MANAGEMENT SERVICES AGREEMENT

                                    BETWEEN

                          J.F. Whitaker, D.D.S., Inc.
                                 (the "New PC")

                                      AND

                   Omega Orthodontics of Woodland Hills, Inc.
                                  (the "MSO")

                                      AND

                            Omega Orthodontics, Inc.
                                   ("OMEGA")

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                         MANAGEMENT SERVICES AGREEMENT

                               TABLE OF CONTENTS


ARTICLE  1 TERM................................................................2

ARTICLE  2 DUTIES OF THE MSO...................................................2
2.1 General....................................................................2
2.2 Orthodontic Office Services................................................2
2.3 Administrative Services....................................................2
2.4 Business Systems, Procedures and Forms.....................................3
2.5 Purchasing, Accounts Payable, Supplies and Inventory Control...............4
2.6 Regulatory Compliance Services.............................................4
2.7 Billing, Collection........................................................4
2.8 Disbursement of Funds......................................................4
2.9 MSO Expenses...............................................................5
2.10 Credit Reports............................................................6
2.11 Accounting; Bookkeeping and Reports.......................................7
2.12 Marketing.................................................................7
2.13 Complaints................................................................8
2.14 Practice Laws.............................................................8
2.15 Monthly Meetings..........................................................8
2.16 Maintenance and Cleaning Services.........................................8
2.17 Licenses and Permits......................................................8
2.18 Insurance.................................................................8
2.19 Practice Transition and Associate Selection...............................8

ARTICLE  3 DUTIES OF THE NEW PC................................................9
3.1 General....................................................................9
3.2 Employment of the Orthodontists and Rendering of Patient Care..............9
3.3 Professional Services......................................................9
3.4 Records...................................................................10
3.5 Professional Expenses.....................................................10
3.6 Professional Liability Insurance..........................................10
3.7 Employment Agreement......................................................11
3.8 Confidentiality...........................................................11

ARTICLE  4  PROFESSIONAL   SERVICES,   CONTROL  OF  SOLICITATION,   APPROVAL  OF
ADVERTISING    MATERIAL    AND    NO    RECIPROCATION.........................12
4.1 Fundamental Understanding.................................................12
4.2 No Solicitation; Control..................................................13
4.3 No Advertising............................................................13
4.4 No Referrals..............................................................13

ARTICLE  5 LEASE OF OFFICE FACILITIES AND EQUIPMENT...........................13
5.1 Office Lease/Sublease.....................................................13
5.2 Leasehold Improvements, etc...............................................14
5.3 No Warranty...............................................................15

ARTICLE  6 COMPENSATION.......................................................15

ARTICLE  7 SECURITY INTEREST..................................................17

ARTICLE  8 COVENANTS..........................................................17
8.1 New PC's Covenants........................................................17
8.2 MSO's Covenants...........................................................18

ARTICLE 9 INSURANCE AND INDEMNITY.............................................18
9.1 Insurance to be Maintained by the New PC..................................19
9.2 Insurance to be Maintained by the MSO.....................................19
9.3 Tail Insurance Coverage...................................................19
9.4 Additional Insureds.......................................................19
9.5 Indemnification...........................................................20

ARTICLE  10 TERMINATION.......................................................20
10.1 Termination by the New PC................................................20
10.2 Termination by MSO.......................................................21

ARTICLE  11 AUTHORIZED AGENT AND POWERS OF ATTORNEY...........................22

ARTICLE  12 INDEPENDENT CONTRACTOR RELATIONSHIP...............................23

ARTICLE  13 MISCELLANEOUS.....................................................23
13.1 Access to Records........................................................23
13.2 Patient Records..........................................................23
13.3 The New PC's Control Over the Orthodontic Practice.......................23

ARTICLE 14 ALTERNATIVE DISPUTE RESOLUTION.....................................24
14.1 Alternative Dispute Resolution...........................................24
14.2 Waiver of Jury...........................................................25

ARTICLE  15 GENERAL PROVISIONS................................................25
15.2 INTENTIONALLY OMITTED....................................................25
15.3 Contract Modifications for Prospective Legal Events......................25
15.4 Remedies.................................................................25
15.5 No Obligation to Third Parties...........................................26
15.6 Entire Agreement.........................................................26
15.7 Assignment...............................................................26
15.8 INTENTIONALLY OMITTED....................................................26
15.9 Governing Law............................................................26
15.10 Events Excusing Performance.............................................27
15.11 Compliance with Applicable Laws.........................................27
15.12 Language Construction...................................................27
15.13 Amendments..............................................................27
15.14 Severability............................................................27
15.15 No Waiver...............................................................27
15.16 Captions................................................................27
15.17 Counterparts............................................................27

SCHEDULE 1 THE ORTHODONTISTS

SCHEDULE 2 ORTHODONTIC OFFICES AND SERVICES

SCHEDULE 3 COMPENSATION - MANAGEMENT FEES

EXHIBIT A ORTHODONTIC OFFICES - MASTER LEASE

EXHIBIT B PRACTICE PROVIDERS

EXHIBIT C NEW PC'S AFFIDAVIT

EXHIBIT D SECURITY AGREEMENT

<PAGE>
                         MANAGEMENT SERVICES AGREEMENT

THIS  AGREEMENT  is made  effective as of this 5th day of August,  1998,  by and
between J.F. Whitaker,  D.D.S., Inc., a professional  corporation (the "New PC")
incorporated under the laws of the State of California (the "State"),  and Omega
Orthodontics of Woodland Hills,  Inc., a Delaware  corporation (the "MSO"),  and
Omega Orthodontics, Inc., a Delaware corporation ("OMEGA").

WHEREAS,  OMEGA  provides  professional  management  and  marketing  services to
orthodontic  and other dental  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 are  provided  directly or  indirectly  through  management
service organizations such as the MSO;

WHEREAS,  OMEGA  and  John F.  Whitaker,  D.D.S.  ("Dr.  Whitaker")  who is duly
licensed to practice  orthodontics  in the State have  entered into that certain
Affiliation Agreement and Stock Purchase Agreement (the "Affiliation Agreement")
dated as of August 5, 1998,  pursuant to which OMEGA acquired  certain stock and
assets of Dr. Whitaker;

WHEREAS,  the New PC 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.
Whitaker and any and all other  Orthodontists  who are or become affiliated with
the New PC as of or following the date hereof and who are or become subsequently
named on Schedule 1 hereto  (individually,  an "Orthodontist"  and collectively,
the "Orthodontists");

WHEREAS,  the MSO was formed to provide equipment,  facilities and personnel to,
and to manage the non-orthodontic business affairs of, the New PC;

WHEREAS,  the  MSO's  services  are  designed  to  improve  the  efficiency  and
profitability  of the New PC while enhancing the ability of Dr. Whitaker and the
Orthodontists (if any) to render quality orthodontic care to the patients of the
New PC;

WHEREAS,  the New PC wishes to retain the MSO to perform  the  functions  and to
provide the services described in this Agreement to assist the New PC to achieve
the above goals.

NOW,  THEREFORE,  IT IS  AGREED  that  the  MSO  shall  perform  managerial  and
administrative  services for the New PC and provide office space and orthodontic
facilities  appropriate  for  rendering  general  orthodontic  treatment  at the
Orthodontic Offices upon the following terms and conditions:

                                   ARTICLE 1
                                      TERM

1.1 The initial term of this  Agreement  shall  commence on the date first above
written and  continue  for a period of twenty (20) years (the  "Initial  Term"),
subject,  however,  to earlier termination in accordance with Article 10 hereof.
This  Agreement  shall continue for two separate and successive ten year periods
(each a "Renewal  Term" and  collectively  with the  Initial  Term,  the "Term")
unless the MSO  otherwise  elects upon six months  written  notice to the New PC
prior to expiration of the Initial Term or any then effective Renewal Term.

                                   ARTICLE 2
                               DUTIES OF THE MSO

2.1  General.  The MSO  shall  provide  the New PC with  comprehensive  practice
management,  financial and marketing services,  and such facilities,  equipment,
and support  personnel as are  reasonably  required by the New PC to operate its
orthodontic  practice at the  Orthodontic  Offices,  as determined by the MSO in
consultation with the New PC. The New PC hereby appoints the MSO as the sole and
exclusive  business manager of the New PC and agrees that the MSO shall have all
power and authority reasonably necessary to manage the non-orthodontic  business
affairs  of the New PC and carry out the MSO's  orthodontic  duties  under  this
Agreement, subject to the requirements of the applicable provisions of State law
relating to the practice of orthodontics  and subject to  consultation  with the
New PC. The MSO may perform some or all of its services at a location other than
at the Orthodontic Offices.

2.2  Orthodontic  Office  Services.  The MSO shall  provide or  arrange  for the
provision of the services  (collectively,  the  "Orthodontic  Office  Services")
described  in Schedule 2 hereto,  as such  Schedule may be amended by the PC and
the MSO from time to time.

2.3  Administrative Services.

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

(b) "Practice  Providers"  shall mean the  individuals  who are duly licensed to
practice  dentistry and/or  orthodontics in the State including Dr. Whitaker and
the Orthodontists (if any) and other individuals who are employees of the New PC
or otherwise  under contract with the New PC to provide  dental or  orthodontic,
services to patients of the New PC or otherwise  required by  applicable  "Laws"
(as  defined in  Section  2.6  below) to be  employees  of the New PC to provide
services to patients of the Practice. A list of all Practice Providers and their
relationship  to the New PC is set  forth  as  Exhibit  B  attached  hereto  and
incorporated  herein by  reference.  Prior to making any  changes in the list of
Practice  Providers,  the New PC shall use its best  efforts to consult with the
MSO.  The New PC also shall use its best  efforts  to consult  with the MSO with
regard  to the  terms  of  contracts  entered  into  between  the New PC and the
Practice  Providers  and  the  terms  and  conditions  of  their  employment  or
engagement as independent contractors.

