Exhibit 10.40

            SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT


         THIS SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (this
"Second Amendment"), executed this 9th day of September 2002, is by and among
BIRNER DENTAL MANAGEMENT SERVICES, INC., a Colorado corporation (the
"Borrower"), and KEYBANK NATIONAL ASSOCIATION, a national banking association
(the "Lender").

R E C I T A L S:
---------------

         A. On October 31, 1996,  Borrower and Lender  entered into that certain
Credit Agreement,  as amended (the "Credit Agreement")  pursuant to which Lender
agreed to make available to Borrower a revolving credit facility,  in an amended
amount not to exceed  $20,000,000 upon the terms and conditions set forth in the
Credit Agreement, as amended.

         B. On December 17, 2001,  Borrower and Lender  amended and restated the
terms and conditions of the Credit  Agreement  pursuant to that certain  Amended
and Restated  Credit  Agreement (the "Amended Credit  Agreement").  Borrower and
Lender  further  amended the Amended  Credit  Agreement  by that  certain  First
Amendment to Amended and Restated Credit Agreement dated April 30, 2002.

         C. Borrower  desires to further  modify certain terms and conditions of
the  Amended  Credit   Agreement,   and  Lender  is  willing  to  agree  to  the
modifications  contained in this Second  Amendment,  on the terms and conditions
set forth herein.

         D. All references herein to the Loan Documents shall refer collectively
to the Amended Credit Agreement,  the Revolving Credit Note, the Term Loan Note,
the Amended and Restated Security Agreement,  UCC-1 Financing Statements (all as
defined in the Amended Credit  Agreement) and any other instruments or documents
evidencing, securing or relating to the Loans, as amended by the First Amendment
and by this Second Amendment.

         NOW,  THEREFORE,  in consideration of the foregoing  premises and other
good and valuable consideration,  the receipt, adequacy and sufficiency of which
are hereby acknowledged, the parties hereto covenant and agree as follows:

1.       AMENDED CREDIT  AGREEMENT  AMENDMENTS.  The Amended Credit Agreement is
         hereby amended as follows:


         (i)  Deletion of Defined  Term.The  defined term "Base Rate Margin" set
forth in Section 1.1 is hereby deleted in its entirety.

         (ii)  Modification  of  Interest on Loans.  Section  2.6(a) and (b) are
hereby deleted in its entirety and replaced with the following:

         "(a) With  respect to any Base Rate Loan,  at a rate per annum equal to
the Base  Rate,  which rate shall  change  when and as the Base Rate  changes in
accordance with this Agreement.

         (b) The Borrower shall pay to the Lender accrued interest on the unpaid
principle balance of each Base Rate Loan on the last day of each month."

2.       LOAN DOCUMENT AMENDMENTS.  Each of the Loan Documents is hereby amended
         to conform to the  amendments  to the Amended  Credit  Agreement as set
         forth in Paragraph 1.

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         3.  DOCUMENT  RATIFICATION.  Subject  to the  amendments  set  forth in
Paragraph  1 above,  all of the terms and  conditions  contained  in the Amended
Credit  Agreement and the other Loan Documents,  shall remain  unmodified and in
full force and effect.

         4.RELEASE.  Except as specifically  set forth herein,  the execution of
this Second  Amendment  by Lender does not and shall not  constitute a waiver of
any  rights  or  remedies  to which  Lender  is  entitled  pursuant  to the Loan
Documents, nor shall the same constitute a waiver of any default now existing or
which may occur in the  future  with  respect  to the Loan  Documents.  Borrower
hereby agrees that Lender has fully  performed its  obligations  pursuant to the
Loan  Documents  through  the  date  hereof  and  hereby  waives,  releases  and
relinquishes any and all claims whatsoever,  known or unknown,  that it may have
against Lender with respect to the Loan Documents through the date hereof.

         5.  PAYMENT OF COSTS AND FEES;  CONDITIONS  PRECEDENT.  Notwithstanding
anything to the  contrary set forth  herein,  the terms and  provisions  of this
Second  Amendment  shall not be effective  unless and until all of the following
shall have occurred:

         (a) Borrower  shall have  executed  and  delivered to Lender such other
documents,  instruments,  resolutions  and  other  items as may be  required  by
Lender, in form satisfactory to Lender.

         (b) Borrower agrees to pay a fee to Lender in the amount of $5,000 with
respect  to  this  Second  Amendment,  and  further  agrees  to pay  Lender  all
out-of-pocket  expenses incurred by Lender in connection with the preparation of
this Second Amendment,  including, without limitation, the costs and expenses of
Lender 's legal fees incurred in connection with this Second Amendment.

6.       REPRESENTATIONS,   WARRANTIES  AND  COVENANTS  OF  BORROWER.   Borrower
         represents, warrants and covenants to Lender:

         (a) No default or event of default  under any of the Loan  Documents as
modified herein,  nor any event,  that, with the giving of notice or the passage
of time or both,  would be a  default  or an event  of  default  under  the Loan
Documents as modified herein has occurred and is continuing.

         (b)  There  has  been  no  material  adverse  change  in the  financial
condition  of Borrower or any other person whose  financial  statement  has been
delivered to Lender in connection  with the Loan from the most recent  financial
statement received by Lender.

         (c) Each and all representations and warranties of Borrower in the Loan
Documents are accurate on the date hereof.

         (d) Borrower has no claims,  counterclaims,  defenses, or set-offs with
respect to the Loan or the Loan Documents as modified herein.

         (e)The Loan  Documents  as modified  herein are the legal,  valid,  and
binding obligation of Borrower,  enforceable against Borrower in accordance with
their terms.

         (f)  Borrower  shall  execute,  deliver,  and  provide  to Lender  such
additional  agreements,  documents,  and  instruments as reasonably  required by
Lender to effectuate the intent of this First Amendment.

7.       CONTROLLING  LAW.  The terms and  provisions  of this Second  Amendment
         shall be construed in  accordance  with and governed by the laws of the
         State of Colorado.

8.       BINDING EFFECT.  This Second  Amendment shall be binding upon and inure
         to the benefit of the parties hereto, their successors and assigns.

9.       CAPTIONS. The paragraph captions utilized herein are in no way intended
         to interpret or limit the terms and conditions hereof, rather, they are
         intended for purposes of convenience only.

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10.      COUNTERPARTS.  This Second  Amendment  may be executed in any number of
         counterparts,  each of which shall be effective  only upon delivery and
         thereafter shall be deemed an original, and all of which shall be taken
         to be one and  the  same  instrument,  for the  same  effect  as if all
         parties hereto had signed the same  signature  page. Any signature page
         of this Second  Amendment may be detached from any  counterpart of this
         Second Amendment  without  impairing the legal effect of any signatures
         thereon  and may be  attached  to another  counterpart  of this  Second
         Amendment  identical  in form  hereto but having  attached to it one or
         more additional signature pages.

11.      DEFINED TERMS. Capitalized terms not defined herein shall have the same
         meaning as set forth in the Amended Credit Agreement.



         IN WITNESS WHEREOF, the parties hereto have executed this Second
Amendment as of the day and year first above written.


                                       BORROWER:

                                       BIRNER DENTAL MANAGEMENT SERVICES, INC.,
                                       a Colorado corporation


                                       By: Dennis N. Genty
                                       ------------------------------
                                       /s/ Dennis N. Genty
                                       Title: Chief Financial Officer




                                       LENDER:

                                       KEYBANK  NATIONAL ASSOCIATION,
                                       a national  banking  association


                                       By: Michelle K. Bushey
                                       -----------------------
                                       /s/ Michelle K. Bushey
                                       Title:   Vice President



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