Document:

FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT

This  FIRST  AMENDMENT  TO STOCK PURCHASE AGREEMENT (the "Amendment") is entered
into  as  of  June 17, 2002 by and between SAFEGUARD HEALTH ENTERPRISES, INC., a
Delaware  corporation  (the "Buyer"), NICHOLAS M. KAVOUKLIS, DMD (the "Seller"),
and  PARAMOUNT  DENTAL  PLAN,  INC., (the "Company") dated as of April 24, 2002.

                                    RECITALS:

     A.     The  Buyer,  Seller and the Company (sometimes collectively referred
to as the "Parties") are parties to that certain Stock Purchase Agreement, dated
as  of  April  24, 2002, (the "Agreement") pursuant to which the Buyer agreed to
purchase  all  the  issued and outstanding capital stock of the Company.  Unless
otherwise  defined  herein,  capitalized  terms  used  herein  shall  have  the
respective  meanings  ascribed  thereto  in  the  Agreement.

     B.     The Parties have agreed to amend the Agreement by removing therefrom
the  requirement  that SafeGuard Health Plans, Inc., a Florida Corporation, into
which the Company will be merged effective upon the closing under the Agreement,
execute  and  deliver  a  Security  Agreement  as  described  in  the Agreement.

     C.     The  Parties have agreed to the amendments to the Agreement deleting
the  requirement of the execution and delivery of the Security Agreement and all
references  to  the  Security  Agreement as described below.  Section references
used  herein  refer  to  the  same  section  in  the  Agreement.

                                   AMENDMENT:

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of  which  is  hereby  acknowledged,  the  Parties  do  hereby agree as follows:

1.   The  Exhibit Section of the Table of Contents is hereby amended to delete
the  term  "Exhibit  F Form of Security Agreement" and is replaced with the term
"Exhibit  F  Intentionally  Omitted"  and  Exhibit  F to the Agreement is hereby
deleted  in  its  entirety.

2.   Section  1.2  (b)  shall  be  amended  to  read  as  follows:

     "(b)  The execution and delivery by Buyer of its seven percent (7%) Secured
     Convertible Promissory Note in the original principal amount of $2,625,000,
     in  the form of Exhibit A attached hereto (the "Convertible Note"), secured
                     ---------                       ----------------
     by  a  pledge  of the Pledged Shares pursuant to the Pledge Agreement; and"

3.   Section 5.2 (j) is hereby amended to delete the paragraph in its entirety
and  insert  the  term  "Intentionally  Omitted."

<PAGE>
4.   Section  6.2  (c)  shall  be  amended  to  read  as  follows:

     "(c) the Employment Agreement, the Registration Rights Agreement, the Lease
     Agreement,  and  the  Pledge  Agreement,  each  duly executed by Seller (or
     Paramount  Properties  in  the  case  of  the  Lease  Agreement);"

5.   Section 6.3 (g) is hereby amended to delete the paragraph in its entirety
and  insert  the  term  "Intentionally  Omitted."

6.   Section  9.7  shall  be  amended  to  read  as  follows:

"Remedies;  Default;  Notice  and  Cure.  If  the  Closing  occurs,  each  party
 --------------------------------------
acknowledges  and  agrees that the sole and exclusive remedy with respect to any
and  all  claims  arising  under  this  Agreement  or  in  connection  with  the
transactions  contemplated  by  this  Agreement  (but excluding claims under the
Lease Agreement, Employment Agreement, Convertible Note, and Registration Rights
Agreement) shall be pursuant to the indemnification provisions set forth in this
Article  9.  No  party  shall  be  deemed in breach of its obligations hereunder
----------
unless it has received written notice from the other party of noncompliance with
a  term  or  provision  of  this  Agreement  specifying  the  specific  item  of
noncompliance  and  the  defaulting  party has failed to cure such noncompliance
within  10  days  after  receipt  of such notice; provided, however, that if the
                                                  --------  -------
nature  of such default is such that it cannot be cured solely by the payment of
money  and  that  more than 10 days may be reasonably required to effect a cure,
then  the  defaulting  party  shall not be deemed to be in default if such party
shall commence such cure within such 10 day period and thereafter diligently and
in good faith prosecutes such cure to successful completion within 60 days after
receipt  of such notice.  Any liability for indemnification under this Agreement
will  be  determined  without  duplication of recovery by reason of the state of
facts  giving  rise  to  the  liability constituting the breach of more than one
representation,  warranty,  covenant  or  agreement."

