Document:

SAFEGUARD  HEALTH  ENTERPRISES,  INC.
                                   _____________________

                                   TERM  SHEET  AGREEMENT
                                   _____________________

DATE:     March  1,  2000  (the  "Effective  Date")

PARTIES:
        1.     SafeGuard  Health  Enterprises,  Inc.  (the  "Company")
        2.     CAI  Partners  and  Company II, L.P. and CAI Capital Partners
               And Company II,  L.P.  (collectively  "CAI")
        3.     Jack  R.  Anderson  ("Anderson")
        4.     Silicon  Valley  Bank  ("Bank")
        5.     John  Hancock Mutual Life Insurance Company and the other holders
               of the 7.91%  Senior  Notes  of  the  Company  due  September 30,
               2005  (collectively "Hancock")
        6.     Steven  J.  Baileys,  D.D.S.  ("Baileys")

     _______________

     This  Term  Sheet  Agreement  (the  "Agreement") summarizes various binding
agreements  between  the  parties.  It  is  not a letter of intent.  The parties
contemplate that the agreements evidenced by this Agreement will be memorialized
in  further  documentation  which  may  include  a Shareholders Agreement, to be
prepared  and  executed by the parties at a later date.  However, the agreements
evidenced by this Agreement are not subject to or conditioned upon the execution
and  delivery  of  such  further  documentation.

     1.     Investor  Senior Loan.  On the Effective Date hereof, CAI, Anderson,
            ---------------------
and  Baileys  (collectively  the  "Investors"), severally and not jointly, shall
loan the Company the aggregate amount of $8,000,000 (the "Investor Senior Loan")
in the following amounts: CAI - $5,000,000; Anderson - $2,500,000; and Baileys -
$500,000.  The  Investor  Senior  Loan  shall  bear  interest at the rate of ten
percent  (10%)  per  annum.  Interest is payable quarterly and at maturity.  The
maturity  date of the Investor Senior Loan is April 30, 2001.  The maturity date
of  the  Investor Senior Loan shall be accelerated in the event of a liquidation
or  dissolution  of  the Company.  The Investor Senior Loan is unsecured but the
Company  agrees with the Investors to comply with the same negative pledges with
respect to liens on its assets as is contained in the Loan Documents between the
Company  and  the  Bank  and the Note Purchase Agreement between the Company and
Hancock.  The  Company shall not incur any other indebtedness senior or equal to
the  Investor  Senior Loan.  Repayment of the Investor Senior Loan in full shall
be  prior  to  repayment of the Bank Loan and the Hancock Notes according to the
subordination  agreement  set  forth  below.  In the event of the closing of the
sale of the Preferred Stock and Convertible Notes described below, the principal
balance  of the Investor Senior Loan shall be cancelled as consideration for the
purchase  of  the Series A Preferred Stock and Series A Convertible Notes by the
Investors.

     2.     Sale  of  Series A Preferred Stock and Series A Convertible Notes to
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the Investors.  The Investors, severally and not jointly, agree to purchase from
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the  Company  (a)  64,000  shares  of  Series A Preferred Stock for an aggregate
purchase  price  of  $6.4  million  and (b) Series A Convertible Notes having an
aggregate  principal amount of $1.6 million.  The consideration for the Series A
Preferred  Stock and the Series A Convertible Notes shall be cancellation of the
outstanding principal balance of the Investor Senior Loan.  Accrued interest due
under  the Investor Senior Loan shall be payable in cash to the Investors on the
date  of  closing.

     a.     Series  A  Preferred Stock.  The Series A Preferred Stock shall have
            --------------------------
the  following  rights,  preferences  and  limitations:

     i.     The  Series A Preferred Stock shall have a liquidation preference of
$100  per  share  or  an  aggregate liquidation preference of $6.4 million.  The
liquidation  preference  shall  be senior to all other securities of the Company
including  the  Series B, C and D Preferred Stock described below and the Common
Stock.

     ii.     The Series A Preferred Stock shall not have specified dividends but
shall  be entitled to participate on an as-converted basis in any dividends paid
on  the  Common  Stock  of  the Company or the Series B, C or D Preferred Stock.

     iii.     The  Series  A  Preferred  Stock shall not be subject to mandatory
redemption  at  the election of the Investors but shall be subject to redemption
at  a  redemption price of $100 per share by the Company at any time on or after
ten  (10)  years  after  the  original  date  of  issuance.

     iv.     The  Series  A  Preferred Stock shall be convertible into shares of
Common  Stock  at a conversion price of $1.00 per share.  Each share of Series A
Preferred  Stock  shall be initially convertible into 100 shares of Common Stock
based on the $100 liquidation preferential amount thereof.  The conversion price
and  number of shares will be subject to customary anti-dilution adjustments for
stock  splits,  share  dividends, recapitalizations, stock issuances, etc., with
the  anti-dilution  adjustment  for  the  issuance  of  shares  at less than the
conversion  price  being  determined  on  the  "weighted  average  method."

     v.     Subject  to  the  provisions  of  Section  3A  hereof,  the Series A
Preferred Stock, voting as a single class, shall be entitled to elect a majority
(4)  of the Board of Directors.  On all other matters, the holders of the Series
A  Preferred  Stock shall vote together with the holders of the Common Stock and
the Series B, C and D Preferred Stock and shall be entitled to cast one vote for
each  share  of  Common  Stock  into  which  the  Series  A  Preferred  Stock is
convertible.

     vi.     The  approval of the Series A Preferred Stock, voting as a separate
class,  shall  be required for the issuance of any securities having liquidation
or  other rights senior or superior or equal in any respect to the rights of the
Series  A  Preferred  Stock.

     b.     Series  A  Convertible  Notes.  The Series A Convertible Notes shall
            -----------------------------
have  the  following  terms.

     i.     The  Series  A  Convertible Notes shall bear interest at the rate of
ten  percent (10%) per annum from the date of issuance, payable quarterly and at
maturity.

     ii.     The  Series  A  Convertible  Notes shall be automatically converted
into shares of Series A Preferred Stock upon the approval by the stockholders of
the  Company  of an amendment to its certificate of incorporation increasing the
number  of  authorized  shares  of  Common  Stock sufficient for the issuance of
Common  Stock  upon the conversion of the shares of Series A Preferred Stock and
the  Series B, C and D Preferred Stock issuable upon the automatic conversion of
the Series A Convertible Notes and the Series B, C and D Convertible Notes.  The
conversion  price  will  be $100 per share and subject to the same anti-dilution
protection  as the Series A Preferred Stock.  Initially the Series A Convertible
Note  will  be  convertible  into  an  aggregate  of  16,000  shares of Series A
Preferred  Stock.

     iii.     The  Series  A  Convertible  Notes  shall  have  no voting rights.

     iv.     The  Series  A  Convertible  Notes and the payment thereof shall be
senior  and  superior  to  the  Series  B,  C  and  D  Convertible  Notes.

