Document:

BERMAN  DEVALERIO  PEASE
   TABACCO  BURT  &  PUCILLO
Joseph  J.  Tabacco,  Jr.  (75484)
Susan  G.  Kupfer  (141724)
425  California  Street,  Suite  2025
San  Francisco,  CA  94104
Telephone:  (415)  433-3200

-And-

Norman  Berman
Michael  Matraia
One  Liberty  Square
Boston,  MA  02109
Telephone:  (617)  542-8800

Lead  Counsel  for  Lead  Plaintiff

                          UNITED STATES DISTRICT COURT

                         CENTRAL DISTRICT OF CALIFORNIA

_________________________________________
                                          )
STEPHAN LEVINE, on behalf of himself      )
and all others similarly situated,        )     Civil Litigation No.
                                          )
                                          )     SA CV 99-1575 DOC (ANx)
        Plaintiff,                        )
                                          )     STIPULATION OF
                                          )     SETTLEMENT
    v.                                    )
                                          )
SAFEGUARD HEALTH ENTERPRISES,             )
 INC., STEVEN J. BAILEYS, JOHN E. COX,    )
ROBERT J. POMMERSHEIM, THOMAS C.          )
TEKULVE, and KENNETH E. KEATING,          )
                                          )
                                          )
        Defendants.                       )
                                          )
_________________________________________ )

<PAGE>
                            STIPULATION OF SETTLEMENT
                            -------------------------

     This  Stipulation  of Settlement (the "Stipulation"), is submitted pursuant
to  Rule  23  of the Federal Rules of Civil Procedure.  This Stipulation is made
and entered into by and among the following Settling Parties (as defined further
in Section IV hereof) to the above-referenced litigation (the "Litigation"): (i)
the Lead Plaintiff (as defined in Sec.1.12) (on behalf of themselves and each of
the  Class  Members),  by and through their counsel of record in the Litigation;
and  (ii)  SafeGuard  Health  Enterprises, Inc., Steven J. Baileys, John E. Cox,
Robert  J. Pommersheim, Thomas C. Tekulve, and Kenneth E. Keating (collectively,
the  "Defendants"),  by  and  through their counsel of record in the Litigation.
This  Stipulation  is  intended  by  the  Settling Parties to fully, finally and
forever  resolve,  discharge,  settle,  release,  and dismiss with prejudice the
Litigation  and the Released Claims (as defined herein), upon and subject to the
terms  and  conditions  hereof.  This  Stipulation  resolves  claims  that  are
contested  and shall not be deemed an admission by any party as to the merits of
any  claim  or  defense.

I.   THE  LITIGATION

     On  December  21,  1999,  plaintiffs  filed their original Complaint in the
Litigation  in  the  United  States  District  Court for the Central District of
California  (the  "Court")  as  a  proposed securities class action on behalf of
those  persons  who purchased the publicly-traded securities of SafeGuard Health
Enterprises, Inc. ("SafeGuard" or the "Company") during the period from February
26,  1998  through  November  13,  1999,  inclusive:

          -    Stephan  Levine,  on  behalf  of himself and all others
               similarly  situated,  v.  SafeGuard Health Enterprises,
               Inc.,  Steven  J.  Baileys,  John  E.  Cox,  Robert  J.
               Pommersheim,  and  Thomas  C.  Tekulve,  Case No. SA CV
               99-1575  DOC  (ANx).

     Plaintiffs'  Complaint  in the Litigation purported to state claims against
the  Defendants  for  alleged  violations  of  Section  10(b)  of the Securities
Exchange  Act  of  1934  (the  "Exchange  Act"),  and SEC Rule 10b-5 promulgated
thereunder,  and  against  the  individual  Defendants for alleged violations of

<PAGE>
Section  20(a)  of  the  Exchange  Act,  all  related  generally  to  alleged
misstatements  concerning  SafeGuard's  business  performance,  prospects,  and
financial position, including but not limited to alleged misstatements set forth
in  and  concerning  SafeGuard's financial statements for the fourth quarter and
year  ended  December 31, 1997, through and including the third quarter of 1999.

     Pursuant  to a motion brought as a group by six plaintiffs, including Roger
Legare  and Stephan Levine, the Court filed an order on March 7, 2000 appointing
Roger  Legare  lead  plaintiff  and  approving  his  choice  of  counsel, Berman
DeValerio  &  Pease  LLP(1),  as lead counsel for plaintiffs in this Litigation.

     On or about May 15, 2000, plaintiffs filed their First Amended Complaint in
the  Litigation,  and  added  Kenneth E. Keating as a Defendant to the action in
addition  to  the  other  Defendants  named  in  the  original  Complaint.

     On  July  14,  2000, defendants filed a motion to dismiss the First Amended
Complaint  pursuant  to  Rules  9(b)  and 12(b)(6) of the Federal Rules of Civil
Procedure  and the provisions of the Private Securities Litigation Reform Act of
1995.  Plaintiffs opposed the motion to dismiss.  After a hearing on the motion,
on  September  12, 2000, the Court entered an order dismissing the First Amended
Complaint,  with  prejudice.

     Plaintiffs  timely  filed  an  appeal from the Court's order dismissing the
First Amended Complaint.  After full briefing and oral argument, on February 22,
2002,  the United States Circuit Court of Appeals for the Ninth Circuit reversed
the  Court's  order,  and  remanded the action to the Court with instructions to
allow plaintiffs leave to file a Second Amended Complaint.  The Court thereafter
ordered  that  plaintiffs  should  file a Second Amended Complaint no later than
July  15,  2002.

     On  May  29,  2002, the parties engaged in a mediation before the Honorable
Edward  A.  Infante  (retired  United  States  Magistrate Judge), a professional
mediator  with  extensive experience in evaluating and settling securities class
actions,  and  through this mediation the parties reached an agreement to settle
the  Litigation  according  to  the  terms  set  forth  herein.

---------------
1.   The firm is now Berman DeValerio Pease Tabacco Burt & Pucillo.

<PAGE>
II.  DEFENDANTS' DENIALS OF WRONGDOING AND LIABILITY

     The  Defendants have denied and continue to deny each and all of the claims
and  contentions  alleged by plaintiffs in the Litigation.  Defendants expressly
have  denied and continue to deny all charges of wrongdoing or liability against
them  arising  out of any of the conduct, statements, acts or omissions alleged,
or  that  could  have been alleged, in the Litigation.  The Defendants also have
denied and continue to deny, inter alia, the allegations that the Lead Plaintiff
and  the  Class Members have suffered damage, that the price of SafeGuard common
stock (or any other SafeGuard securities) was artificially inflated by reason of
any  alleged  misrepresentation,  non-disclosure or otherwise, and that the Lead
Plaintiff  or any Members of the Class were harmed by the conduct alleged in the
Complaint  and  the First Amended Complaint.  Defendants believe that the claims
asserted  in the Litigation do not have merit and that the evidence developed to
date  does  not  support  the  claims  asserted.

     Nonetheless,  Defendants  have  concluded  that  further  conduct  of  the
Litigation  could  potentially  be  protracted  and expensive and would cause an
undesirable  diversion of the time and attention of the Company's management and
employees  from the normal, ongoing business of the Company and, therefore, that
it  is  desirable  that the Litigation be fully and finally resolved in order to
limit  further expense, inconvenience and distraction.  The Defendants have also
taken  into  account  the  uncertainty  and  risks  inherent  in any litigation,
especially  in complex cases like this Litigation.  Accordingly, Defendants have
concluded  that  it  is  desirable and beneficial to them that the Litigation be
settled  in  the  manner  and  upon  the  terms and conditions set forth in this
Stipulation.

<PAGE>
III. CLAIMS OF THE LEAD PLAINTIFF AND BENEFITS OF SETTLEMENT

          The Lead Plaintiff believes that the claims asserted in the Litigation
have  merit and that the damages are significant.  However, counsel for the Lead
Plaintiff  recognize  and  acknowledge  the  expense  and  length  of  continued
proceedings necessary to prosecute the Litigation against the Defendants through
trial  and  through  possible appeals.  Lead Plaintiff's Counsel also have taken
into  account  the  uncertain outcome and the risk of any litigation, as well as
difficulties  and  delays inherent in such litigation.  Lead Plaintiff's Counsel
also  are  aware of the inherent problems of proof in, and possible defenses to,
the  alleged  federal  securities  law  violations  asserted  in the Litigation.
Finally,  Lead  Plaintiff's  Counsel  are  mindful  of  the  difficulties  of
ascertaining  precisely  the amount of loss attributable to the alleged wrongful
conduct and the fact that some trading losses resulted from stock price declines
that  cannot  be  shown  to  be  related  to  the  alleged  wrongful  conduct.

