other than in  connection  with the
services to be rendered hereunder. Dr. Hill further agrees: (i) to keep strictly
confidential  and hold in trust all  Confidential  Information  and not disclose
such  Confidential  Information  to any third party,  including his  affiliates,
partners,  employees  and  independent  contractors  without the  express  prior
written consent of OMEGA; and (ii) to impose this obligation of  confidentiality
on his partners,  employees and independent  contractors.  Dr. Hill acknowledges
that  the  disclosure  of  Confidential  Information  to him by OMEGA is done in
reliance  upon  his  representations  and  covenants  in  this  Agreement.  Upon
expiration  or  termination  of this  Agreement  by either  party for any reason
whatsoever,  Dr. Hill shall  immediately  return and shall  cause his  partners,
shareholders  and  independent  contractors to  immediately  return to OMEGA all
Confidential  Information,  and Dr. Hill will not, and will cause his  partners,
employees and independent  contractors not to, thereafter use,  appropriate,  or
reproduce such Confidential Information. Dr. Hill further expressly acknowledges
and  agrees  that  any  such  use,  appropriation  or  reproduction  of any such
Confidential  Information  by any of  the  foregoing  after  the  expiration  or
termination of this Agreement will result in irreparable  injury to OMEGA,  that
the remedy at law for the foregoing  would be inadequate,  and that in the event
of any  such  use,  appropriation,  or  reproduction  of any  such  Confidential
Information  after the  termination or expiration of this  Agreement,  OMEGA, in
addition to any other remedies or damages available to OMEGA,  shall be entitled
to injunctive or other equitable  relief without the necessity of proving actual
damages but such rights to relief shall not preclude  OMEGA from other  remedies
which may be available to it hereunder.
<PAGE>
                                   SCHEDULE 3

                         COMPENSATION - MANAGEMENT FEES

         OMEGA shall receive,  as compensation for the performance of all of its
obligations and duties contained in the Agreement, monthly management fees in an
amount equal to  seventy-five  Percent (75%) of the Practice  Revenues,  and Dr.
Hill shall be entitled to  twenty-five  Percent (25%) of the Practice  Revenues,
except  as the  parties  may  otherwise  agree  from  time to  time in  writing.
Notwithstanding the foregoing, in no event shall OMEGA receive less than fifteen
(15%) percent  calendar  quarter as  compensation  for its  management  services
("Minimum  Management Services Fee"). At the end of each calendar quarter during
the term of this  Agreement,  OMEGA shall  provide  Dr.  Hill with an  unaudited
internal  accounting of OMEGA Expenses,  prepared in accordance with the accrual
method of  accounting.  In  addition,  if OMEGA  Expenses as  reflected  in such
accounting as having been paid by OMEGA are less than sixty (60%) percent of the
Practice  Revenues for such calendar  quarter,  sixty five (65%) percent of such
difference  shall be returned by OMEGA to Hill as a profit incentive rebate (the
"Rebate").  If such  OMEGA  Expenses  are more than sixty  (60%)  percent of the
Practice  Revenues for such calendar  quarter,  sixty-five (65%) percent of such
excess  will be charged to Dr. Hill and  recorded  as a liability  to be set off
against  future  Rebates or  utilized as payment of OMEGA's  Minimum  Management
Services Fee if Practice Revenues are insufficient  provided,  however, that the
full amount of such  liability  shall be paid to OMEGA within 15 days  following
the termination of this Agreement.  If the Agreement to which this Schedule 3 is
attached  is  terminated  or expires,  the  foregoing  management  fees shall be
payable  to OMEGA  based on all  Practice  Revenue  collected  as of the date of
termination or expiration.

         Payment  to OMEGA  shall be made in monthly  installments  based on the
Practice Revenues realized by OMEGA for services rendered hereunder. OMEGA shall
distribute the proceeds  received from the  Orthodontic  Practice's  Account and
allocate  the proceeds  between  OMEGA and Dr. Hill as  described  above,  on or
before the 15th day of the succeeding  month. In the event the 15th day falls on
a weekend or holiday then said  distribution  shall be made on the next business
day. The parties hereto may agree to handle such matters in a different manner.

         For purposes of this  Agreement,  "Practice  Revenues" shall mean gross
collections  of all  revenues  generated  by or on  behalf  of  the  Orthodontic
Practice  (whether  through  subsidiaries  or  affiliates),  including,  but not
limited  to,  all  fees  and  charges  collected  as a  result  of  professional
orthodontic  services  furnished to patients by Dr. Hill and for any other goods
or services sold or provided to such patients.