Document:

AMENDMENT TO CREDIT AGREEMENT

     This  is  an  Amendment  to  Credit  Agreement  (this  "Amendment") between
SAFEGUARD  HEALTH  ENTERPRISES,  INC.  ("Borrower"), a Delaware corporation, and
NICHOLAS M. KAVOUKLIS, DMD ("Lender"). The parties agree as follows:

     1.   BACKGROUND.  Borrower  is  the  borrower  under  a Secured Convertible
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Promissory  Note  (the  "Original  Note"),  in  the original principal amount of
$2,625,000.00,  which was made by Borrower in favor of Lender in connection with
the  Stock Purchase Agreement dated as of April 24, 2002, among Borrower, Lender
and  Paramount  Dental  Plan,  Inc. (the "Stock Purchase Agreement" and together
with  the other agreements and instruments executed in connection with the Stock
Purchase  Agreement,  the  "Credit  Agreement"),  as  previously amended.  As of
December  1,  2003,  Borrower  has reduced the principal balance of the Original
Note  to  $1,601,629.53 through scheduled monthly payments.  Borrower and Lender
have  agreed to amend and restate the terms of the Original Note pursuant to the
terms  and  conditions of an Amended and Restated Secured Convertible Promissory
Note  (the  "Note"),  in the original principal amount of $1,601,629.53, made by
Borrower  in  favor  of  Lender  dated  the  same  day  as this Amendment.  This
Amendment  further  amends  the Credit Agreement and terminates the Registration
Rights  Agreement.

     2.   AMENDMENT  TO  THE CREDIT AGREEMENT.  The terms "Convertible Note" and
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"Note"  as  used  in the Credit Agreement are hereinafter deemed to refer to the
Note.

     3.   TERMINATION OF REGISTRATION RIGHTS AGREEMENT.  The Registration Rights
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Agreement dated as of August 30, 2002, between Borrower and Lender is terminated
and  of  no  further  force  and  effect.

     4.   REPRESENTATIONS  AND  WARRANTIES.  Borrower  represents  to Lender the
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following as of the effective date of this Amendment:

          (a)  Borrower  has  all requisite power, authority, and legal right to
     execute,  deliver  and  perform  this  Amendment;

          (b)  The  execution,  delivery,  and performance of this Amendment and
     the  Note  by  Borrower has been duly authorized by all requisite corporate
     action and will not (i) violate any Law, (ii) conflict with the articles of
     incorporation  or  bylaws of Borrower, (iii) accelerate the maturity of, or
     result  in  any lien, penalty, security interest, or encumbrance in, on, or
     under,  any  mortgage,  indebtedness,  security  agreement,  or  contingent
     obligation,  (iv)  result  in  a  default  or breach of any material order,
     lease,  contract,  indenture, mortgage, judgment, promissory note, or other
     agreement  or  instrument to which Borrower is a party or any of Borrower's
     property  is  subject, or (v) require any filing with, or consent, license,
     authorization,  or  approval  of,  any  Person;

          (c)  Borrower  has  complied  with all the terms and conditions of the
     Credit  Agreement,  that  there  does  not  exist  any  fact  or event that
     constitutes,  or  with  notice  or

<PAGE>
     lapse  of time or both would constitute, an event of default under the Note
     or  the  Credit  Agreement;

          (d)  This  Amendment and the Note are valid and binding obligations of
     Borrower  legally enforceable by Lender against Borrower in accordance with
     their  terms;  and

          (e)  There  has  been  no  material  adverse  change in the condition,
     financial  or  other, of Borrower, from such condition as it existed on the
     date  of  the  Original  Note.

     5.   OTHER  PROVISIONS.  All  capitalized  terms  that  are  used  but  not
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expressly  defined  in  this  Amendment have the respective meanings ascribed to
them  in the Stock Purchase Agreement, and the definitions of those terms in the
Credit  Agreement  are  incorporated  by  reference  in  this  Amendment.  This
Amendment  and  the documents contemplated by it record the final, complete, and
exclusive  understanding  between Lender and Borrower regarding the modification
of  the  Credit  Agreement  and  the  termination  of  the  Registration  Rights
Agreement.  Except  as  amended and modified by this Amendment, the terms of the
Credit  Agreement  remain  in  full  force  and  effect in accordance with their
respective  terms  and this Amendment shall not constitute a novation.  Borrower
acknowledges that the Credit Agreement and Note are not subject to any defenses,
counterclaims, or rights of set-off.  Lender has not waived, and does not waive,
any  of  its  rights  under  the  Credit  Agreement.  This Amendment will become
effective  when  it  or  a  counterpart  of  it  has been executed by Lender and
Borrower.

     6.   COUNTERPARTS.  This  Amendment  may be executed in counterparts.  Each
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executed  counterpart  will  constitute  an  original document, and all executed
counterparts,  together,  will  constitute  the  same  agreement.

EFFECTIVE:  As of December 1, 2003.

                              SAFEGUARD HEALTH ENTERPRISES, INC. ("Borrower")

                              By:  ______________________________________
                              Name:   Ronald  I.  Brendzel
                              Title:  Senior  Vice  President  and  Secretary

                              _______________________________________
                              NICHOLAS M. KAVOUKLIS, DMD ("Lender")

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<PAGE>THIS NOTE AND THE COMMON STOCK ISSUABLE ON EXERCISE OF THE CONVERSION OPTION SET
FORTH IN THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND
MAY  NOT  BE SOLD OR TRANSFERRED IN THE ABSENCE OF (a) AN EFFECTIVE REGISTRATION
STATEMENT  FOR  THE NOTE AND/OR COMMON STOCK UNDER THE SECURITIES ACT OF 1933 OR
(b)  AN  OPINION  REASONABLY  SATISFACTORY TO SAFEGUARD HEALTH ENTERPRISES, INC.
FROM  COUNSEL  FOR  SAFEGUARD  HEALTH  ENTERPRISES, INC. OR FROM COUNSEL FOR THE
PROPOSED  TRANSFEROR  TO  THE  EFFECT  THAT THE TRANSFER MAY BE EFFECTED WITHOUT
REGISTRATION.

                              AMENDED AND RESTATED
                       SECURED CONVERTIBLE PROMISSORY NOTE

Borrower:   SAFEGUARD  HEALTH  ENTERPRISES,  INC.

Holder:     NICHOLAS  M.  KAVOUKLIS,  DMD

Initial Principal Amount: $1,601,629.53     Date of Note: As of December 1, 2003

     This Amended and Restated Secured Convertible Promissory Note (this "NOTE")
amends  and  restates the Secured Convertible Promissory Note dated as of August
30,  2002,  (the "ORIGINAL NOTE") executed by Borrower in favor of Holder in the
principal  amount  of  up  to  $2,625,000.  This  Note  renews  the indebtedness
evidenced  by  the  Original  Note  and  does not evidence any new indebtedness.