     Lead  Plaintiff's  Counsel  have conducted an investigation relating to the
claims  and  the  underlying  events and transactions alleged in the Litigation.
Lead  Plaintiff's Counsel have researched the applicable law with respect to the
claims  of  the  Lead  Plaintiff  and  the Class against the Defendants, and the
potential  defenses thereto.  Plaintiffs, by their counsel, have conducted arm's
length negotiations with counsel for Defendants, including a mediation conducted
by  the  Honorable Edward A. Infante (Ret.), a retired magistrate judge from the
United  States  District  Court for the Northern District of California, who has
vast  experience  in  mediating  securities class actions.  Counsel for the Lead
Plaintiff  believe  that a recovery now will provide an immediate benefit to the
members  of  the  Class,  which  is  superior to the risk of proceeding with the
Litigation  in the hope of a larger recovery later.  The settlement set forth in
the  Stipulation  confers  substantial  benefits  upon the Class. Based on their
evaluation,  counsel  for the Lead Plaintiff have determined that the settlement
set  forth in the Stipulation is in the best interests of the Lead Plaintiff and
of  the  Class.

<PAGE>
IV.  TERMS OF STIPULATION AND AGREEMENT OF SETTLEMENT

          NOW,  THEREFORE,  IT  IS HEREBY STIPULATED AND AGREED by and among the
Lead  Plaintiff  (for  himself and the Class Members) and the Defendants, by and
through  their  respective  undersigned counsel that, subject to the approval of
the  Court,  the  Litigation  and the Released Claims shall be finally and fully
compromised,  settled  and  released, and the Litigation shall be dismissed with
prejudice, as to all Settling Parties and the Released Persons, upon and subject
to  the  terms  and  conditions  of  the  Stipulation,  as  follows:

     1.   DEFINITIONS.

     As used in the Stipulation, the following terms have the meanings specified
below:

          1.1     "Authorized  Claimant"  means  a  Class Member whose claim for
recovery has been allowed pursuant to the terms of the Stipulation and/or by the
Court.

          1.2     "Claimant"  means  any Class Member who files a Proof of Claim
in  such  form  and  manner, and within such time, as the Court shall prescribe.

          1.3     "Claims  Administrator"  means  the  firm  of Strategic Claims
Services,  which  shall  administer  the  settlement.

          1.4     "Class"  means all Persons who purchased or otherwise acquired
common  stock  or other securities of SafeGuard Health Enterprises, Inc., during
the  period beginning February 26, 1998 and ending November 13, 1999, inclusive.
Excluded from the Class are Defendants, members of the immediate families of the
individual  Defendants,  any  entity  in  which  any Defendant has a controlling
interest,  directors  and  officers of SafeGuard Health Enterprises, Inc. during
the  Class  Period, and the legal representatives, heirs, successors, or assigns
of  any  such excluded Person or entity.  Also excluded from the Class are those
Persons who request exclusion from the Class in a timely and valid manner as set
forth  in  the  Notice  of  Proposed  Settlement  of  Class  Action.

<PAGE>
          1.5     "Class Period" means the period  commencing  on  February  26,
1998, through and  including  November  13,  1999.

          1.6     "Class  Member"  or  "Member  of  the Class" means a Person or
entity  who  falls  within  the  definition  of  the  Class as set forth herein.

          1.7     "Defendants"  means SafeGuard Health Enterprises, Inc., Steven
J.  Baileys,  John E. Cox, Robert J. Pommersheim, Thomas C. Tekulve, and Kenneth
E.  Keating.

          1.8     "Effective  Date"  means  the  first  date by which all of the
events and conditions specified in Sec.7.1 of this Stipulation have been met and
have  occurred.

          1.9     "Escrow  Agent"  means  the  Berman  Firm or its successor(s).

          1.10    "Final" means the later of: (i) following final affirmance on
an appeal of the Judgment, the date of the expiration of the time for a petition
for or a denial of a writ of certiorari to review the Judgment or, if certiorari
is  granted,  the  date  of  final  affirmance  of the Judgment following review
pursuant  to  that grant; or (ii) the date of final dismissal of any appeal from
the  Judgment,  or the final dismissal of any proceeding on certiorari to review
the  Judgment;  or  (iii)  if  no  appeal  or  petition for review is filed, the
expiration  date  of  the time for the filing or noticing of any appeal from the
Court's  Judgment approving the Stipulation substantially in the form of Exhibit
B  hereto;  i.e.,  thirty (30) days after entry of the Judgment, or such further
time  for the filing or noticing such an appeal as may be permitted by any court
or  other  proper authority.  Any proceeding or order, or any appeal or petition
for  a  writ  of  certiorari  pertaining solely to any plan of allocation and/or
application  by  Lead Plaintiff's Counsel for attorneys' fees, costs or expenses
from  the  Settlement  Fund, shall not in any way delay or preclude the Judgment
from  becoming  Final.

          1.11     "Judgment"  means  the  judgment  to be rendered by the Court
based upon this Settlement, substantially in the form attached hereto as Exhibit
B.

          1.12     "Lead  Plaintiff"  means  each  Person  who filed or joined a
complaint  or  motion  for  appointment  of  lead  plaintiff  in the Litigation,
including  Roger  Legare, Stephan Levine, Scott Desind, John Duncan, Mary Duncan
and  Omar  Hall.

<PAGE>
          1.13     "Lead  Plaintiff's  Counsel"  means  the  law  firm of Berman
DeValerio  Pease  Tabacco  Burt  &  Pucillo  ("the  Berman  Firm").

          1.14     "Person"  means  an  individual,  corporation,  partnership,
limited  partnership,  association,  joint  stock  company,  estate,  legal
representative,  trust,  unincorporated association, government or any political
subdivision or agency thereof, and any other business or legal entity, and their
spouses,  heirs,  predecessors,  successors,  representatives  or  assignees.

          1.15     "Plaintiffs'  Counsel"  means  Lead  Plaintiff's Counsel: the
Berman  Firm, One Liberty Square, Boston, Massachusetts 02109 and 425 California
Street,  21st  Floor,  San  Francisco,  California  94104.

          1.16     "Plan of Allocation" means a plan or formula of allocation of
the  Net  Settlement Fund which shall be described in the Notice of Pendency and
Settlement of Class Action, whereby the Net Settlement Fund shall be distributed
to  Authorized  Claimants  after payment of reasonable and necessary expenses of
notice  and  administration  of the settlement, Taxes and Tax Expenses, and such
attorneys'  fees,  costs,  expenses and interest as may be awarded by the Court.
Any Plan of Allocation is not part of the Stipulation, and Defendants shall have
no  responsibility  or  liability  with  respect  thereto.

          1.17     "Related Parties" means each of a Defendant's past or present
directors,  officers,  employees,  partners,  members,  principals,  agents,
underwriters,  insurers,  co-insurers,  reinsurers,  controlling  shareholders,
attorneys,  accountants  or  auditors,  banks  or  investment banks, associates,
advisers,  personal or legal representatives, predecessors, successors, parents,
subsidiaries,  divisions,  joint  ventures,  assigns, spouses, heirs, related or
affiliated  entities,  and  any  entity  in  which  such  Person  has  or  had a
controlling  interest;  members  of  their  immediate families; and any trust of
which  any Defendant is the settlor or which is for the benefit of any Defendant
and/or  member(s)  of  his  family,  and  each of their trustees, beneficiaries,
successors,  and  assigns.

<PAGE>
          1.18     "Released  Claims" shall collectively mean any and all claims
(including  "Unknown  Claims"  as  defined  in  Sec.1.22),  demands,  rights,
liabilities,  suits,  debts,  obligations, actions and causes of action of every
nature  and  description  whatsoever,  known or unknown, contingent or resolute,
matured  or  unmatured, discoverable or undiscoverable, whether or not concealed
or  hidden,  asserted  or that might have been asserted, regardless of upon what
legal  theory  based including, without limitation, claims for negligence, gross
negligence,  recklessness,  breach  of  duty  of  care  and/or breach of duty of
loyalty,  fraud, mismanagement, misrepresentation, omission, breach of contract,
breach  of  fiduciary duty, or violations of the common law or any local, state,
federal,  foreign  or international statutes, rules, regulations, laws, treaties
or  compacts,  by  the Lead Plaintiff and Class Members, or any of them, against
the  Defendants  and Related Parties, or any of them, arising out of, based upon
or  related  to both the purchase or other acquisition of SafeGuard common stock
or  other  SafeGuard  security  during  the  Class Period, and any of the facts,
transactions,  events,  occurrences, acts, disclosures, statements, omissions or
failures  to  act which were or could have been alleged in or encompassed by the
Litigation  or  in any other action or forum, including, but not limited to, the
claims actually asserted in the Litigation.  Released Claims include any and all
claims  arising out of, relating to, or in connection with the settlement of the
Litigation.

          "Released  Persons"  means  each  and  all of the Defendants and their
Related  Parties.

