Document:

RESTATED CERTIFICATE OF INCORPORATION

                      OF SAFEGUARD HEALTH ENTERPRISES, INC.

The  Corporation  was  originally  incorporated in Delaware under the name "SFGD
Reincorporation  Company"  on  April  27,  1987, and the Restated Certificate of
Incorporation  was  duly  adopted  in accordance with Section 245 and 242 of the
General  Corporation  Law  of  Delaware.

FIRST.  The  name  of  the  corporation  is  SafeGuard  Health Enterprises, Inc.

SECOND.  The  address  of  its  registered  office  in  the State of Delaware is
Corporation  Trust  Center, 1209 Orange Street in the City of Wilmington, County
of  New  Castle.  The  name  of  its  registered  agent  at  such address is The
Corporation  Trust  Company.

THIRD.  The nature of the business or purposes to be conducted or promoted is to
engage  in  any  lawful  act  or  activity  for which corporations may be now or
hereafter  organized  under  the  General  Corporation  Law  of  Delaware.

FOURTH.  The  total  number  of  shares of stock that the corporation shall have
authority  to  issue  is  Forty-one Million (41,000,000), of which Forty Million
(40,000,000)  shares  are  Common  Stock  and One Million (1,000,000) shares are
Preferred  Stock,  and  the  par  value  of  each such share is one cent ($.01),
amounting  in  the  aggregate  to  Four Hundred Ten Thousand Dollars ($410,000).

The  Board  of Directors is authorized, subject to limitations prescribed by law
and  the  provisions  of this Article FOURTH, to provide for the issuance of the
shares  of  Preferred  Stock  in one or more series, and by filing a certificate
pursuant  to the applicable law of the State of Delaware, to establish from time
to time the number of shares to be included in any such series, and to determine
or  alter  the designation, powers, preferences and rights of the shares of each
wholly  unissued  series  and  the  qualifications,  limitations or restrictions
thereof.

Within  the  limits  and  restrictions,  if any, stated in any resolution of the
Board  of  Directors  originally  fixing  the  number of shares constituting any
series,  the  Board  of Directors is authorized to increase or decrease (but not
below  the  number of shares of each such series then outstanding) the number of
shares  of  any series subsequent to the issue of shares of such series.  Except
as  otherwise  provided  for  in  this Certificate of Incorporation, in case the
number  of  shares  of any series shall be so decreased, the shares constituting
such  decrease  shall  resume the status which they had prior to the adoption of
the  resolution  originally  fixing  the  number  of  shares  of  such  series.

The  authority  of  the  Board  of  Directors  with respect to each series shall
include,  but  not  be  limited  to,  determination  of  the  following:

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     (a)     The  number  of shares constituting that series and the distinctive
designation  of  that  series;

     (b)     The  dividend  rate of the shares of that series, whether dividends
shall  be  cumulative,  and,  if  so, from which date or dates, and the relative
rights  of  priority,  if any, of payment of dividends on shares of that series;

     (c)     Whether  that  series  shall have voting rights, in addition to the
voting  rights  provided  by  law,  and, if so, the terms of such voting rights;

     (d)     Whether  that  series shall have conversion privileges, and, if so,
the  terms and conditions of such conversion, including provision for adjustment
of  the  conversion  rate  in  such  events,  as  the  Board  of Directors shall
determine;

     (e)     Whether  or not the shares of that series shall be redeemable, and,
if  so, the terms and conditions of such redemption, including the date or dates
upon  or  after which they shall be redeemable, and the amount per share payable
in  case  of redemption, which amount may vary under different conditions and at
different  redemption  rate;

     (f)     Whether that series shall have a sinking fund for the redemption or
purchase  of  shares  of  that  series, and, if so, the terms and amount of such
sinking  fund;

     (g)     The  rights  of the shares of that series in the event of voluntary
or  involuntary  liquidation,  dissolution or winding up of the corporation, and
the  relative  rights  of priority, if any, of payment of shares of that series;
and

     (h)     Any  other  relative  rights,  preferences  and limitations of that
series.

Dividends on outstanding shares of Preferred Stock shall be paid or declared and
set  apart  for  payment  before any dividends shall be paid or declared and set
apart for payment on the common shares with respect to the same dividend period.

If  upon  any voluntary or involuntary liquidation, dissolution or winding up of
the  corporation,  the assets available for distribution to holders of shares of
Preferred  Stock  of all series shall be sufficient to pay such holders the full
preferential  amount  to  which  they  are  entitled,  then such assets shall be
distributed  ratably  among  the  shares  of  all  series  of Preferred Stock in
accordance with the respective preferential amounts (including unpaid cumulative
dividends,  if  any)  payable  with  respect  thereto.

FIFTH.  In furtherance and not in limitation of powers conferred by statute, the
Board  of  Directors  is expressly authorized to make, repeal, alter, amend, and
rescind from time to time any or all of the bylaws of the corporation; provided,
however,  any  bylaw  amendment  adopted by the Board of Directors increasing or
reducing  the authorized number of directors, shall require a resolution adopted
by  the  affirmative  vote  of  not  less than seventy-five percent (75%) of the
directors.  In  addition, new bylaws may be adopted or the bylaws may be amended
or  repealed  by  a  vote  of not less than sixty-six and two-thirds percent (66
2/3%)  of  the  outstanding  stock  of the corporation entitled to vote thereon.

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<PAGE>
SIXTH.  (a)  The  number  of directors which shall constitute the whole Board of
Directors  of  this  corporation  shall  be  as  specified in the bylaws of this
corporation,  subject to the provisions of Article FIFTH hereof and this Article
SIXTH.

       (b)  Each  director shall serve  until  his successor is duly elected and
qualified  or  until  his  death,  resignation  or  removal.

SEVENTH.  No  action  shall  be taken by the stockholders except at an annual or
special  meeting  of  stockholders.  No action shall be taken by stockholders by
written  consent.

EIGHTH.  Special  meetings  of  the  stockholders  of  this  corporation for any
purpose or purposes may be called at any time only by the Chairman of this Board
of  Directors,  by  a  committee  of  the Board of Directors which has been duly
designated by the Board of Directors and whose powers and authority, as provided
in  a resolution of the Board of Directors or in the bylaws of this corporation,
include the power to call such meetings, or by the holder or holders of not less
than  ten  percent  (10%)  of  this corporation's outstanding voting securities.