7.   The  definition of "Related Agreements" in Article 11 shall be amended to
read  as  follows:

""Related  Agreements"  means  the  Contracts that are to be entered into at the
  -------------------
Closing  or  otherwise  pursuant to this Agreement, and includes the Convertible
Note,  Pledge  Agreement,  Registration  Rights Agreement, Employment Agreement,
Lease  Agreement,  and  Guaranty."

8.   The  term  and  definition of "Security Agreement" in Article 11 shall be
deleted  in  its  entirety.

9.   All  other  references  to  the  Security  Agreement contained within the
Related  Agreements  are  hereby  deleted.

10.   All  other  terms  and  conditions  of  the  Agreement  and  the Related
Agreements  not  otherwise  amended  by this Amendment shall remain the same and
unchanged  and the Agreement is hereby ratified and confirmed as amended by this
First  Amendment.

<PAGE>
                   FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT

                              BUYER SIGNATURE PAGE

The  undersigned  execute  the  First  Amendment to Stock Purchase Agreement and
authorize  this  signature  page  to  be  attached to a counterpart of the First
Amendment  executed  by  the  other  parties  to  the  First  Amendment.

Executed as of the day and year first above written.

                                      BUYER:

                                      SAFEGUARD HEALTH ENTERPRISES, INC.,
                                      a Delaware corporation

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

                                      By:         /s/ Stephen J. Baker
                                           -------------------------------------
                                           STEPHEN J. BAKER
                                           Executive Vice President and Chief
                                           Operating Officer

<PAGE>
                   FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT

                        SELLER AND COMPANY SIGNATURE PAGE

The  undersigned  execute  the  First  Amendment to Stock Purchase Agreement and
authorize  this  signature  page  to  be  attached to a counterpart of the First
Amendment  executed  by  the  other  parties  to  the  First  Amendment.

Executed as of the day and year first above written.

                                      SELLER:

                                           /s/ Nicholas M. Kavouklis, DMD
                                      ------------------------------------------
                                      NICHOLAS M. KAVOUKLIS, DMD

                                      COMPANY:

                                      PARAMOUNT DENTAL PLAN, INC.,
                                      a Florida corporation

                                      By:  /s/ Nicholas M. Kavouklis, DMD
                                           -------------------------------------
                                           NICHOLAS M. KAVOUKLIS, DMD
                                           President and Chief Executive Officer

<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.

TRANSFER OF THIS NOTE AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF
THIS  NOTE  ARE  SUBJECT  TO  THE  TERMS AND PROVISIONS OF A REGISTRATION RIGHTS
AGREEMENT  DATED  THE  SAME  DATE AS THE NOTE, A COPY OF WHICH IS ON FILE AT THE
PRINCIPAL OFFICE OF SAFEGUARD HEALTH ENTERPRISES, INC.  THIS NOTE AND THE SHARES
OF COMMON STOCK ISSUABLE ON CONVERSION OF THIS NOTE MAY NOT BE SOLD OR OTHERWISE
DISPOSED,  EXCEPT  IN  ACCORDANCE  WITH THAT AGREEMENT.  A COPY OF THE AGREEMENT
WILL  BE  FURNISHED  WITHOUT  CHARGE  TO  THE  HOLDER OF THIS NOTE ON RECEIPT BY
SAFEGUARD  HEALTH  ENTERPRISES,  INC.  AT  ITS  PRINCIPAL  PLACE  OF BUSINESS OR
REGISTERED  OFFICE OF A WRITTEN REQUEST FROM THE HOLDER REQUESTING A COPY.  THIS
NOTE  IS  SECURED  BY  A  STOCK  PLEDGE AGREEMENT OF EVEN DATE HEREWITH, BETWEEN
HOLDER  AND  SAFEGUARD  HEALTH  ENTERPRISES,  INC.

                       SECURED CONVERTIBLE PROMISSORY NOTE

Borrower:     SAFEGUARD HEALTH ENTERPRISES, INC.

Holder:       NICHOLAS M. KAVOUKLIS, DMD

Initial Principal Amount: $2,625,000               Date of Note: August 30, 2002

     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  Two  Million Six Hundred Twenty Five Thousand and 00/100
Dollars ($2,625,000), 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  is  merging into SafeGuard Health Plans,
Inc.,  a  Florida  corporation  ("SAFEGUARD  FLORIDA").