          "Settlement  Fund"  means  the  principal  amount  of  One Million Two
Hundred  Fifty  Thousand  Dollars  ($1,250,000)  to  be  deposited  into  an
interest-bearing  account  designated  by  Lead  Plaintiff's  Counsel,  plus any
interest  accruing  following  such  deposit(s).

<PAGE>
          1.21     "Settling  Parties"  means,  collectively,  each  of  the
Defendants  and  the Lead Plaintiff, on behalf of himself and the Members of the
Class.

          1.22     "Unknown  Claims" means any and all Released Claims which any
Lead  Plaintiff or Class Member does not know or suspect to exist in his, her or
its  favor at the time of the release of the Released Persons which, if known by
him,  her or it, might have affected his, her or its settlement with and release
of  the Released Persons, or might have affected his, her or its decision not to
object  to  this  Settlement.  With  respect to any and all Released Claims, the
Settling  Parties  stipulate  and  agree that, upon the Effective Date, the Lead
Plaintiff  shall  expressly waive, and each of the Class Members shall be deemed
to  have,  and  by  operation  of  the Judgment shall have, expressly waived and
relinquished  the  provisions, rights and benefits of California Civil Code Sec.
1542,  which  provides:

               A  GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH
               THE  CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN
               HIS  FAVOR  AT  THE TIME OF EXECUTING THE RELEASE,
               WHICH  IF  KNOWN  BY  HIM  MUST  HAVE  MATERIALLY
               AFFECTED  HIS  SETTLEMENT  WITH  THE  DEBTOR.

          The  Lead  Plaintiff  shall  expressly  waive,  and  each of the Class
Members  shall  be  deemed to have, and by operation of the Judgment shall have,
expressly  waived  any  and all provisions, rights and benefits conferred by any
law  of  any  state  or  territory  of the United States, or any local, federal,
foreign  or  international  law,  or  principle of common law, which is similar,
comparable or equivalent to California Civil Code Sec. 1542.  The Lead Plaintiff
and/or any Class Member may hereafter discover facts in addition to or different
from  those which he, she or it now knows or believes to be true with respect to
the  subject  matter  of  the  Released Claims, but each Lead Plaintiff and each
Class  Member  shall  expressly  be  deemed to, and by operation of the Judgment
shall,  have  fully,  finally,  and  forever  settled  and  released any and all

<PAGE>
Released  Claims,  known  or  unknown,  suspected  or unsuspected, contingent or
noncontingent,  whether  or  not  concealed  or  hidden,  which  now  exist,  or
heretofore have existed, upon any theory of law or equity now existing or coming
into  existence  in  the future, including, but not limited to, conduct which is
negligent,  reckless,  intentional,  with  or without malice, or a breach of any
duty,  law  or  rule, without regard to the subsequent discovery or existence of
such  different  or  additional facts.  The Lead Plaintiff acknowledges, and the
Class Members shall be deemed by operation of the Judgment to have acknowledged,
that  the foregoing waiver was separately bargained for and a key element of the
settlement  of  which  this  release  is  a  part.

     2.     THE  SETTLEMENT  FUND.

          2.1     The  principal amount of $1,250,000 in cash, plus any interest
accruing  after transfer of such funds to the Escrow Agent, shall constitute the
Settlement  Fund.  The  Settlement  Fund  shall  be  transferred  into  an
interest-bearing  account  identified  and  maintained  by  the Escrow Agent, as
follows:

               a.     Within  seven  (7) calendar days following notice of entry
of  the  Court's  order  giving  preliminary  approval  of  this Settlement, the
Company's  directors'  and officers' liability insurer shall cause the amount of
$1,000,000  to  be  transferred into the account identified by the Escrow Agent,
and  SafeGuard  shall  transfer  the  amount  of  $83,333  into  such  account;

               b.     Within  ninety  (90)  days  thereafter,  SafeGuard  shall
transfer  the  additional  amount  of  $83,333  into  such  account;  and

               c.     Within  five  (5) business days after the Judgment becomes
Final as defined in paragraph 1.10, SafeGuard shall transfer the final amount of
$83,334  into  such  account.

          2.2     The  Escrow  Agent  shall invest the Settlement Fund deposited
pursuant  to Sec.2.1 above in instruments backed by the full faith and credit of
the United States Government or fully insured by the United States Government or
an  agency  thereof and shall reinvest the proceeds of these instruments as they
mature  in  similar  instruments  at their then current market rates. The Escrow
Agent  shall  bear  all  risks  related  to  investment  of the Settlement Fund.

<PAGE>
          2.3     The Escrow Agent shall not disburse the Settlement Fund except
as  provided  in  the  Stipulation  or  by  an  order  of  the  Court.

          2.4     Subject  to  further order and/or directions as may be made by
the Court, the Escrow Agent is authorized to execute such transactions on behalf
of  the  Class  Members  as  are  consistent  with the terms of the Stipulation.

          2.5     All  funds  held  by  the  Escrow  Agent  shall  be deemed and
considered to be in custodia legis of the Court, and shall remain subject to the
jurisdiction  of  the  Court, until such time as such funds shall be distributed
pursuant  to  the  Stipulation  and/or  further  order(s)  of  the  Court.

          2.6     Within twenty (20) days after the first installment payment of
the Settlement Fund to the Escrow Agent pursuant to Sec.2.1(a), the Escrow Agent
may  establish  a  "Class Notice and Administration Fund," and may deposit up to
$50,000  from  the  Settlement  Fund in it.  The Class Notice and Administration
Fund may be used by Plaintiff's Counsel to pay costs and expenses reasonably and
actually  incurred  in  connection  with providing notice to the Class, locating
Class  Members,  soliciting  Class  claims, assisting with the filing of claims,
administering  and  distributing  the  Settlement  Fund to Authorized Claimants,
processing Proof of Claim and Release forms and paying escrow fees and costs, if
any.  The  Class  Notice  and  Administration Fund may also be invested and earn
interest  in  the  same  manner  as provided for in Sec.2.2 of this Stipulation.

          2.7     On  the  Effective Date, any balance (including interest) then
remaining  in  the  Class Notice and Administration Fund, less expenses incurred
but  not  yet paid, may be transferred by the Escrow Agent to, and deposited and
credited as part of the Settlement Fund, to be applied as set forth in paragraph
5.2  below.  Thereafter,  Lead  Plaintiff's  Counsel shall have the right to use
such  portions  of  the  Settlement Fund as are, in their exercise of reasonable
judgment,  necessary  to  carry  out  the  purposes  set forth in paragraph 2.6.

<PAGE>
          2.8  (a)     Settling  Parties and the Escrow Agent agree to treat the
Settlement  Fund  as being at all times a "qualified settlement fund" within the
meaning  of Treas. Reg. Sec.1.468B-l. In addition, the Escrow Agent shall timely
make  such  elections  as  necessary or advisable to carry out the provisions of
this  Sec.2.8, including the "relation-back election" (as defined in Treas. Reg.
Sec.  1.468B-  1)  back  to the earliest permitted date. Such elections shall be
made  in  compliance  with  the  procedures  and  requirements contained in such
regulations.  It  shall  be the responsibility of the Escrow Agent to timely and
properly  prepare  and  deliver the necessary documentation for signature by all
necessary  parties,  and  thereafter  to  cause the appropriate filing to occur.

               (b)     For  the purpose of Sec.468B of the Internal Revenue Code
of  1986,  as  amended,  and  the  regulations  promulgated  thereunder,  the
"administrator"  shall  be  the Escrow Agent.  The Escrow Agent shall timely and
properly  file  all  informational  and other tax returns necessary or advisable
with  respect  to  the Settlement Fund (including without limitation the returns
described  in  Treas.  Reg.  Sec.1.468B-2(k) and 1.468B-2(1)).  Such returns (as
well  as  the  election  described  in Sec.2.8(a)) shall be consistent with this
Sec.2.8  and in all events shall reflect that all Taxes (including any estimated
Taxes,  interest or penalties) on the income earned by the Settlement Fund shall
be  paid  out  of  the  Settlement  Fund  as  provided  in  Sec.2.8(c)  hereof.