     1.   PROMISE  TO  PAY, INTEREST RATE.  For value received, SafeGuard Health
Enterprises,  Inc.,  a Delaware corporation ("BORROWER"), promises to pay to the
order of Nicholas M. Kavouklis, DMD ("KAVOUKLIS", and subsequent holders of this
Note  are  collectively,  the "HOLDER"), in lawful money of the United States of
America,  the  sum  of One Million, Six Hundred One Thousand, Six Hundred Twenty
Nine  Dollars  and  Fifty  Three  Cents  ($1,601,629.53) (the "INITIAL PRINCIPAL
AMOUNT"),  together  with  interest  assessed on a fixed-rate basis at a rate of
seven  percent  (7%)  per annum. Capitalized terms not otherwise defined in this
Note  have  the  meanings  assigned to them in the Stock Purchase Agreement (the
"STOCK  PURCHASE  AGREEMENT")  dated  as  of  April  24,  2002,  among Borrower,
Kavouklis, and Paramount Dental Plan, Inc., a Florida corporation ("PARAMOUNT").
Concurrently  with closing of the stock purchase transaction contemplated by the
Stock Purchase Agreement, Paramount merged into and with SafeGuard Health Plans,
Inc.,  a  Florida  corporation  ("SAFEGUARD  FLORIDA").

     2.MATURITY.  Borrower  shall  pay  the outstanding principal amount of this
Note,  together  with any accrued unpaid interest, on the earliest of (a) twenty
(20)  months  after  the  Resumption  Date  specified below, (b) at the Holder's
election,  the  occurrence  of  a  Change  in  Control  (as  defined in the next
paragraph),  or  (c)  at  the  Holder's  election,  one  (1) year after Borrower
terminates  Kavouklis' employment with Borrower if such termination was "Without
Cause" (as such term is defined in Section 6.2 of the Employment Agreement dated
as  of  August  30, 2002, by and between Borrower and Kavouklis), all subject to
the right of acceleration described below (the "MATURITY DATE").

<PAGE>
     A  "CHANGE  OF  CONTROL"  means (w) equity holders of Borrower or SafeGuard
Florida  approve  a  liquidation  of  all  or substantially all of Borrower's or
SafeGuard  Florida's assets, as the case may be; (x) a sale, lease, exchange, or
other transfer of all or more than fifty percent (50%) in value of the assets of
Borrower  or  SafeGuard  Florida in one transaction or a series of transactions;
(y)  a  merger,  consolidation, reorganization, tender offer, exchange offer, or
share  exchange  in which securities possessing more than fifty percent (50%) of
the total combined voting power of Borrower's or SafeGuard Florida's outstanding
securities  are  transferred to a person or persons different from those persons
holding those securities prior to such transaction; or (z) the occurrence of any
event,  transaction,  or  arrangement  that results in any person or group other
than  the  shareholders  of  Borrower  or SafeGuard Florida, as the case may be,
prior  to such event, transaction, or arrangement becoming the beneficial owner,
either  directly or indirectly, of a majority of the outstanding Common Stock or
outstanding common stock of SafeGuard Florida, as the case may be.

     3.  PAYMENTS. Borrower shall pay accrued interest only to Holder commencing
on  January  1,  2004,  and  continuing  on  the  first  (1st) day of each month
thereafter through the first (1st) day of the month prior to the Resumption Date
described  below.  Commencing  on  a  date  specified  by  Holder in a notice to
Borrower  given  at  least  ninety  (90)  days in advance of the first scheduled
payment, which must be the first (1st) day of a month and not later than January
1,  2007,  (the  "RESUMPTION  DATE"),  Borrower  shall  pay  to  Holder  monthly
installments in the amounts set forth below until this Note is paid in full.  As
of December 1, 2003, the principal balance of this Note is the Initial Principal
Amount  stated  above  and  Borrower  has  paid  to  Holder fifteen (15) monthly
payments  of  Eighty  Thousand  Seven  Hundred Ninety Four Dollars and Fifty Six
Cents  ($80,794.56) per month.  Borrower shall make a payment of Eighty Thousand
Seven  Hundred  Ninety  Four  Dollars  and  Fifty  Six Cents ($80,794.56), which
includes  principal  and interest, on the Resumption Date and on the first (1st)
day  of  each  of the next succeeding twenty (20) months.  Borrower shall make a
final  payment of all outstanding principal and unpaid accrued interest, if any,
on  the  Maturity Date.  Each payment will be due and payable on the first (1st)
Business Day of each month of each year during the term of this Note, commencing
on  the  date  of this Note.  Borrower may not prepay this Note without Holder's
prior  consent.

     In  the  event  a  portion  of  this Note is converted into Common Stock of
SafeGuard  pursuant  to  Section  11  of  this  Note,  the amount of the monthly
installments specified above will be adjusted.  The parties will recalculate the
amount  of  the  equal  monthly  installments based on the outstanding principal
amount after the conversion and interest thereon over the remaining term of this
Note,  in  accordance  with  the  terms  of  this  Note.

     4.   OTHER  TRANSACTION DOCUMENTS.  Borrower shall be subject to the terms,
conditions,  and  covenants of and shall comply with the provisions set forth in
the  Stock  Purchase  Agreement  and  Related  Agreements.

     5.   BORROWER'S  AFFIRMATIVE COVENANTS.  Until full payment and performance
of all obligations of Borrower under this Note, Borrower shall:

     (a)  Compliance.  Comply,  and  cause  its  subsidiaries  to comply, in all
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material  respects  with all applicable laws, ordinances, rules, regulations and
governmental  requirements.

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<PAGE>
     (b)  Conduct  of  Business; Maintenance of Corporate Status.  Continue, and
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cause  each  of  its subsidiaries to continue, to engage in business of the same
general  type  as  now conducted by Borrower and its subsidiaries, and preserve,
renew  and keep in full force and effect, and cause each subsidiary to preserve,
renew  and  keep  in full force and effect, their respective corporate existence
and their respective rights, privileges and franchises necessary or desirable in
the  normal  conduct  of  business; provided, however, if Borrower in good faith
                                    --------  -------
determines  the  action  to  be  in  the  best  interest of the Borrower and not
materially  disadvantageous  to  Borrower,  Borrower may terminate the corporate
existence  of  any subsidiary, surrender any license or certificate of authority
of  any  subsidiary  or  sell  the capital stock of any subsidiary, in all cases
other  than  SafeGuard  Florida.

