STOCK PUT/CALL OPTION AND SUCCESSOR DESIGNATION AGREEMENT

             This Stock Put/Call Option and Successor Designation Agreement (the
"Agreement")  is made effective as of this 5th day of August,  1998 by and among
J.  F.  Whitaker,  D.D.S.,  Inc.  a  professional  corporation  (the  "New  PC")
incorporated  under the laws of the State of California  (the "State");  John F.
Whitaker,  D.D.S. ("Dr. Whitaker") who is duly licensed to practice orthodontics
in the State; Omega Orthodontics,  Inc., a Delaware corporation  ("OMEGA");  and
Omega Orthodontics of Woodland Hills, Inc., a Delaware  corporation (the "MSO"),
which is a  wholly-owned  subsidiary of OMEGA,  with  reference to the following
facts.

                                    RECITALS

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

         B. OMEGA  acquired  certain  assets of Dr.  Whitaker  pursuant  to that
certain  Affiliation  Agreement and Asset Purchase  Agreement (the  "Affiliation
Agreement") dated as of August 5, 1998 by and between OMEGA and Dr. Whitaker.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

         5.       Successor Designation Option.

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

                  (i) the death of Dr. Whitaker;

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

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

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

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

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

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

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

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

                  (x) if Dr.  Whitaker  is  subjected  involuntarily  to  such a
         petition or  assignment,  or any creditor or other  persons  obtains an
         attachment  or other legal or  equitable  interest in any shares of the
         Capital Stock of Dr. Whitaker and such involuntary petition, assignment
         or attachment is not discharged within sixty (60) days after creation;

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

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

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

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

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

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

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

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

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


         10. Purchase Price of the Capital Stock.

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

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

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

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

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

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

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

         11.  Insurance.

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

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

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

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

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

         13.  Restriction on Transfer.

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

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

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

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

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

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

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

         17.  General

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

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

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

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

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

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

                  If to Dr. Whitaker, to:

                  J. F. Whitaker, D.D.S., Inc.
                  13252 Hawthorne Blvd., Suite 200
                  Hawthorne, California 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.

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

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

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

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

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

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

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

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

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

         18. Dispute Resolution.

         Any dispute which arises as a result of this Agreement shall be settled
in accordance with the terms set forth in Article 14 of the Management  Services
Agreement executed August ___, 1998.

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

"NEW PC"

J. F.  Whitaker, D.D.S., Inc.
an California corporation


By: ______________________________
    John F. Whitaker, D.D.S., President


DR. WHITAKER


______________________________
John F. Whitaker, D.D.S.,


"MSO"

OMEGA ORTHODONTICS OF WOODLAND HILLS, INC.
a Delaware corporation


By: ______________________________
    Robert J. Schulhof, President

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

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

<PAGE>
                           SPOUSAL JOINDER AND CONSENT


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

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

Executed this     day of August, 1998.



Signature:                                    


Printed or Typed Name:                        Sydney Whitaker

<PAGE>
                                   EXHIBIT A

                              ORTHODONTIC OFFICES

The offices and related  leasehold  improvements  constituting  the  Orthodontic
Offices are located at 13252 Hawthorne Blvd., Suite 200,  Hawthorne,  California
90250.

<PAGE>
                                   EXHIBIT B

                                     STOCK

         The authorized  capital stock of the New PC is 100,000 shares of common
stock, $0.00 par value per share. 5,000 shares of the common stock of the New PC
are issued and are outstanding, all of which shares are evidenced by Certificate
No. 1 issued in the name of John F. Whitaker, D.D.S.

<PAGE>
                                   EXHIBIT C

                           NON-COMPETITION AGREEMENT

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

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

                                    RECITALS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

         8. Miscellaneous.

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

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

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

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

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

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

If to Dr. Whitaker:                 Dr. John F. Whitaker, D.D.S.
                                    13252 Hawthorne Blvd., Suite 200
                                    Hawthorne, California 90250


If to the New PC:                   Dr. J. F. Whitaker, D.D.S., Inc.
                                    13252 Hawthorne Blvd., Suite 200
                                    Hawthorne, California 90250

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

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

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

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


"NEW PC"

J. F.  Whitaker, D.D.S., Inc.
an California corporation


By: ______________________________
    John F. Whitaker, D.D.S., President


DR. WHITAKER


______________________________
John F. Whitaker, D.D.S.,


ACKNOWLEDGED BY:

"MSO"

OMEGA ORTHODONTICS OF WOODLAND HILLS, INC.
a Delaware corporation


By: ______________________________
    Robert J. Schulhof, President