               (c)     All (i) Taxes (including any estimated Taxes, interest or
penalties)  arising  with  respect  to the income earned by the Settlement Fund,
including any Taxes or tax detriments that may be imposed upon the Defendants or
Related Parties with respect to any income earned by the Settlement Fund for any
period  during  which  the  Settlement  Fund  does  not  qualify as a "qualified
settlement  fund"  for  federal or state income tax purposes ("Taxes"), and (ii)
expenses  and costs incurred in connection with the operation and implementation
of this Sec.2.8 (including, without limitation, expenses of tax attorneys and/or

<PAGE>
accountants,  mailing and distribution costs and expenses relating to filing (or
failing  to file) the returns described in this Sec.2.8) ("Tax Expenses"), shall
be  paid out of the Settlement Fund; in no event shall any of the Defendants and
Related  Parties  have  any liability or responsibility for the Taxes or the Tax
Expenses.  The  Escrow Agent shall indemnify and hold each of the Defendants and
Related  Parties  harmless  for  Taxes  and  Tax  Expenses  (including,  without
limitation,  Taxes  payable  by  reason  of any such indemnification).  Further,
Taxes  and  Tax  Expenses  shall  be treated as, and considered to be, a cost of
administration  of  the  Settlement  Fund and shall be timely paid by the Escrow
Agent  out  of  the  Settlement  Fund without prior order from the Court and the
Escrow  Agent  shall  be  obligated  (notwithstanding  anything  herein  to  the
contrary)  to  withhold  from  distribution  to  Authorized  Claimants any funds
necessary  to  pay such amounts including the establishment of adequate reserves
for  any  Taxes and Tax Expenses (as well as any amounts that may be required to
be  withheld  under  Treas.  Reg. Sec. 1.468B-2(1)(2)); the Defendants and their
Related Parties are not responsible therefore, nor shall they have any liability
therefore.  The  parties  hereto  agree to cooperate with the Escrow Agent, each
other,  and  their  respective  tax  attorneys  and  accountants  to  the extent
reasonably  necessary  to  carry  out  the  provisions  of  this  Sec.2.8.

               (d)     For  the  purpose  of  this  Sec.2.8,  references  to the
Settlement  Fund shall include both the Settlement Fund and the Class Notice and
Administration  Fund  and  shall  also  include  any  earnings  thereon.

          2.9.     In  the  event  that  the  Stipulation is not approved by the
Court,  or is terminated, canceled, or fails to become effective for any reason,
the  Settlement  Fund  (including  accrued  interest) and the funds in the Class
Notice and Administration Fund, less expenses actually incurred or due and owing
in  connection  with  the  settlement, shall be refunded to SafeGuard and/or its
insurer  as described in Sec.7.5 below.  In the event of such refund, Defendants
shall  be  entitled  to  an  accounting  of  any  such  expenses.

<PAGE>
     3.   NOTICE  ORDER  AND  SETTLEMENT  HEARING.

          3.1     Promptly after execution of this Stipulation, Lead Plaintiff's
Counsel  shall  submit  this Stipulation together with its Exhibits to the Court
and  shall  apply  for entry of an order, substantially in the form of Exhibit A
(the  "Notice  Order"),  providing,  inter alia, for preliminary approval of the
Settlement  as  set forth in the Stipulation, the certification of the Class for
settlement  purposes  only,  and  approval  for  the  mailing of a notice of the
settlement  of  this  Litigation (the "Notice") and for publication of a Summary
Notice  of  the  settlement,  substantially  in the form of Exhibits A-1 and A-3
hereto, which shall include the general terms of the settlement set forth in the
Stipulation,  the  proposed Plan of Allocation, the general terms of the Fee and
Expense  Application  as defined in Sec.6.1 below and the date of the Settlement
Hearing  as  defined  below.

          3.2     Lead Plaintiff's Counsel and Defendants' counsel shall jointly
request  that  after  notice is given to the Class the Court hold a hearing (the
"Settlement  Hearing")  and  give  its  final  approval of the settlement of the
Litigation  as  set  forth  herein.  At  or  after  the Settlement Hearing, Lead
Plaintiff's  Counsel  also will request that the Court approve the proposed Plan
of  Allocation  and  the  Fee  and  Expense  Application.

          3.3     After  notice  of  entry  of the Notice Order, SafeGuard shall
promptly provide or cause to be provided to the Claims Administrator shareholder
information  reasonably  available  from  its  transfer agent for the purpose of
providing  notice  to  the  Class.

     4.     RELEASES  AND  BAR  ORDER.

          4.1     Upon  the  Effective  Date,  as  defined  in Sec.1.8, the Lead
Plaintiff  and  each  of  the  Class  Members  shall  be  deemed to have, and by
operation  of  the  Judgment  shall  have, fully, finally, and forever released,
relinquished  and  discharged  all  Released  Claims against each and all of the
Released  Persons,  as  well  as any and all claims against the Released Persons

<PAGE>
arising out of, relating to, or in connection with the defense and/or settlement
of  the  Litigation,  whether or not such Class Member executes and delivers the
Proof  of  Claim  and  Release.

          4.2     The Proof of Claim and Release to be executed by Class Members
shall  release  all  Released  Claims  against all Released Persons and shall be
substantially  in  the  form  contained  in  Exhibit  A-2.

          4.3     Upon  the  Effective  Date, as defined in Sec.1.8, each of the
Released Persons shall be deemed to have, and by operation of the Judgment shall
have, fully, finally, and forever released, relinquished and discharged each and
all  of  the  Class  Members  and  counsel to the Lead Plaintiff from all claims
(including  "Unknown Claims"), arising out of, relating to or in connection with
the  institution,  prosecution,  assertion  or  resolution  of  the  Litigation.

          4.4     All Members of the Class who do not request exclusion from the
Class  in  a timely and valid manner shall be bound by the Releases set forth in
paragraph  4.1 whether or not they submit a timely or valid Proof of Claim.  All
Class  Members  whose  claims are not approved by the Court shall be barred from
participating  in  distributions from the Settlement Fund but otherwise shall be
bound  by all of the terms of this Stipulation and the Settlement, including the
terms  of  the Judgment to be entered in the Litigation, and will be barred from
bringing  any  action  against any of the Released Persons concerning any of the
Released  Claims.

          4.5     The  Judgment shall bar any and all claims for contribution or
indemnification  arising out of or related to the Litigation and/or the Released
Claims  by  any  Person  against  any  and  all  Defendants.

     5.   ADMINISTRATION AND CALCULATION OF CLAIMS, FINAL AWARDS AND SUPERVISION
          AND DISTRIBUTION OF SETTLEMENT FUND

          5.1     Lead  Plaintiff's  Counsel, or their authorized agents, acting
on  behalf  of  the  Class  and subject to such supervision and direction of the
Court  as may be necessary or as circumstances may require, shall administer and

<PAGE>
calculate  the  claims submitted by Class Members and shall oversee distribution
of  the  Net  Settlement  Fund  (defined  below)  to  Authorized  Claimants.

          5.2     The  Settlement  Fund  shall  be  applied  as  follows:

               (a)     to  pay  counsel  to  Lead  Plaintiff's  attorneys' fees,
expenses  and  costs with interest thereon (the "Fee and Expense Award"), if and
to  the  extent  allowed  by  the  Court;

               (b)     to pay all the costs and expenses reasonably and actually
incurred in connection with providing notice, locating Class Members, soliciting
Class  claims,  assisting  with  the  filing  of  claims,  administering  and
distributing  the  Settlement  Fund to Authorized Claimants, processing Proof of
Claim  and  Release  forms  and  paying  escrow  fees  and  costs,  if  any;

               (c)     to  pay  Taxes  and  Tax  Expenses;  and

               (d)     to  distribute  the  balance  of the Settlement Fund (the
"Net  Settlement  Fund")  to Authorized Claimants as allowed by the Stipulation,
the  Plan  of  Allocation  or  the  Court.

          5.3     Upon  the Effective Date and thereafter and in accordance with
the  terms  of  the Stipulation, the Plan of Allocation or such further approval
and  further  order(s)  of the Court as may be necessary or as circumstances may
require,  the  Net Settlement Fund shall be distributed to Authorized Claimants,
subject  to  and  in  accordance  with  the  following:

               (a)     Within  ninety  (90) days after the mailing of the Notice
or  such  other  time  as may be set by the Court, each Person claiming to be an
Authorized  Claimant  shall  be required to submit to the Claims Administrator a
completed  Proof  of Claim and Release, substantially in the form of Exhibit A-2
hereto,  signed  under  penalty  of  perjury  and supported by such documents as
specified  in  the Proof of Claim and Release and as are reasonably available to
the  Authorized  Claimant.

               (b)     Except  as  otherwise  ordered  by  the  Court, all Class
Members  who  fail  to  timely  submit  a Proof of Claim and Release within such

<PAGE>
period,  or  such  other period as may be ordered by the Court, shall be forever
barred  from  receiving  any  payments  pursuant  to  the  Stipulation  and  the
settlement  set  forth therein, but will in all other respects be subject to and
bound  by  the provisions of the Stipulation, the releases contained herein, and
the  Judgment.

               (c)     The  Net  Settlement  Fund  shall  be  distributed to the
Authorized Claimants substantially in accordance with a Plan of Allocation to be
described  in  the  Notice  and  approved  by  the  Court.  The proposed Plan of
Allocation shall not be part of this Stipulation.  If, after distribution of the
Net  Settlement  Fund,  any  balance  still  remains,  it shall be donated to an
appropriate  non-profit  organization  or  charity  as  approved  by  the Court.