2.4 Business Systems, Procedures and Forms. In consultation with the New PC, the
MSO shall establish standardized business systems and procedures for the New PC,
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 New PC operating  efficiency.  The MSO shall analyze
such  information  on an ongoing  basis in order to advise the New PC on ways of
improving operating efficiencies. The MSO shall provide training to the staff of
the New PC in the  implementation  and operation of such  standardized  business
systems and procedures.  The MSO shall additionally  provide the New PC with and
train the New PC's staff in the use of standardized  clinical forms,  including,
without  limitation,  forms for patient evaluations and treatment plans. The New
PC expressly  acknowledges  and agrees that it 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 3.8 hereof and be subject to the restrictions on the use, appropriation,
and reproduction of such Confidential Information provided for in Section 3.8.

2.5 Purchasing,  Accounts Payable, Supplies and Inventory Control. The MSO 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 New PC. The MSO shall order
and purchase and maintain all inventory and  orthodontic  supplies as reasonably
required  by the New PC to enable the New PC to render  orthodontic  care to its
patients including,  all orthodontic  appliances and other supplies,  laboratory
supplies and sanitation supplies.

2.6  Regulatory  Compliance  Services.  The MSO shall arrange for or cause to be
rendered  to  the  New  PC  such  business,   legal  and  regulatory  management
consultation and advice as may be reasonably required or requested by the New PC
and  directly  related to the  non-orthodontic  operations  of the New PC or its
compliance   with  Federal,   state  or  local  laws,   rules,   regulations  or
interpretations  governing or applicable to the New PC  (collectively,  "Laws");
provided,  however,  that the MSO  shall  not be  responsible  for any  services
related to malpractice or other professional service claims or other matters not
directly  related to services  provided by the MSO  hereunder or its  compliance
with Laws,  or for any legal or tax advice or  services  or  personal  financial
services to Dr. Whitaker and the Orthodontists (if any) or any employee or agent
of the New PC.

2.7  Billing,  Collection.  The MSO shall be  responsible  for:  (i) billing and
collecting payments for all orthodontic and other professional services rendered
by the New PC and the Practice  Providers,  with all such billing and collecting
to be done in the name of the New PC; (ii)  receiving  payments  from  patients,
insurance companies and all other third party payors; (iii) taking possession of
and  endorsing  in the  name  of the New PC 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 the MSO and consented to (which consent shall not be unreasonably
withheld  or  delayed)  by the  Practice  Provider  rendering  the  professional
services which resulted in the applicable  accounts  receivable,  assigning such
accounts  receivable  to a  collection  agency or the bringing of a legal action
against a patient  or a payor on the New PC's  behalf.  In seeking  payments  on
behalf  of the New PC  hereunder,  the MSO  shall  act as the New PC's  agent in
billing and collecting professional fees, charges and other accounts owed to the
New PC and shall only bill under the New PC's provider  number.  In this regard,
the New PC appoints the MSO for the Term of this  Agreement in  accordance  with
the provisions of Article 11 hereof as its true and lawful  attorney-in-fact for
the purposes  set forth above in this Section 2.7 and in Section 2.8 below.  The
MSO does not guarantee collection and is not responsible for any loss to the New
PC as a result of any inability to collect fees and charges.

2.8  Disbursement of Funds.

(a) All monies collected for the New PC by the MSO pursuant to Section 2.7 above
shall be deposited  into an account (the "the New PC Account") with a bank whose
deposits are insured with the Federal  Deposit  Insurance  Corporation and which
bank is acceptable  to the MSO and the New PC (the  "Bank").  The New PC Account
shall contain the name of the New PC, however, only the MSO shall be entitled to
make all  disbursements  therefrom.  The MSO  shall  account  for all  monies so
disbursed from the New PC Account.

(b) From the funds collected and deposited by the MSO or Dr. Whitaker in the New
PC  Account,  the MSO shall  make for and on behalf of the New PC the  following
disbursements promptly, when payable:

         (1) Compensation,  including salaries,  benefits and other direct costs
         payable to Dr.  Whitaker and the  Orthodontists  (if any) and the other
         Practice  Providers  of the  New  PC,  and all  withholding  taxes  and
         assessments  payable  to  Federal,   state  and  local  governments  in
         connection with the employment of such personnel; and

         (2) All compensation payable to the MSO pursuant to Article 6 hereof.

(c) In the  event  the  funds  in  the  New PC  Account  will,  at any  time  be
insufficient  to cover  the  current  portion  of the  foregoing  expenses  when
payable,  the  MSO may  advance  to the New PC the  necessary  funds  to pay the
current  portion of such expenses for the benefit of the New PC, which  advances
will be deemed to be loans to the New PC to be repaid without  interest from the
New PC Account at such times as there are  adequate  funds  therein or upon such
other  terms and at such  times as  agreed  to by the New PC and the MSO,  which
indebtedness shall not be deemed an MSO Expense for purposes of Section 2.9.

2.9 MSO Expenses. The MSO shall be responsible for the payment (whether received
pursuant to Section  2.8(b)(2) hereof or from other sources unrelated to the New
PC) of all MSO Expenses,  as defined  below,  during the term of this  Agreement
without  reimbursement  by the New PC, unless otherwise agreed to by the parties
hereto.

(a) "MSO Expenses" shall mean such operating and non-operating expenses incurred
by the MSO in performing its services, including, without limitation:

         (1)  Salaries,  benefits and other direct costs of all employees of the
         MSO  providing  services to the New PC  hereunder  (but  excluding  Dr.
         Whitaker  and  all  the  Orthodontists  (if  any)  and  other  Practice
         Providers);

         (2) Direct costs  associated  with operating the  Orthodontic  Offices,
         including  without  limitation,  utilities,  cleaning and  maintenance,
         including  maintenance  of the  interior,  exterior  and grounds of the
         Orthodontic offices as provided in the Master Lease;

         (3)  Obligations  of the MSO 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;

         (4) Personal  property and intangible  taxes assessed against the MSO's
         assets  used  in  connection  with  the  operation  of the  Orthodontic
         Offices,  including  furnishing of a mutually  agreed upon  orthodontic
         software  package  to the  New  PC,  commencing  on the  date  of  this
         Agreement;

         (5) In the event an opportunity arises for additional  Orthodontists to
         become  employed by the New PC or other  orthodontic  entities to merge
         with the New PC,  actual  out-of-pocket  expenses of the MSO  personnel
         working on a specified employment arrangement or merger, whether or not
         such employment arrangement or merger is consummated;

         (6) The MSO shall pay for  reasonable  practice  promotion(s),  such as
         advertising, which the MSO and Dr. Whitaker mutually agree upon;

         (7) Other expenses  incurred by the MSO in carrying out its obligations
         under this Agreement, but excluding any corporate overhead costs of the
         MSO or any corporation  affiliated with the MSO not specifically listed
         above.

"MSO Expenses" shall not include:

         (1) Any  Federal,  state  or  local  income  taxes  of the New PC,  Dr.
         Whitaker  and  the  Orthodontists  (if  any)  and  the  other  Practice
         Providers,  or the  costs of  preparing  Federal,  state  or local  tax
         returns thereof;

         (2) Salaries, benefits and other direct costs of employing Dr. Whitaker
         and the Orthodontists (if any) and the other Practice Providers;

         (3) Physician  licensure fees,  board  certification  fees and costs of
         membership  in  professional  associations  and  societies for Practice
         Providers;

         (4)  One-half of  Professional  liability  insurance  for the  Practice
         Providers as provided for under Section 3.6 hereof;

         (5) Costs of continuing  professional education for Practice Providers,
         including  travel and  related  expenses,  exceeding  the lesser of the
         fifty  (50%)  percent  of the  cost  of  such  continuing  professional
         education (fifty units over two years) or $1,500;

         (6) Costs associated with legal,  accounting and professional  services
         incurred by or on behalf of the New PC;

         (7)  Liability  judgments  assessed  against the New PC or the Practice
         Providers in excess of policy limits or within the deductible limits of
         any policy;

         (8) Direct personal expenses of the Practice  Providers of a kind which
         the New PC may have  historically  provided or charged to its  Practice
         Providers  (including,  but not  limited to, car  allowances  and other
         expenses which are personal in nature);

         (9) Charitable contributions by the New PC; and

         (10) Any  other  expenses  which  are  expressly  designated  herein as
         expenses or responsibilities of the New PC.

2.10     INTENTIONALLY BLANK

2.11 Accounting;  Bookkeeping and Reports.  The MSO shall provide for or arrange
for all accounting and bookkeeping  services related to the New PC's operations,
provided that such services are incurred in the ordinary course of business.  In
addition,  the MSO shall provide the New PC 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
the MSO's internal  statements,  as well as the books and records of the New PC,
all prepared by or with the  assistance of an  accountant  chosen by the MSO. At
the end of each fiscal year of the New PC, the MSO shall arrange for a financial
statement with respect to the New PC to be prepared by the MSO's accountant.  At
the New PC's  request,  the MSO  shall  prepare  reports  indicating  the  gross
revenues,  number  of  patients,  type of  patients,  and the  activity  and the
productivity  of the New PC.  The MSO shall  assist and advise the New PC in the
financial management of the New PC.

2.12 Marketing. The MSO shall design and execute a marketing plan to promote the
New PC's professional  services. The MSO shall also make available to the New PC
all brochures, contracts, and other materials reasonably related to the carrying
out of the business  purposes of the New PC, including all stationery,  printing
and postage costs in connection  therewith.  In connection  with such  marketing
plan,  the MSO shall  advise  Dr.  Whitaker  and the  Orthodontists  (if any) on
establishing  and  maintaining  a plan for  patients'  payments for  orthodontic
services on an installment plan basis. All marketing  activities hereunder shall
be conducted in compliance with all applicable Laws governing advertising by the
orthodontic profession.

2.13  Complaints.  The MSO shall assist the New PC in handling  all  complaints,
grievances and disputes  involving the New PC and the Practice Providers and any
patients or third parties.  However,  the MSO shall have no control over the New
PC's patients.  All decisions  concerning the New PC's patients shall be made by
the New PC and the Practice Providers.