     3.     Sale  of  Series  B,  C  and D Preferred Stock and Series B, C and D
            --------------------------------------------------------------------
Convertible  Notes.  The  Bank  and  Hancock  agree  to purchase an aggregate of
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176,000  shares  of  Series  B,  C  and  D Preferred Stock and Series B, C and D
Convertible  Notes  having  an aggregate principal balance of $4.4 million.  The
consideration  for  the  Series B Preferred Stock and Series B Convertible Notes
shall be the cancellation of all indebtedness and obligations of any kind of the
Company,  whether principal, interest, costs, expenses or other, to the Bank and
Hancock,  respectively.  The  amount  of  shares  of Series B, C and D Preferred
Stock  and  principal amount of the Series B, C and D Convertible Notes shall be
allocated  to  the  Bank and Hancock, respectively, as follows: (i) the Bank and
Hancock  shall  each  purchase 32,000 shares of Series B Preferred Stock (in the
aggregate  64,000  shares)  and  a  Series  B  Convertible Note with a principal
balance  of  $.8  million  (in  the aggregate $1.6 million); (ii) the Bank shall
purchase  24,000  shares  of Series C Preferred Stock and a Series C Convertible
Note with the principal balance of $.6 million, and (iii) Hancock shall purchase
88,000  shares  of Series D Preferred Stock and a Series D Convertible Note with
the  principal  balance  of  $2.2  million.

     a.     Series  B,  C  and  D  Preferred Stock.  The rights, preferences and
            --------------------------------------
limitations  of  the Series B, C and D Preferred Stock shall be identical except
as  set  forth  below:

     i.     The  Series  B,  C and D shall have a liquidation preference of $100
per  share.  The Series B Preferred Stock liquidation preference shall be senior
to  the Series C Preferred Stock liquidation preference.  The Series C Preferred
Stock  liquidation  preference  shall  be senior to the Series D Preferred Stock
liquidation  preference.  The  Series  B,  C  and  D Preferred Stock liquidation
preferences  shall be secondary to the Series A Preferred Stock but prior to any
liquidation  rights  of  the  Common  Stock.

ii.     The Series B, C and D Preferred Stock shall not have specified dividends
but  shall  be entitled to participate on an as-converted basis in any dividends
paid  on  the  Common  Stock of the Company or the Series A, B, C or D Preferred
Stock  as  the  case  may  be.

     iii.     The  Series  B,  C  and  D Preferred Stock shall not be subject to
mandatory  redemption  at  the election of the Investors but shall be subject to
redemption at a redemption price of $100 per share by the Company at any time on
or  after  ten  (10)  years  after  the  original  date  of  issuance.

     iv.     The  Series  B,  C  and D Preferred Stock shall be convertible into
shares  of Common Stock at a conversion price of $1.00 per share.  Each share of
Series B, C and D Preferred Stock shall be initially convertible into 100 shares
of  Common Stock based on the $100 liquidation preferential amount thereof.  The
conversion price and number of shares will be subject to customary anti-dilution
adjustments  for  stock  splits,  share  dividends,  recapitalizations,  stock
issuances, etc., with the anti-dilution adjustment for the issuance of shares at
less  than  the  conversion  price  being  determined  on  the "weighted average
method."

     v.     Subject  to the provisions of Section 3A hereof, the Series B, C and
D  Preferred Stock voting together as a single class, shall be entitled to elect
one  director  to  the Board of Directors.  On all other matters, the holders of
the  Series  B,  C and D Preferred Stock shall vote together with the holders of
the  Series A Preferred Stock and the Common Stock and shall be entitled to cast
one  vote  for  each  share  of  Common  Stock  into which the Series B, C and D
Preferred  Stock  is  convertible.

     vi.     The  approval of the Series B, C and D Preferred Stock, voting as a
separate  class,  shall  be  required  for  the  issuance of any security of the
Company  having  liquidation or other rights senior and superior or equal in any
respect  to  the  rights  of  the  Series  B,  C  and  D  Preferred  Stock.

     b.     Series  B,  C and D Convertible Notes.  The terms of the Series B, C
            -------------------------------------
and  D  Convertible  Notes  shall be identical to the Series A Convertible Notes
except  that  (i)  the  Series B, C and D Convertible Notes shall be convertible
into  Series  B,  C  and D Preferred Stock, respectively and (ii) payment of the
Series  B  Convertible  Note  shall  be  senior  and  superior  to  the Series C
Convertible  Note,  (iii) payment of the Series C Preferred Note shall be senior
and  superior to payment of the Series D Convertible Note.  Initially the Series
B,  C  and  D  Convertible Notes will be convertible into an aggregate of 16,000
shares of Series B Preferred Stock, 6,000 shares of Series C Preferred Stock and
22,000  shares  of  Series  D  Preferred  Stock,  respectively.

     3A.     Change  in  Class  Vote Applicable to Elections.  In the event that
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CAI  and  Anderson  at  any  time  sell  fifty  percent  (50%)  or more of their
respective Investor Senior Loan or their respective Series A Preferred Stock and
Series A Convertible Notes, then, with respect to the election of directors, the
Series  A,  B,  C  and D Preferred Stock shall be entitled to vote together as a
single  class  to  elect  five  (5)  directors to the Board of Directors and the
provisions  of  Section  2.a.v.  and  Section  3.a.v. hereof with respect to the
election  of  directors  shall  not  be  applicable.

4.     Closing.  The  closing  of  the  sale  of  the  Preferred  Stock  and the
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Convertible  Notes  shall  occur on the first calendar day of the calendar month
following  the  month  in  which satisfaction of the following conditions occurs
effective  immediately  prior  to  the  commencement  of  business  on such day:

     a.     Regulatory  Approval.  Receipt  of all required regulatory approvals
            --------------------
to  the  transactions  contemplated by this Agreement unless otherwise waived by
CAI  and  Anderson;

     b.     Performance.  The  performance by all of the Investors, the Bank and
            -----------
Hancock  of  their  obligations  to  purchase  the  Preferred  Stock  and  the
Convertibles  Notes  as  described  above;

     c.     Bankruptcy.  The  Company  shall not have been placed in bankruptcy,
            ----------
either  voluntary  or  involuntarily;

     d.     Receivership.  Neither the Company nor any of its subsidiaries shall
            ------------
have  been  placed in a receivership or conservatorship by any regulatory agency
unless  otherwise  waived  by  CAI  and  Anderson;  and

     e.     Forbearance.  The  Banks  and  Hancock  have  complied  with  the
            -----------
forbearance  and  subordination  agreements  set  forth  in  this  agreement.

     The  Closing  shall  not  be  subject  to  any  other conditions precedent.

     5.     Terminated  Purchase  Agreement.  The  Company, the Bank and Hancock
            -------------------------------
acknowledge  and  agree  that  CAI and Anderson properly terminated that certain
Debenture and Note Purchase Agreement dated as of June 29, 1999 (the "Terminated
Purchase  Agreement")  pursuant to Sections 8.4(a) and 8.4(b) thereof and waives
and releases any contrary claim or assertion.  This Agreement does not supersede
or  extinguish  any  of  the  rights  of  CAI  and Anderson under the Terminated
Purchase  Agreement  that  survived  the  termination thereof including, without
limitation,  their  rights  to  be  reimbursed  costs  and  expenses as provided
therein.  Such  costs  and  expenses  which  shall  not  exceed  $250,000 in the
aggregate,  together  with  the  costs  and  expenses  of  CAI  and  Anderson in
connection with this Agreement, shall be paid immediately after the execution of
this  Agreement  out  of  the  proceeds  of  the  Investor  Senior  Loan.