          5.4     The  Defendants  and  Related  Parties  shall  have  no
responsibility for, interest in (except as provided in paragraphs 2.9, 6.3, 7.5,
& 7.6) or liability whatsoever with respect to the investment or distribution of
the  Settlement  Fund, the Plan of Allocation, the determination, administration
or  calculation  of  claims,  the payment or withholding of Taxes, or any losses
incurred  in  connection  therewith.  No Person shall have any claim of any kind
against  Defendants  and  Related  Parties,  or any of them, with respect to the
matters  set  forth  in  this  paragraph.

          5.5     No  Person  shall  have any claim against Plaintiff's Counsel,
any  claims administrator or other agent designated by Lead Plaintiff's Counsel,
or  Defendants  and  their  Related  Parties  based  on  the  distributions made
substantially  in  accordance  with the Stipulation and the settlement contained
therein,  the  Plan  of  Allocation  or  further  orders  of  the  Court.

          5.6     It  is  understood and agreed by the Settling Parties that any
proposed  Plan  of  Allocation  of  the  Net  Settlement Fund, including but not
limited  to any adjustments to an Authorized Claimant's claim set forth therein,
is not a part of the Stipulation and is to be considered by the Court separately
from  the  Court's consideration of the fairness, reasonableness and adequacy of
the  settlement  set  forth  in  the  Stipulation,  and any order or proceedings

<PAGE>
relating  to the Plan of Allocation shall not operate to terminate or cancel the
Stipulation  or  affect  the  finality  of  the  Court's  Judgment approving the
Stipulation  and  the  settlement  set forth therein or any other orders entered
pursuant  to  the  Stipulation.

     6.   PLAINTIFFS' COUNSELS' ATTORNEYS' FEES AND REIMBURSEMENT OF EXPENSES.

          6.1     Lead  Plaintiff's  Counsel  may  submit  an  application  or
application(s)  (the  "Fee  and  Expense Application") for distributions to them
from  the  Settlement  Fund  for:  (a)  an  award  of  attorneys' fees; plus (b)
reimbursement  of  actual  expenses  incurred in connection with prosecuting the
Litigation,  plus  any interest on such attorneys' fees and expenses at the same
rate  and  for  the  same  periods  as earned by the Settlement Fund (until such
attorneys'  fees  and  expenses are paid), as may be awarded by the Court.  Lead
Plaintiff's  Counsel  reserve the right to make additional applications for fees
and  expenses  from  the  Settlement Fund as may be incurred in post judgment or
appellate  proceedings.

          6.2     The  attorneys'  fees  and  expenses,  including  the  fees of
experts  and  consultants,  as  awarded  by  the  Court,  shall  be paid to Lead
Plaintiff's  Counsel from the Settlement Fund, as ordered, immediately after the
Court  executes  an  order  awarding  such  fees and expenses.  Lead Plaintiff's
Counsel  shall  thereafter  allocate the attorneys' fees amongst themselves in a
manner  in  which  they in good faith believe reflects the contributions of such
counsel  to  the  prosecution  and  settlement  of  the  Litigation.

          6.3     In  the  event  that the Effective Date does not occur, or the
Judgment  or the order making the Fee and Expense Award is reversed or modified,
or  the  Stipulation  is canceled or terminated for any other reason, and in the
event  that the Fee and Expense Award has been paid to any extent, then all Lead
Plaintiff's  Counsel  that  have  received funds from the Settlement Fund shall,
within  five (5) business days from receiving notice from Defendants' Counsel or
from  a  court  of  appropriate  jurisdiction, refund to the Settlement Fund the

<PAGE>
fees,  expenses  and costs previously paid to them from the Settlement Fund plus
interest  thereon at the same rate as earned on the Settlement Fund in an amount
consistent with such reversal or modification.  Plaintiffs' Counsels' law firms,
as a condition of receiving such fees and expenses, on behalf of itself and each
partner  and/or  shareholder  of  it,  agree  that the law firm and its partners
and/or shareholders are subject to the jurisdiction of the Court for the purpose
of  enforcing  the  provisions  of  this  Sec.6.3.

          6.4     The  procedure  for  and  the allowance or disallowance by the
Court  of  any  applications by Lead Plaintiff's Counsel for attorneys' fees and
expenses  to  be  paid out of the Settlement Fund are not part of the settlement
set  forth  in  the Stipulation and are to be considered by the Court separately
from  the  Court's consideration of the fairness, reasonableness and adequacy of
the  settlement  set  forth  in  the  Stipulation  and  any order or proceedings
relating  to  the  Fee  and  Expense  Application,  or any appeal from any order
relating  thereto  or  reversal  or  modification  thereof, shall not operate to
terminate  or  cancel  the  Stipulation  or  affect or delay the finality of the
Judgment  approving  the  Stipulation  and  the settlement of the Litigation set
forth  therein.

          6.5     Defendants  and  their  Related  Parties  shall  have  no
responsibility  for, and no liability whatsoever with respect to, any payment to
Lead  Plaintiff's  Counsel  from  the  Settlement  Fund.

          6.6     Defendants  and  their  Related  Parties  shall  have  no
responsibility  for, and no liability whatsoever with respect to, the allocation
among Lead Plaintiff's Counsel and/or any other Person who may assert some claim
thereto, of any Fee and Expense Award that the Court may make in the Litigation,
and  Defendants  and  the  Related Parties take no position with respect to such
matters.

     7.   CONDITIONS  OF  SETTLEMENT,  EFFECT  OF  DISAPPROVAL,  CANCELLATION OR
          TERMINATION

          7.1     The  Effective Date of the Stipulation shall be conditioned on
the  occurrence  of  all  of  the  following  events:

<PAGE>
               (a)     SafeGuard  and  its  insurer shall have timely made their
respective  contributions  to  the Settlement Fund as required by Sec.2.1 above;

               (b)     the  Court  has  entered the Notice Order, as required by
Sec.3,  above;

               (c)     the  Court  has  entered  the  Judgment,  or  a  judgment
substantially  in  the  form  of Exhibit B, which shall provide, inter alia, for
dismissal  of  the  Litigation  with  prejudice;

               (d)     SafeGuard shall not have exercised the right provided for
in  Sec.7.2;  and

               (e)     the  Judgment  has  become Final, as defined in Sec.1.10,
above.

          7.2     If,  prior  to  the  Settlement Hearing, Persons who otherwise
would  be  members  of  the Class have timely requested exclusion ("Requests for
Exclusion") from the Class in accordance with the provisions of the Notice Order
and  the  notice  given  pursuant  thereto,  and  such  Persons in the aggregate
purchased  a  number  of  SafeGuard  shares during the Class Period in an amount
greater  than the sum specified in a separate Supplemental Agreement between the
parties,  SafeGuard  shall have, in its sole and absolute discretion, the option
to terminate this Stipulation in accordance with the procedures set forth in the
Supplemental  Agreement.  The  Supplemental Agreement will not be filed with the
Court unless and until a dispute among the parties concerning its interpretation
or  application arises.  Copies of all Requests for Exclusion received, together
with  copies  of  all  written  revocations  of  Requests for Exclusion shall be
delivered to counsel for Defendants within three (3) business days of receipt by
Lead  Plaintiff's Counsel, but in no event later than five (5) court days before
the  Settlement  Hearing(s).

          7.3     Upon the occurrence of all of the events referenced in Sec.7.1
above,  any  and  all  remaining  interest  or  right of Defendants in or to the
Settlement  Fund,  if  any,  shall  be  absolutely  and  forever  extinguished.

<PAGE>
          7.4     If  all  of  the  conditions specified in Sec.7.1 are not met,
then  the Stipulation shall be canceled and terminated subject to Sec.7.5 unless
Plaintiff's  Counsel  and  counsel  for  Defendants mutually agree in writing to
proceed  with  the  Stipulation.

          7.5     Unless  otherwise  ordered  by  the  Court,  in  the event the
Stipulation  shall  be  terminated,  canceled,  declared void or fails to become
effective  for  any  reason,  within  five  (5)  business  days  after  written
notification of such event is sent by counsel for Defendants or Lead Plaintiff's
Counsel  to  the Escrow Agent, the Settlement Fund (including accrued interest),
plus  any amount then remaining in the Notice and Administration Fund (including
accrued  interest)  and  any  amounts  due  to  the  Settlement Fund pursuant to
paragraph  6.3,  less  expenses  and  any costs which have either been disbursed
pursuant  to  Sec.2.6  or  are  determined  to  be  chargeable to the Notice and
Administration  Fund, shall be refunded by the Escrow Agent to SafeGuard and its
insurer  pursuant  to  written  instructions  from counsel to SafeGuard.  At the
request  of  counsel  to SafeGuard, the Escrow Agent or its designee shall apply
for  any  tax  refund  owed  to  the Settlement Fund and pay the proceeds, after
deduction  of  any  fees  or  expenses  incurred  in  connection  with  such
application(s)  for  refund,  to  SafeGuard  and  its  insurer.