NINTH.  The  affirmative  vote  of  the  holders  of not less than sixty-six and
two-thirds  percent (66 2/3%) of the outstanding voting stock of the corporation
shall  be  required  for  the  approval  or  authorization of any: (i) merger or
consolidation  of  the  corporation  with or into any other corporation; or (ii)
sale,  lease,  exchange  or other disposition of all or substantially all of the
assets  of  the  corporation  to  or with any other corporation, person or other
entity;  provided, however, that such sixty-six and two-thirds percent (66 2/3%)
voting  requirement  shall  not  be  applicable if the Board of Directors of the
corporation  shall  have  approved  such  transaction in clause (i) or (ii) by a
resolution  adopted by at least eighty percent (80%) of the members of the Board
of  Directors.  The provisions set forth in Article NINTH may not be repealed or
amended  in  any  respect  unless  such  repeal  or  amendment is approved by an
affirmative  vote  of not less than sixty-six and two-thirds percent (66 2/3) of
the  total  voting  power of all outstanding shares of stock in this corporation
entitled  to  vote  thereon.

TENTH.  The corporation reserves the right to amend, alter, change or repeal any
provision  contained  in this Certificate of Incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred on stockholders herein
are  granted  subject  to  this reservation.  Notwithstanding the foregoing, the
provisions  set  for  the  in  Articles  FIFTH,  SIXTH, SEVENTH, EIGHTH and this
Article  TENTH  may not be repealed or amended in any respect unless such repeal
or  amendment is approved by the affirmative vote of not less than sixty-six and
two-thirds percent (66 2/3%) of the total voting power of all outstanding shares
of  stock  in  this  corporation  entitled  to  vote  thereon.

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<PAGE>
ELEVENTH.  A  director  of the corporation shall not be personally liable to the
corporation,  or  its  stockholders for monetary damages for breach of fiduciary
duty  as  a  director, except for liability (i) for any breach of the director's
duty  of  loyalty  to  the  corporation  or  its  stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation  of  law,  (iii) under Section 174 of the Delaware General Corporation
Law,  as the same exists or hereafter may be amended or (iv) for any transaction
from  which the director derived any improper personal benefit.  If the Delaware
General  Corporation Law is hereafter amended to authorize, with the approval of
a  corporation's  stockholders,  further  elimination's  or  reductions  in  the
liability  of  the  corporation's directors for breach of fiduciary duty, then a
director  of  the  corporation  shall  not  be liable for any such breach to the
fullest  extent permitted by the Delaware General Corporation Law as so amended.
Any  repeal or modification of the foregoing provisions of this Article ELEVENTH
by  the stockholders of the corporation shall be prospective only, and shall not
adversely  affect  any  right  or  protection  of  a director of the corporation
existing  at  the  time  of  such  repeal  or  modification.

We  the  undersigned  do  hereby certify that the forgoing is a true and correct
Restated  Certificate  of  Incorporation of SafeGuard Health Enterprises, Inc. a
Delaware  Corporation.

Executed  as  of  the  25th  day  of  October  2000  at Aliso Viejo, California.

SafeGuard  Health  Enterprises,  Inc.

/s/  JAMES  E.  BUNCHER
-------------------------------------
By:  JAMES  E.  BUNCHER
President and Chief Executive Officer

/s/  RONALD  I.  BRENDZEL
-------------------------------------
By:  RONALD  I.  BRENDZEL
Senior Vice President and Secretary

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<PAGE>CERTIFICATE OF POWERS, DESIGNATIONS,
               PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL,
              OR OTHER SPECIAL RIGHTS OF SERIES A PREFERRED STOCK,
             SERIES B PREFERRED STOCK, SERIES C PREFERRED STOCK AND
                            SERIES D PREFERRED STOCK

                                       OF

                       SAFEGUARD HEALTH ENTERPRISES, INC.

It is hereby certified that:

     A.     The  name  of the corporation (hereinafter called the "Corporation")
is  SafeGuard  Health  Enterprises, Inc.  The Corporation is organized under the
General  Corporation  law  of  Delaware.

     B.     The  Certificate  of  Incorporation,  as amended, of the Corporation
authorizes  the issuance of 1,000,000 shares of Preferred Stock, $.01 par value,
and  expressly  vests in the Board of Directors of the Corporation the authority
provided therein to issue any or all of said shares in one or more series and to
fix  by  resolution or resolutions, the designations and the powers, preferences
and  rights  and the qualifications, limitations, or restrictions of each series
to  be  issued.

     C.     The Board of Directors of the Corporation, pursuant to the authority
expressly  vested  in  it,  has  adopted  the  following resolutions relating to
creating  issues of Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred  Stock  and  Series  D  Preferred  Stock:

          RESOLVED  that,  pursuant  to  Article  FOUR  of  the  Certificate  of
     Incorporation  of the  Corporation,  there be and hereby is author-ized and
     created four series of Preferred Stock,  hereby designated as (i) "Series A
     Preferred Stock",  such series to consist of 80,000 shares, $.01 par value;
     (ii) "Series B Preferred  Stock",  such series to consist of 80,000 shares,
     $.01 par value; (iii) "Series C Preferred Stock", such series to consist of
     30,000 shares,  $.01 par value; and (iv) "Series D Preferred  Stock",  such
     series to consist of 110,000 shares,  $.01 par value; and the designations,
     full or limited voting  powers,  preferences  and relative,  participating,
     optional  and other  special  rights and the  qualifications,  limitations,
     restrictions and other distinguishing characteristics of Series A Preferred
     Stock,  Series B Preferred  Stock,  Series C  Preferred  Stock and Series D
     Preferred Stock (hereinafter collectively called the "Preferred Stock") are
     to be as follows:

<PAGE>
     "1.     Dividends.  The  holders  of  the  Preferred  Stock  shall  not  be
             ---------
entitled  to  any  preferential  dividends.  The  holders of the Preferred Stock
shall  be  entitled  to  participate  on  an as-converted basis in any dividends
declared  and  paid  on  the  Common  Stock  or  any  Junior  Stock.

     2.     Redemption.  At  any  time  on  or  after  ten  (10) years after the
            ----------
original  date  of  issuance  of  the  Preferred  Stock,  but  not  before,  the
Corporation  may  redeem the whole or any part of the then outstanding Preferred
Stock  at any time and from time to time at the option of the Board of Directors
pursuant  to  the  provisions  of  Paragraph  3 hereof, by paying the Redemption
Price.  The  Redemption  Price shall be equal to the amount of $100.00 per share
and  the  Redemption  Price plus declared but unpaid dividends to the date fixed
for  redemption  shall  be  paid  for  each  share  of Preferred Stock redeemed.