<PAGE>
     2.     MATURITY.  Borrower  shall  pay  the outstanding principal amount of
this  Note,  together  with  any accrued unpaid interest, on the earliest of (a)
August  30,  2005,  (b)  at the Holder's election, the occurrence of a Change in
Control  (as defined in the next sentence), 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  the same date as this Note by and between Borrower
and  Kavouklis,  all  subject  to the right of acceleration described below (the
"MATURITY  DATE").   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 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.  Except  as  otherwise  provided  in  this Note, this Note
shall be due and payable in equal monthly installments of principal and interest
in the amount of $80,794.56, and in a final payment of all outstanding principal
and  unpaid accrued interest on the Maturity Date.  Each payment will be due and
payable  on the first Business Day of each month of each year during the term of
this  Note,  commencing  on  the first Business Day of the first full month that
commences  more  than  fifteen  days  after this Note is executed and delivered.
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  of  principal  and  interest specified above will be adjusted. The
parties  will  recalculate  the  amount  of  the  equal  monthly installments of
principal  and  interest  based  on  the  outstanding principal amount after the
conversion  and  interest  thereon  over  the  remaining  term  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
             ----------
material  respects  with all applicable laws, ordinances, rules, regulations and
governmental  requirements.

<PAGE>
     (b)     Conduct  of  Business;  Maintenance of Corporate Status.  Continue,
             -------------------------------------------------------
and  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  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
-------
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
                                    -------- -------  -------
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.

     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,  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

<PAGE>
     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 (i)
     transactions  entered  in  good faith and on terms comparable to those that
     could be obtained from an unaffiliated third party, and (ii) the consulting
     agreement in effect on the date of this Note between Borrower and Steven J.
     Baileys.  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 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 5% or more.

          (d)     SafeGuard FloridaActions.  Without the Holder's prior consent,
                  ------------------------
     cause  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 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

<PAGE>
          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  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 the same date as this Note, 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-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
             ----------------------------------------
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
             ---------------------------------------------------
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  substantial  part  of  the  property  of  the

<PAGE>
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 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 twelve (12) months
     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

<PAGE>
     election  to  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, in form
     satisfactory  to  Borrower,  duly  executed  by  the Holder or the Holder's
     authorized attorney, together with an amount sufficient to pay any transfer
     or  similar  tax. 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 the 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 the
     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.

<PAGE>
               (i)     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  therefor 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 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.

               (ii)     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 therefor
          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.

               (iii)     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

<PAGE>
          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.

               (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

<PAGE>
     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  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.

<PAGE>
               (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.

          (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.

<PAGE>
               (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, 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

<PAGE>
     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 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.

<PAGE>
     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  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

<PAGE>
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.

     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]

<PAGE>
                     SECURED CONVERTIBLE PROMISSORY NOTE

                       SIGNATURE PAGE

                       BORROWER:

                       SAFEGUARD  HEALTH  ENTERPRISES,  INC.,
                       a  Delaware  corporation

                       By:    /s/  Stephen  J.  Baker
                              --------------------------------------------------
                       Name:  Stephen  J.  Baker
                              --------------------------------------------------
                       Title: Executive Vice President & Chief Operating Officer
                              --------------------------------------------------

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

STATE  OF  CALIFORNIA
COUNTY  OF  ORANGE,  TO  WIT:

     I  HEREBY  CERTIFY  that  on  this  4th day of September, 2002, before me a
Notary  Public of said State/Commonwealth, personally appeared Stephen J. Baker,
Executive  Vice  President  &  Chief  Operating  Offier  of  SafeGuard  Health
Enterprises,  Inc., known to me to be the person whose name is subscribed to the
foregoing instrument and acknowledged that he executed the same for the purposes
therein  contained.

     WITNESS  my  hand  and  Notarial  Seal.

                                   /s/  Kathryn S. Viau
                              --------------------------------------------------
                                   Notary  Public

                              My  Commission  Expires:  9/10/03

<PAGE>
STATE  OF  CALIFORNIA,
COUNTY  OF  ORANGE,  TO  WIT:

     I  HEREBY  CERTIFY  that  on  this  4th day of September, 2002, before me a
Notary  Public  of  said  State/Commonwealth,  personally  appeared  Ronald  I.
Brendzel,  Senior  Vice President and Secretary of SafeGuard Health Enterprises,
Inc.,  known  to  me  to be the person whose name is subscribed to the foregoing
instrument  and  acknowledged that he executed the same for the purposes therein
contained.

     WITNESS  my  hand  and  Notarial  Seal.

                                   /s/  Kathryn  S.  Viau
                             ---------------------------------------------------
                                   Notary  Public

                              My  Commission  Expires:9/10/03

<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:
         ------------------------

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

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

                        Principal Portion to be converted
                               (if less than all)

                                $_______________

                      Shares of Common Stock to be Issued

                             _______________ shares

<PAGE>

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00043-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00043-of-00352.parquet"}]]