          7.6     In the event that the Stipulation is not approved by the Court
or the settlement set forth in the Stipulation is terminated, canceled, declared
void  or  fails  to  become effective in accordance with its terms, the Settling
Parties  shall be restored to their respective positions in the Litigation as of
May  28, 2002.  In such event, the terms and provisions of the Stipulation, with
the  exception  of  paragraphs 2.2, 2.3, 2.5, 2.6, 2.8, 2.9, 5.4, 5.5, 6.3, 6.5,
6.6,  7.4,  7.5,  7.6,  7.7,  8.4, 8.6 and 8.15, shall have no further force and
effect  with  respect  to  the  Settling  Parties  and shall not be used in this
Litigation  or  in  any  other  proceedings for any purpose, and any Judgment or

<PAGE>
order entered by the Court in accordance with the terms of the Stipulation shall
be  treated  as  vacated, nunc pro tunc.  Notwithstanding any other provision of
this Stipulation, no order of the Court or modification or reversal on appeal of
any  order  of  the  Court  concerning the Plan of Allocation, or concerning the
amount of any attorneys' fees, costs, expenses and interest awarded by the Court
to  the Lead Plaintiff or Lead Plaintiff's counsel, shall constitute grounds for
cancellation  or  termination  of  the  Stipulation.

          7.7     If the Effective Date does not occur, or if the Stipulation is
terminated  pursuant  to  its  terms,  neither  Lead  Plaintiff nor any of their
counsel  shall  have  any  obligation to repay any amounts actually and properly
disbursed  from  the  Notice and Administration Fund.  In addition, any expenses
already  incurred  and properly chargeable to the Notice and Administration Fund
pursuant  to  Sec.2.6 at the time of such termination or cancellation, but which
have  not  been  paid,  shall be paid by the Escrow Agent in accordance with the
terms  of the Stipulation prior to the balance being refunded in accordance with
Sec.7.5  above.

          7.8     If  a case is commenced in respect to SafeGuard under Title 11
of the United States Code (Bankruptcy), or a trustee, receiver or conservator is
appointed  under any similar law, and in the event of the entry of a final order
of  a court of competent jurisdiction determining the transfer of the Settlement
Fund,  or  any portion thereof, by or on behalf of SafeGuard to be a preference,
voidable  transfer,  fraudulent  transfer  or  similar  transaction, then, as to
SafeGuard  only,  the  releases given and Judgment entered in favor of SafeGuard
pursuant  to  this  Stipulation  shall  be  null  and  void.

     8.   MISCELLANEOUS PROVISIONS.

          8.1     The  Settling  Parties (a) acknowledge that it is their intent
to  consummate  this  Settlement;  and  (b)  agree  to  cooperate  to the extent
reasonably necessary to effectuate and implement all terms and conditions of the
Stipulation and to exercise their best efforts to accomplish the foregoing terms
and  conditions  of  the  Stipulation.

<PAGE>
          8.2     Each Defendant warrants as to himself, herself or itself that,
at  the  time  any  of  the  payments  provided for herein are made on behalf of
himself, herself or itself, he, she or it is not insolvent, and the payment will
not  render  him,  her  or  it  insolvent.  This  representation is made by each
Defendant  as  to  himself, herself or itself and is not made by counsel for the
Defendants.

          8.3     The  parties intend this settlement to be a final and complete
resolution  of  all  disputes  between  them with respect to the Litigation. The
settlement  compromises  claims  that  are  contested and shall not be deemed an
admission  by  any Settling Party as to the merits of any claim or defense.  The
Final  Judgment  will  contain  a  statement  that  during  the  course  of  the
Litigation,  the parties and their respective counsel at all times complied with
the  requirements  of  Federal Rule of Civil Procedure 11.  The Settling Parties
agree  that  the  amounts paid to the Settlement Fund and the other terms of the
settlement  were  negotiated  in  good  faith  and  fair dealing by the Settling
Parties,  and  reflect  a  settlement  that  was  reached  voluntarily  after
consultation  with  competent  legal  counsel  and  the  benefit  of a mediation
conducted by the Honorable Edward A Infante, a retired magistrate judge from the
United  States  District  Court for the Northern District of California, who has
extensive  experience  in  settling  securities  class  litigation.

          8.4     Neither  the Stipulation nor the settlement, nor any statement
made,  act performed or document executed in the negotiation of, pursuant to, or
in furtherance of the Stipulation or the settlement:  (a) is or may be deemed to
be or may be used as an admission of, or evidence of, the validity or invalidity
of any Released Claim or of any wrongdoing or liability of the Released Persons;
or  (b) is or may be deemed to be or may be used as an admission of, or evidence
of,  any fault or omission of any of the Released Persons in any civil, criminal
or  administrative  proceeding  in  any  court,  administrative  agency or other
tribunal.  Released  Persons may file the Stipulation and/or the Judgment and/or
any  other  document  executed  as  part  of  this  settlement  in any action or

<PAGE>
proceeding  that  may  be  brought against them in order to support a defense or
counterclaim  based on principles of res judicata, collateral estoppel, release,
good  faith  settlement,  judgment bar or reduction or any other theory of claim
preclusion or issue preclusion or similar defense or counterclaim.  In addition,
any  Settling Party may file this Stipulation and/or the Judgment to enforce any
of  their  terms.

          8.5     Plaintiffs, Defendants, and their respective counsel shall not
make any applications for sanctions, pursuant to Rule 11 of the Federal Rules of
Civil  Procedure  ("F.R.Civ.P.") or other court rule or statute, with respect to
any  claims  or  defenses  in  this  Litigation.

          8.6     All  agreements  made  and orders entered during the course of
the  Litigation  relating  to  the confidentiality of information, including any
such  agreements  or  understandings occurring during settlement discussions and
mediation,  shall  survive  this  Stipulation.

          8.7     All  of  the  Exhibits  to  this  Stipulation are material and
integral  parts  hereof  and  are  fully  incorporated herein by this reference.

          8.8     The  Stipulation  may be amended or modified only by a written
instrument  signed  by  or on behalf of all Settling Parties or their respective
successors-in-interest.

          8.9     This  Stipulation  and  the  Exhibits  attached hereto and the
Supplemental  Agreement constitute the entire agreement among the parties and no
representations,  warranties  or  inducements  have  been  made  to  any  party
concerning  the  Stipulation,  its  Exhibits or the Supplemental Agreement other
than the representations, warranties and covenants contained and memorialized in
such  documents.  Except as otherwise provided herein, each party shall bear its
own  costs.

          8.10     Lead  Plaintiff's  Counsel,  on  behalf  of  the  Class,  are
expressly  authorized  by Lead Plaintiff to take all appropriate action required
or  permitted to be taken by the Class pursuant to the Stipulation to effectuate
its  terms  and also are expressly authorized to enter into any modifications or
amendments  to  the  Stipulation  on  behalf  of the Class which they represent.

<PAGE>
          8.11     Each counsel or other Person executing the Stipulation or any
of  its  Exhibits  on behalf of any party warrants that such Person has the full
authority  to  do  so.

          8.12     The  Stipulation may be executed in one or more counterparts.
All  executed  counterparts  and  each of them shall be deemed to be one and the
same  instrument.  A  complete  set  of  original executed counterparts shall be
filed  with  the  Court.

          8.13     The  Stipulation  shall  be  binding  upon,  and inure to the
benefit  of,  the  successors  and  assigns  of  the  parties  hereto.

          8.14     The  Court  shall  retain  jurisdiction  with  respect  to
implementation  and enforcement of the terms of the Stipulation, and all parties
hereto  submit to the jurisdiction of the Court for purposes of implementing and
enforcing  the  settlement  embodied  in  the  Stipulation.

          8.15     This  Stipulation and the Exhibits hereto shall be considered
to  have  been  negotiated,  executed  and  delivered  and  to  be substantially
performed  in  the  State  of  California, and the rights and obligations of the
parties  to  the  Stipulation shall be construed and enforced in accordance with
and  governed  by  the  internal,  substantive  laws  of the State of California
without  giving  effect  to  that  State's  choice  of  law  principles.

/ / /

/ / /

/ / /

/ / /

/ / /

/ / /

/ / /

/ / /

<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Stipulation to be
executed  by  their  duly  authorized  attorneys,  on  September  17,  2002.

                                             BERMAN DEVALERIO PEASE
                                               TABACCO BURT & PUCILLO

                                             By:  /s/  Joseph J. Tabacco, Jr.
                                                  ------------------------------
                                                  Joseph J. Tabacco, Jr.