     3.     Notice of Redemption; Depositary.  In the event that the Corporation
            --------------------------------
shall  redeem  any Preferred Stock, notice thereof shall be sent at least thirty
(30)  days  prior  to  the redemption date to the holders of the Preferred Stock
being  redeemed  by  registered or certified mail, postage prepaid, to each such
registered  holder  as  his  address  shall  appear on the stock register of the
Corporation.  In the case of a redemption of only a part of the Preferred Stock,
the  Corporation  shall be required to redeem: (i) all of the shares of Series A
Preferred  Stock  before  the  redemption  of  any  shares  of  Series B, C or D
Preferred  Stock;  (ii) all of the shares of Series B Preferred Stock before the
redemption  of  any shares of Series C or D Preferred Stock and (iii) all of the
shares of Series C Preferred Stock before the redemption of any shares of Series
D  Preferred  Stock.  In the case of the redemption of only a part of the shares
of  any series of Preferred Stock, the Corporation shall make such redemption on
a pro rata basis based on the number of shares of such series of Preferred Stock
held  by  a  holder compared to the total number of all shares of such series of
Preferred  Stock then outstanding.  The Board of Directors shall have full power
and  authority  to  prescribe the manner in which and, subject to the provisions
and  limitations  herein  contained,  the  terms  and  conditions upon which the
Preferred  Stock  shall  be  redeemed  from  time  to  time.  If after notice of
redemption of all or any of the Preferred Stock shall have been duly given as in
this  paragraph  provided, and if on or before the redemption date given in such
notice,  the Corporation shall deposit with a bank or trust corporation having a
capital  stock  and surplus of at least $100,000,000 (the "Depositary") in trust
to be applied to the redemption of the Preferred Stock so called for redemption,

                                        2
<PAGE>
an  amount sufficient to redeem all such Preferred Stock upon the date specified
in  the  notice  of  redemption,  then, notwithstanding that any certificate for
Preferred  Stock  so  called  for redemption shall not have been surrendered for
cancellation,  from  and  after the redemption date all rights of holders of the
Preferred  Stock  so  called  for  redemption as stockholders of the Corporation
(including  the  right  to  receive  dividends) shall cease.  The holder of such
Preferred Stock to convert on or before the redemption date all or a part of the
Preferred Stock called for redemption as provided in Paragraph 6 or the right to
receive  the moneys so deposited in trust for said series, but without interest;
any  moneys  so  deposited  for  Preferred  Stock  which  is  converted shall be
immediately repayable to the Corporation and any other moneys so deposited which
remain unclaimed at the end of two (2) years from the date of such deposit shall
be  repaid  to  the Corporation, after which event the holders of such Preferred
Stock  shall  look  only  to the Corporation for payment of the Redemption Price
(subject  to  applicable  escheat  or  similar  laws).

     4.     Liquidation.  Subject  to  the  provisions of Paragraph 6 hereof, in
            -----------
the  event  of  any liquidation, dissolution or winding-up of the affairs of the
Corporation,  the holders of the Preferred Stock shall be entitled to be paid in
full  the sum of $100.00 per share, together with declared but unpaid dividends,
before  any  distribution  or payment shall be made to the holders of the Common
Stock  or any Junior Stock of any class or series.  The preferential liquidation
rights of the Preferred Stock shall be as follows:  (i) Series A Preferred Stock
shall  be  senior to Series B, C, and D Preferred Stock; (ii) Series B Preferred
Stock  shall  be  senior  to  Series C and D Preferred Stock; and (iii) Series C
Preferred  Stock  shall  be senior to Series D Preferred Stock.  The liquidation
preferences  granted  pursuant to this paragraph to the holders of the Preferred
Stock  shall  be  senior to any liquidation rights of the Common Stock. If, upon
any  such  liquidation, dissolution or winding up of the Corporation, the assets
distributable  among the holders of the Preferred Stock shall be insufficient to
permit  the  payment  in  full  to  all such holders of the preferential amounts
hereinabove  provided,  then  the entire assets of the Corporation available for
distribution to stockholders shall be applied to the redemption of the Preferred
Stock  then outstanding, in the order of seniority stated above, so that all the
shares  of  each  series  of  Preferred  Stock  are  paid  the full preferential
liquidation  amount  before  any liquidation payment is made with respect to any
shares  of  any  series  of  Preferred  Stock  to  which  such series is senior.

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<PAGE>
          After  such  payment in full to the holders of the Preferred Stock, as
hereinabove  provided,  the holders of the Preferred Stock shall not be entitled
to  any  further  preferential  liquidation  payments.

          The sale, conveyance, exchange or transfer (for cash, shares of stock,
securities  or  other consideration) of all or substantially all of the property
and  assets  of  the  Corporation  shall  be  deemed  a  voluntary  dissolution,
liquidation  or winding up of the Corporation for the purposes of this Paragraph
4,  but  the  merger  or  consolidation  of the Corporation to or with any other
corporation or the merger or consolidation of any other corporation into or with
the Corporation, shall not be deemed to be a dissolution, liquidation or winding
up,  voluntary  or  involuntary,  for  the  purposes  of  this  Paragraph  4.

     5.     No  Reissue  of Preferred Stock.  None of the Preferred Stock of the
            -------------------------------
Corporation  acquired  pursuant  to the provisions of Paragraph 2 or surrendered
for conversion pursuant to Paragraph 6, or otherwise acquired by the Corporation
in any manner shall be reissued, but the Corporation shall from time to time and
at  convenient  times  cause  all  such  stock to be retired and canceled in the
manner  provided  by  law  and  its  capital  to  be  reduced  accordingly.

     6.     Conversion.
            ----------

          (a)     Conversion  of  Preferred Stock into Common Stock.  Subject to
                  -------------------------------------------------
the  provisions  of  Paragraphs  2  and  4  hereof  regarding  redemption  and
liquidation,  and  subject  to the terms and conditions of this Paragraph 6, the
holder  of  any  share or shares of Preferred Stock shall have the right, at its
option  at  any time, to convert any such shares of Preferred Stock (except that
(i)  in  respect  of  any such stock which shall have been called for redemption
such  right  shall  terminate  at  the  close  of  business on the day fixed for
redemption unless the Corporation shall default in the payment of the Redemption
Price  (together  with  all  declared  but  unpaid  dividends  as of the date of
redemption)  and  (ii)  on  any  liquidation  of  the  Corporation  the right of
conversion  shall  terminate  at the close of business on the last full business
day  before  the  date fixed for full payment of the distributable amount on the
Preferred  Stock  if then paid) into such number of fully paid and nonassessable
shares  of  Common  Stock  as is obtained by multiplying the number of shares of
Preferred  Stock  so  to  be converted by the preferential liquidation amount of
$100.00  per  share and dividing the result by the conversion price of $1.00 per
share  or,  in  case  an  adjustment  of  such  conversion price has taken place
pursuant  to  the further provisions of this Paragraph 6, then by the conversion
price  as  last  adjusted  and  in  effect  at  the  date any share or shares of
Preferred Stock are surrendered for conversion (such price or such price as last
adjusted,  as  the  case  may  be,  being  referred to herein as the "Conversion