     (c)  Deliver  Stock  Certificates.  On  conversion  of  all or part of this
          ----------------------------
Note,  promptly issue and deliver to Holder a certificate for the number of full
shares  of  Common Stock issuable upon such conversion and, if applicable, a new
Note  evidencing  any  remaining  principal  amount  not  converted,  in  a form
substantially  identical  to  this  Note.

     (d)  Reserve  Common  Stock.  Reserve  and  keep  available,  free  from
          ----------------------
preemptive  rights,  from  its  authorized  shares  of Common Stock, the maximum
number  of  shares  that  are  issuable  upon  conversion  of  this  Note.

     (e)  Taxes.  Accurately  prepare and timely file, and cause each subsidiary
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to  accurately  prepare  and  timely file, all tax returns required by law to be
filed  on  behalf  of  Borrower or subsidiary, as applicable.  Borrower and each
subsidiary  shall  promptly  pay  and  discharge  all  taxes,  assessments  and
governmental charges or levies imposed by applicable law upon them or upon their
income  or  profit, or upon their properties, real, personal or mixed; provided,
                                                                       --------
however,  that  neither  Borrower nor any subsidiary shall be required to pay or
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cause  to  be paid any such tax, assessment, charge or levy if the same will not
at  the  time be due and payable or if the validity thereof is contested in good
faith  by  appropriate proceedings; provided further, however, that Borrower and
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each  subsidiary  shall  pay  all  such  taxes,  assessments,  charges or levies
forthwith  whenever,  as  the  result of proceedings to foreclose any lien which
attached  as  security  therefore, foreclosure on such lien appears imminent, or
will  obtain  a  surety  bond  or  take  such  other  steps as will prevent such
foreclosure.

     (f)  Financial  Information.  Provide  to  Holder  financial information of
Borrower  on  a quarterly basis not less than forty-five (45) days following the
close  of  each calendar quarter while this Note is outstanding, which financial
information  shall  include Borrower's balance sheet, profit and loss statement,
and statement of cash flows in the same format as Borrower provides to its Board
of  Directors.

     6.   BORROWER'S  NEGATIVE  COVENANTS.  Until it fully pays and performs all
of  its  obligations  under  this  Note,  Borrower  shall  not:

     (a)  Dividends and Redemptions.  Declare any dividends on any shares of any
          -------------------------
class  of  its  capital  stock,  or  apply  any of its property or assets to the
purchase,  redemption  or  other  retirement  of,  or  set apart any sum for the
payment  of  any  dividends  on, or for the purchase, retirement of, or make any
other  distribution  or  reduction  of  capital  or  otherwise  in  respect  of,

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<PAGE>
any  shares  of  its  capital  stock;  provided, however, that Borrower shall be
                                       --------  -------
permitted  to  take  any such actions so long as at the time of such action: (i)
there  is  not an Event of Default under this Note or condition with the passage
of  time or notice will constitute an Event of Default; (ii) the total amount of
the  consideration  paid  does  not exceed the cumulative net income of Borrower
from  and  after  February  28, 2002; and (iii) such action does not result in a
disproportionate  payment  to  Borrower's shareholders on an as-converted basis,
unless  all of Borrower's shareholders first had been given the same opportunity
to  participate  in  such  action.

     (b)  Restrict  Performance.  Enter  into  any  agreements that restrict its
          ---------------------
right  or  ability  to  perform  under  this  Note.

     (c)  Related  Party  Transactions.  Enter,  or  cause  SafeGuard Florida to
          ----------------------------
enter,  into  any  transaction  with  a  Related  Party, except for transactions
entered  in  good  faith and on terms comparable to those that could be obtained
from  an unaffiliated third party.  For purposes of the foregoing provision, the
term  "RELATED  PARTY"  means any person who directly or indirectly controls, is
controlled  by,  or  under  common  control  with,  Borrower  or any subsidiary,
including  an officer, director, or holder of more than ten percent (10%) of the
Borrower's or any subsidiary's capital stock, a spouse or relative of any of the
foregoing  persons,  and  any  entity of which any of the foregoing persons is a
member,  officer,  director, employee, partner, trustee, or a direct or indirect
beneficial  owner  of  any equity or beneficial interest of five percent (5%) or
more.

     (d)  SafeGuard Florida Actions.  Without  the Holder's prior consent, cause
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or  permit  SafeGuard  Florida  to  do  any  of  the  following:

          (i)  create,  assume,  issue or incur debt in excess of $50,000 in the
     aggregate,  excluding  ordinary  trade  payables;

          (ii)  issue any more stock or other securities, except to SafeGuard if
     the additional securities are pledged to Holder as collateral for the Note,
     or  redeem  any  of  its  outstanding  stock;

          (iii)  create  financial  obligations (other than traditional (and not
     synthetic)  operating  leases)  that  are  not  reported  as liabilities or
     obligations  to  pay  on  the  balance sheet of the financial statements of
     SafeGuard  Florida,  whether  the  obligations are leases, lease-purchases,
     non-recourse  financing,  or other means or methods commonly referred to as
     "off-balance  sheet  financing";

          (iv)  extend, endorse, or guarantee, or become a surety, accommodation
     party,  or  responsible  for,  any  indebtedness or other obligation of any
     other  person,  except  for  guarantees and endorsements made in connection
     with  the  deposit  of  items  for  collection;

          (v)  prepay,  redeem,  retire,  or  otherwise  acquire  for  value any
     indebtedness  in  amounts  greater or at times earlier than required, other
     than  payment  of  accounts  payable  in  the  usual and ordinary course of
     business;

          (vi)  sell,  transfer, or otherwise dispose of its assets, or encumber
     its  assets, except for inter-company or dividend payments to Borrower, but
     only  if:  (1)  at  the  time  of

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<PAGE>
     the  payment  or  dividend  there is not an Event of Default or a condition
     that  with  the  passage  of  time  or  notice  will constitute an Event of
     Default;  and  (2) after the payment SafeGuard Florida retains at least the
     net  worth  amount  required  under  applicable  laws,  including,  without
     limitation,  regulations  of  the  Florida  Department  of  Insurance;  or

          (vii)  incur,  create,  enter  into,  or  assume  a  commitment  that
     restricts,  conditions,  prohibits or otherwise adversely affects SafeGuard
     Florida's ability to declare or pay dividends, or make other distributions,
     in  cash,  property  or stock, with respect to its capital stock, provided,
                                                                       --------
     however,  that  Holder  acknowledges  that  the  payment  of  dividends  by
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     SafeGuard  Florida  is  restricted  by  the  Florida  laws  and regulations
     applicable  to  SafeGuard  Florida  as  a  Limited  Prepaid  Health  Care
     Organization.