6.     Subordination  Agreement.  The  Bank  and Hancock agree that the Investor
       ------------------------
Senior  Loan  shall  be paid 100% in full in cash before any payment of any kind
shall  be  made  on  the Bank Loan or the Hancock Notes.  Any distribution which
would  otherwise,  but  for  the  provision  of  this  Agreement,  be payable or
deliverable  in  respect  of the Bank Loan or the Hancock Notes shall be paid or
delivered directly to the Investors in payment of the Investor Senior Loan until
the Investor Senior Loan, principal and interest, is paid 100% in full.  For the
purpose  thereof  "distribution" means, with respect to any indebtedness (a) any
payment  or distribution by any person of cash, securities or other property, by
set-off  or  otherwise,  on  account of such indebtedness or obligation, (b) any
redemption,  purchase or other acquisition of such indebtedness or obligation by
any  person  or  (c) the granting of any lien or security interest to or for the
benefit  of  the  holders  of  such  indebtedness  or  obligation in or upon any
property  of  any person.  The Investor Senior Loan shall continue to be treated
as debt that is senior to the Bank Loan and the Hancock Notes and the provisions
of this Agreement shall continue to govern the relative rights and priorities of
the  Investors,  the Bank and Hancock even if all or part of the Investor Senior
Loan is subordinated, set aside, voided, invalidated or disallowed in connection
with  any  proceeding  or  sale  or  transfer  or  other  distribution of all or
substantially  all  of  the  assets  of  the Company and this Agreement shall be
reinstated  if  at any time any payment of the Investor Senior Loan is rescinded
or  must  otherwise  be returned by any holder of the Investor Senior Loan.  The
Bank  and Hancock agree not to initiate or prosecute any claim, action, or other
proceeding  challenging  the  enforceability  or validity of the Investor Senior
Loan.

     7.     Forbearance  Agreement.  Until  April 30, 2001, the Bank and Hancock
            ----------------------
shall  not demand or accept any payment, principal or interest, or accelerate or
take any enforcement action with respect to the Bank Loan and the Hancock Notes.
For  the purposes hereof "enforcement action" means any of the following: (a) to
take  from  or  for the account of the Company by set-off or in any other manner
the  whole  or  any  part  of  any monies which may now or after be owing by the
Company  with  respect  to  the  Bank  Loan or the Hancock Notes; (b) to sue for
payment  of,  or initiate or participate in any other suit, action or proceeding
against  the  Company  (i)  to enforce payment of or to collect the whole or any
part  of the Bank Loan or the Hancock Notes or (ii) to enforce any other rights,
powers, privileges or remedies under the Bank Loan Documents or the Hancock Note
Agreement;  or  (c)  to  take  any  action  under the provisions of any state or
federal  law to enforce, foreclose upon, take possession of or sell any property
or  assets  of  the  Company.  In  addition, the Bank and Hancock shall agree to
cooperate  to  the  extent  commercially  reasonable  with  respect to any other
forbearance  matters which shall be required in order for the Company to receive
a "clean" audit report in its financial statements without any qualifications or
exceptions.

     8.     Shareholders  Agreement.  The  Investors, the Bank and Hancock agree
            -----------------------
to  an  agreement  among  such  parties  having  the  following  provisions:

     a.     Voting.  Such  parties agree to vote all shares of voting securities
            ------
of the Company now or hereafter held by such parties (i) to approve an amendment
to  the  certificate  of  incorporation of the Company increasing the authorized
number of shares of Common Stock of the Company to a number sufficient to permit
the  conversion of the Series A Preferred Stock and the Series B Preferred Stock
issuable  upon  conversion of the Convertible Notes as specified above, and (ii)
to  maintain  the size of the Board of Directors at seven (7), and (iii) to take
and  authorize any such further actions as may be necessary or required to fully
effectuate  this  Agreement.  The  holders of the Series A Preferred Stock shall
elect  as  a  director  an  individual  designated  by  the Bank and Hancock and
reasonably  approved  by  the holders of the Series A Preferred Stock.  Upon the
closing, the director designated by the Bank and Hancock shall be elected to the
Board  of  Directors to fill the vacant position as contemplated by Section 9(d)
below.

     b.     Drag-Along  Rights.  CAI  and  Anderson shall have drag-along rights
            ------------------
with  respect  to  the shares owned by the Bank and Hancock in connection with a
sale  of  the Company in a transaction approved by the Board of Directors of the
Company;  provided  that  if  the value of the securities of the Company in such
sale  is less than $30 million, a fairness opinion by an investment banker shall
be  provided.

     9.     Certain  Representations.  SafeGuard, acting by and through its duly
            ------------------------
authorized  officers, and Baileys, individually, hereby represent and warrant to
the  Investors,  the  Bank  and  Hancock  as  follows:

     a.     Material  Events.  To the best knowledge of the Company and Baileys,
            ----------------
there  is no event or claim of any kind whatsoever that has occurred, is pending
or  is  threatened  that  has had or could have a material adverse effect on the
Company  or  would  be considered a material event as such term is defined under
federal  securities laws (including court decisions interpreting the same) which
event  or claim has not been publicly disclosed in a report filed by the Company
with  the Securities and Exchange Commission pursuant to the Securities Exchange
Act  of  1934,  as amended, or otherwise publically disclosed in a press release
issued  by  the  Company  or  that certain press release dated December 17, 1999
issued  by  Berman,  Devalerio & Pease, L.L.P. related to a class action lawsuit
against  the  Company.  For  the  purpose  hereof,  any notice of termination or
non-renewal,  notice  of  intent  to  terminate  or  non-renew or termination or
non-renewal  of  any  group  or  individual  customer  contracts  which  either
individually  or  in the aggregate represent a material number of the members of
the  plan  of  the  Company  shall  constitute  a  material  adverse  event.

     b.     Regulatory  Compliance.  Up  to  $5  million  of the proceeds of the
            ----------------------
Investor Senior Loan will be used immediately for a capital contribution to Safe
Health  Life  Company,  the  insurance subsidiary of the Company, required to be
made  on  the Effective Date by applicable governmental regulations.  Except for
such  capital  infusion,  all  the  other  subsidiaries  of  the  Company are in
compliance  with  all  material  provisions  of  the laws, rules and regulations
applicable  to  the  certificate of authority or license held by such subsidiary
and  none  of the subsidiaries has any deficit in any required reserves, capital
or  other  funds  required  to be maintained by such subsidiary under applicable
regulatory  requirements.

     c.     Board  Approval.  This  Agreement  and  the transactions provided in
            ---------------
this  Agreement,  including,  without  limitation,  the issuance of the Investor
Senior  Loan, the Preferred Stock, the Convertible Notes and the approval of the
amendment  to the certificate of incorporation as contemplated herein, have been
approved  by the affirmative vote of not less than seventy-five percent (75%) of
the  current  members of the Board of Directors of the Company at a meeting duly
called  and  held  in  accordance  with the Bylaws of the Company.  The Board of
Directors  have  taken  all  action and adopted all approvals necessary in order
that  the transactions contemplated by this Agreement do not and shall not cause
the  rights  issued  to the stockholders of the Company pursuant to that certain
Rights  Agreement,  dated  as of March 22, 1996 between the Company and American
Stock  Transfer and Trust Company, as Rights Agent, to become exercisable or any
similar  rights  under any other rights agreement applicable to the stockholders
of  the  Company  to  become  exercisable.