                                             Susan G. Kupfer
                                             425 California Street, Suite 2025
                                             San Francisco, CA 94104
                                             Telephone:  (415) 433-3200
                                             Facsimile:  (415) 433-6382

                                             -And-

                                             Norman Berman
                                             Michael Matraia
                                             One Liberty Square
                                             Boston, MA 02109
                                             Telephone:  (617) 542-8300
                                             Facsimile:  (617) 542-1194

                                             LEAD COUNSEL FOR LEAD PLAINTIFF

                                             BROBECK, PHLEGER
                                               & HARRISON LLP

                                              By:  /s/  Howard M.  Privette
                                                   -----------------------------
                                                   Howard M. Privette

                                             550 South Hope Street, Suite 2100
                                             Los Angeles, CA 90071
                                             Telephone:  (213) 489-4060
                                             Facsimile:  (213) 745-3345

                                             COUNSEL FOR DEFENDANTS SAFEGUARD
                                             HEALTH ENTERPRISES, INC., STEVEN J.
                                             BAILEYS, JOHN E. COX, ROBERT J.
                                             POMMERSHEIM, THOMAS C. TEKULVE, AND
                                             KENNETH E. KEATING

<PAGE>UNITED STATES DISTRICT COURT
                         CENTRAL DISTRICT OF CALIFORNIA

_____________________________________
                                      )
STEPHAN LEVINE, on behalf of          )      Civil  Action  No.
himself and all others similarly      )
situated,                             )      SA  CV  99-1575  DOC  (ANx)
                                      )      ORDER  PRELIMINARILY
         Plaintiff,                   )      APPROVING SETTLEMENT,
                                      )      PROVIDING FOR NOTICE TO
 v.                                   )      THE CLASS,  AND
                                      )      SCHEDULING FINAL
SAFEGUARD  HEALTH                     )      APPROVAL  HEARING  ON
ENTERPRISES, INC., STEVEN J.          )      SETTLEMENT
BAILEYS, JOHN E. COX, ROBERT          )
J. POMMERSHEIM,  THOMAS  C.           )
TEKULVE,  and  KENNETH  E.            )
KEATING,                              )
                                      )
         Defendants.                  )     [EXHIBIT  A]
_____________________________________ )

<PAGE>
     The  Court  has  received the Stipulation of Settlement dated September 17,
2002  (the  "Stipulation"), that has been entered into by Lead Plaintiff and the
Defendants.  The  Court  has reviewed the Stipulation and its Exhibits, and good
cause  appearing,

     IT  IS  HEREBY  ORDERED  that:

     1.     The  Court,  for purposes of this order, adopts all defined terms as
set  forth  in  the  Stipulation.

     2.     The Court preliminarily approves the Settlement of the Litigation as
set  forth  in  the  Stipulation and the terms of the Settlement, subject to the
right  of  any  Class  Member  to  challenge  the  fairness, reasonableness, and
adequacy  of  the  Settlement  and  to  show  cause,  if any exists, why a final
judgment  dismissing  the  Litigation  based  on  the  Stipulation should not be
entered,  and  subject  to further consideration of such matters by the Court at
the  hearing on final approval of the Stipulation (the "Final Approval Hearing")
described  below.

     3.     The  Final  Approval  Hearing  shall  be  held  before this Court on
November  25,  2002 at 8:30 a.m., (or at any such adjourned or continued time or
times  as  the  Court  may  without further notice direct), in the United States
Courthouse, 411 West Fourth Street, Courtroom 9D, Santa Ana, California, for the
purpose of determining: (a) whether the proposed Settlement of the Litigation as
set  forth in the Stipulation in the amount of One Million Two Hundred and Fifty
Thousand  Dollars  ($1,250,000)  should  be  approved  by  the  Court  as  fair,
reasonable  and  adequate  as to each of the Settling Parties and the Members of
the  Class;  (b)  whether,  thereafter,  the Litigation should be dismissed with
prejudice  as  set  forth  in  the Stipulation; (c) whether the proposed Plan of
Allocation  of  the  Net  Settlement  Fund  is fair, reasonable and adequate and
therefore  should  be  approved;  and  (d)  whether  the  application  of  Lead

<PAGE>
Plaintiff's  Counsel  for  the  payment  of attorneys' fees and reimbursement of
costs and expenses incurred in connection with the Litigation should be approved
from  the  Settlement  Fund.

     4.     The  Court conditionally certifies the following Class of plaintiffs
in  accordance  with  the  Stipulation,  for  purposes  of  effectuating  this
settlement:

          All  Persons  who purchased or otherwise acquired common stock or
     other  securities  of  SafeGuard  Health  Enterprises, Inc. during the
     period  beginning  February  26,  1998  and  ending November 13, 1999,
     inclusive.  Excluded  from  the  Class  are Defendants, members of the
     immediate  families  of the individual Defendants, any entity in which
     any  Defendant  has  a controlling interest, directors and officers of
     SafeGuard  Health  Enterprises,  Inc.  during the Class Period and the
     legal  representatives,  heirs,  successors,  or  assigns  of any such
     excluded  Person  or  entity.  Also  excluded from the Class are those
     Persons  who  request  exclusion  from the Class in a timely and valid
     manner  as set forth in the Notice of Pendency and Proposed Settlement
     of  Class  Action.

The  certification of the Class by this Order shall be binding only with respect
to  the  settlement  of  the litigation and shall be withdrawn if the settlement
does  not  become  effective  for  any reason. By entering into the Stipulation,
Defendants  have  not waived any rights with respect to any arguments they might
make  in  opposition  to  a motion for class certification in the event that the
Settlement  does  not  become  effective.

     5.     The  Court  approves, as to form and content, the Notice of Pendency
and  Proposed  Settlement of Class Action (the "Notice"), the Proof of Claim and
Release  form  (the  "Proof  of  Claim"), and the Summary Notice for Publication
("Summary  Notice")  substantially in the form attached as Exhibits A-1, A-2 and
A-3  hereto, and finds that the mailing and distribution of the Notice and Proof
of  Claim  and  publishing of the Summary Notice substantially in the manner and
form  set  forth  in  this  Order meet the requirements of Federal Rule of Civil
Procedure  23,  due  process under the United States Constitution, and any other
applicable  law or principle of equity, is the best notice practicable under the
circumstances,  and  shall  constitute  due and sufficient notice to all Persons

<PAGE>
entitled  to  notice  of  their  rights  and potential claims in relation to the
Settlement.

     6.     Following  notice  of entry of this Order, SafeGuard and its insurer
shall transfer, or cause to be transferred, into an account so identified by the
Escrow  Agent,  the  monies  constituting the principal amount of the Settlement
Fund, in the amounts and according to the schedule set forth in Paragraph 2.1 of
the  Stipulation.

     7.     No  later  than  ten (10) calendar days from the date of this Order,
SafeGuard  Health  Enterprises,  Inc.  shall, at its expense, cause its transfer
agent(s) to furnish (electronically, on computer disks or tape, if available) to
Lead  Plaintiff's  Counsel  (or  their  designee) the names and addresses of all
potential  members  of  the Class to the extent such information is reflected on
SafeGuard  Health  Enterprises,  Inc.'s  stock  transfer  records.

     8.     Lead  Plaintiff's  Counsel  are  authorized  to act on behalf of the
Class  with  respect  to all acts required by, or which may be given pursuant to
the  Stipulation or such other acts which are reasonably necessary to consummate
the  proposed Settlement set forth in the Stipulation.  Lead Plaintiff's Counsel
are  hereby authorized to retain the firm of Strategic Claims Services as Claims
Administrator  to  supervise  and administer the notice procedure as well as the
processing  of  claims  in  accordance  with this Order and the Stipulation. The
Court  herby  authorizes payment out of the Class Notice and Administration Fund
of  the  expenses  described  in  paragraph  2.6  of  the  Stipulation.

          (a)     Not  later  than  September 27, 2002 (the "Notice Date"), Lead
Plaintiff's  Counsel shall cause copies of the Notice and of the Proof of Claim,
substantially  in the form attached as Exhibits A-1 and A-2 hereto, to be mailed
by  first  class  mail to all potential Class Members who can be identified with
reasonable  effort.  The  Notice  and  Proof of Claim shall further be posted on
Lead  Plaintiff's  Counsels'  web  site;

<PAGE>
          (b)     Nominees who purchased or otherwise acquired or held SafeGuard
Health Enterprises, Inc. securities during the Class Period shall either: (1) by
first class mail send the Notice and the Proof of Claim to those potential Class
Members  for which they acted as nominee, within ten (10) days after the nominee
receives  the  Notice;  or  (2)  send  a list of the names and addresses of such
beneficial  owners  to  the  Claims Administrator within ten (10) days after the
nominee  receives  the  Notice  and,  in  the  event  of  the latter, the Claims
Administrator  shall  promptly  send by first class mail the Notice and Proof of
Claims  to  all  potential  Class  members who are on the list received from the
nominee.