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<PAGE>
Price").  Such  rights  of  conversion  shall  be exercised by the holder of the
Preferred  Stock  by  giving  written notice that the holder elects to convert a
stated number of shares of Preferred Stock into Common Stock and by surrender of
a  certificate or certificates for the Preferred Stock so to be converted to the
transfer  agent  of  the  Corporation  (or  such  other  office or agency of the
Corporation  as the Corporation may designate by notice in writing to the holder
or  holders  of the Preferred Stock) at any time during its usual business hours
on  the  date set forth in such notice, together with a statement of the name or
names  (with  address)  in  which  the certificate or certificates for shares of
Common  Stock  shall  be  issued.

          (b)     Issuance  of Certificates; Time Conversion Effected.  Promptly
                  ---------------------------------------------------
after  the  receipt  of  the  written  notice  referred to in Paragraph 6(a) and
surrender  of  the  share  or  shares  of  Preferred  Stock to be converted, the
Corporation shall issue and deliver, or cause to be issued and delivered, to the
holder,  registered  in  such  name  or  names  as  such  holder  may  direct, a
certificate  or  certificates for the number of shares of Common Stock, issuable
upon the conversion of such share or shares thereof.  To the extent permitted by
law,  such  conversion  shall be deemed to have been effected and the Conversion
Price  shall be determined as of the close of business on the date on which such
notice  shall have been received by the Corporation and the certificate for such
share  or  shares shall have been surrendered as aforesaid, and at such time the
rights of the holder of such share or shares as such holder shall cease, and the
person  or  persons  in  whose name or names any certificate or certificates for
shares of Common Stock shall be issuable upon such conversion shall be deemed to
have  become  the holder or holders of record of the shares represented thereby.

          (c)     Fractional  Shares;  Dividends;  Partial  Conversion.  No
                  ----------------------------------------------------
fractional shares shall be issued upon conversion of Preferred Stock into Common
Stock  and no payment or adjustment shall be made upon any conversion on account
of any cash dividends (except as provided in Paragraph 6(e)) on the Common Stock
issued  upon  such  conversion.  At the time of each conversion, the Corporation
shall,  to  the  extent permitted by law, pay in cash all dividends declared and
unpaid on the shares of Preferred Stock surrendered for conversion.  In case the
number  of  shares  of  Preferred  Stock  represented  by  the  certificate  or
certificates surrendered pursuant to Paragraph 6(a) exceeds the number of shares
converted,  the  Corporation shall, upon such conversion, execute and deliver to
the  holder  thereof,  at  the  expense of the Corporation, a new certificate or
certificates  for  the  number  of  shares of Preferred Stock represented by the
certificate  or  certificates surrendered which are not to be converted.  If any
fractional  interest in a share of Common Stock would, except for the provisions
of  the  first  sentence  of  this  Paragraph 6(c), be deliverable upon any such
conversion, the Corporation, in lieu of delivering the fractional share thereof,
shall pay to the holder surrendering Preferred Stock for conversion an amount in
cash equal to the current Market Value of such fractional interest determined in
conformity  with  the  principles  set  forth  in  Paragraph  6(d)(10).

                                        5
<PAGE>
          (d)(1)     Adjustment  of  Conversion  Price  Upon  Issuance of Common
Stock  and  Other  Securities.

                    (i)     Except  as  provided  in  Paragraph  6(d)(5), if and
     whenever the Corporation shall issue or sell any shares of its Common Stock
     for a consideration per share less than the Conversion Price then in effect
     on the date of such issue or sale, then, forthwith upon such issue or sale,
     the  Conversion  Price  shall be  reduced to the price  (calculated  to the
     nearest cent, a half cent or more being  considered a full cent) determined
     by multiplying the Conversion Price in effect immediately prior to the time
     of such issue or sale by a fraction,  the  numerator  of which shall be the
     sum of (i) the  number of shares of Common  Stock  outstanding  immediately
     prior to such issue or sale  multiplied by the  Conversion  Price in effect
     immediately  prior  to such  issue  or sale  plus  (ii)  the  consideration
     received by the Corporation upon such issue or sale, and the denominator of
     which  shall be the  product of (iii) the total  number of shares of Common
     Stock outstanding  immediately after such issue or sale, multiplied by (iv)
     the Conversion Price in effect immediately prior to such issue or sale.

                    For the purposes of the foregoing calculation, all shares of
     Common  Stock  of the  Corporation  issuable  upon  conversion  of all then
     outstanding   convertible   securities   and  upon  exercise  of  all  then
     outstanding options, warrants or other rights to acquire Common Stock shall
     be deemed  outstanding  but only to the  extent  and only if (a) the Market
     Value of the Common Stock of the  Corporation  on the date of such issue or
     sale is in excess of the conversion  price of such  convertible  securities
     then in effect or the  exercise  price of such  options,  warrants or other
     rights then in effect,  respectively,  and (b) the  conversion  or exercise
     right is not  subject  to any  vesting  condition  based  on the  continued
     employment  for a period of more than six (6) months by the  Corporation of
     the purchaser or recipient thereof.

                    (ii)     In case of the issuance or sale of shares of Common
     Stock for a consideration part or all of which shall be cash, the amount of
     cash  consideration  therefore  shall be  deemed  to be the  amount of cash
     received by the  Corporation for such shares (or, if shares of Common Stock
     are offered by the Corporation for  subscription,  the subscription  price,
     or, if shares of Common Stock shall be sold to  underwriters or dealers for
     public  offering  without  a  subscription  offering,  the  initial  public
     offering  price)  without  deducting  therefrom  any  compensation  paid or
     discount  allowed  in  the  sale,   underwriting  or  purchase  thereof  by
     underwriters  or  dealers  or others  performing  similar  services  or any
     expenses incurred in connection therewith.