2.14 Practice Laws.  Notwithstanding  any provision in this  Agreement,  the MSO
shall  not take any  action  in  connection  with the  services  to be  rendered
hereunder that violates any Law, including,  without limitation, the performance
of any  task or the  taking  of any  action  which  violates  the  Business  and
Professions  Code  of  the  State  as it  relates  to  professional  orthodontic
practices.

2.15 Monthly Meetings.  The MSO shall initiate monthly or more frequent meetings
with the New PC regarding the policies and  procedures  for the operation of the
New PC.

2.16  Maintenance  and Cleaning  Services.  The MSO shall  arrange for security,
maintenance  and cleaning of the Orthodontic  Offices,  including the furniture,
fixtures and equipment therein.

2.17  Licenses and Permits.  The MSO shall  provide and pay for all business and
other  licenses  and permits as  necessary  to operate  the New PC except  those
related to licensure and certifications of the Practice Providers. The MSO shall
prepare and file all reports,  forms and returns  required by Law in  connection
with workers' compensation,  unemployment  insurance,  social security and other
similar Laws with respect to the MSO's employees.

2.18  Insurance.  The MSO shall  provide and pay for customary  office  property
damage  and  liability,  including  business  interruption  insurance,  but  not
including  professional  liability  insurance  (which  shall be and  remain  the
responsibility of the New PC).

2.19  Practice  Transition  and  Associate  Selection.   Dr.  Whitaker  and  the
Orthodontists  (if any) shall keep the MSO  informed of  retirement  goals on an
ongoing  basis;  provided,  however,  that Dr.  Whitaker  shall,  at a  minimum,
continue as a full time employee of the New PC, actively engaged in the practice
of  orthodontics,  for a period of three (3)  years  following  the date of this
Agreement.  Dr.  Whitaker may,  after a period of three (3) years  following the
date of this Agreement,  notify the MSO of his intent to retire.  Upon receiving
such  notice,  the MSO shall  have a period of two (2) years to conduct a search
for an appropriate Orthodontist and other professionals (collectively, "Practice
Associates") who will assume the MSO Agreement. Such search shall include use by
the  MSO  of a  national  journal  advertising  program  and  networking  in the
profession to locate appropriate Practice Associates.  If at the end of such two
(2) year period the MSO has been unable to find a replacement who will undertake
the practice and the MSO  Agreement,  then the MSO and Dr.  Whitaker  shall work
together for a period of one (1) year to find an Orthodontist  who will purchase
the practice  valued as if it were a traditional  (i.e. not operated with a MSO)
practice holding both the clinical and non-clinical  assets.  At the end of such
one (1) year period,  the MSO shall sell the practice to the highest  offer made
by a bona fide purchaser.

The  MSO  will  provide  screening  of all  applicants  and  will  then  present
appropriate  applicants  for final  selection by the New PC. The New PC shall be
responsible for interviewing and selecting each Practice Associate.

After the Practice  Associate(s)  is (are)  selected by the New PC, the MSO will
assist  the New PC with a trial  plan of  approximately  six  months for the new
Practice  Associate(s).  It is understood  that at the end of this period either
the New PC or the new Practice  Associate may terminate  the  relationship.  All
such Practice  Associates  recruited by the MSO as may be accepted by the New PC
shall be employees of the Practice (if so employed)  and not of the MSO. The MSO
will confer with the New PC on an appropriate salary/work-in arrangement for the
new Practice Associate and the final arrangements shall be determined by the New
PC.

                                   ARTICLE 3
                              DUTIES OF THE NEW PC

3.1 General.  The New PC shall be responsible  for the operation of its practice
and the Orthodontic  Office,  in accordance with the requirements of the Laws of
the State.

3.2  Employment of the  Orthodontists  and Rendering of Patient Care. The New PC
shall be  responsible  for the employment  and  professional  supervision of Dr.
Whitaker  and  all  Orthodontists  and  the  other  Practice  Providers  and all
orthodontic care rendered to patients shall be rendered by Dr. Whitaker and such
Orthodontists.  Additionally,  the New PC shall be  solely  responsible  for the
professional  supervision of all other Practice  Providers in their rendering of
patient care.

3.3  Professional  Services.  The New PC shall use and  occupy  the  Orthodontic
Offices  designated  on  Schedule  2 hereof  exclusively  for the  practice  and
rendering of orthodontic services, and shall comply with all applicable Laws and
all standards of orthodontic  care. It is expressly  acknowledged by the parties
that the  orthodontic  practice  conducted at the  Orthodontic  Offices shall be
conducted  solely by Dr. Whitaker and the  Orthodontists  and the other Practice
Providers  acting  under the  supervision  and control of Dr.  Whitaker  and the
Orthodontists (if any), and no other  Orthodontist  shall be permitted to use or
occupy the Orthodontic Offices.  The New PC shall provide professional  services
to patients hereunder in compliance at all times with ethical standards and Laws
applying  to the  orthodontic  profession.  The New PC  shall  ensure  that  Dr.
Whitaker 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. Whitaker or any Orthodontist or other
Practice  Provider,  the New PC shall immediately  inform the MSO of such action
and the  underlying  facts and  circumstances  subject  to such  confidentiality
agreement or arrangements as the New PC and the MSO shall mutually  determine at
or prior to the time of such disclosure. The New PC agrees to cooperate with and
participate in quality  assurance/utilization review programs established by the
MSO 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 the MSO, and  appropriate  steps shall be taken by the New PC at
once to remedy such deficiencies.

3.4  Records.  The New PC 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 the
MSO,  on behalf  of the New PC, to obtain  payments  for  services  and  related
charges and to  facilitate  the delivery of quality  patient care by the New PC.
Notwithstanding  the  foregoing,  patient dental records shall be and remain the
property  of  the  New  PC  and  the  contents   thereof  shall  be  solely  the
responsibility of the New PC.

3.5 Professional  Expenses.  The New PC 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 each
Orthodontist  and other  Practice  Provider  employed  by the New PC. The New PC
shall ensure that Dr. Whitaker and all the Orthodontists  employed by the New PC
participate in such  continuing  education as is necessary for Dr.  Whitaker and
such the Orthodontist to remain current.

3.6 Professional  Liability Insurance.  The New PC 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
Article 9 hereof. The New PC shall also cooperate in any programs recommended by
the MSO to assure  that each of its  Orthodontists  is  insurable,  and that Dr.
Whitaker  and each  Orthodontist  participates  in an on-going  risk  management
program.

3.7 Employment Agreement. The parties recognize that the services to be provided
by the  MSO are  feasible  only if the New PC  operates  an  active  orthodontic
practice to which it, Dr. Whitaker and each Orthodontist associated with the New
PC devote their full time and attention (which shall mean an average of not less
than fourteen (14) full days per month),  unless other  specific  provisions are
made in writing and mutually  agreed upon by the MSO and New PC. The New PC will
cause Dr.  Whitaker and each  individual  full-time  Orthodontist  who now is or
hereafter becomes  affiliated with the New PC to enter into a written employment
agreement (the "Employment Agreement") satisfactory in form and substance to the
MSO,  pursuant  to which Dr.  Whitaker  or the  Orthodontist  shall agree not to
establish,  operate or provide orthodontic or dental services, without the prior
written  consent of both the New PC and the MSO, at any office or facility other
than the  Orthodontic  Office.  In addition,  such  Employment  Agreement  shall
provide by its own terms or by a separate  agreement  that if Dr.  Whitaker's or
such  Orthodontist's  employment  shall  terminate  for any reason (other than a
material  breach of this  Agreement by the MSO or OMEGA) during the Term of this
Agreement,  for a period of 24 months after the termination of Dr. Whitaker's or
such Orthodontist's  Employment  Agreement with the New PC, Dr. Whitaker or such
Orthodontist  shall agree not to establish,  operate or provide  orthodontic  or
dental  services,  without the prior written  consent of both the New PC and the
MSO, at any office practice or facility whatsoever providing services similar to
those  provided by the New PC at any  orthodontic  office  within a fifteen (15)
mile  radius.  Such  Employment  Agreement  (or separate  agreement)  shall also
provide,  among other things, that in the event of a breach of Dr. Whitaker's or
the Orthodontist's agreement not to compete with the New PC provided for in such
Employment  Agreement  (or  separate  agreement),  the MSO shall be  entitled to
receive,  in  addition  to  other  remedies  and  not by way of an  election  of
remedies, liquidated damages equaling the greater of: (a) Dr. Whitaker's or such
Orthodontist's  income, as shown on the W-2 form prepared by the New PC, for the
most recent  calendar  year; or (b) Thirty five (35%) percent of the  preceeding
years Gross Practice Revenues.  Such payment shall be made to the MSO by the New
PC  immediately  following  receipt  of the  payment  from Dr.  Whitaker  or the
breaching  Orthodontist  by the New PC.  Each of the  MSO  and  OMEGA  shall  be
expressly named as a third-party  beneficiary to such agreements between the New
PC and Dr. Whitaker and each Orthodontist and the rights and remedies of the MSO
and OMEGA  thereunder or otherwise in respect of the  restrictive  covenants set
forth in such agreements shall survive termination of this Agreement.