     d.     Board of Directors.  The following changes with respect to the Board
            ------------------
of  Directors  of  the  Company  have  occurred or have been duly authorized and
approved  by the Board of Directors of the Company in accordance with the Bylaws
of  the  Company:

     i.     After  the  Board approvals described in Section 9(c) above, Messrs.
Cox, McKenna, Mann, Stevens and Boyd resigned from the Board of Directors of the
Company  and  the incumbent directors of the Company were then Baileys, Brendzel
and  Dennis  Gates;

     ii.     Jack  R. Anderson, Leslie B. Daniels and James E. Buncher were then
by  the  Board of Directors appointed as directors of the Company effective upon
execution  of  this  Agreement;  and

     iii.     One  vacancy shall remain on the Board of Directors of the Company
to  be filled upon the closing by the holders of the Series B, C and D Preferred
Stock  as  provided  in  Section  8(a)(iii)  above.

     e.     Employment  Agreements.  Messrs.  Cox,  Brendzel  and  Kaufman  have
            ----------------------
agreed  that  any  acceleration  or  vesting of any rights or benefits under his
respective  employment  agreement with the Company or otherwise resulting from a
change  of  control,  including severance payments, shall not occur by virtue of
the  transactions  contemplated by this Agreement and have waived any claim that
such  is  the  case.

     10.     Cancellation  of  Warrants.  Upon  the  closing  of the sale of the
             --------------------------
Preferred  Stock  and  the  Convertible Notes, Hancock agrees that those certain
Warrants  for  an  aggregate  of  382,000  shares of Common Stock of the Company
issued  pursuant  to  that  certain  First Amendment and Waiver to Note Purchase
Agreement  dated  as  of  May  28,  1999  shall  be  cancelled  in all respects.

     11.     Registration  Rights.  None  of  the Investors, the Bank or Hancock
             --------------------
shall  have any demand registration rights.  The Investors, the Bank and Hancock
shall have piggyback registration rights with respect to any securities offering
by  the  Company  (other  than  in connection with an acquisition or an employee
benefit  plan)  on a pro rata basis, subject to any underwriter's cutback on the
total  number  of  shares available to be sold by stockholders of the Company in
the  offering.  The parties shall have indemnification rights in connection with
any  such offering as specified in the Registration Rights Agreement attached as
an  Exhibit  to  the  Terminated  Purchase  Agreement.  The Company will pay all
registration  expenses  but  no  selling  expenses.

     12.     Certain  Covenants.
             ------------------

     a.     Regulatory  Filings.  Each  party  hereto  agrees to proceed in good
            -------------------
faith  and as  soon as practicable to make and pursue all regulatory filings and
to obtain of all regulatory approvals required for the transactions specified in
this  Agreement.

     b.     Stockholder  Meeting.  Upon the closing of the sale of the Preferred
            --------------------
Stock  and  the  Convertible Notes, SafeGuard shall immediately take all actions
required to call and hold a special meeting of the stockholders for the purposes
of  approving an amendment to the certificate of incorporation of the Company to
increase  the  number  of  authorized  shares  of Common Stock of the Company as
contemplated  by  this  Agreement.

     13.     Other  Understandings.
             ---------------------

     a.     Board  of  Directors.  So  long  as  the  Investor  Senior  Loan  is
            --------------------
outstanding,  three  (3)  directors of the Company shall be designees of CAI and
Anderson.

     b.     Senior Debt.  Notwithstanding any provision of this Agreement to the
            -----------
contrary,  the Board of Directors of the Company may borrow up to $3,500,000 for
working  capital  purposes on a basis senior and superior to the Investor Senior
Loan,  the Bank Loan, the Hancock Notes, the Preferred Stock and the Convertible
Notes  without  the  consent  of  the  Investors,  the  Bank  or  Hancock.

     c.     Outstanding Shares.  In connection with the transactions provided in
            ------------------
this Agreement, the issued and outstanding shares of Common Stock of the Company
on  the Effective Date shall remain issued and outstanding and the stock options
granted  to employees and officers of the Company under the stock option plan of
the  Company  prior to the Effective Date shall remain issued and outstanding in
accordance  with  their  terms.

     d.     Costs and Expenses.  Whether or not the transactions contemplated by
            ------------------
this Agreement are consummated, the Company will pay (or reimburse upon request)
all  costs  and  expenses  of  CAI  and  Anderson including, without limitation,
reasonable  fees  and expenses of their consultants, counsel and accountants, in
connection with or leading to the preparation, negotiation and execution of this
Agreement  and  the  consummation  of  the  transactions  contemplated  by  this
Agreement.

     e.     Indemnity.  The  Company  will  pay and indemnify the Investors, the
            ---------
Bank  and  Hancock  and  their  respective  stockholders,  partners,  trustees,
officers,  employees  and agents, against all liability and loss with respect to
(i)  all  claims  for fees or commissions of brokerage or finders engaged by the
Company  with  respect  to the transactions contemplated by this Agreement, (ii)
all taxes, fees and other public charges payable in connection with the issuance
of  any  of the Preferred Stock or Convertible Notes or the execution, delivery,
and  enforcement  of this Agreement for any of the rights of the Preferred Stock
or  Convertible  Notes,  and  (iii)  all  claims  and  suits,  either  direct or
derivative,  commenced by or on behalf of the Company or the stockholders of the
Company  relating  to  or  arising  out  of  this  Agreement or the transactions
contemplated  herein.  Such rights shall survive the termination or consummation
of  this  Agreement.  The Company shall indemnify the three directors designated
by  CAI  and  Anderson  to  the  fullest  extent  permitted  by  applicable law.

f.     Waiver.  Baileys,  the Bank and Hancock agree that they shall not assert,
       ------
and  hereby  waive, any claims in their capacity as a shareholder or creditor of
the  Company against the three directors designated by CAI and Anderson for acts
or  omissions  in  their capacity as directors of the Company at any time during
the  period  from  the  Effective  Date  through  the  closing  date  except for
intentional  acts  of  fraud  or  dishonesty.

g.     Employment Agreement.  Baileys agrees that any acceleration or vesting of
       --------------------
any  rights  or  benefits  under his employment agreement or otherwise resulting
from  a  change  of  control,  including  severance payments, shall not occur by
virtue  of the occurrence of the transactions contemplated by this Agreement and
waives  any  claim  that  such  is  the  case.  In  addition,  Baileys agrees to
voluntarily  resign his position as chief executive officer of the Company as of
the  Effective  Date  and  the  Company  shall  have  no  obligation to make any
severance  payments  of  any kind thereunder as a result thereof.  Baileys shall
remain  as  Chairman  of  the  Board  of  Directors  of  the Company.  All other
provisions  of  his  employment agreement shall remain in full force and effect.