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<PAGE>
                    (iii)     In case of the issuance or sale (otherwise than as
     a dividend  or other  distribution  on or  subdivision  of any stock of the
     Corporation  or on  conversion  or  exchange  of  other  securities  of the
     Corporation) of shares of Common Stock for a  consideration  part or all of
     which shall be other than cash, the amount of the  consideration  therefore
     other than cash shall be deemed to be the value of such  consideration,  as
     determined in good faith by the Board of Directors of the  Corporation,  at
     or about, but as of, the date of the adoption of the resolution authorizing
     such  issuance  for a  consideration  other than cash of such Common  Stock
     immediately  prior to the  close of  business  on the  date  fixed  for the
     determination of security holders entitled to receive such Common Stock.

                    (iv)     Shares  of Common Stock issuable by way of dividend
     or other  distribution  on or subdivision  of any stock of the  Corporation
     shall be deemed to have  been  issued  immediately  after  the  opening  of
     business  on the date  following  the date fixed for the  determination  of
     stockholders  entitled to receive such  dividend or other  distribution  or
     subdivision.

               (d)(2)     Except  as  hereinafter  provided,  in  case  the
Corporation  shall  at any time after the date hereof issue options or rights to
subscribe for shares of Common Stock (including shares held in the Corporation's
treasury),  or  issue any securities convertible into or exchangeable for shares
of  Common  Stock, for consideration per share less than the Conversion Price in
effect  immediately  prior  to  the  issuance  of  such  options  or  rights  or
convertible or exchangeable securities, or without consideration, the Conversion
Price  in  effect immediately prior to the issuance of such options or rights or
securities  shall  be  increased  or  reduced  to a price determined by making a
computation  in  accordance  with  the  provisions  of Paragraph 6(d)(1) and the
following:

                    (i)     the  aggregate  maximum  number  of shares of Common
     Stock  deliverable under such options or rights shall be considered to have
     been  delivered at the time such  options or rights were issued,  and for a
     consideration  equal  to the  purchase  price  per  share of  Common  Stock
     provided for in such options or rights, plus the consideration  (determined
     in the same manner as consideration received on the issue or sale of Common
     Stock), if any, received by the Corporation for such options or rights;

                                        7
<PAGE>
                    (ii)     the  aggregate  maximum  number of shares of Common
     Stock  deliverable  upon  conversion of or exchange for any such securities
     shall be considered to have been  delivered at the time of issuance of such
     securities,  and for a consideration equal to the consideration (determined
     in the same manner as consideration received on the issue or sale of Common
     Stock)  received  by  the  Corporation  for  such   securities,   plus  the
     consideration,  if any, to be received by the Corporation upon the exchange
     or conversion thereof; and

                    (iii)     on  the  expiration  of such options or rights, or
     the termination of such right to convert or exchange,  if none or only part
     of such options or rights have been exercised,  the Conversion  Price shall
     forthwith  be  readjusted  to such  Conversion  Price  as would  have  been
     obtained had the adjustments made upon the issuance of such options, rights
     or convertible or  exchangeable  securities been made upon the basis of the
     delivery of only the number of shares of Common  Stock  actually  delivered
     upon the exercise of such options or rights or upon  conversion or exchange
     of such securities.

               (d)(3)     In  the  event  the Corporation shall issue additional
shares  of  Common Stock in a stock dividend, stock distribution or subdivision,
the  Conversion  Price in effect immediately prior to such stock dividend, stock
distribution  or  subdivision shall, concurrently with the effectiveness of such
stock dividend, stock distribution or subdivision, be proportionately decreased.

               (d)(4)     In  the  event  the outstanding shares of Common Stock
shall  be  combined  or  consolidated,  by reclassification or otherwise, into a
lesser  number  of  shares  of  Common  Stock, the Conversion Price in effective
immediately  prior to such combination or consolidation shall, concurrently with
the  effectiveness  of  such  combination  or  consolidation, be proportionately
increased.

               (d)(5)     Notwithstanding  anything  contained  herein  to  the
contrary,  no  adjustment  of  the  Conversion  Price  shall  be  made:

                    (i)     In  connection  with  the issuance or sale of Common
     Stock  upon  the  exercise of options or rights or upon the  conversion  or
     exchange of  convertible or  exchangeable  securities  in any case where an
     adjustment  of  the  Conversion  Price  was  made upon the issuance of such
     options, rights, or convertible or exchangeable securities by reason of the
     provisions of this Paragraph 6(d).

                                        8
<PAGE>
                    (ii)     In  connection with grants to employees, directors,
     consultants or others with similar  relationships  with the  Corporation or
     its  subsidiaries of options to purchase,  at a price equal to or in excess
     of Market Value as  determined  by the Board of Directors of the Company at
     the time of grant, shares of Common Stock of the Corporation.

                    (iii)     In  connection with any issuance or sale of Common
     Stock to  officers,  directors  or  employees  of, or  consultants  to, the
     Corporation  pursuant to a grant or plan approved by the Board of Directors
     of the Corporation.

                    (iv)     In  connection  with  any  acquisition  of  assets,
     securities,  or a business or any exchange of  securities to acquire all or
     part of any business,  provided that such  acquisition or exchange has been
     approved by the Board of Directors of the Corporation.

                    (v)     In  connection  with the issuance of Common Stock or
     other securities upon conversion of Series A, B, C, and D Convertible Notes
     issued  pursuant to that certain Term Sheet  Agreement  dated March 1, 2000
     between the Company and the Investors named therein.

                    (vi)     In  connection with the issuance of Common Stock or
     other securities upon the conversion of the Preferred Stock.

               (d)(6)     If  any  capital reorganization or reclassification of
the  capital stock of the Corporation (other than a change in par value, or from
par value to no par value, or as a result of the subdivision or combination), or
consolidation  or merger of the Corporation with another corporation (other than
a consolidation or merger in which the Corporation is the continuing corporation
and  which  does  not  result  in any reclassification of the outstanding Common
Stock),  or  the  sale  of  all  or  substantially  all of its assets to another
corporation  shall  be  effective,  then, as a condition of such reorganization,
reclassification,  consolidation,  merger or sale, lawful and adequate provision
shall  be  made  whereby  the  holder  hereof shall thereafter have the right to
purchase  and receive upon the basis and upon the terms and conditions specified
for  the  Preferred  Stock  and  in lieu of the shares of Common Stock and other
capital  stock  (if  any) of the Corporation immediately theretofore purchasable
and  receivable  upon  the exercise of the conversion rights represented hereby,
such  shares  of  stock,  securities  or assets as may be issued or payable with
respect  to  or  in  exchange  for a number of outstanding shares of such Common
Stock  and  other  capital  stock (if any) equal to the number of shares of such
Common  Stock  and  other  capital  stock  (if  any)  immediately  theretofore
purchasable  and  receivable  upon  the  exercise  of  the  conversion  rights
represented  hereby  had  such  reorganization, reclassification, consolidation,