     7.   SECURITY.  This Note is secured by a lien and security interest in all
of  the  shares of stock of SafeGuard Florida granted to Kavouklis pursuant to a
Pledge  Agreement  (the  "PLEDGE  AGREEMENT")  dated  as  of August 30, 2002, as
amended  from  time  to  time,  between  Borrower  and  Kavouklis.

     8.   DEFAULT.  Each of the following shall constitute an "Event of Default"
under  this  Note:

     (a)  Non-payment.  Borrower  fails  to  pay in full within five (5) days of
          -----------
the  date  when  due any principal, interest, fee or other amount payable to the
Holder  under  this  Note  or  any  other  obligation of Borrower to the Holder,
whether  at maturity or otherwise and fails to cure such default within five (5)
days  after  written  notice  of such default from Holder to Borrower, provided,
                                                                       --------
however,  if Holder previously provided Borrower with two (2) written notices of
-------
default  pursuant  to  this Section 8(a) in any twelve (12) month period, Holder
shall not be required to provide Borrower with a written notice of such default;

     (b)  Breach  of  Representation  or  Warranty.  A  material  breach  of any
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representation  or  warranty made by Borrower or SafeGuard Florida in this Note,
the  Stock  Purchase Agreement, or any Related Agreement and the failure to cure
such  breach  or  violation within twenty (20) days after written notice thereof
from Holder to Borrower (but only if the breach or violation is of a nature that
it  can  be  cured);

     (c)  Breach  of  Covenant.  A breach of or failure by Borrower or SafeGuard
          --------------------
Florida  to  perform any covenant or obligation of Borrower or SafeGuard Florida
set  out  or  contemplated  in  this  Note, the Stock Purchase Agreement, or any
Related Agreement and the failure to cure such breach or violation within twenty
(20)  days after written notice thereof from Holder to Borrower (but only if the
breach  or  violation  is  of  a  nature  that  it  can  be  cured);

     (d)  Voluntary  Bankruptcy  and  Insolvency  Proceedings.  Borrower  or
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SafeGuard Florida files a petition in bankruptcy or for reorganization or for an
arrangement  or  any  composition,  readjustment,  liquidation,  dissolution  or
similar  relief  pursuant  to  the  Federal Bankruptcy Code or under any similar
present  or  future federal law or the law of any other jurisdiction or shall be
adjudicated  a bankrupt or become insolvent, or consent to the appointment of or
taking  possession  by  a  receiver,  liquidator,  assignee, trustee, custodian,
sequester  (or  other  similar official) of the Borrower or SafeGuard Florida or
for  all  or  any

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<PAGE>
substantial  part of the property of the Borrower or SafeGuard Florida, or shall
make  an  assignment for the benefit of its creditors, or shall admit in writing
its  inability  to pay its debts generally as they become due, or shall take any
corporate  action,  in  furtherance  or  any  of  the  foregoing;

     (e)  Adjudication  of  Bankruptcy.  A petition or answer is filed proposing
          ----------------------------
the  adjudication  of  Borrower  or  SafeGuard  Florida  as  a  bankrupt  or its
reorganization  or  arrangement,  or any composition, readjustment, liquidation,
dissolution  or  similar  relief  with  respect  to  it  pursuant to the Federal
Bankruptcy Code or under any similar present or future federal law or the law of
any  other  jurisdiction  applicable  to  Borrower or SafeGuard Florida and such
petition  is  not  dismissed within sixty (60) days after the date of service on
Borrower  or  SafeGuard  Florida;  or

     (f)  Other  Defaults.  There  shall  occur  any  default  under  any  other
          ---------------
indenture,  agreement  or  instrument  evidencing  or  securing  indebtedness of
Borrower  or SafeGuard Florida or under any of Borrower's or SafeGuard Florida's
capital  leases,  which  default  shall  not be cured within any applicable cure
period  for  such default, if such indebtedness of Borrower or SafeGuard Florida
is an amount greater than $1,000,000 in each case or in the aggregate, provided,
                                                                       --------
however, neither Borrower nor SafeGuard Florida shall be deemed in default under
-------
any  capital  lease as a result of a good faith dispute between Borrower and the
lessor  regarding  the  exercise price of a fair market value purchase option of
the  equipment  under  such  capital  lease.

     9.   HOLDER'S RIGHTS ON DEFAULT.  On the occurrence of an Event of Default,
the  Holder may (i) declare the entire outstanding amount due on this Note to be
immediately  due  and  payable,  in  which  case  this Note shall become due and
payable  both  as  to  principal  and  interest,  and  initiate legal action for
collection  of this Note, (ii) pursue its rights under the Pledge Agreement, and
(iii)  pursue  the  other  remedies  under  applicable  law,  the Stock Purchase
Agreement,  or  any  Related  Agreement  that  Holder  deems  appropriate.

     10.  DEFAULT  RATE  OF  INTEREST.  From and after an Event of Default until
the  default  is cured, interest shall accrue on this Note in an amount equal to
twelve  percent  (12%)  per  annum.

     11.  CONVERSION.

     (a)  The Holder of this Note has the right at the Holder's option, but only
prior  to payment in full of the principal balance of this Note, to convert this
Note  in  whole  or  in part into fully paid and non-assessable shares of Common
Stock  of  Borrower,  at  any  time  after  the  date  of  this Note, in minimum
installments  of  at  least $500,000.  The number of shares of Common Stock into
which  this  Note may be converted (the "CONVERSION SHARES") shall be determined
by  dividing  the  outstanding  principal  balance hereof to be converted by the
Conversion  Price  (defined  below)  in  effect  at the time of conversion.  The
Conversion  Price  initially will be $1.625, and will be adjusted as hereinafter
provided  (the  "CONVERSION  PRICE").

     (b)  To  convert  this  Note,  the  Holder shall surrender this Note at the
principal  office  of  Borrower in Aliso Viejo, California together with written
notice  to  Borrower  of  the  election  to

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<PAGE>
convert this Note, and shall state the principal amount to be converted.  Unless
the  shares  of Common Stock issuable on conversion are to be issued in the same
name  as  the  name  in  which  this  Note  is  registered,  this  Note shall be
accompanied  by  an  instrument  of  transfer.  Borrower  shall  promptly issue,
execute  and  deliver to the Holder a certificate or certificates for the number
of  shares  of  Common  Stock  to  which  the  Holder shall be entitled upon the
conversion.  The  conversion  shall  be deemed to have been effected immediately
prior to the close of business on the date that the Holder surrenders this Note,
and  the  person  entitled  to  receive  shares  of  Common  Stock issuable upon
conversion  will  be treated for all purposes as the record holder or holders of
such  shares  of  Common  Stock  as  of  that  date.  All shares of Common Stock
delivered  on  conversion  of this Note will, upon delivery, be duly and validly
issued  and  fully paid and nonassessable, free of all liens and charges and not
subject  to  any  preemptive  rights.