3.8  Confidentiality.  The New PC agrees  and  acknowledges  that all  materials
defined as  "Confidential  Information"  in  paragraph  10.7 of the  Affiliation
Agreement constitute "Confidential  Information" and are disclosed in confidence
and with the understanding  that it constitutes  valuable  business  information
developed by the MSO with the assistance of OMEGA at great expenditures of time,
effort  and money.  The New PC further  agrees  that it shall not,  directly  or
indirectly,  without  the  express  prior  written  consent  of the MSO,  use or
disclose such Confidential  Information for any purpose other than in connection
with the  services to be rendered  hereunder.  The New PC further  agrees (i) to
keep strictly  confidential and hold in trust all  Confidential  Information and
not  disclose  such  Confidential  Information  to any third  party  (except Dr.
Whitaker and his  partners,  employees and  professional  advisors on a "need to
know" basis)  without the express prior written  consent of the MSO; and (ii) to
impose this  obligation  of  confidentiality  on Dr.  Whitaker and his partners,
employees and professional advisors. The New PC acknowledges that the disclosure
of  Confidential  Information  to it by the  MSO is done in  reliance  upon  its
representations and covenants in this Agreement.  Upon expiration or termination
of this  Agreement by either party for any reason  whatsoever,  the New PC shall
immediately return and shall cause Dr. Whitaker and his partners,  employees and
professional  advisors  to  immediately  return  to  the  MSO  all  Confidential
Information,  and the New PC will  not,  and will  cause  Dr.  Whitaker  and his
partners,   employees  and  professional   advisors  not  to,   thereafter  use,
appropriate,  or reproduce  such  Confidential  Information.  The New PC 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 the MSO and 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,  the MSO and  OMEGA,  in  addition  to any other
remedies or damages  available  to either or both of them,  shall be entitled to
injunctive or other  equitable  relief  without the necessity of proving  actual
damages  but such  rights to relief  shall not  preclude  the MSO and OMEGA from
other remedies which may be available to either or both of them hereunder.

                                   ARTICLE 4
                PROFESSIONAL SERVICES, CONTROL OF SOLICITATION,
             APPROVAL OF ADVERTISING MATERIAL AND NO RECIPROCATION

4.1 Fundamental  Understanding.  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 the MSO.  Thus,  the New PC shall have sole and absolute  control of
the delivery of all professional  services and treatment rendered to patients at
the Orthodontic Offices.

4.2 No Solicitation;  Control.  No employee or other  representative  of the MSO
shall be engaged  in, or allowed to solicit  patients  on behalf of, the New PC,
nor shall the MSO have any control over the New PC's patients.

4.3 No 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 New PC shall
be used or distributed without having first been approved by the New PC.

4.4 No Referrals.  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 the MSO to any
patients  of the New PC or its  shareholders,  officers,  directors,  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 the New PC or any of its Practice  Providers,  employees,
contractors or agents.

                                   ARTICLE 5
                    LEASE OF OFFICE FACILITIES AND EQUIPMENT

5.1 Office  Lease/Sublease.  In  consideration of the sums to be paid to the MSO
under the terms of this  Agreement,  the MSO  hereby  leases or  sub-leases,  as
applicable, to the PC during the Term of this Agreement the Orthodontic Offices,
and the  leasehold  improvements  and  fixtures,  furniture and equipment at the
Orthodontic  Offices as listed from time to time on  Schedule 2 attached  hereto
and  incorporated  herein  by this  reference,  under  the  following  terms and
conditions:

                  (a) The MSO is the lessee by  assignment  under  lease for the
premises occupied by the PC  (collectively,  the "Master Lease") a copy of which
is attached hereto as Exhibit A and incorporated  herein by this reference.  The
PC hereby  acknowledges  that the premises  described under the Master Lease are
suitable for the PC's orthodontic  practice.  Based and contingent upon the PC's
promise  to timely pay all  amounts  due under  this  Agreement,  the MSO hereby
agrees to sublease the leased  premises to the PC upon the  following  terms and
conditions:

                           (i) This  sublease  between the MSO and the PC of the
                  premises  shall be subject to all of the terms and  conditions
                  of the Master Lease.  In the event of the  termination  of the
                  MSO's  interest  as  lessee  under  the  Master  Lease for any
                  reason, then the sublease created hereby shall  simultaneously
                  terminate,  unless the PC assumes  the  obligations  under the
                  Master Lease in question and the Lessor consents thereto.

                           (ii) All of the terms and conditions contained in the
                  Master Lease are  incorporated  herein as terms and conditions
                  of the sublease (with each  reference  therein to "Lessor" and
                  "Lessee,"  to be  deemed  to  refer  to the  MSO  and  the PC,
                  respectively)  and,  along with the provisions of this Section
                  5.1(b)  and  Exhibit  "A,"  shall be the  complete  terms  and
                  conditions of the sublease created hereby.

                           (iii)  Notwithstanding the foregoing,  as between the
                  MSO and the PC, the MSO shall remain  responsible  for meeting
                  the obligations of "Lessee" under the sections  entitled Rent,
                  Additional Rent Adjustment,  Insurance on Fixtures,  Liability
                  Insurance,  Repairs,  and Taxes of the  Master  Lease,  all of
                  which obligations  shall be considered MSO Expenses  hereunder
                  and the PC shall have no monetary  obligation  in that regard.
                  In  addition,  as  between  the MSO and the PC,  the MSO shall
                  retain  the right to  exercise  any  options to  purchase  the
                  premises,  or other similar rights of ownership or possession,
                  which may be granted under the Master Lease,  and the PC shall
                  have no rights in that regard.

                           (iv)  In  the  event  this  Agreement  is  terminated
                  according to its terms,  this  sublease  shall also  terminate
                  automatically.

                           (v) If the Master  Lease  contains an option to Renew
                  the terms  thereof,  the MSO shall  notify the PC, at least 30
                  days prior to the expiration of the time for  exercising  such
                  option,  of the MSO's  intention to Renew or not to Renew such
                  term. If the MSO  determines  not to Renew such term,  the MSO
                  shall  provide  or arrange  for the  provision  of  comparable
                  office space (the  "Substitute  Orthodontic  Office") within a
                  radius of 15 miles of the Orthodontic Office, which Substitute
                  Orthodontic  Office shall be subject to the approval of the PC
                  (which  approval  shall  not  be   unreasonably   withheld  or
                  delayed).   The  lease  or   sublease   for  such   Substitute
                  Orthodontic  Office,  as applicable,  shall be substituted for
                  the lease  described on Exhibit A hereto and all references to
                  the "Master Lease" shall thereafter be applicable to the lease
                  or sublease for the Substitute Orthodontic Office for purposes
                  of this Agreement, ab initio.

                           (vi) INTENTIONALLY OMITTED.

5.2 Leasehold Improvements,  etc. In accordance with Article 2.2 hereof, the MSO
shall provide the New PC at the Orthodontic  Offices such  additional  leasehold
improvements,  fixtures, furniture, furnishings and equipment as may be mutually
agreed to with the New PC and  reflected  from time to time on a  supplement  to
Schedule  2  hereto.  The  use by the  New  PC of  all  leasehold  improvements,
fixtures,  furniture,  furnishings  and equipment  provided  hereunder  shall be
subject to the following conditions:

(a) Subject to the terms of the lease, title to all such leasehold improvements,
fixtures, furnishings,  furniture and equipment shall remain in the MSO and upon
termination of this Agreement, the New PC shall immediately return and surrender
all such leasehold improvements,  fixtures, furniture, furnishings and equipment
to the MSO in as good condition as when received, normal wear and tear excepted.

(b)  Subject  to the terms of the  lease,  the MSO  shall be fully and  entirely
responsible for all repairs and maintenance of all such leasehold  improvements,
fixtures, furniture,  furnishings and equipment; provided, however, that the New
PC agrees that it will use its best efforts to prevent  damage,  excessive wear,
and  breakdown  of  all  such  leasehold  improvements,   fixtures,   furniture,
furnishings  and  equipment,  and  shall  advise  the MSO of any and all  needed
repairs and equipment failures.

(c) The obligation of the MSO to provide the leasehold  improvements,  fixtures,
furniture,  furnishings  and equipment  stated  herein shall be  concurrent  and
co-extensive with the Term of this Agreement.

5.3 No Warranty.

(a) THE NEW PC ACKNOWLEDGES THAT THE MSO MAKES NO WARRANTIES OR REPRESENTATIONS,
EXPRESS  OR  IMPLIED,  AS TO  THE  SUITABILITY  OR  ADEQUACY  OF  ANY  LEASEHOLD
IMPROVEMENTS, FIXTURES, FURNITURE, FURNISHINGS, EQUIPMENT, INVENTORY OR SUPPLIES
PROVIDED OR LEASED OR SUBLEASED PURSUANT TO THIS AGREEMENT FOR THE CONDUCT OF AN
ORTHODONTICS PRACTICE OR FOR ANY OTHER PARTICULAR PURPOSE.

(b) Nothing in this  Agreement  shall be construed to affect or limit in any way
the  professional  discretion  of the  Practice  Providers  to  select  and  use
fixtures, furniture, furnishings and equipment, inventory and supplies purchased
or provided  by the MSO in  accordance  with the  provisions  of this  Agreement
insofar as such selection or use constitutes or might constitute the practice of
dentistry or orthodontics.

                                   ARTICLE 6
                                  COMPENSATION

As  consideration  for the  performance of all of its duties and  obligations as
provided in this Agreement, including but not limited to, the costs and expenses
associated  with  furnishing  the  services,  personnel,  facilities,  leasehold
improvements,  fixtures,  furniture,  furnishings,  equipment,  inventories  and
supplies provided for herein, the MSO shall receive  compensation in the form of
monthly  management  fees (the  "Management  Fees")  based upon a  predetermined
percentage of the "Practice  Revenues",  as defined and determined in accordance
with the  provisions  set forth in Schedule 3 attached  hereto and  incorporated
herein by this  reference.  It is acknowledged by and between the parties hereto
that the MSO and/or its affiliates has (have) incurred  substantial expenses and
future  obligations  in  acquiring  the capital  stock of the MSO,  acquiring or
otherwise  establishing  the  Orthodontic  Offices,  establishing  its  systems,
including fees for consultants and other professionals,  interest expense, lease
obligations,  and costs of furnishing or refurbishing  the premises at which the
Orthodontic   Offices  are  located.   The  MSO  has  also  assumed  substantial
obligations associated with the continuing operation of the Orthodontic Offices,
including  those of  lessee,  obligor  and  guarantor  and  obligor  on loans to
establish and operate the Orthodontic  Offices. The parties,  therefore,  having
considered various  compensation  formulae,  acknowledge and agree that in order
for the MSO to  receive  a fair  and  reasonable  return  for its  expenses  and
obligations,  and a fair return for the lease of the premises and  equipment and
for providing the services contemplated hereunder,  that the agreed compensation
is not excessive.  The New PC acknowledges that the compensation  arrangement is
reasonable  under the  circumstances  noted herein and has executed an Affidavit
attesting  to this fact  which is  attached  hereto and  incorporated  herein as
Exhibit C. The New PC specifically  agrees that the MSO may defer actual receipt
of its  Management  Fees and/or  advance monies for purposes of managing the New
PC's cash flow, and the MSO may repay itself, without interest, such advances or
pay said deferred Management Fees when it deems appropriate.