     14.     Miscellaneous.
             -------------

     a.     Notices.  All  notices and other communications under this Agreement
            -------
shall  be  in writing and shall be deemed given upon (i) confirmation or receipt
of  a  facsimile  transmission  (ii)  confirmed  delivered by standard overnight
carrier,  (iii)  when  delivered  by  hand  or  (iv)  the expiration of five (5)
business  days  after  the  date  when  mailed  by  registered or certified mail
(postage  prepaid, return receipt requested), addressed to respective parties as
set  forth  in  the  prior  Purchase  Agreement,  the Bank Loan Documents or the
Hancock  Note  Agreement,  as  applicable.

     b.     Entire  Agreement.  This  Agreement constitutes the entire agreement
            -----------------
and  supersedes  all  prior  agreements  and  understandings  (other  than  the
provisions  of  the  Terminated  Purchase  Agreement  that  survive  termination
thereof),  both  written or oral, among the parties or any of them, with respect
to  the  subject  matter  hereof.

     c.     Assignment.  This  Agreement  shall  not be assigned by operation in
            ----------
law  or  otherwise,  except  that (i) Anderson may assign part of his respective
rights  and  obligations  hereunder  to up to two third parties and (ii) CAI may
assign all or any part of its respective rights and obligations hereunder to any
affiliated  investment  partnership.

     d.     Amendment.  This  Agreement  may not be amended except by instrument
            ---------
in  writing  signed  on  behalf  of  each  of  the  parties  hereto.

     e.     Binding  Effect.  This  Agreement  shall be binding upon the parties
            ---------------
hereto,  their  respective  heirs,  representatives,  successors  and  permitted
assigns  specifically  including  any  transferees of the Bank Loan, the Hancock
Notes,  the Investor Senior Loan, the Preferred Stock and the Convertible Notes.

     f.     Exculpation.  Among  Investors,  Bank  and  Hancock.  Each  of  the
            ---------------------------------------------------
Investors, the Bank and Hancock acknowledges that such party is not relying upon
any  person,  firm or corporation, other than the representations of the Company
contained herein, in making its investment or decision to invest in the Investor
Senior  Loan, the Preferred Stock or the Convertible Notes and specifically each
such party has not relied on any representation or warranty of any of such other
parties in making such investment or decision.  The Company acknowledges that it
is  not  relying  upon any representation or warranty of the Investors, the Bank
and  Hancock  in  entering  into  this  Agreement.

     g.     Arbitration.  In the event of any dispute between any one or more or
            -----------
all  of  the parties to this Agreement with respect to the respective rights and
obligations  of  the parties under this Agreement, such dispute shall be settled
by  arbitration  in  accordance with the arbitration procedures set forth in the
Terminated  Purchase  Agreement.

     h.     Governing Law.  This Agreement shall be governed by and construed in
            -------------
accordance  with  the laws of the State of Delaware without giving effect to the
provisions  thereof  relating  to  conflicts  of  laws.

     i.     Counterparts.  This  Agreement  may  be  executed  in  two  or  more
            ------------
counterparts,  each of which shall be deemed an original, but all of which shall
constitute  one  and  the  same  agreement.

<PAGE>
IN  WITNESS  WHEREOF, the parties hereto have executed this Term Sheet Agreement
as  of  the  Effective  Date.

<TABLE>
<CAPTION>
<S>                                          <C>
CAI PARTNERS AND COMPANY II, L.P.            JOHN HANCOCK LIFE INSURANCE COMPANY f/k/a
                                             JOHN HANCOCK MUTUAL LIFE INSURANCE
By:  CAI PARTNERS G.P. AND COMPANY, L.P.,    COMPANY
     GENERAL PARTNER
                                             By:____________________________
By:                                          Name:__________________________
Leslie B. Daniels                            Title:_________________________

CAI CAPITAL PARTNERS AND COMPANY II, L.P.    JOHN HANCOCK VARIABLE LIFE INSURANCE
                                             COMPANY
By:  CAI CAPITAL PARTNERS G.P. AND COMPANY,
     L.P., GENERAL PARTNER                   By:____________________________
                                             Name:__________________________
By: _________________________                Title:_________________________
Leslie B. Daniels
                                             INVESTORS PARTNER LIFE INSURANCE COMPANY
_________________________                    (f/k/a JOHN HANCOCK LIFE INSURANCE COMPANY
Jack R. Anderson                             OF AMERICA)

 _________________________                   By:____________________________
Steven J. Baileys, D.D.S.                    Name:__________________________
                                             Title:_________________________
SAFEGUARD HEALTH ENTERPRISES, INC.
                                             MELLON BANK, N.A., solely in its capacity as Trustee for
By: _________________________                Bell Atlantic Master Trust
Steven J. Baileys, D.D.S.,                   (f/k/a Nynex Master Pension Trust), (as directed by John
Chairman and Chief Executive Officer         Hancock Mutual Life Insurance Company) and not in its
                                             individual capacity
By:_________________________
Ronald I. Brendzel, Secretary                By:_________________________
                                             Name:_________________________
                                             Title:_________________________

                                             SILICON VALLEY BANK

                                             By:_________________________
                                             Name:_________________________
                                             Title:_________________________
</TABLE>

<PAGE>
                            INVESTOR SENIOR LOAN NOTE

                       SAFEGUARD HEALTH ENTERPRISES, INC.

THIS  NOTE  WAS  ISSUED  IN  A PRIVATE PLACEMENT, WITHOUT REGISTRATION UNDER THE
SECURITIES  ACT  OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD, ASSIGNED,
                                           ---
PLEDGED  OR  OTHERWISE  TRANSFERRED  IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT  UNDER  THE  ACT  COVERING  THE  TRANSFER  OR  AN  OPINION  OF COUNSEL
ACCEPTABLE  TO  THE ISSUER THAT SUCH REGISTRATION UNDER THE ACT IS NOT REQUIRED.

$2,500,000.00     March  1,  2000

     FOR  VALUE RECEIVED, the undersigned, SafeGuard Health Enterprises, Inc., a
Delaware  corporation (the "Issuer") HEREBY PROMISES TO PAY to the order of Jack
                            ------
R.  Anderson  (the  "Payee"),  on or before April 30, 2001, the principal sum of
                     -----
$Two  Million  Five  Hundred  Thousand  Dollars  ($2,500,000.00).  The  unpaid
principal  amount  of this Note from time to time shall accrue and bear interest
at  the  rate of ten percent (10%) per annum (computed on the basis of a 360-day
year  of  twelve  30-day  months),  and overdue principal and, to the extent not
prohibited by applicable law, overdue installments of interest, shall accrue and
bear  interest  at  the  rate  of  2%  per  annum in excess of the interest rate
                                       ---  -----
specified  above.

     Both  principal  and  interest  are  payable in cash or by wire transfer of
immediately  available  funds at the depositary institution specified in writing
by  the  Payee.

1.     THE  NOTES.  This Note is one of an issue of Short Term Senior Loan Notes
of  the  Issuer  (the "Notes") issued pursuant to the Term Sheet Agreement dated
                       -----
March  1,  2000,  by  and  between  the  Issuer  and  the parties named therein.

2.     PAYMENT PROVISIONS. The Issuer covenants that so long as any of the Notes
is  outstanding:

2.1     Payment  at  Maturity  of Notes. On the last Business Day on or prior to
        -------------------------------
April 30, 2001, or on any accelerated maturity of the Notes, the Issuer will pay
the  entire  principal amount of all of the Notes then outstanding together with
all  accrued  and  unpaid  interest  thereon.