     (c)  Borrower  shall  pay all interest on the principal amount of this Note
surrendered  for  conversion  accrued to the date of conversion.  Borrower shall
pay  any  and  all  taxes, documentary, stamp or similar issue or transfer taxes
that  are  payable  with  respect to the issuance or delivery of Common Stock on
conversion  of  this  Note; provided, that the Borrower shall not be required to
pay any tax payable in respect of any transfer involved in the issue or delivery
of shares of Common Stock in a name other than that of the Holder.

     12.  ADJUSTMENT  ON  CHANGES  IN  STOCK.

     (a)  GENERALLY.  The  Conversion  Price  and the number of shares of Common
          ---------
Stock  issuable  upon the conversion of this Note shall be subject to adjustment
for  transactions entered into after the date of the Stock Purchase Agreement as
follows:

          (i)  Except  as  hereinafter  provided  in  Section 12(c), if Borrower
     shall  at any time after the execution date of the Stock Purchase Agreement
     issue  or  sell  any  shares  of  Common  Stock  (including  shares held in
     Borrower's treasury) for a consideration per share less than the Conversion
     Price  (or, if an adjusted Conversion Price shall be in effect by reason of
     a  previous  adjustment  under this Section 12 as provided below, then less
     than  the adjusted Conversion Price), 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  will  be  the sum of (A) 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  (B)  the  consideration  received  by the Borrower upon such issue or
     sale,  and  the  denominator of which shall be the product of (Y) the total
     number  of  shares of Common Stock outstanding immediately after such issue
     or sale, multiplied by (Z) the Conversion Price in effect immediately prior
     to  such  issue  or  sale.

          (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  Borrower  for such shares (or, if shares of Common Stock are offered by
     Borrower  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

                                        7
<PAGE>
     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.

          (iii) In case of the issuance or sale (otherwise than as a dividend or
     other  distribution  on  or  subdivision  of  any  stock  of Borrower or on
     conversion or exchange of other securities of Borrower) 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  Borrower, 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 Borrower 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.

     (b)  For  purposes  of  subparagraph  (a)(i),  the  following subparagraphs
(b)(i) to (b)(viii) also apply to conversion of this Note to Common Stock:

          (i)  ISSUANCE  OF  RIGHTS  OR  OPTIONS.  In  case  the Borrower in any
               ---------------------------------
     manner  issues (whether directly or by assumption in a merger or otherwise)
     warrants  or  other  rights  to  subscribe  for  or purchase, or options to
     purchase,  Common  Stock  or  stock  or  securities  convertible  into  or
     exchangeable  for  Common  Stock  (the  warrants,  rights  or  options  are
     "OPTIONS"  and  the  convertible  or  exchangeable  stock or securities are
     "CONVERTIBLE  SECURITIES"),  whether  or  not  the  Options  or Convertible
     Securities  are  immediately  exercisable,  and  the  price  per  share
     (determined,  for  a  formula  price, based on current circumstances or, if
     dependent  on  future  circumstances, facts that would result in the lowest
     price  per  share)  for  which  Common  Stock  is  issuable on the Options'
     exercise  or  on  the  conversion or exchange of the Convertible Securities
     (determined  by  dividing  (1)  the  total  amount,  if any, payable to the
     Borrower  as  consideration for the Option grant, plus the aggregate amount
     of additional consideration payable to the Borrower on the Option exercise,
     plus, in the case of any Options that relate to Convertible Securities, any
     consideration  payable  on  the issue or sale of the Convertible Securities
     and  on  their conversion or exchange, by (2) the total number of shares of
     Common  Stock  issuable  upon the Options' exercise or on the conversion or
     exchange  of  Convertible  Securities issuable on the Options' exercise) is
     less  than  the  Conversion  Price  in effect immediately before the Option
     grant,  the total number of shares of Common Stock issuable on the Options'
     exercise  or  on  conversion  or  exchange  of  any  Convertible Securities
     issuable  on the Options' exercise will be deemed issued for such price per
     share  on  the  date  of  the  Options' grant and thereafter will be deemed
     outstanding.  Except  as  otherwise  provided in subparagraph (b)(iii), the
     Conversion  Price  will  not  be  further adjusted when the Common Stock is
     actually  issued  on  exercise  of the Options or conversion or exchange of
     Convertible  Securities.

                                        8
<PAGE>
          (ii)  ISSUANCE OF CONVERTIBLE SECURITIES.  In case the Borrower in any
                ----------------------------------
     manner  issues (whether directly or by assumption in a merger or otherwise)
     or  sells  Convertible Securities, whether or not the rights to exchange or
     convert  the  Convertible  Securities  are immediately exercisable, and the
     price  per  share (determined, in the case of a formula price, on the basis
     of  current  circumstances  or,  if  dependent on future circumstances, the
     facts would result in the lowest price per share) for which Common Stock is
     issuable  upon  the  conversion or exchange (determined by dividing (1) the
     total amount payable to the Borrower as consideration for the issue or sale
     of  the  Convertible  Securities,  plus  the aggregate amount of additional
     consideration,  if  any, payable to the Borrower on the their conversion or
     exchange,  by  (2)  the  total number of shares of Common Stock issuable on
     conversion or exchange of all such Convertible Securities) is less than the
     Conversion  Price  in effect immediately before the issue or sale, then the
     total number of shares of Common Stock issuable upon conversion or exchange
     of  the  Convertible  Securities will be deemed to be issued for such price
     per share as of the date of the issue or sale of the Convertible Securities
     and  thereafter  will  be  deemed  outstanding, provided that (a) except as
     provided  in subparagraph (b)(iii), no further adjustment of the Conversion
     Price  will  be  made otherwise when the Common Stock is actually issued on
     conversion or exchange of the Convertible Securities and (b) the Conversion
     Price  will  not  be  further  adjusted pursuant to this subsection for the
     issue  or  sale  of  Convertible  Securities  on the exercise of Options to
     purchase  the  Convertible  Securities  if the Conversion Price has been or
     will  be  adjusted for the transaction pursuant to other provisions of this
     paragraph  (b).