                                   ARTICLE 7
                               SECURITY INTEREST

As assurance and collateral  security for the payment of the monthly  Management
Fees owed to the MSO pursuant to this  Agreement  and any funds  advanced by the
MSO to or on  behalf  of the  New PC  pursuant  to  this  Agreement  and for the
faithful  and timely  performance  of all the  covenants  and  conditions  to be
performed by the New PC under this Agreement, the New PC hereby pledges, grants,
bargains, assigns and transfers to the MSO a security interest,  pursuant to the
Uniform  Commercial  Code  of the  State,  in and to all  Practice  Revenue  and
accounts  receivable  of  patients  of the New PC,  together  with all  proceeds
thereof  (collectively,  the  "Collateral"),  and further  agrees not to pledge,
assign,  transfer or convey any of the  Collateral  or any  proceeds  therefrom,
without the prior written  consent of the MSO,  except to affiliates of the MSO.
Concurrent  with the execution of this  Agreement,  the New PC shall execute the
Security Agreement attached hereto as Exhibit D and incorporated  herein by this
reference in order that the MSO may perfect its interest in the Collateral.  The
New PC expressly agrees to execute any appropriate UCC-1 Financing Statement and
UCC-1 Fixture filings, if so requested in writing by the MSO.

                                   ARTICLE 8
                                   COVENANTS

8.1 New PC's Covenants.  As further  consideration  for the MSO's performance of
the terms and conditions of this Agreement, the New PC covenants, represents and
warrants as follows  (which  covenants,  representations  and  warranties  shall
survive the execution of this Agreement):

(a) The New PC shall comply with all Laws and ethical and professional standards
applicable to the practice of orthodontics  and to cause all of its employees to
do the same.

(b) The New PC shall provide  quality  services and shall cause Dr. Whitaker and
the Orthodontists (if any) to serve the orthodontic needs of the patients of the
New PC. The New PC covenants to monitor  rigorously  utilization  and quality of
services provided at the Orthodontic  Offices and shall take all steps necessary
to  remedy  any  and  all  deficiencies  in the  efficiency  or the  quality  of
orthodontic care provided.

(c)  During  the Term of this  Agreement,  the New PC  shall  not,  directly  or
indirectly,  own an interest in, operate,  join,  control,  participate in or be
connected in any manner with any corporation, partnership, proprietorship, firm,
association, person or entity providing orthodontic care in competition with the
practice at the Orthodontic  Offices, or any other orthodontic  practice managed
by the MSO,  within a radius  of 15 miles of the  Orthodontic  Office or of such
other orthodontic practice, without the MSO's prior written consent.

(d) The New PC recognizes the proprietary  interest of OMEGA in and to its OMEGA
Patient  Scheduling  System and the MSO in its systems for managing the delivery
of orthodontic  care and all policies,  procedures,  operating  manuals,  forms,
contracts and other information (collectively,  the "MSO Information") regarding
such system. The New PC acknowledges and agrees that all information relating to
the OMEGA Patient  Scheduling  System and the MSO Information  constitutes trade
secrets  of OMEGA  and/or the MSO.  The New PC hereby  waives any and all right,
title and interest in and to such trade  secrets and agrees to return all copies
of such trade secrets and information  relating  thereto,  at its expense,  upon
termination of this Agreement.

(e) The New PC  acknowledges  and agrees that OMEGA and the MSO are  entitled to
prevent  their  respective   competitors  from  obtaining  and  utilizing  their
respective trade secrets.  The New PC agrees to hold OMEGA'S and the MSO's trade
secrets in  strictest  confidence  and not to disclose  them or allow them to be
disclosed  directly or indirectly to any person or entity other than persons who
are engaged by the New PC to perform  duties in  connection  with the New PC and
who have a need to know such trade  secrets in the  performance  of their duties
for the New PC, without OMEGA's or the MSO's prior written consent,  as the case
may be. The New PC acknowledges  its fiduciary  obligations to OMEGA and the MSO
and the  confidentiality  of its relationships with OMEGA and the MSO and of any
information  relating to the services and business  methods of OMEGA and the MSO
which it may  obtain  during the term of this  Agreement.  The New PC shall not,
either during the term of this  Agreement or at any time after the expiration or
sooner  termination  hereof,   disclose  to  anyone,  other  than  employees  or
independent  contractors  of OMEGA  and the MSO who use  OMEGA's  and the  MSO's
system in the course of the  performance of their duties,  any  confidential  or
proprietary information or trade secrets obtained by the New PC. The New PC also
agrees to place  any  persons  to whom said  information  is  disclosed  for the
purpose of  performance  under legal  obligation  to treat such  information  as
strictly confidential.

8.2 MSO's Covenants.  As further  consideration  for the New PC's performance of
the terms and conditions of this  Agreement,  the MSO covenants,  represents and
warrants  (which  covenants,  representations  and warranties  shall survive the
execution of this  Agreement)  that during the Term of this  Agreement,  the MSO
agrees not to  establish,  develop or open any  offices in  affiliation  with an
Orthodontist  for the provision of orthodontic  services within a 15 mile radius
of the Orthodontic Offices, without the express written consent of the New PC.

                                   ARTICLE 9
                            INSURANCE AND INDEMNITY

9.1  Insurance  to be  Maintained  by the New PC.  Throughout  the  Term of this
Agreement,  the New PC 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 per Dr.  Whitaker and each of the
Orthodontists providing services for the New PC and a separate limit for the New
PC. The New PC shall be responsible for all liabilities  within  deductibles and
for all liabilities in excess of the limits of such policies.  The MSO agrees to
negotiate for and cause premiums to be paid on behalf of the New PC with respect
to such insurance.  Premiums and deductibles with respect to such policies shall
not be MSO  Expenses.  The  New PC also  agrees  to name  the MSO and  OMEGA  as
co-insureds  and provided for waivers of insurers rights of subrogation in favor
of the MSO and  OMEGA.  The New PC  agrees  to  deliver  to the MSO and  OMEGA a
certificate of insurance indicating such coverage.  In the event that naming the
MSO as an additional  insured  results in extra cost to the New PC, then the MSO
shall reimburse the New PC for such cost.

9.2  Insurance  to be  Maintained  by the  MSO.  Throughout  the  Term  of  this
Agreement, the MSO will use reasonable efforts to provide and maintain, as a MSO
Expense, (a) comprehensive professional liability insurance for all professional
employees of the MSO with limits as  determined  reasonable  by the MSO; and the
MSO shall provide (b)  comprehensive  general  liability and property  insurance
covering the Orthodontic  Office premises and operations.  Such insurances shall
provide for waivers of insurers  rights of subrogation in favor of Dr.  Whitaker
and each of the Orthodontists providing services for the New PC.

9.3  Tail  Insurance  Coverage.  The New PC will  cause  Dr.  Whitaker  and each
Orthodontist (if any) providing services to enter into an agreement with the New
PC that upon termination of Dr. Whitaker's or such  Orthodontist's  relationship
with the New PC, for any reason,  tail  insurance  coverage will be purchased by
Dr.  Whitaker or such  Orthodontist.  Such  provisions  may be  contained  in an
employment agreement,  restrictive covenant agreement or other agreement entered
into by the New PC and Dr. Whitaker or the  Orthodontist,  and the New PC hereby
covenants with the MSO to enforce such provisions relating to the tail insurance
coverage  or to  provide  such  coverage  at the  expense  of the  New PC or Dr.
Whitaker or each such Orthodontist.

9.4 Additional  Insureds.  The New PC and the MSO agree to use their  reasonable
efforts  to have  each  other  named as an  additional  insured  on the  other's
respective  liability  insurance  policies  and  obtain  appropriate  waivers of
insurers  rights  of  subrogation.  In  the  event  that  naming  the  MSO as an
additional  insured  results  in extra  cost to the New PC,  then the MSO  shall
reimburse the New PC for such cost.

9.5  Indemnification.  The New PC shall indemnify,  hold harmless and defend the
MSO and OMEGA and their respective officers, directors, shareholders,  employees
and representatives,  from and against any and all liability,  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  the  New PC  and/or  its
affiliates,  its  shareholders,   agents,  the  Practice  Providers,  its  other
employees and/or its subcontractors (other than the MSO) during the Term hereof.
The MSO shall  indemnify,  hold  harmless  and defend the New PC, its  officers,
directors,  shareholders and employees,  from and against such liability,  loss,
damage,  claim, causes of action, and expenses (including  reasonable attorneys'
fees),  to the extent caused,  directly or indirectly,  by or as a result of the
performance  of any  intentional  acts,  negligent  acts or omissions by the MSO
and/or its shareholders, agents, employees and/or subcontractors (other than the
New PC) during the Term hereof.

9.6 Notwithstanding anything to the contrary contained in this Agreement, or any
Schedule or Exhibit hereto, in no event shall Dr. Whitaker,  the New PC, 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.

                                   ARTICLE 10
                                  TERMINATION

10.1 Termination by the New PC.

(a)  Termination  by the New PC.  The New PC may  terminate  this  Agreement  as
follows:

         (1) In the event of the filing of a petition in voluntary bankruptcy or
         an  assignment  for the benefit of  creditors by the MSO, or upon other
         action  taken or  suffered,  voluntarily  or  involuntarily,  under any
         federal or state law for the benefit of debtors by the MSO,  except for
         the filing of a petition  in  involuntary  bankruptcy  against  the MSO
         which is dismissed  within sixty (60) days  thereafter,  the New PC may
         give written notice of the immediate termination of this Agreement.