                                        9
<PAGE>
merger  or  sale  not  taken  place, and in any such case appropriate provisions
shall  be  made  with  respect  to the rights and interest of the holders of the
Preferred  Stock  to  the  end  that  the  provisions hereof shall thereafter be
applicable,  as nearly as may be, in relation to any shares of stock, securities
or  assets  thereafter  deliverable upon exercise hereof.  The Corporation shall
not  effect  any  such  consolidation,  merger  or  sale,  unless  prior  to  or
simultaneously with the consummation thereof the successor corporation (if other
than  the  Corporation)  resulting  from  such  consolidation  or  merger or the
corporation  purchasing  such  assets  shall  assume  by  written instrument the
obligation  to deliver to such holder such shares of stock, securities or assets
as,  in accordance with the foregoing provisions, such holder may be entitled to
purchase and the other obligations granted herein.  The adjustments provided for
in this Paragraph 6(d)(6) shall apply with respect to each such change occurring
while  the  Preferred  Stock  is  outstanding.

               (d)(7)     In  case  at  any  time:

                    (i)     The  Corporation shall declare any dividend upon its
     Common  Stock  payable  otherwise  than in cash or in  Common  Stock of the
     Corporation or payable  otherwise than out of consolidated net income for a
     twelve-month  period  ending not earlier  than 90 days prior to the date of
     payment of such dividend; or

                    (ii)     The Corporation shall offer for subscription to the
     holders of its Common Stock any additional  shares of stock of any class or
     any other  securities  convertible  into  shares of stock or any  rights to
     subscribe  thereto other than the sale of any  additional  shares of Common
     Stock contemplated under the Agreement; or

                    (iii)     There  shall  be  any  capital  reorganization  or
     reclassification of the capital stock of the Corporation,  or a sale of all
     or substantially  all of the assets of the Corporation,  or a consolidation
     or merger of the Corporation with another  corporation (other than a merger
     with a  subsidiary  in  which  merger  the  Corporation  is the  continuing
     corporation and which does not result in any  reclassification),  or change
     of the then  outstanding  shares of  Common  Stock or other  capital  stock
     issuable upon conversion of the Preferred Stock (other than a change in par
     value, or from par value or as a result of subdivision or combination); or

                                       10
<PAGE>
                    (iv)     There   shall   be  a   voluntary  or   involuntary
     dissolution, liquidation  or  winding  up  of  the  Corporation.

then, in any one or more of said cases, the Corporation shall cause to be mailed
to  each  of  the  registered  holders  of  the  Preferred Stock at the earliest
practicable  time  (and,  in  any event, not less than 20 days before any record
date  or  other  date  set for definitive action), written notice of the date on
which  the  books  of the Corporation shall close or a record shall be taken for
such  dividend,  distribution  or  subscription  rights  or such reorganization,
reclassification, sale, consolidation, merger, dissolution, or liquidation shall
take  place, as the case may be.  Such notice shall also set forth such facts as
shall indicate the effect of such action (to the extent such effect may be known
at  the  date of such notice) on the Conversion Price and the kind and amount of
the  shares  of  stock  and  other  securities which thereafter will be properly
deliverable  upon  conversion  of  the  Preferred Stock.  Such notice shall also
specify  the  date  as  of which the holders of the Common Stock of record shall
participate  in  said  dividend, distribution or subscription rights or shall be
entitled  to  exchange  their  Common  Stock  for  securities  or other property
deliverable  upon  such  reorganization,  reclassification, sale, consolidation,
merger,  dissolution,  liquidation, winding up or conversion, as the case may be
(on  which  date,  in  the  event  of  voluntary  or involuntary dissolution, or
liquidation  of  the Corporation, the right to convert the Preferred Stock shall
terminate).

          (d)(8)     Record  Date.  In  case the Corporation shall take a record
                     ------------
of  the  holders  of  its  Common Stock for the purpose of entitling them (i) to
receive  a  dividend  or  other distribution payable in Common Stock, Options or
Convertible  Securities,  or  (ii)  to  subscribe  for or purchase Common Stock,
Options  or  Convertible Securities, then such record date shall be deemed to be
the  date of the issue or sale of the shares of Common Stock deemed to have been
issued or sold upon the declaration of such dividend or the making of such other
distribution  or  the  date  of  the  granting  of such right of subscription or
purchase,  as  the  case  may  be.

          (d)(9)     Treasury  Shares.  The  number  of  shares  of Common Stock
                     ----------------
outstanding  at  any given time shall not include shares owned or held by or for
the  account of the Corporation, and the disposition of any such shares shall be
considered  an  issue or sale of Common Stock for the purposes of this Paragraph
6(d).

                                       11
<PAGE>
          (d)(10)     Definition  of  Market  Value.  "Market  Value"  for  the
                      -----------------------------
purposes of this Paragraph 6 shall mean the average of the closing prices of the
Common  Stock for sales on all national securities exchanges on which the Common
Stock  may  at  the time be listed, or, if there shall have been no sales on any
such  exchange  on  any such day, the average of the bid and asked prices at the
end  of such day, or, if the Common Stock shall not be so listed, the average of
the high and low bid and asked prices on such day in the over-the-counter market
as  reported  by  the  National  Quotation Bureau,  Incorporated, or any similar
successor  organization,  in  each  such case averaged over a period of ten (10)
consecutive  business  days prior to the day as of which "Market Value" is being
determined; provided that if the Common Stock is listed on any domestic exchange
the  term  "business  days" as used in this sentence shall mean business days on
which such exchange is open for trading.  If at any time the Common Stock is not
listed  on  any  national  securities exchange or quoted in the over-the-counter
market,  the  "Market  Value"  shall  be deemed to be the higher of (i) the book
value  thereof,  as  determined by any firm of independent public accountants of
recognized standing selected by the Board of Directors of the Corporation, as at
the last day of any month ending within sixty (60) days preceding the date as of
which the determination is to be made, or (ii) the fair value thereof determined
in good faith by the Board of Directors of the Corporation as of a date which is
within  fifteen  (15)  days  of  the date as of which the determination is to be
made.