          (iii)  CHANGE  IN OPTION PRICE OR CONVERSION RATE.  Upon the happening
                 ------------------------------------------
     of  any of the following events, namely, if the purchase price provided for
     in  any  Option  referenced  in  subparagraph  (b)(i),  the  additional
     consideration,  if  any,  payable  upon  the  conversion or exchange of any
     Convertible  Securities  referred  to in subparagraph (b)(i) or (b)(ii), or
     the rate at which Convertible Securities referred to in subparagraph (b)(i)
     or (b)(ii) are convertible into or exchangeable for Common Stock changes at
     any  time  (including,  but  not  limited to, changes under or by reason of
     provisions  designed  to protect against dilution), the Conversion Price in
     effect at the time of such event will be readjusted to the Conversion Price
     which would have been effective at that time had the Options or Convertible
     Securities  still  outstanding  provided  for  such changed purchase price,
     additional  consideration  or  conversion  rate,  as  the case may be, when
     initially  granted, issued or sold; and on the expiration of the Options or
     the  termination  of  a  right  to  convert  or  exchange  any  Convertible
     Securities,  the  Conversion  Price then in effect will be increased to the
     Conversion  Price  that  would  have  been  in  effect  at  the time of the
     expiration  or  termination had the Options or Convertible Securities never
     been  issued.

          (iv)  STOCK DIVIDENDS AND SUBDIVISIONS.  In case the Borrower declares
                --------------------------------
     a dividend or makes any other distribution on stock of the Borrower payable
     in  Common  Stock,  Options,  or  Convertible Securities, the Common Stock,
     Options, or Convertible Securities, as the case may be, issuable in payment
     of  the dividend or distribution will be deemed to have been issued or sold
     (as of the record date) without consideration (except for the consideration
     payable  to exercise any Options or convert any Convertible Securities). In
     case  the  Borrower  subdivides  its  outstanding  shares  of  Common Stock

                                        9
<PAGE>
     into  a  greater number of shares, the Conversion Price then in effect will
     be proportionately reduced to reflect the subdivision. In case the Borrower
     combines  its  outstanding  shares  of  Common Stock into a fewer number of
     shares,  the  Conversion  Price  then  in  effect  will  be proportionately
     increased  to  reflect the combination. An adjustment made pursuant to this
     paragraph  (b)(iv)  will  become effective retroactively (x) in the case of
     any  such  dividend  or  distribution,  to a date immediately following the
     close  of  business  on the record date for determination of the holders of
     Common  Stock  entitled to receive such dividend or distribution, or (y) in
     the  case  of any such subdivision or combination, to the close of business
     on the day upon which such corporate action becomes effective.

          (v)  CONSIDERATION  FOR  STOCK.  In  case  any shares of Common Stock,
               -------------------------
     Options,  or  Convertible  Securities  are  issued  or  sold  for cash, the
     consideration deemed to be received will be the amount actually received by
     the  Borrower,  without  deduction  of  any  expenses  incurred  or  any
     underwriting  commissions or concessions paid or allowed by the Borrower in
     connection  with  the issuance or sale. In case any shares of Common Stock,
     Options,  or  Convertible Securities are issued or sold for a consideration
     other  than  cash, the amount of the consideration other than cash received
     by  the Borrower will be the fair value of such consideration as determined
     in  good  faith  by the Borrower's Board of Directors, without deduction of
     any  expenses  incurred or any underwriting commissions or concessions paid
     or allowed by the Borrower in connection with the issuance or sale.

          (vi)  RECORD  DATE.  If  the  Borrower  does  not set a record date to
                ------------
     determine  the  holders  of  its  Common  Stock  entitled  (1) to receive a
     dividend  or  other  distribution  payable  in  Common  Stock,  Options, or
     Convertible  Securities  or  (2) to subscribe for or purchase Common Stock,
     Options,  or  Convertible  Securities, the record date will 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 a dividend or the making of
     another  distribution  or  the  date  of  the  granting  of  such  right of
     subscription  or  purchase,  as  the  case  may  be.

          (vii)  TREASURY  SHARES.  The  number  of  shares  of  Common  Stock
                 ----------------
     outstanding  at  any given time does not include shares owned or held by or
     for  the  account  of Borrower, and its disposition of these shares will be
     considered  an  issue  or sale of Common Stock for purposes of this Section
     12.

          (viii)  REPORTS  AS  TO ADJUSTMENTS.  Whenever the Conversion Price is
                  ---------------------------
     adjusted as provided in this subsection, any adjustment shall be rounded to
     three  decimal points and Borrower will promptly compute the adjustment and
     furnish  to  the  Holder  a  certificate,  signed  by a principal financial
     officer  of Borrower, setting forth the new Conversion Price and the number
     of shares of Common Stock into which the Note is convertible as a result of
     the  adjustment,  a  brief statement of the facts requiring the adjustment,
     the  computation  of  the  adjustment,  and when the adjustment will become
     effective.

                                       10
<PAGE>
     (c)     CERTAIN  ISSUES  OF  COMMON  STOCK  EXCEPTED.  Notwithstanding  the
             --------------------------------------------
foregoing  provisions,  Borrower  will  not be required to adjust the Conversion
Price  as  a  result  of  the  following  transactions:

          (i)  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 the adjustment was made upon the issuance of
     such  options,  rights, or convertible or exchangeable securities by reason
     of  the  provisions  of  Section  12.

          (ii)  the issuance to employees, directors, consultants or others with
     similar  relationships  with  Borrower  or  its  subsidiaries of options to
     purchase,  at  a  price  equal  to  or  in  excess  of fair market value as
     determined  by  the  Board  of  Directors of Borrower at the time of grant,
     shares  of Common Stock and the issuance of shares of Common Stock upon the
     exercise  of  any  such  options.

          (iii)  the  issuance  or  sale  of shares of Common Stock to officers,
     directors  or employees of, or consultants to, Borrower pursuant to a grant
     or  plan  approved  by  the  Board  of  Directors  of  Borrower.

          (iv)  the  issuance  of  shares  of  Common  Stock  or any security or
     instrument  exchangeable  for or convertible into shares of Common Stock 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  Borrower.

          (v)  the  issuance of Common Stock for any contribution by Borrower to
     its  401(k)  plan.

          (vi) the issuance of Common Stock upon the conversion of the preferred
     stock of Borrower and the stock options of Borrower that are outstanding on
     the  date  of  this  Note.

          (vii) the issuance of Common Stock or other securities upon conversion
     of  this  Note.

          (viii)  the  issuance  of  Common  Stock to the Holder pursuant to the
     Stock  Purchase  Agreement.