         (2) In the event the MSO shall materially default in the performance of
         any  duty or  obligation  imposed  upon it by this  Agreement  and such
         default  shall  continue for a period of sixty (60) days after  written
         notice  thereof has been given to the MSO by the New PC, the New PC may
         terminate this Agreement.

Upon  termination  of this  Agreement  by the  Orthodontic  Practice  under this
Section  10.1,  the New PC shall be entitled to exercise  the "Call  Option," as
defined in and on the terms and  conditions  set forth in Section 3 of the Stock
Put/Call  Option and  Successor  Designation  Agreement  and recover such direct
damages actually incurred by Dr. Whitaker as a result of such termination.

10.2 Termination by MSO.  MSO may terminate this Agreement as follows:

(a) In the event of the  filing of a  petition  in  voluntary  bankruptcy  or an
assignment  for the  benefit  of  creditors  by the  New PC or any  shareholders
thereof,  or upon other action taken or suffered,  voluntarily or involuntarily,
under any  federal or state law for the  benefit of debtors by the New PC or any
shareholders  thereof,  except  for the  filing  of a  petition  in  involuntary
bankruptcy  against the New PC or any  shareholder  thereof  which is  dismissed
within sixty (60) days thereafter,  MSO may give written notice of the immediate
termination of this Agreement.

(b) In the event the New PC fails to perform orthodontic services on a full-time
basis  consistent  with its  pattern of practice  in the  immediately  preceding
calendar  year  (other  than as a  result  of the  death  or  disability  of Dr.
Whitaker) and such default shall  continue for a period of sixty (60) days after
written  notice  thereof  has been  given to the New PC by the MSO,  the MSO may
terminate this Agreement.

(c) In the event the New PC shall  materially  default in the performance of any
other duty or  obligation  imposed upon it by this  Agreement,  and such default
shall  continue for a period of sixty (60) days after written notice thereof has
been given to the New PC by the MSO, the MSO may terminate this Agreement.

(d) In the event Dr. Whitaker or any Orthodontist breaches or defaults under his
or her Employment  Agreement and the New PC does not cause Dr.  Whitaker or such
Orthodontist  to cure such breach or default within any applicable  grace period
therefor but not less than sixty (60) days,  the MSO may give written  notice of
the immediate termination of this Agreement.

Upon  termination  of this  Agreement by the MSO under this Section 10.2 or upon
expiration  of the Term of this  Agreement,  the MSO and  OMEGA  shall  have the
option to either (1) exercise the "Put Option" and/or the "Successor Designation
Option," as defined in and on the terms and subject to the  conditions set forth
in Sections 2 and 5, respectively,  of the Stock Put/Call Option and Designation
Agreement or (2) Omega may terminate  this Agreement by paying to the New PC the
sum of  $1,000  and  Omega  may then  bring in a  replacement  to take  over the
practice.  If this  Agreement is  terminated by the MSO or Omega,  Dr.  Whitaker
shall be bound by the terms of the non-compete  agreement  attached as Exhibit C
to the Stock  Put/Call  Agreement.  In addition,  upon any  termination  of this
Agreement or upon  expiration  of the Term of this  Agreement,  the MSO shall be
entitled to receive the Management  Fees collected to the effective date of such
termination or expiration,  the amounts of any loans or advances  (including any
accrued but unpaid  interest  thereon)  and all other sums accrued or related to
occurrences  arising at or prior to the date of  termination  and  recover  such
direct  damages  actually  incurred  by  OMEGA  or the MSO as a  result  of such
termination.

                                   ARTICLE 11
                    AUTHORIZED AGENT AND POWERS OF ATTORNEY

The New PC hereby  designates the MSO (and its  designees) its authorized  agent
and lawful attorney-in-fact for purposes of depositing payments, paying accounts
payables,  signing  checks,  negotiating  and signing  contracts for services or
goods,  securing  loans  or  incurring  obligations  on  behalf  of the  New PC;
provided,  however, that all contracts or fees set for services on behalf of the
New PC  will  be  subject  to  final  approval  and  acceptance  by the  New PC.
Additionally, the New PC hereby irrevocably appoints the MSO (and its designees)
its  authorized  agent and  lawful  attorney-in-fact  to  collect  all bills and
accounts  receivable  for  professional  fees,  charges  and other  amounts  and
authorizes the MSO through its designees to take possession of all checks, money
orders  and  similar  instruments  received  as  payment  of  receivables  to be
deposited into the New PC Account.  The New PC hereby  irrevocably  appoints the
MSO as the New PC's attorney-in-fact, with full power and authority in the place
and stead of the New PC, in the MSO's discretion,  to endorse in the name of the
New PC any checks,  payments,  notes,  insurance  payments and money orders,  to
withdraw  funds for payments of expenses,  including  Management  Fees and other
sums  payable to the MSO,  to open and close the New PC  Account  and other bank
accounts,  to take any action and to execute any other  instrument which the MSO
may deem necessary or advisable to accomplish the purposes hereof. The powers of
attorney granted herein are coupled with an interest and are irrevocable.  Third
parties and entities and persons not a party to this  Agreement  are entitled to
rely on the  foregoing  attorneys-in-fact  and an affidavit of the MSO attesting
thereto.  The acceptance of this appointment by the MSO shall not obligate it to
perform any duty or covenant  required to be performed by the New PC under or by
virtue of this Agreement.  Notwithstanding the foregoing powers of attorney, the
New PC shall at any time, on the request of the MSO, sign financing  statements,
security agreements or other agreements necessary or advisable to accomplish the
purpose of this  Agreement.  Upon the New PC's  failure  to sign said  financing
statements,  security  agreements or other agreements,  the MSO is authorized as
the agent of the New PC to sign any such instruments.  The New PC may review all
deposits and expenses upon request.

                                   ARTICLE 12
                      INDEPENDENT CONTRACTOR RELATIONSHIP

Neither the New PC nor its employees  shall have any claim under this  Agreement
or   otherwise   against  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 the New PC. Since  neither the New PC nor its  employees  are
employees  of the MSO,  the MSO  shall  not  withhold  on  behalf  of the New PC
unemployment  insurance,  Social Security,  or otherwise  pursuant to any law or
requirement of any  governmental  agency,  and all such  withholding,  if any is
required, shall be the sole responsibility of the New PC.

                                   ARTICLE 13
                                 MISCELLANEOUS

13.1 Access to Records. From and after any termination, each party shall provide
the other party with 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.

13.2 Patient  Records.  Upon  termination  of this  Agreement,  the New PC shall
retain all patient  dental  records  maintained  by the New PC or the MSO in the
name of the New PC. During the term of this Agreement,  and thereafter,  the New
PC or its designee shall have reasonable  access during normal business hours to
the New PC's and the MSO's  records,  including,  but not limited to, records of
collections,  expenses and  disbursements  as kept by the MSO in performing  the
MSO's obligations under this Agreement,  and the New PC may copy any or all such
records.

13.3 The New PC's Control Over the  Orthodontic  Practice.  Notwithstanding  the
authority  granted to the MSO herein,  the MSO and the New PC agree that the New
PC,  personally or through Dr. Whitaker or any of its Orthodontists (if any) and
other Practice  Providers,  shall have complete control and supervision over the
professional  aspects of the New PC's practice,  as well as the provision of all
professional services,  including, without limitation, the selection of a course
of treatment for a patient,  the procedures or materials to be used as a part of
such course of  treatment,  and the manner in which such course of  treatment is
carried  out by the New PC. The New PC shall have sole  authority  to direct the
business, professional, and ethical aspects of the New PC. The MSO shall have no
authority,  directly or  indirectly,  to  perform,  and shall not  perform,  any
orthodontic  function,  or to influence or otherwise interfere with the exercise
of the New PC's professional judgment.  The MSO may, however,  advise the New PC
as to the relationship between its performance of orthodontic  functions and the
overall administrative and business functioning of the New PC.

                                   ARTICLE 14
                               DISPUTE RESOLUTION

14.1 Dispute Resolution.

(a) If during the term of this  Agreement a dispute  arises between the parties,
or one party  perceives  the  other as acting  unfairly  or  unreasonably,  or a
question of interpretation  arises  hereunder,  then the parties' shall promptly
confer and exert  their best  efforts  in good faith to reach a  reasonable  and
equitable resolution of the issue.

If  resolution  cannot be reached by the parties  within thirty (30) days as set
forth above,  then any  controversy or claim arising out of this Agreement of an
aggregate amount less than $250,000 not resolved  pursuant to the above shall be
settled by arbitration under the rules or the American Arbitration Association's
Rules.  Judgment upon any award rendered by the  arbitrator(s) may be entered in
any court having  jurisdiction  thereof.  Any arbitration  decision  awarding an
amount less than  $250,000  shall be final and binding upon the parties.  Amount
awarded in excess of $250,000 shall be appealable to a court in accordance  with
Article 15.9 hereof. Any arbitration  proceeding shall be filed in the office of
the American  Arbitration  Association  located in Los Angeles,  California  and
conducted in Los Angeles,  California.  Judgment upon the award  rendered by the
arbitrator  may be entered in any court  having  jurisdiction.  The  arbitrator,
shall be bound by the terms and  conditions of this Agreement and shall not have
the authority to award  multiple,  punitive or  consequential  damages under any
circumstances.

For claims exceeding  $250,000,  either Party may, at its option,  elect to have
any dispute  adjudicated by either  arbitration in accordance  with Article 15.9
hereof.

14.2 Waiver of Jury.  With respect to any dispute arising under or in connection
with  this  Agreement  or  any  related  agreement,  as to  which  legal  action
nevertheless occurs, each party hereby irrevocably waives all rights it may have
to demand a jury trial. This waiver is knowingly,  intentionally and voluntarily
made by the parties and each party  acknowledges that no person acting on behalf
of the other party has made any  representation of fact to induce this waiver of
trial by jury or in any way modified or nullified  its effect.  The parties each
further  acknowledge that it has been represented (or has had the opportunity to
be  represented)  in the  signing  of this  Agreement  and in the making of this
waiver by independent legal counsel,  selected of its own free will, and that it
has had the opportunity to discuss this waiver with counsel.  Each party further
acknowledges  that it has read and understands the meaning and  ramifications of
this waiver provision.