          (e)     Liquidating  Dividends.  The  Corporation  will  not  pay  or
                  ----------------------
declare  a  dividend  upon  the  Common  Stock  payable  otherwise  than  out of
consolidated  earnings  or consolidated earned surplus (determined in accordance
with  generally  accepted   accounting  principles,   including  the  making  of
appropriate  deductions  for  minority interests, if any, in subsidiaries) or in
Common  Stock,  unless  the holders of at least 75% of the outstanding shares of
Preferred  Stock  shall  have consented to such dividend in writing, and, in the
event  that  the  Corporation  shall pay or declare a dividend payable otherwise
than out of such consolidated earnings or consolidated earned surplus  with such
consent,  the  Corporation  will pay over to such holders of Preferred Stock pro
rata,  on  the  dividend  payment  date, the cash, stock or other securities and
other  property  which  each such holder would have received if it had converted
all shares of Preferred Stock then held by it into Common Stock and had been the
record  holder  of  such Common Stock on the date on which a record is taken for
the  purposes  of  such  dividend,  or, if a record is not taken, the date as of
which the holders of Common Stock of record entitled to such dividends are to be
determined.  For  the  purposes  of the foregoing, a dividend other than in cash
shall  be  considered payable out of earnings or surplus (other than revaluation
or paid-in surplus) only to the extent that such earnings or surplus are charged
an  amount  equal to the fair value of such dividend as determined in good faith
by  the  Board  of  Directors  of  the  Corporation.

                                       12
<PAGE>
          (f)     Certain  Events.  If  any  event  occurs  as  to  which in the
                  ---------------
opinion  of  the Board of Directors the other provisions of this Paragraph 6 are
not  strictly  applicable or if strictly applicable would not fairly protect the
conversion  rights  of  the holder of the Preferred Stock in accordance with the
essential  intent and principles of such provisions, then the Board of Directors
shall  make  an  adjustment in the application of such provisions, in accordance
with  such  essential  intent  and  principles, so as to protect such conversion
rights  as  aforesaid, but in no event shall any such adjustment have the effect
of  increasing  the  Conversion  Price  as otherwise determined pursuant to this
Paragraph  6  except  in  the  event  of an increase in option price, additional
consideration  or conversion rate as contemplated by Paragraph 6(d)(4), and then
in  no  event to an amount larger than the Conversion Price as adjusted pursuant
to  paragraph  6(d)(4).

          (g)     No  Participating  Preferred  Stock.  So long as any shares of
                  -----------------------------------
Preferred  Stock  are  outstanding,  and  subject to the further restrictions in
Paragraph  9,  the  Corporation  will  not  issue any capital stock of any class
preferred as to dividends or preferred as to the distribution of assets upon any
voluntary  or  involuntary  liquidation,  dissolution  or winding-up unless such
preferential  rights  of  the holders thereof shall be limited to a fixed sum or
percentage  of  par  value  in  respect of dividends and distribution of assets.

          (h)     Stock  to  be  Reserved.  The  Corporation  will  at all times
                  -----------------------
reserve  and  keep  available out of its authorized Common Stock or its treasury
shares,  solely  for  the  purpose of issue upon the conversion of the Preferred
Stock as herein provided, such number of shares of Common Stock as shall then be
issuable  upon the conversion of all outstanding shares of Preferred Stock.  The
Corporation  covenants  that all shares of Common Stock which shall be so issued
shall  be duly and validly issued and fully paid and nonassessable and free from
all  taxes,  liens  and  charges with respect to the issue thereof, and, without
limiting the generality of the foregoing, the Corporation covenants that it will
from  time  to  time take all such action as may be requisite to assure that the
par  value  per  share of the Common Stock is at all times equal to or less than
the  effective  Conversion  Price.  The Corporation will take all such action as
may be necessary to assure that all such shares of Common Stock may be so issued
without violation of any applicable law or regulation, or of any requirements of
any  national securities exchange upon which the Common Stock of the Corporation
may  be  listed.  The  Corporation  will not take any action that results in any
adjustment of the Conversion Price if the total number of shares of Common Stock
issued  and  issuable  after  such action upon conversion of the Preferred Stock
would  exceed  the  total  number  of  shares of Common Stock of such class then
authorized  by  the  Corporation's  Certificate  of  Incorporation.

                                       13
<PAGE>
          (i)     Registration.  If  any  shares  of Common Stock required to be
                  ------------
reserved  for  purposes  of  conversion of the Preferred Stock hereunder require
registration with or approval of any governmental authority under any Federal or
State  law,  or  listing on any national securities exchange, before such shares
may  be  issued  upon  conversion,  the  Corporation will, at its expense and as
expeditiously  as  possible, cause such shares to be duly registered or approved
or  listed  on  such  national  securities  exchange,  as  the  case  may  be.

          (j)     Issue  Tax.  The issuance of certificates for shares of Common
                  ----------
Stock upon conversion of the Preferred Stock shall be made without charge to the
holders  of  such  Preferred  Stock  for  any  issuance  tax in respect thereof,
provided  that the Corporation shall not be required to pay any tax which may be
payable  in respect of any transfer involved in the issuance and delivery of any
certificate  in  a  name  other  than  that of the holder of the Preferred Stock
converted.

          (k)     Closing  of  Books.  The Corporation will at no time close its
                  ------------------
transfer  books  against the transfer of any Preferred Stock or of any shares of
Common  Stock  issued or issuable upon the conversion of any shares of Preferred
Stock  in  any  manner  that  interferes  with  the  timely  conversions of such
Preferred  Stock.

          (l)     Definition  of  Common Stock.  As used in this Paragraph 6 the
                  ----------------------------
term  "Common  Stock" shall mean and include the Corporation's authorized Common
Stock,  par  value $.01 per share, as constituted on the date of issuance of the
Preferred  Stock  and  shall  also include any capital stock of any class of the
Corporation  thereafter  authorized which shall not be limited to a fixed sum or
percentage  of  par  value  in  respect  of the rights of the holders thereof to
participate  in dividends or in the distribution of assets upon the voluntary or
involuntary  liquidation,  dissolution  or  winding  up  of  the  Corporation.

     7.     Certain  Definitions.
            --------------------

          (a)     Junior  Stock.  The  term "Junior Stock" shall mean any shares
                  -------------
of  any  class  or  series  of  capital  stock of the Corporation other than the
Preferred  Stock,  any  Senior  Stock  or  the  Common  Stock.

          (b)     Senior  Stock.  The  term "Senior Stock" shall mean any shares
                  -------------
of  any class or any series of capital stock of the Corporation ranking prior to
the  Preferred  Stock  in  respect  of  the right to receive dividends and/or to
participate  in  any  distribution  of  assets  other  than by way of dividends.