     (d)  ADJUSTMENTS  FOR  MERGER,  CONSOLIDATION,  ETC.  In  the  case  of any
          ----------------------------------------------
classification,  reclassification,  or  other  reorganization  of the Borrower's
capital  stock,  or  in  the case of the merger or consolidation of the Borrower
with  or  into  another corporation, or the conveyance to another corporation of
all  or  any  major  portion  of  the  Borrower's  assets,  then, as part of the
classification, reclassification, merger, consolidation, or conveyance, adequate
provision  will be made for the Holder, on exercise of its conversion privilege,
to receive on the same basis and conditions set forth in Section 11 (as modified
by Section 12) with respect to the Common Stock, the stock, securities, or other
property  that  the  Holder  would  have  been  entitled  to  receive  on  such
classification,  reclassification,  merger, consolidation, or conveyance, if the
Holder  had  exercised  the  conversion  privilege  immediately  before  the
classification,  reclassification,  merger,

                                       11
<PAGE>
consolidation, or conveyance, and in any such case appropriate provision will be
made  with respect to the rights and interests of the Holder to the end that the
provisions of Section 11 (including without limitation, provision for adjustment
of  the Conversion Price in this Section 12) will be applicable to the shares of
stock,  securities,  or  other  property  deliverable  on  the  exercise  of the
conversion  privilege;  and,  as  a  condition  of any consolidation, merger, or
conveyance,  any  corporation  that  succeeds  to  the Borrower by reason of the
merger,  consolidation  or  conveyance will assume the obligation to deliver, on
exercise  of  the conversion privilege, the shares of stock, securities or other
considerations  that  the  Holder  is entitled to receive pursuant to this Note.

     (e)  CERTAIN  NOTICES.  If  at  any  time  Borrower  proposes  to:
          -----------------

          (i)  declare  a  cash  dividend  on  its  Common  Stock;

          (ii) declare a dividend on its Common Stock payable in stock or make a
     special  dividend or other distribution to the holders of its Common Stock;

          (iii)  reorganize, or reclassify the capital stock of the Borrower, or
     consolidate,  merge  or  otherwise  combine  with,  or  sell  of  all  or
     substantially  all  of  its  assets  to,  another  corporation;

          (iv)  voluntarily  or  involuntarily dissolve, liquidate or wind up of
     the  affairs  of  the  Borrower;  or

          (v)  redeem  or purchase any shares of its capital stock or securities
     convertible  into  its  capital  stock;

then, Borrower shall give to the Holder, by certified or registered mail, (A) at
least  twenty  (20) days' prior written notice of the date on which the books of
Borrower  shall  close or a record shall be taken for the dividend, distribution
or  subscription rights or for determining rights to vote in respect of any such
reorganization,  reclassification,  consolidation,  merger,  sale,  dissolution,
liquidation  or  winding  up,  and  (B)  in  the  case  of  such reorganization,
reclassification,  consolidation,  merger,  sale,  dissolution,  liquidation  or
winding up, at least twenty (20) days' prior written notice of the date when the
event will take place.  Any notice required by clause (A) shall also specify, in
the  case of any such dividend, distribution or subscription rights, the date on
which  the  holders  of  Common  Stock  will be entitled thereto, and any notice
required  by  clause  (B)  shall specify the date on which the holders of Common
Stock  shall  be entitled to exchange their Common Stock for securities or other
property  deliverable upon such reorganization, reclassification, consolidation,
merger,  sale,  dissolution,  liquidation  or  winding  up,  as the case may be.

     (f)  DISTRIBUTIONS  TO SHAREHOLDERS.  If Borrower does any of the following
          ------------------------------
(a  "DILUTIVE  EVENT")  after the execution date of the Stock Purchase Agreement
(but  before  conversion of this Note): (i) makes any distribution of its assets
to holders of its Common Stock as a liquidation or partial liquidation or return
of  capital;  (ii)  declares or distributes to the holders of Common Stock (A) a
noncash dividend payable in any property or securities of Borrower, (B) any cash
payable  by  dividend  or otherwise out of the capital surplus (as distinguished
from  the

                                       12
<PAGE>
earned  surplus) of Borrower, or (C) cash, property, or securities in connection
with  a  spin-off, split-up, or similar transaction; then upon the conversion of
this  Note after the record date for, or the occurrence of, each Dilutive Event,
the  Holder  will  be  entitled  to receive, in addition to the shares of Common
Stock  otherwise issuable upon conversion of this Note, the other securities and
property  (including  cash)  resulting from every Dilutive Event that the Holder
would  have  been  entitled to receive if the Holder had (1) converted this Note
immediately  before  the  Dilutive  Event  and  had been the record owner of the
number  of shares of Common Stock issuable pursuant to the conversion since that
time,  and  (2)  had  participated  in  every Dilutive Event as a holder of that
number of shares of Common Stock and had retained all shares of Common Stock and
other  or  additional securities and property (including cash) receivable during
that period, after giving effect to all the Dilutive Events that occurred during
that  period.  Whenever an adjustment occurs in the number or kind of securities
and other property (including cash) issuable or distributable upon conversion of
this Note, the Borrower promptly shall deliver to the Holder a notice describing
in  reasonable detail the facts requiring the adjustment and the number and kind
of  securities  and  other property (including cash) issuable upon conversion of
this  Note  after  the  adjustment.

     13.  WAIVERS.  Except  as  expressly  set  forth  herein,  Borrower  waives
demand,  presentment  for  payment,  protest,  notice  of  protest and notice of
nonpayment.  Any  discharge  or  release of any party who is or may be liable to
Holder for the indebtedness represented by this Note will not have the effect of
releasing  any  other  party  or  parties,  which  will remain liable to Holder.
Holder's  acceptance  of payment other than in accordance with the terms of this
Note,  or Holder's subsequent agreement to extend or modify the repayment terms,
or  Holder's  failure  or  delay in exercising any rights or remedies granted to
Holder,  will  likewise  not  have the effect of releasing Borrower or any other
party  or parties from their respective obligations to Holder.  In addition, any
failure  or  delay  on  the  part  of  Holder  to exercise any of the rights and
remedies  granted to Holder shall not have the effect of waiving any of Holder's
rights  and remedies under this Note.  Any partial exercise of any rights and/or
remedies granted to Holder shall furthermore not be construed as a waiver of any
other  rights  and  remedies,  it  being  Borrower's  intent  and agreement that
Holder's  rights and remedies shall be cumulative in nature.  Should any default
event  occur  or exist under this Note, any waiver or forbearance on the part of
Holder  to  pursue  the rights and remedies available to Holder will bind Holder
only  to  the extent that Holder agrees in writing to the waiver or forbearance.

     14.  CAPTION  HEADINGS.  Caption  headings of the sections of this Note are
for  convenience  purposes only and are not to be used to interpret or to define
their  provisions.  In this Note, whenever the context so requires, the singular
includes  the  plural  and  the  plural  also  includes  the  singular.

     15.  SEVERABILITY.  If  any  provision  of this Note is held to be invalid,
illegal or unenforceable by any court, that provision shall be deleted from this
Note  and  the  balance  of  this  Note  shall  be interpreted as if the deleted
provision  never  existed.