                                   ARTICLE 15
                               GENERAL PROVISIONS

15.1  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. Whitaker, to:

     John F. Whitaker, D.D.S.
     13252 Hawthorne Blvd. Suite 200
     Hawthorne, CA 90250

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.

15.2 INTENTIONALLY OMITTED.

15.3 Contract Modifications for Prospective Legal Events. In the event any state
or federal Laws, now existing or enacted or promulgated after the effective date
of this Agreement,  are interpreted by judicial decision, a regulatory agency or
legal  counsel  for  both  parties  in such a  manner  as to  indicate  that the
management structure of this Agreement may be in violation of such Laws, the New
PC 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 the New PC and the MSO.  Neither party shall be
deemed to be in breach of this  agreement  by reason of a violation of such Laws
as described  above unless such party had actual  knowledge of such violation as
of the effective date of this Agreement.

15.4  Exclusive  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,
employees, agents, subcontractors, and suppliers.

15.5 No Obligation to Third Parties.  None of the  obligations and duties of the
MSO or the New PC under  this  Agreement  shall in any way or in any  manner  be
deemed to create  any  obligation  of the MSO or of the New PC to, or any rights
in, any person or entity not a party to this  Agreement  other than OMEGA  which
shall be deemed a party for limited purposes as set forth in this Agreement.

15.6 Entire  Agreement.  This  Agreement  including  the  Schedules and Exhibits
hereto, together with the Affiliation Agreement of even date herewith, the Stock
Put/Call  Option and Successor  Designation  Agreement of even date herewith and
the Employment Agreement(s) (including the related non-competition agreements or
covenants), constitutes the entire agreement between the parties concerning this
subject  matter,  and  supersedes  all  prior  and  contemporaneous  agreements,
representations  and  understandings  of the  parties  concerning  the  contents
hereof.  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.

15.7  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 the MSO shall be permitted  to assign its rights and  obligations
hereunder without the consent of the New PC or Dr. Whitaker to any person,  firm
or  corporation  controlled  by the MSO,  controlling  the MSO or  under  common
control with the MSO or to any financing institutions as may be required by such
financing  institutions or the terms of credit  agreements  which may be entered
into from time to time by Omega for the  obtaining of  additional  financing for
Omega.

15.8  INTENTIONALLY OMITTED.

15.9  Governing  Law.  This  Agreement  shall be  governed by and  construed  in
accordance  with  the  laws of the  State  of  California,  irrespective  of its
conflict of laws rules.  The parties agree to submit to the  jurisdiction of any
state  or  federal  court  located  in  Los  Angeles,  California.  The  parties
acknowledge  that  the MSO 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 the MSO
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 the MSO shall be deemed waived and forever
unenforceable and the provisions of Section 15.14 shall be applicable.

15.10 Events  Excusing  Performance.  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 control for so long as such events continue,
and for a reasonable period of time thereafter.

15.11  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.

15.12 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.

15.13  Amendments.  This Agreement may be amended only by the written consent of
both parties.

15.14  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
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.

15.15 No Waiver. The waiver by either party to this Agreement of any one or more
defaults,  if any, on the part of the other  party,  shall not be  construed  to
operate as a waiver of the other or future defaults under this Agreement.

15.16  Captions.  Captions  to  paragraphs  in this  Agreement  are for  ease of
reference, and shall not be considered an interpretation of the paragraph.

15.17 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.

         NEW PC:

         J. F.  Whitaker, D.D.S., Inc.



         By:_______________________________
         Name: John F.  Whitaker, D.D.S.
         Title:   President


         MSO:

         OMEGA ORTHODONTICS OF WOODLAND HILLS, INC.



         By:_______________________________
         Name:  Robert J. Schulhof
         Title: President


         OMEGA:
         OMEGA ORTHODONTICS, INC.



         By:_______________________________
         Name:  Robert J. Schulhof
         Title: President

<PAGE>
                                   SCHEDULE 1

                               THE ORTHODONTISTS


Name and Address

John F. Whitaker, D.D.S.
13252 Hawthorne Blvd. Suite 200
Hawthorne, CA 90250


<PAGE>
                                   SCHEDULE 2

                        ORTHODONTIC OFFICES AND SERVICES


The office space and related leasehold  improvements  which the MSO will provide
to the New PC pursuant to Section 2.2 of the  Management  Services  Agreement to
which this Schedule 2 is attached are located at 13252  Hawthorne  Blvd.,  Suite
200, Hawthorne,  California 90250. The related fixtures, furniture,  furnishings
and  equipment  are set forth on the  attached  asset list.  The  services to be
provided by the MSO to the New PC in relation to the Orthodontic Offices are the
repair,  maintenance and replacement of the Orthodontic Offices,  including such
leasehold improvements,  fixtures, furniture,  furnishings and equipment, except
for repairs,  maintenance and replacement  necessitated by the negligence of the
New PC, its  employees  and agents (not  including  the MSO or its  employees or
agents). The MSO shall also provide telephone, facsimile transmission, printing,
duplicating and transcribing  services as needed, as well as all laundry,  linen
and uniforms.
<PAGE>
                                   SCHEDULE 3

                         COMPENSATION - MANAGEMENT FEES


The  MSO  shall  receive,  as  compensation  for the  performance  of all of its
obligations and duties  contained in the Agreement,  (a) during the Term of this
Agreement,  monthly  Management  Fees in an amount equal to Seventy Five Percent
(75%) of the Practice Revenues, plus (b) during the first thirty six (36) months
of this Agreement  only, a monthly start up management fee in an amount equal to
$2,500  commencing on the effective date of this Agreement.  The New PC shall be
entitled to Twenty Five Percent (25%) of such monthly  Practice  Revenues,  less
the start up  management  fee  during the first  thirty six (36)  months of this
Agreement,  except  as the  parties  may  otherwise  agree  from time to time in
writing;  provided,  however,  that in no event shall the MSO receive  less than
fifteen (15%) percent of the Practice Revenues in Management Fees (not including
the start up  management  fees  during the first  thirty six (36) months of this
Agreement)  annually and such minimum Management Fee shall be disbursed prior to
disbursement of any other funds. At the end of each financial quarter during the
Term, the MSO shall provide the New PC with an unaudited internal  accounting of
the MSO Expenses actually incurred for such quarter, prepared in accordance with
the accrual  method of  accounting.  If the MSO  Expenses as  reflected  in such
accounting  as having been paid by the MSO are less than Sixty (60%)  percent of
the Practice  Revenues for such financial  quarter,  fifty (50%) percent of such
difference  shall be  returned  by the MSO to the New PC as a  profit  incentive
rebate (the "Rebate"). If such MSO Expenses are more than sixty (60%) percent of
the Practice  Revenues for such financial  quarter,  fifty (50%) percent of such
excess will be charged to the New PC and set off against payments due to the New
PC  hereunder.  If the  Agreement  to  which  this  Schedule  3 is  attached  is
terminated or expires,  the foregoing  Management  Fees  (including any start up
management  fees)  shall be  payable  to the MSO based on all  Practice  Revenue
collected as of the date of termination or expiration.

Payment to the MSO shall be made in monthly  installments  based on the Practice
Revenues  realized by the MSO for  services  rendered  hereunder.  The MSO shall
distribute  the  proceeds  from the New PC Account  and  allocate  the  proceeds
between the MSO and the New PC 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  New PC  (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 the New PC and for any  other  goods or  services  sold or  provided  to such
patients.

<PAGE>
                                   EXHIBIT A

                       ORTHODONTIC OFFICES - MASTER LEASE


<PAGE>
                                   EXHIBIT B

                               PRACTICE PROVIDERS

John F. Whitaker, D.D.S.
13252 Hawthorne Blvd. Suite 200
Hawthorne, CA 90250



<PAGE>
                                   EXHIBIT C

                               New PC'S AFFIDAVIT


<PAGE>
                                   AFFIDAVIT

         I, John F. Whitaker, D.D.S., declare:

         I am an  Orthodontist,  duly licensed in the State of California  and I
practice  through a  professional  corporation  under  the name J. F.  Whitaker,
D.D.S., Inc. (the "New PC").

         I have had substantial  experience in the practice of orthodontics  and
in managing and operating an orthodontic office.

         In the  course  of  operating  orthodontic  offices,  I  have  acquired
significant  knowledge as to the  overhead  costs  incurred  and gross  receipts
generated by similar types of orthodontic offices.  Further, I am fully aware of
the non-orthodontic, operational, accounting, billing, financing, management and
personnel requirements of an orthodontic office and the cost factors involved in
providing  such  management,   personnel,  accounting,  billing,  financing  and
operation.

         I have  thoroughly  reviewed the  Management  Services  Agreement  (the
"Agreement"),  which is effective as of ________ ___,  1998,  between the New PC
and Omega  Orthodontics  of Woodland  Hills,  Inc.  (the "MSO")  concerning  the
duties,  responsibilities and obligations  undertaken by the MSO in managing and
operating all non-orthodontic  aspects of the Orthodontic Office as contemplated
by the Agreement.

         I  have  reviewed  the  prior  operating  financial  statements  of the
orthodontic  office located at 13252  Hawthorne  Blvd.  Suite 200 Hawthorne,  CA
90250 and an operating  budget and estimated  income of the orthodontic  office,
which,  in my opinion,  can  reasonably  be expected  from the operation of said
office.

         In my opinion, based upon my experience, the Management Fees of Seventy
Five  Percent  (75%)  of  "Practice  Revenues"  to be  charged  by  the  MSO  as
contemplated  by the  Agreement  (plus the monthly  start up  management  fee of
$2,500  payable  during  each  of  the  first  thirty  six  (36)  months  of the
Agreement),  will  afford  it a  reasonable  but not  excessive  return  for its
services rendered and obligations incurred. In addition, the Twenty Five Percent
(25%) of "Practice  Revenues"  (less the start up management fees due during the
first  thirty six (36)  months of this  Agreement)  retained  by the New PC will
provide reasonable earnings for the performance of orthodontic services.