2.2     Payment  and  Accrual  of  Interest. Interest shall accrue on the unpaid
        -----------------------------------
principal  amount  of  the  Notes  from and including March 1, 2000 and shall be
payable  quarterly  in  arrears  on  the  last Business Day of each March, June,
September  and  December  commencing  on  June  30,  2000.

2.3     Prepayment  of Notes. This Note is not subject to prepayment without the
        --------------------
consent  of  the  Payee.

2.4     Payments  on  Business  Days.  Whenever any payment to be made hereunder
        ----------------------------
shall  be  stated  to  be  due on a day that is not a Business Day, such payment
shall  be  made  on  the  immediately  succeeding  Business  Day.

3.     SENIOR  INDEBTEDNESS.  This  Note is senior indebtedness of the Issuer to
the  extent  and  as  provided  in  the Term Sheet Agreement.  This Note and the
holder  shall be entitled to all the rights and privileges set forth in the Term
Sheet  Agreement.

4.     MISCELLANEOUS.  Presentment  for  payment,  demand,  notice  of dishonor,
protest  and  notice  of protest and all other demands and notices in connection
with  the  delivery,  acceptance,  performance  and enforcement of this Note are
hereby  waived.  Issuer  agrees  that this Note shall be construed, governed and
enforced  in accordance with the laws of the State of Delaware without regard to
principles  of  conflicts  of  law.

<PAGE>

SAFEGUARD  HEALTH  ENTERPRISES,  INC.

By:_________________________
     Steven  J.  Baileys,  D.D.S.
Chairman  and  Chief  Executive  Officer

By:_________________________
     Ronald  I.  Brendzel,  Secretary

<PAGE>
                            INVESTOR SENIOR LOAN NOTE

                       SAFEGUARD HEALTH ENTERPRISES, INC.

THIS  NOTE  WAS  ISSUED  IN  A PRIVATE PLACEMENT, WITHOUT REGISTRATION UNDER THE
SECURITIES  ACT  OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD, ASSIGNED,
                                           ---
PLEDGED  OR  OTHERWISE  TRANSFERRED  IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT  UNDER  THE  ACT  COVERING  THE  TRANSFER  OR  AN  OPINION  OF COUNSEL
ACCEPTABLE  TO  THE ISSUER THAT SUCH REGISTRATION UNDER THE ACT IS NOT REQUIRED.

$380,779                                                         March  1,  2000

     FOR  VALUE RECEIVED, the undersigned, SafeGuard Health Enterprises, Inc., a
Delaware  corporation  (the "Issuer") HEREBY PROMISES TO PAY to the order of CAI
                             ------
Capital  Partners  &  Co. II-C, L.P. (the "Payee"), on or before April 30, 2001,
                                           -----
the  principal  sum  of  Three  Hundred  Eighty  Thousand  Seven  Hundred  and
Seventy-Nine  Dollars  ($380,779). The unpaid principal amount of this Note from
time to time shall accrue and bear interest at the rate of ten percent (10%) per
annum  (computed  on  the  basis of a 360-day year of twelve 30-day months), and
overdue  principal  and, to the extent not prohibited by applicable law, overdue
installments  of  interest, shall accrue and bear interest at the rate of 2% per
                                                                             ---
annum  in  excess  of  the  interest  rate  specified  above.
-----

     Both  principal  and  interest  are  payable in cash or by wire transfer of
immediately  available  funds at the depositary institution specified in writing
by  the  Payee.

1.     THE  NOTES.  This Note is one of an issue of Short Term Senior Loan Notes
of  the  Issuer  (the "Notes") issued pursuant to the Term Sheet Agreement dated
                       -----
March  1,  2000,  by  and  between  the  Issuer  and  the parties named therein.

2.     PAYMENT PROVISIONS. The Issuer covenants that so long as any of the Notes
is  outstanding:

2.1     Payment  at  Maturity  of Notes. On the last Business Day on or prior to
        -------------------------------
April 30, 2001, or on any accelerated maturity of the Notes, the Issuer will pay
the  entire  principal amount of all of the Notes then outstanding together with
all  accrued  and  unpaid  interest  thereon.

2.2     Payment  and  Accrual  of  Interest. Interest shall accrue on the unpaid
        -----------------------------------
principal  amount  of  the  Notes  from and including March 1, 2000 and shall be
payable  quarterly  in  arrears  on  the  last Business Day of each March, June,
September  and  December  commencing  on  June  30,  2000.

2.3     Prepayment  of Notes. This Note is not subject to prepayment without the
        --------------------
consent  of  the  Payee.

2.4     Payments  on  Business  Days.  Whenever any payment to be made hereunder
        ----------------------------
shall  be  stated  to  be  due on a day that is not a Business Day, such payment
shall  be  made  on  the  immediately  succeeding  Business  Day.

3.     SENIOR  INDEBTEDNESS.  This  Note is senior indebtedness of the Issuer to
the  extent  and  as  provided  in  the Term Sheet Agreement.  This Note and the
holder  shall be entitled to all the rights and privileges set forth in the Term
Sheet  Agreement.

4.     MISCELLANEOUS.  Presentment  for  payment,  demand,  notice  of dishonor,
protest  and  notice  of protest and all other demands and notices in connection
with  the  delivery,  acceptance,  performance  and enforcement of this Note are
hereby  waived.  Issuer  agrees  that this Note shall be construed, governed and
enforced  in accordance with the laws of the State of Delaware without regard to
principles  of  conflicts  of  law.

SAFEGUARD  HEALTH  ENTERPRISES,  INC.

By:_________________________
     Steven  J.  Baileys,  D.D.S.
     Chairman  and  Chief  Executive  Officer

By:_________________________
     Ronald  I.  Brendzel,  Secretary

<PAGE>
                            INVESTOR SENIOR LOAN NOTE

                       SAFEGUARD HEALTH ENTERPRISES, INC.

THIS  NOTE  WAS  ISSUED  IN  A PRIVATE PLACEMENT, WITHOUT REGISTRATION UNDER THE
SECURITIES  ACT  OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD, ASSIGNED,
                                           ---
PLEDGED  OR  OTHERWISE  TRANSFERRED  IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT  UNDER  THE  ACT  COVERING  THE  TRANSFER  OR  AN  OPINION  OF COUNSEL
ACCEPTABLE  TO  THE ISSUER THAT SUCH REGISTRATION UNDER THE ACT IS NOT REQUIRED.

$3,095,503                                                      March  1,  2000

     FOR  VALUE RECEIVED, the undersigned, SafeGuard Health Enterprises, Inc., a
Delaware  corporation  (the "Issuer") HEREBY PROMISES TO PAY to the order of CAI
                             ------
Capital  Partners & Co. II, L.P. (the "Payee"), on or before April 30, 2001, the
                                       -----
principal  sum  of  Three  Million  Ninety-Five  Thousand Five Hundred and Three
Dollars ($3,095,503). The unpaid principal amount of this Note from time to time
shall  accrue  and  bear  interest  at  the  rate of ten percent (10%) per annum
(computed  on  the basis of a 360-day year of twelve 30-day months), and overdue
principal  and,  to  the  extent  not  prohibited  by  applicable  law,  overdue
installments  of  interest, shall accrue and bear interest at the rate of 2% per
                                                                             ---
annum  in  excess  of  the  interest  rate  specified  above.
-----

     Both  principal  and  interest  are  payable in cash or by wire transfer of
immediately  available  funds at the depositary institution specified in writing
by  the  Payee.