     16.  SAVINGS  CLAUSE.  Borrower  and  Holder intend to comply strictly with
applicable  law regulating the maximum allowable rate or amount of interest that
Holder  may  charge  and  collect on the loan by Holder to Borrower evidenced by
this  Note.  Accordingly,  and  notwithstanding  anything  in  this  Note to the
contrary,  the  maximum,  aggregate  amount  of

                                       13
<PAGE>
interest  and  other charges constituting interest under applicable law that are
payable,  chargeable,  or receivable under the Note shall not exceed the maximum
amount  of  interest  now  allowed  by  applicable  law or any greater amount of
interest allowed because of a future amendment to existing law.  Borrower is not
liable  for  any interest in excess of the maximum lawful amount, and any excess
interest  charged  or collected by Holder will constitute an inadvertent mistake
and,  if charged but not paid, will be cancelled automatically, or if paid, will
be  either  refunded  to  Borrower or credited against the outstanding principal
balance  of  the  Note,  at  the  election  of  Borrower.

     17.  ATTORNEY'S  FEES  AND COSTS.  In the event of an Event of Default, and
in the event that thereafter this Note is placed in the hands of an attorney for
collection,  or  in the event this Note is collected in whole or in part through
legal  proceedings of any nature, then and in any such case Borrower promises to
pay  all reasonable costs of collection, including but not limited to reasonable
attorneys'  fees  incurred  by  the Holder hereof on account of such collection,
whether  or  not  suit  is  filed.

     18.  WAIVER OF JURY TRIAL.  BORROWER AND HOLDER KNOWINGLY, VOLUNTARILY, AND
INTENTIONALLY  WAIVE  ALL  RIGHTS  TO  A  JURY TRIAL IN ANY LAWSUIT, PROCEEDING,
COUNTERCLAIM,  OR  OTHER  LITIGATION ARISING UNDER OR RELATING TO THIS NOTE, THE
STOCK PURCHASE AGREEMENT AND ANY OF THE RELATED AGREEMENTS.  BORROWER AND HOLDER
HAVE  FULLY DISCUSSED THIS PROVISION AND AGREE THAT THIS WAIVER IS SUBJECT TO NO
EXCEPTIONS AND WAS A MATERIAL INDUCEMENT FOR HOLDER TO MAKE THE LOAN TO BORROWER
EVIDENCED  BY  THIS  NOTE.

     19.  GOVERNING  LAW;  VENUE.  The  laws  of  the  State  of Florida and the
federal  laws  of  the  United  States  of  America, excluding the laws of those
jurisdictions  pertaining  to  the  resolution  of  conflict  with laws of other
jurisdictions,  govern  the  validity,  construction,  enforcement,  and
interpretation  of this Note.  The exclusive venue for all actions to enforce or
interpret  the  provisions  of  this  Agreement  will  be courts of the State of
Florida  or  of  the United States having jurisdiction over Hillsborough County,
Florida.  All  parties  irrevocably  waive  any  objection  they may have to the
laying  of  venue  of  any suit, action or proceeding arising out of or relating
hereto  brought  in  any  such court, irrevocably waives any claim that any such
suit, action or proceeding so brought has been brought in an inconvenient forum,
and  further  waives  the  right  to  object  that  such  court  does  not  have
jurisdiction  over such party.  No party will bring a suit, action or proceeding
in  respect  of  this  Agreement  in  any  other  jurisdiction.

     20.  VOTING  RIGHTS.  The Holder of this Note shall have no right and power
to  vote  the  shares  of  Common  Stock  into which this Note is convertible as
determined from time to time by the provisions hereof unless and until this Note
is  converted  and  such  shares  are  issued  to  the  Holder.

     21.TRANSFERABILITY.  This  Note  evidenced hereby may not be pledged, sold,
assigned  or transferred except upon satisfaction of the conditions specified in
the  legend  on  the  face  of  this  certificate.

                                       14
<PAGE>
     22. SUCCESSORS AND  ASSIGNS.  All of the covenants, stipulations, promises,
and  agreements  in  this  Note  by  or  on  behalf  of  Borrower shall bind its
successors  and  assigns,  whether  so expressed or not; provided, however, that
Borrower may not, without the prior written consent of the Holder hereof, assign
any rights, duties, or obligations under this Note.  Any assignment in violation
of  the  foregoing  shall  be  null  and  void.

                           [SIGNATURE PAGES TO FOLLOW]

                                       15
<PAGE>
                              AMENDED AND RESTATED
                       SECURED CONVERTIBLE PROMISSORY NOTE

                                 SIGNATURE PAGE

                                 BORROWER:

                                 SAFEGUARD  HEALTH  ENTERPRISES,  INC.,
                                 a  Delaware  corporation

                                 By:
                                    --------------------------------------------
                                 Name:  Ronald  I.  Brendzel
                                 Title:  Senior  Vice  President  and  Secretary

STATE OF CALIFORNIA,
CITY/COUNTY OF ALISO VIEJO/ORANGE COUNTY, TO WIT:

     On  December 4, 2003, before me, Kathryn S. Viau, Notary Public, personally
appeared Ronald I. Brendzel, personally known to me, to be the person whose name
is  subscribed  to the within instrument and acknowledged to me that he executed
the same in his authorized capacity, and that by his signature on the instrument
the  person,  or  the entity upon behalf of which the person acted, executed the
instrument.

     WITNESS my hand and official seal.

                                  -----------------------------------------
                                  Notary  Public

                                  My Commission Expires: September 16, 2007

                                       16
<PAGE>
                               ELECTION TO CONVERT
                               -------------------

To the Chief Financial Officer of SafeGuard Health Enterprises, Inc.

The  undersigned owner of the accompanying Note hereby irrevocably exercises the
option to convert to shares of Common Stock in accordance with the terms of such
Note,  and directs that the shares issuable and deliverable upon such conversion
be  issued  in  the  name  of  and  delivered  to  the  undersigned.

Dated:
      ------------------------------

COMPLETE  FOR  REGISTRATION  OF  SHARES  OF  COMMON  STOCK ON THE STOCK TRANSFER
RECORDS  MAINTAINED  BY  THE  COMPANY:

--------------------------------------------------------------------------------
Name of Note Holder

Name(s) or Entities in which Common Stock Certificate(s) are to be registered:

--------------------------------------------------------------------------------
Address:
        -----------------------------------------
City, State, Zip Code:
                      ---------------------------

----------------------------------------
Nicholas M. Kavouklis, DMD

--------------------------------------------------------------------------------
Taxpayer Identification Number

                        Principal Portion to be converted
                               (if less than all)

                                $_______________

                       Shares of Common Stock to be Issued

                             _______________ shares

                                       17
<PAGE>

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00064-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00064-of-00352.parquet"}]]