         I declare under penalty of perjury that the foregoing statement is true
and correct to the best of my knowledge and belief.

         Executed at Los Angeles, California this ____ day of August, 1998.


                                                ---------------------------
                                                John F. Whitaker, D.D.S.

                               STATE OF CALIFORNIA

___________________, ss.                                       August ___, 1998


         Then personally  appeared the above-named John F. Whitaker,  D.D.S. and
acknowledged the foregoing Affidavit to be his free act and deed.


[SEAL]                                 ____________________________
                                       Notary Public
                                       My Commission Expires:


<PAGE>
                                   EXHIBIT D

                               SECURITY AGREEMENT



<PAGE>
                               SECURITY AGREEMENT


THIS SECURITY AGREEMENT is effective as of the 1st day of January 1998, by J. F.
Whitaker,  D.D.S.,  Inc., an California  corporation (the "New PC"), and John F.
Whitaker,  D.D.S. ("Dr. Whitaker") who is duly licensed to practice orthodontics
in the State  and  Omega  Orthodontics  of  Woodland  Hills,  Inc.,  a  Delaware
corporation (the "MSO") with reference to the following facts:

WHEREAS, pursuant to a Management Services Agreement (the "Agreement"), dated as
of the date hereof,  between the New PC and the MSO, as assurance and collateral
security for the payment of the monthly Management Fees owed to the MSO pursuant
to the Agreement and any funds advanced by the MSO to or on behalf of the New PC
pursuant to the Agreement and for the faithful and timely performance of all the
covenants  and  conditions  to be  performed  by the New PC under the  Agreement
(collectively,  the "Obligations") the New PC agreed to pledge,  grant, bargain,
assign and  transfer  to the MSO a security  interest,  pursuant  to the Uniform
Commercial  Code of the State,  in and to all Practice  Revenue and the accounts
receivable  of  patients  of the New PC,  together  with  all  proceeds  thereof
(collectively, the "Collateral");

WHEREAS,  the New PC is obligated as a condition to the MSO's  performance under
the Agreement to execute and deliver this Security Agreement;

NOW,  THEREFORE,  in  consideration  of the  foregoing  and of the covenants and
agreements hereinafter set forth, the parties hereto agree as follows:

1. Grant of Security Interest. As and for collateral security for payment by the
New PC of the  Obligations  and any and all amounts  payable under this Security
Agreement (collectively,  the "Secured Obligations"), the New PC hereby pledges,
grants,  bargains,  assigns and  transfers  to the MSO,  and grants to the MSO a
security  interest in, the  Collateral.  Dr.  Whitaker shall cause the New PC to
perform fully and on a timely basis all of the New PC's  obligations  under this
Security  Agreement.  The MSO may at its option file a financing statement (Form
UCC-1) in order to perfect its security interest hereunder.

2. Representations and Warranties. The New PC represents and warrants all of the
accounts  receivable  constituting  a portion  of the  Collateral  of the New PC
pledged to the MSO are and will be validly  created  obligations  of each of the
obligors who incurred same for services actually rendered in the ordinary course
of business of the New PC. Further,  the New PC represents and warrants that the
Collateral is not subject to any lien, pledge,  charge,  encumbrance or security
interest or right or option on the part of any third person.

3. Release of Security  Interest.  Upon the  termination  of the  Agreement  and
payment in full of the accrued  Management Fees thereunder and any and all other
Secured Obligations,  the MSO shall release its security interest hereunder, and
will deliver to the New PC any property forming part of the Collateral delivered
to the MSO and then held by the MSO hereunder.

4.  Realization  of  Collateral.  The  MSO  shall  have,  with  respect  to  the
Collateral,  the rights and  obligations  of a secured  party  under the Uniform
Commercial Code as adopted in the state of California (the "State"). Such rights
shall include, without limitation, the following:

         A.  The  right,  upon  default,  to have  the  Collateral,  or any part
         thereof, transferred to its own name or to the name of its nominee;

         B. The right,  upon default,  to sell, assign or deliver as much of the
         Collateral   as  is   reasonably   necessary  to  repay  the  defaulted
         indebtedness  (together  with  expenses  attendant  upon  such sale and
         repayment), at public or private sale, as the MSO may elect, either for
         cash or on credit,  without  assumption  of any credit risk and without
         demand or advertisement (unless otherwise required by law).

         C. The New PC hereby  irrevocably  authorizes  the MSO to sign and file
         financing statements naming the New PC as the debtor and the MSO as the
         secured party, at any time with respect to any Collateral,  without the
         signature of the New PC. The New PC hereby irrevocably appoints the MSO
         as the New PC's attorney-in-fact,  with full authority in the place and
         stead of the New PC and in the name of the New PC, from time to time in
         the MSO's discretion,  to take any action and to execute any instrument
         which  the MSO may  deem  necessary  or  advisable  to  accomplish  the
         purposes hereof. The attorney-in-fact granted herein is coupled with an
         interest and is irrevocable. Third parties and entities and persons not
         a  party  to  this  Security  Agreement  are  entitled  to rely on this
         attorney-in-fact  and an affidavit of the MSO  attesting  thereto.  The
         acceptance  of this  appointment  by the MSO shall not  obligate  it to
         perform any duty or covenant  required  to be  performed  by the New PC
         under or by virtue of the  Collateral.  Notwithstanding  the  foregoing
         power of  attorney,  the New PC shall at any time on the request of the
         MSO, sign Financing Statements, security agreements or other agreements
         with respect to any Collateral.  Upon the New PC's failure to sign said
         Financing Statements,  security agreements or other agreements, the MSO
         is authorized as the agent of the New PC to sign any such  instruments.
         Upon the  request of the MSO,  the New PC agrees to pay all filing fees
         and to  reimburse  the MSO on demand for all costs and  expenses of any
         kind (including, without limitation, legal fees) incurred in any way in
         connection with the Collateral.

5. Purchase of Collateral.  At any such private or public sale of the Collateral
or part thereof,  the MSO may purchase and pay for the same by  cancellation  of
such portion of the  Obligations,  equal to the  purchase  price and free of any
right of redemption on the part of the New PC. The MSO agrees, however, that the
New PC shall  have all  rights,  including  rights of  notice,  provided  by the
Uniform  Commercial  Code as adopted in the State.  In any case where  notice is
required,  five days' notice shall be deemed reasonable  notice. In the event of
any sale  hereunder,  the MSO shall  apply the  proceeds  in the order set forth
below in Paragraph 6 hereof.  The MSO may have resort to the  Collateral  or any
portion  thereof with no  requirements  on the part of the MSO to proceed  first
against any other person or property.

6.  Application of  Collateral.  Proceeds from the sale of the Collateral or any
part thereof shall be applied by the MSO in the following order:

         A. To the payment of the costs and expenses of  collection  incurred by
         the MSO, including,  without limitation,  attorneys' fees and all other
         reasonable  expenses,  liabilities  and  costs  incurred  by the MSO in
         connection therewith;

         B. To the  payment  of the  whole  amount  then  owing and  unpaid  for
         advances and/or Management Fees;

         C. To the payment in full of all other  Obligations of the New PC under
         the Agreement; and

         D. To the payment to the New PC of any surplus then remaining from such
         proceeds.

7. Extension of Agreement.  No Renewal or extension of the Agreement, no release
or surrender of any Collateral given as security in connection therewith, and no
delay in  enforcement  thereof or in exercising  any right or power with respect
thereto or  hereunder  shall  affect  the rights of the MSO with  respect to the
Collateral or any part thereof.

8. Notices.  Any notice to be given pursuant to this  Agreement  shall be deemed
effective the same day when such notice is given personally,  or by telegram, or
electronic  transmission  to the  President of the party to whom notice is being
given.  Notice by mail shall be deemed effective three days after deposit in the
United States mail, and properly addressed with postage prepaid.

                  Notices to the MSO shall be given at:

                  Omega Orthodontics of Woodland Hills, Inc.
                  c/o Omega Orthodontics, Inc.
                  3621 Silver Spur Lane
                  Acton, CA 93510
                  Attn: Robert Schulhof

or other such  addresses  as may be delivered by the MSO to the New PC from time
to time in writing.

                  Notices to the New PC shall be given at:

                  John F. Whitaker, D.D.S.
                  13252 Hawthorne Blvd. Suite 200
                  Hawthorne, CA 90250

or other such  addresses  as may be delivered by the New PC to the MSO from time
to time in writing.

9. Waiver.  The waiver by either party to this Security  Agreement of any one or
more defaults, if any, on the part of the other party, shall not be construed to
operate as a waiver of the other or future defaults under this  Agreement.  This
Security  Agreement  may be amended or modified  only by the written  consent of
both parties.

10.  Additional  Documents.  The New PC  agrees  that it will duly  execute  and
deliver to the MSO any additional documents which may be reasonably necessary to
give  effect  fully  to the  security  interest  granted  to the MSO  hereunder,
including, without limitation, a financing statement on Form UCC-1.

11. Benefit.  This Security Agreement shall inure to the benefit of and shall be
binding upon the respective heirs, successors and assigns of the parties hereto.

12.  Applicable  Law.  This  Agreement  shall be  governed by and  construed  in
accordance with the laws of the State.

13. Defined Terms.  Capitalized terms used in this Security  Agreement which are
not  defined  herein  but which are  defined  in the  Agreement,  shall have the
respective meanings ascribed therein.

14. Counterparts.  This Security 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 caused this  Agreement to be duly
executed, as of the day and year first hereinabove written.


NEW PC:                                     MSO:

J. F.  Whitaker, D.D.S., Inc.               OMEGA ORTHODONTICS OF
                                            WOODLAND HILLS, INC.


By:____________________________             By:__________________________
Name: John F.  Whitaker, D.D.S.             Name:  Robert J. Schulhof
Title:  President                           Title:  President


DR. WHITAKER


____________________________
John F. Whitaker, D.D.S.