1.     THE  NOTES.  This Note is one of an issue of Short Term Senior Loan Notes
of  the  Issuer  (the "Notes") issued pursuant to the Term Sheet Agreement dated
                       -----
March  1,  2000,  by  and  between  the  Issuer  and  the parties named therein.

2.     PAYMENT PROVISIONS. The Issuer covenants that so long as any of the Notes
is  outstanding:

2.1     Payment  at  Maturity  of Notes. On the last Business Day on or prior to
        -------------------------------
April 30, 2001, or on any accelerated maturity of the Notes, the Issuer will pay
the  entire  principal amount of all of the Notes then outstanding together with
all  accrued  and  unpaid  interest  thereon.

2.2     Payment  and  Accrual  of  Interest. Interest shall accrue on the unpaid
        -----------------------------------
principal  amount  of  the  Notes  from and including March 1, 2000 and shall be
payable  quarterly  in  arrears  on  the  last Business Day of each March, June,
September  and  December  commencing  on  June  30,  2000.

2.3     Prepayment  of Notes. This Note is not subject to prepayment without the
        --------------------
consent  of  the  Payee.

2.4     Payments  on  Business  Days.  Whenever any payment to be made hereunder
        ----------------------------
shall  be  stated  to  be  due on a day that is not a Business Day, such payment
shall  be  made  on  the  immediately  succeeding  Business  Day.

3.     SENIOR  INDEBTEDNESS.  This  Note is senior indebtedness of the Issuer to
the  extent  and  as  provided  in  the Term Sheet Agreement.  This Note and the
holder  shall be entitled to all the rights and privileges set forth in the Term
Sheet  Agreement.

4.     MISCELLANEOUS.  Presentment  for  payment,  demand,  notice  of dishonor,
protest  and  notice  of protest and all other demands and notices in connection
with  the  delivery,  acceptance,  performance  and enforcement of this Note are
hereby  waived.  Issuer  agrees  that this Note shall be construed, governed and
enforced  in accordance with the laws of the State of Delaware without regard to
principles  of  conflicts  of  law.

SAFEGUARD  HEALTH  ENTERPRISES,  INC.

By: _________________________
     Steven  J.  Baileys,  D.D.S.
     Chairman  and  Chief  Executive  Officer

By: _________________________
     Ronald  I.  Brendzel,  Secretary

<PAGE>
                            INVESTOR SENIOR LOAN NOTE

                       SAFEGUARD HEALTH ENTERPRISES, INC.

THIS  NOTE  WAS  ISSUED  IN  A PRIVATE PLACEMENT, WITHOUT REGISTRATION UNDER THE
SECURITIES  ACT  OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD, ASSIGNED,
                                           ---
PLEDGED  OR  OTHERWISE  TRANSFERRED  IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT  UNDER  THE  ACT  COVERING  THE  TRANSFER  OR  AN  OPINION  OF COUNSEL
ACCEPTABLE  TO  THE ISSUER THAT SUCH REGISTRATION UNDER THE ACT IS NOT REQUIRED.

$1,523,718                                                       March  1,  2000

     FOR  VALUE RECEIVED, the undersigned, SafeGuard Health Enterprises, Inc., a
Delaware  corporation  (the "Issuer") HEREBY PROMISES TO PAY to the order of CAI
                             ------
Partners  &  Co.  II,  L.P.  (the  "Payee"),  on  or  before April 30, 2001, the
                                    -----
principal  sum  of  One Million Five Hundred Twenty-Three Thousand Seven Hundred
and Eighteen Dollars ($1,523,718). The unpaid principal amount of this Note from
time to time shall accrue and bear interest at the rate of ten percent (10%) per
annum  (computed  on  the  basis of a 360-day year of twelve 30-day months), and
overdue  principal  and, to the extent not prohibited by applicable law, overdue
installments  of  interest, shall accrue and bear interest at the rate of 2% per
                                                                             ---
annum  in  excess  of  the  interest  rate  specified  above.
-----

     Both  principal  and  interest  are  payable in cash or by wire transfer of
immediately  available  funds at the depositary institution specified in writing
by  the  Payee.

1.     THE  NOTES.  This Note is one of an issue of Short Term Senior Loan Notes
of  the  Issuer  (the "Notes") issued pursuant to the Term Sheet Agreement dated
                       -----
March  1,  2000,  by  and  between  the  Issuer  and  the parties named therein.

2.     PAYMENT PROVISIONS. The Issuer covenants that so long as any of the Notes
is  outstanding:

2.1     Payment  at  Maturity  of Notes. On the last Business Day on or prior to
        -------------------------------
April 30, 2001, or on any accelerated maturity of the Notes, the Issuer will pay
the  entire  principal amount of all of the Notes then outstanding together with
all  accrued  and  unpaid  interest  thereon.

2.2     Payment  and  Accrual  of  Interest. Interest shall accrue on the unpaid
        -----------------------------------
principal  amount  of  the  Notes  from and including March 1, 2000 and shall be
payable  quarterly  in  arrears  on  the  last Business Day of each March, June,
September  and  December  commencing  on  June  30,  2000.

2.3     Prepayment  of Notes. This Note is not subject to prepayment without the
        --------------------
consent  of  the  Payee.

2.4     Payments  on  Business  Days.  Whenever any payment to be made hereunder
        ----------------------------
shall  be  stated  to  be  due on a day that is not a Business Day, such payment
shall  be  made  on  the  immediately  succeeding  Business  Day.

3.     SENIOR  INDEBTEDNESS.  This  Note is senior indebtedness of the Issuer to
the  extent  and  as  provided  in  the Term Sheet Agreement.  This Note and the
holder  shall be entitled to all the rights and privileges set forth in the Term
Sheet  Agreement.

4.     MISCELLANEOUS.  Presentment  for  payment,  demand,  notice  of dishonor,
protest  and  notice  of protest and all other demands and notices in connection
with  the  delivery,  acceptance,  performance  and enforcement of this Note are
hereby  waived.  Issuer  agrees  that this Note shall be construed, governed and
enforced  in accordance with the laws of the State of Delaware without regard to
principles  of  conflicts  of  law.

SAFEGUARD  HEALTH  ENTERPRISES,  INC.

By: _________________________
     Steven  J.  Baileys,  D.D.S.
     Chairman  and  Chief  Executive  Officer

By: _________________________
     Ronald  I.  Brendzel,  Secretary

<PAGE>
                            INVESTOR SENIOR LOAN NOTE

                       SAFEGUARD HEALTH ENTERPRISES, INC.

THIS  NOTE  WAS  ISSUED  IN  A PRIVATE PLACEMENT, WITHOUT REGISTRATION UNDER THE
SECURITIES  ACT  OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD, ASSIGNED,
                                           ---
PLEDGED  OR  OTHERWISE  TRANSFERRED  IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT  UNDER  THE  ACT  COVERING  THE  TRANSFER  OR  AN  OPINION  OF COUNSEL
ACCEPTABLE  TO  THE ISSUER THAT SUCH REGISTRATION UNDER THE ACT IS NOT REQUIRED.