                                       14
<PAGE>
          (c)     Parity  Stock.  The  term "Parity Stock" shall mean any shares
                  -------------
of  any  class or any series of capital stock that, if dividends thereon are not
paid  in  full,  be  entitled  to  share ratably with the Preferred Stock in the
payment  of  dividends  including  accumulations, if any, in accordance with the
sums  which  would  be payable on such shares if all dividends were declared and
paid  in  full,  and/or  shall, in the event that the amounts payable thereon on
liquidation  are  not  paid  in  full,  be  entitled  to  share ratably with the
Preferred  Stock in any distribution of assets other than by way of dividends in
accordance with the sums which would be payable in such distribution if all sums
payable  were  discharged  in  full.

     8.     Voting  Rights  of  Preferred  Stock.
            ------------------------------------

          (a)(i)     Except as otherwise provided in this Paragraph 8, or by law
expressly  otherwise provided, the holder of each share of Preferred Stock shall
have  the  right  and  power to vote, together with the holders of all the other
shares  of  Preferred  Stock  and  the  holders of all the outstanding shares of
Common  Stock  and not by classes, on each matter on which the holders of record
of  the Common Stock shall be entitled to vote (subject, in the case of election
of  directors,  to  the provisions of paragraphs 8(a)(ii) and 8(a)(iii) hereof),
and  the  holders  of  the  Preferred Stock shall receive notice of and shall be
entitled  to  attend  in  person  or  by proxy any meeting of stockholders.  The
number of votes which the holder of each share of Preferred Stock is entitled to
vote  pursuant  to this paragraph 8(a)(i) shall be equal to the number of shares
of  Common  Stock  into  which  each share of Preferred Stock is convertible, as
determined  from  time to time by the provisions of Paragraph 6 hereof.  For the
purposes  of computing the voting rights of the Preferred Stock, the Corporation
shall  compute the aggregate number of shares of Common Stock into which all the
shares  of  Preferred  Stock  held  by each holder of the Preferred Stock may be
converted,  and any resulting fractional shares of Common Stock shall be rounded
to  the  nearest whole number (which, in the case of one-half or more of a vote,
shall  be  rounded  upward).

          (ii)     The  holders  of  the Series A Preferred Stock shall have the
right and power to one vote per share, voting as a single class, separately from
all  other classes and series of capital stock of the Corporation, to elect four
(4)  members  of  the Board of Directors of the Corporation.  The holders of the
Series  B,  C,  and D Preferred Stock shall have the right and power to one vote
per  share, voting together as a single class, separately from all other classes
and  series  of capital stock of the Corporation, to elect one (1) member of the
Board  of  Directors.

          (iii)     Notwithstanding the provisions of Paragraph 8(a)(ii), in the
event  that  less  than  40,000  shares  of  Series  A  Preferred Stock are held
collectively  by  CAI  Partners  and  Company II, L.P., CAI Capital Partners and
Company  II,  L.P.,  CAI  Capital  Partners  and  Company II-C, L.P. and Jack R.
Anderson, then the holders of all the series of Preferred Stock, voting together
as  a  single class, shall have the right and power to elect five (5) members of
the  Board  of  Directors  and the provisions of Paragraph 8(a)(ii) shall not be
applicable.

                                       15
<PAGE>
          (iv)     If  any  vacancies  occur  in  the  Board of Directors of the
Corporation by reason of the death, resignation, retirement, disqualification or
removal from office or otherwise of any director elected by a one or more series
of Preferred Stock pursuant to paragraphs 8(a)(ii) or 8(a)(iii), then a majority
of  the directors elected pursuant to paragraph 8(a)(ii) or 8(a)(iii) may choose
a  successor or successors and the director(s) so chosen shall hold office until
the  election  of  a  successor or successors by the vote of the holders of such
series  of Preferred Stock that originally elected the director(s) to the vacant
positions.

          (b)     In  addition  to any voting rights provided herein, unless the
consent  or approval of a greater number of shares shall be required by law, the
affirmative  consent of the holders of at least 75% of the shares of each series
of  the Preferred Stock then issued and outstanding, given in person or by proxy
either  in writing or at a meeting called for that purpose at which such holders
of  each  respective series of Preferred Stock shall vote separately as a class,
shall  be necessary for authorizing and approving: (i) the amendment, alteration
or  repeal  of any of the provisions hereof which have reference to or which are
protective  of,  or  the  taking  of  any  action  which  adversely affects, the
preferences, rights, powers or privileges of such series of the Preferred Stock,
(ii)  the  authorization  or  issuance  of  any shares of any class or series of
Senior  Stock  or  Parity  Stock  to such series of Preferred Stock or (iii) any
change  in  the  number of members of the Board of Directors of the Company from
seven  (7).

     9.     Payments  Due  on  Saturday,  Sunday or Legal Holidays.  In case the
            ------------------------------------------------------
date  of  fixed  for  redemption  of  any  shares  of Preferred Stock shall be a
Saturday,  Sunday  or,  in  New  York,  N.Y.,  a legal holiday or a day on which
banking  institutions  are  authorized  or required by law or executive order to
close  or  remain  closed,  the making of a redemption on such stock need not be
made  on  such  date  but may be made on the next succeeding day not a Saturday,
Sunday,  or in such city, a legal holiday or a day on which banking institutions
are  closed,  with  the  same force and effect as if made on such date fixed for
redemption."

                                       16
<PAGE>
     And  it  was  further

          RESOLVED,  that  the statements contained in the foregoing resolutions
     setting forth and fixing  (i)  the  Certificate  of  Powers,  Designations,
     Preferences and  Relative,  Participating, Optional or Other Special Rights
     and (ii)  the  Qualifications,  Limitations,  or  Restrictions  of Series A
     Preferred Stock,  Series B  Preferred  Stock, Series  C Preferred Stock and
     Series D Preferred Stock and fixing the powers,  designations,  preferences
     and  relative, participating, optional or  other  special  rights  and  the
     qualifications, limitations,  or restrictions thereof shall be deemed to be
     included in and be a part  of the Certificate of Incorporation of SafeGuard
     Health  Enterprises,  Inc. pursuant  to the provisions of Sections 104, 151
     and 242 of the Delaware General Corporation Law.

     IN  WITNESS  WHEREOF,  the  undersigned,  the  President  and  Secretary of
SafeGuard  Health  Enterprises, Inc., a Delaware Corporation, have executed this
Certificate,  this  8th  day  of  December  2000.

                                    SAFEGUARD  HEALTH  ENTERPRISES,  INC.

                                    By:      /s/  James  E.  Buncher
                                           -------------------------------------
                                    Name:  JAMES  E.  BUNCHER
                                    Title: President and Chief Executive Officer

                                    By:      /s/  Ronald  I.  Brendzel
                                           -------------------------------------
                                    Name:  RONALD  I.  BRENDZEL
                                    Title: Senior Vice President and Secretary

                                       17
<PAGE>

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