          (c)     Not later than October 7, 2002, Lead Plaintiff's Counsel shall
cause  the  Summary Notice, substantially in the form attached hereto as Exhibit
A-3,  to  be published at least once in the Investors' Business Daily and over a
national  business  wire  service  with  corresponding  Internet  news  service.

          (d)     No  later  than  seven  (7)  calendar  days prior to the Final
Approval  Hearing,  Lead  Plaintiff's Counsel shall serve on Defendants' counsel
and  file  with  the Court, proof of such mailing and publishing by affidavit or
declaration.

     9.     All  Members  of  the Class shall be bound by all determinations and
judgments  in  the  Litigation  concerning  the Settlement, whether favorable or
unfavorable  to  the  Class.

     10.     Any  Class  Member who wishes to participate in the Settlement Fund
shall  complete and submit a valid Proof of Claim to the Claims Administrator in
accordance  with the instructions contained on the attached Proof of Claim form.
Unless the Court orders otherwise, all Proof of Claim forms must be submitted to
the  Claims  Administrator  no later than ninety (90) days from the Notice Date.
Class  Members  who  do  not timely submit valid Proofs of Claim within the time
provided  for  shall  be  forever barred from sharing in the distribution of the

<PAGE>
proceeds of the Settlement Fund, unless otherwise ordered by the Court, but will
in  all  other  respects  be  subject  to  and  bound  by  the provisions of the
Stipulation  and  the  Final  Judgment  if  entered.

     11.     Any  Member of the Class may enter an appearance in the Litigation,
at  his, her, or its own expense, individually or through counsel of his, her or
its own choice.  Class Members who do not enter appearances shall be represented
by  Lead  Plaintiff's  Counsel.  Any  Class  Member who anticipates the need and
wishes  to appeal any aspect of the Settlement should formally move to intervene
as  a  party  under  Rule  24  of  the  Federal  Rules  of  Civil  Procedure.

     12.     Pending resolution of these settlement proceedings, no other action
now  pending  or  hereafter  filed arising out of all or any part of the subject
matter  of  the  Litigation shall be maintained as a class action and, except as
provided by this or further order of this Court, for good cause shown, all Class
Members  are hereby enjoined during the pendency of these settlement proceedings
from  filing  or prosecuting purported class actions against any Released Person
with  respect  to  any  of  the  Released  Claims.

     13.     Any  Person  falling  within  the definition of the Class may, upon
request,  be excluded from the Class.  Any such Person must submit to the Claims
Administrator  a  request for exclusion ("Request for Exclusion"), postmarked no
later  than November 8, 2002.  A Request for Exclusion must state: (1) the name,
address,  and  telephone  number  of  the  Person  requesting exclusion; (2) the
Person's purchases, acquisitions and sales of SafeGuard Health Enterprises, Inc.
securities  during  the Class Period, including the dates, the number of shares,
and  price  paid  or  received per share for each such purchase or sale; and (3)
that  the  Person  wishes to be excluded from the Class.  All Persons who submit
valid  and  timely  Requests  for  Exclusion  in  the  manner  set forth in this
paragraph  shall  have  no  rights under the Stipulation, shall not share in the

<PAGE>
distribution  of  the Settlement Fund, and shall not be bound by the Stipulation
or  the  Final  Judgment.

     14.     Any  Member  of the Class who objects to the proposed Settlement of
the  Litigation,  to  entry  of  a  judgment of dismissal of the Litigation with
prejudice,  the  proposed  Plan  of  Allocation,  or  the  application  by  Lead
Plaintiff's  Counsel  for attorneys' fees and expenses from the Settlement Fund,
shall  have  a  right  to appear and be heard at the Final Approval Hearing.  No
Class  Member  or any other Person shall be heard at the Final Approval Hearing,
or  be  entitled  to  contest  the  approval  of the terms and conditions of the
proposed Stipulation and Settlement, or, if approved, the Judgment to be entered
approving  the  same,  or  an  order  approving  the  Plan of Allocation, or the
attorneys'  fees  and  expenses to be awarded to counsel for the Plaintiffs from
the  Settlement  Fund, unless that Person has filed with the Court and delivered
to  Lead  Plaintiff's  Counsel and Defendants' Counsel a written notice of those
objections  and any supporting papers and briefs, along with proof of membership
in  the  Class, including the number of shares purchased and sold, such that the
notice  and  supporting  papers are received on or before November 8, 2002.  Any
Member  of  the  Class who does not make his, her or its objection in the manner
provided  shall  be  deemed  to  have waived such objection and shall forever be
foreclosed from making any objection to the fairness or adequacy of the proposed
Settlement as incorporated in the Stipulation, to the Plan of Allocation, to the
dismissal  of  the Litigation and/or the Judgment of the Court, and to the award
of  attorneys'  fees  and  expenses  to  counsel  for  the  Plaintiffs  from the
Settlement  Fund,  unless  otherwise  ordered  by  the  Court.

     15.     The  passage  of  title and ownership of the Settlement Fund to the
Escrow  Agent in accordance with the terms and obligations of the Stipulation is
approved.  No  Person not a Class Member or counsel to the Plaintiffs shall have
any  right  to  any  portion  of, or in the distribution of, the Settlement Fund
unless  otherwise  ordered  by  the  Court  or  as  otherwise  provided  in  the
Stipulation.

<PAGE>
     16.     All  funds  held by the Escrow Agent shall be deemed and considered
to  be  in  custodia  legis of the Court in accordance with the Stipulation, and
shall  remain  subject to the jurisdiction of the Court, until such time as such
funds  shall  be distributed pursuant to the Stipulation, the Plan of Allocation
and/or  further  order(s)  of  the  Court.

     17.     All  papers  in support of the Stipulation, the Plan of Allocation,
and  any  application  by  counsel for the Lead Plaintiff for attorneys' fees or
reimbursement  of expenses from the Settlement Fund shall be filed and served no
later  than  seven  (7)  calendar  days  prior  to  the  Final Approval Hearing.

     18.     Neither  Defendants  nor  Defendants'  counsel  shall  have  any
responsibility  for  the  Plan  of  Allocation of the Net Settlement Fund or any
application  for  attorneys' fees or reimbursement of expenses submitted by Lead
Plaintiff's  Counsel  to be paid from the Settlement Fund, and such matters will
be  considered  separately from the fairness, reasonableness and adequacy of the
Settlement.

     19.     At  or  after the Final Approval Hearing, the Court shall determine
whether  the  Plan  of  Allocation  proposed  by  Plaintiffs'  Counsel,  and any
application  for attorneys' fees or reimbursement of expenses shall be approved.

     20.     All reasonable expenses incurred in identifying and notifying Class
Members,  as  well  as  administering  the Settlement Fund, shall be paid as set
forth  in  the Stipulation.  In the event the Stipulation is not approved by the
Court, or otherwise fails to become effective, neither the Plaintiffs nor any of
their  counsel  shall  have  any  obligation  to  repay any amounts actually and
properly  disbursed  from  the  Class  Notice  and  Administration  Fund.

     21.     Neither  the  Stipulation,  nor any of its terms or provisions, nor
any  of the negotiations or proceedings connected with it, shall be construed as
an admission or concession by Plaintiffs regarding the merits of the claims made

<PAGE>
in  the Litigation.  Neither this Order, the Stipulation nor any of the terms or
provisions  of  the  Settlement  contained therein, nor any statements made, act
performed  or  document  executed  in  the  negotiation  of,  pursuant  to or in
furtherance  of the Stipulation or the Settlement: (i) is or may be deemed to be
or  may be used as an admission of, or evidence of, the validity or truth of any
of  the  allegations in the Litigation or the validity of any Released Claim, or
of  any fault, wrongdoing or liability of any of the Defendants or their Related
Parties; or (ii) is or may be deemed to be or may be used as an admission of, or
evidence  of,  any  fault  or omission of any of the Defendants or their Related
Parties  in  any  civil,  criminal  or  administrative  proceeding in any court,
administrative  agency  or  other  tribunal.

     22.     The  Court  may  adjourn  or continue the date or time of the Final
Approval Hearing or extend any of the deadlines set forth in this Order, without
further notice to the Members of the Class, and retains jurisdiction to consider
all  further  applications  arising  out  of,  or  connected  with, the proposed
Settlement.  The  Court  may  approve the Settlement, with such modifications as
may be agreed to by the Settling Parties, if appropriate, without further notice
to  the  Class.

     23.     If  the  proposed Settlement is not approved or consummated for any
reason whatsoever, the proposed settlement and all proceedings had in connection
therewith  shall  be  without  prejudice  to  the  status quo ante rights of the
settling  parties  in  relation  to the Litigation as of May 28, 2002, except as
otherwise  set  forth  in  the  Stipulation.

DATED:     9/19/02                           /s/  David  O.  Carter
       ----------------                  -----------------------------------
                                         Honorable David O. Carter
                                         United States District Judge

<PAGE>

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