$500,000.00                                                      March  1,  2000

     FOR  VALUE RECEIVED, the undersigned, SafeGuard Health Enterprises, Inc., a
Delaware  corporation  (the  "Issuer")  HEREBY  PROMISES  TO PAY to the order of
                              ------
Baileys  Family  Trust (the "Payee"), on or before April 30, 2001, the principal
                             -----
sum  of Five Hundred Thousand Dollars ($500,000.00). The unpaid principal amount
of this Note from time to time shall accrue and bear interest at the rate of ten
percent  (10%)  per  annum  (computed  on  the basis of a 360-day year of twelve
30-day  months),  and  overdue  principal  and,  to the extent not prohibited by
applicable law, overdue installments of interest, shall accrue and bear interest
at  the  rate  of  2%  per annum in excess of the interest rate specified above.
                       --- -----

     Both  principal  and  interest  are  payable in cash or by wire transfer of
immediately  available  funds at the depositary institution specified in writing
by  the  Payee.

1.     THE  NOTES.  This Note is one of an issue of Short Term Senior Loan Notes
of  the  Issuer  (the "Notes") issued pursuant to the Term Sheet Agreement dated
                       -----
March  1,  2000,  by  and  between  the  Issuer  and  the parties named therein.

2.     PAYMENT PROVISIONS. The Issuer covenants that so long as any of the Notes
is  outstanding:

2.1     Payment  at  Maturity  of Notes. On the last Business Day on or prior to
        -------------------------------
April 30, 2001, or on any accelerated maturity of the Notes, the Issuer will pay
the  entire  principal amount of all of the Notes then outstanding together with
all  accrued  and  unpaid  interest  thereon.

2.2     Payment  and  Accrual  of  Interest. Interest shall accrue on the unpaid
        -----------------------------------
principal  amount  of  the  Notes  from and including March 1, 2000 and shall be
payable  quarterly  in  arrears  on  the  last Business Day of each March, June,
September  and  December  commencing  on  June  30,  2000.

2.3     Prepayment  of Notes. This Note is not subject to prepayment without the
        --------------------
consent  of  the  Payee.

2.4     Payments  on  Business  Days.  Whenever any payment to be made hereunder
        ----------------------------
shall  be  stated  to  be  due on a day that is not a Business Day, such payment
shall  be  made  on  the  immediately  succeeding  Business  Day.

3.     SENIOR  INDEBTEDNESS.  This  Note is senior indebtedness of the Issuer to
the  extent  and  as  provided  in  the Term Sheet Agreement.  This Note and the
holder  shall be entitled to all the rights and privileges set forth in the Term
Sheet  Agreement.

4.     MISCELLANEOUS.  Presentment  for  payment,  demand,  notice  of dishonor,
protest  and  notice  of protest and all other demands and notices in connection
with  the  delivery,  acceptance,  performance  and enforcement of this Note are
hereby  waived.  Issuer  agrees  that this Note shall be construed, governed and
enforced  in accordance with the laws of the State of Delaware without regard to
principles  of  conflicts  of  law.

SAFEGUARD  HEALTH  ENTERPRISES,  INC.

By: _________________________
     Steven  J.  Baileys,  D.D.S.
     Chairman  and  Chief  Executive  Officer

By: _________________________
     Ronald  I.  Brendzel,  Secretary

<PAGE>SECOND AMENDMENT TO RIGHTS AGREEMENT

     This SECOND AMENDMENT TO RIGHTS AGREEMENT (the "Amendment") is entered into
as  of  March  9,  2000  by  and  between  SAFEGUARD HEALTH ENTERPRISES, INC., a
Delaware  corporation  (the  "Company"),  and  AMERICAN  STOCK  TRANSFER & TRUST
COMPANY,  as  Rights  Agent  (in  such  capacity,  the  "Rights  Agent").

                                    RECITALS:

     A.     The  Company and the Rights Agent are parties to that certain Rights
Agreement,  dated  as  of  March  22, 1996, as amended (the "Rights Agreement").
Unless  otherwise  defined  herein, capitalized terms used herein shall have the
respective  meanings  ascribed  thereto  in  the  Rights  Agreement.

     B.     The  Company  has  entered  into a Term Sheet Agreement, dated as of
March  1,  2000  (the  "Term  Sheet  Agreement"),  by and among the Company, CAI
Partners and Company II, L.P., CAI Capital Partners and Company II, L.P. Jack R.
Anderson,  Silicon  Valley  Bank, John Hancock Mutual Life Insurance Company and
other  holders  of  Senior  Notes of the Company and Steven J. Baileys, DDS (the
"Investors"  and  individually,  an  "Investor"), pursuant to which, among other
things,  certain Investors have loaned an aggregate of $8,000,000 to the Company
(the  "Loan").  In  addition, the Investors agreed to purchase from the Company,
and  the  Company  agreed  to  sell,  subject  to  certain  conditions, Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and Series D
Preferred  Stock  (the  "Preferred  Stock")  for an aggregate of $20,000,000 and
Series  A  Convertible  Notes,  Series B Convertible Notes, Series C Convertible
Notes  and  Series  D  Convertible  Notes (the "Convertible Notes") an aggregate
principal  amount  of $5,000,000.  The Preferred Stock and the Convertible Notes
shall  be  subject  to  certain  conditions,  convertible  into  Common  Stock.

C.     In addition, pursuant to the Term Sheet, the Investors agreed to vote for
certain  matters  facilitating  the effectuation of the Term Sheet Agreement and
for  certain  designees  to  the  Board  of  Directors  of  the  Company.

D.     The  Board  of  Directors  of  the  Company  has unanimously approved the
execution  and  delivery  of  the  Term  Sheet and the transactions contemplated
thereby,  including,  without  limitation,  Loan,  the issuance of the Preferred
Stock  and  Convertible Notes to the Investors and the issuance of the shares of
Common  Stock  issuable  upon  the  exercise  or  conversion  thereof;

NOW,  THEREFORE,  in  consideration of the premises, the parties hereby agree as
follows:

     "Section  36.  The March 1, 2000 Term Sheet Agreement.  Notwithstanding any
                    --------------------------------------
provision  of  this  Agreement to the contrary, none of the Investors under that
certain Term Sheet Agreement dated March 2, 2000, of the Company shall be deemed
to become an Acquiring Person and no Distribution Date or Stock Acquisition Date
shall  occur  or  be  deemed  to  occur,  in  any  case,  solely  by  reason of:

(i)     the  execution or delivery by the Company of the Term Sheet Agreement or
the  performance  by  the  Company  of  its  obligations  thereunder;

(ii)     issuance by the Company to the Investors under the Term Sheet Agreement
of  the  securities  described  therein;

(iii)     the  issuance  to, or the acquisition by, any of such Investors or any
of  their  respective  Affiliates or Associates of shares of common stock of the
Company  issued  or  issuable  upon  securities;  or

(iv)     the announcement, commencement or consummation of any of the foregoing.
IN  WITNESS  WHEREOF, the undersigned have executed this Amendment as of the day
and  year  first  above  written.

SAFEGUARD  HEALTH  ENTERPRISES,  INC.,
a  Delaware  corporation
By:____________________________________
Name:__________________________________
Title:_________________________________

By:____________________________________
Name:__________________________________
Title:_________________________________
AMERICAN  STOCK  TRANSFER  &  TRUST
COMPANY
By::___________________________________
Authorized  Officer

<PAGE>

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