Exhibit 10.38



         AMENDED AND RESTATED  CREDIT  AGREEMENT  dated as of December 17, 2001,
between BIRNER DENTAL  MANAGEMENT  SERVICES,  INC., a Colorado  corporation (the
"Borrower")  and  KEYBANK  NATIONAL  ASSOCIATION,  a national  association  (the
"Lender").

         RECITALS

         A.  Lender  made a  revolving  loan (the  "Original  Loan") to Borrower
evidenced and secured by (i) a Promissory Note (the "Original Note") dated as of
October  31,  1996 in the  original  principal  amount of  $800,000  executed by
Borrower and payable to the order of Lender,  as amended by that certain Amended
and Restated  Promissory Note (the "Amended Note") dated as of December 31, 1998
in the  amended  principal  amount of  $20,000,000  and the Second  Amended  and
Restated  Promissory  Note (the "Second  Amended  Note") dated as of March ,
2000 in the amended  principal  amount of  $10,000,000  (the Original  Note, the
Amended Note and the Second Amended Note being  collectively  referred to herein
as the  "Note"),  (ii) a Security  Agreement  dated as of October  31, 1996 from
Borrower for the benefit of Lender, (iii) a Credit Agreement dated as of October
31, 1996 between  Borrower  and Lender,  and (iv) certain  other  documents  and
instruments,  which together with the Note, the Security  Agreement,  the Credit
Agreement and such other documents and  instruments as may from  time-to-time be
amended  and  replaced,  are  sometimes  collectively  referred to herein as the
"Original  Loan  Documents."  The  Revolving  Loan was  modified  by (i) a First
Amendment to Loan Documents dated September 3, 1997, (ii) a Second  Amendment to
Loan  Documents  dated  November  18,  1997,  (iii)  a Third  Amendment  to Loan
documents dated  September 30, 1998,  (iv) a Fourth  Amendment to Loan Documents
dated December 31, 1998, (v) a Fifth  Amendment to Loan Documents  dated May 28,
1999, (vi) a Sixth Amendment to Loan Documents dated September 20, 1999, (vii) a
Seventh  Amendment to Loan  Documents  dated March 24, 2000 and (viii) an Eighth
Amendment to Loan Documents dated September 29, 2000.

         B.  Borrower now desires and has  requested  Lender to extend credit in
order to enable Borrower, subject to the terms and conditions of this Agreement,
to (i) borrow on a revolving  basis,  at any time and from time to time prior to
the Revolving Credit Maturity Date (as defined herein),  an aggregate  principal
amount at any time outstanding not in excess of the lesser of (1) the applicable
Borrowing  Base  (calculated in accordance  with the most recent  Borrowing Base
Certificate  delivered to Lender  pursuant to Section  5.4(d) or (2)  $2,000,000
(the "Revolving  Loans") and (ii) borrow on a  non-revolving  basis an aggregate
principal amount not in excess of $4,000,000 (the "Term Loan").  The proceeds of
the  Revolving  Loans and the Term  Loan  shall  provide  working  capital,  the
restructuring  of the Original  Loan and for other general  corporate  purposes.
Lender is willing to extend such credit to the Borrower on the terms and subject
to the conditions set forth herein.

         NOW  THEREFORE,  in  consideration  of the covenants and conditions set
forth  herein,  and for other good and valuable  consideration,  the receipt and
sufficiency  of which are hereby  acknowledged,  the Borrower and Lender  hereby
agree to amend and restate in their  entirety,  the Original  Loan  Documents as
further set forth herein.

1.       DEFINITIONS

         a. Defined Terms.  As used in this  Agreement,  the following words and
terms shall have the meanings specified below:

         "Account  Receivable" means any account  receivable,  account,  chattel
paper, general intangible,  document, or instrument owned, acquired, or received
by a person,  including,  but not  limited to any and all rights,  interest,  or
claims  accruing to Borrower either in its own right or pursuant to the terms of
any lease agreement,  assignment or other instrument by and between the Borrower
and  any  other  person  in  and  to  all  accounts,  contract  rights,  general
intangibles and right to payment of every kind or description now or at any time
hereafter  arising,  directly or  indirectly,  out of the operations of Borrower
and/or  the  provision  of  services  by or on behalf of  Borrower.  An  Account
Receivable,  as referred to in this Agreement,  shall not include any government
receivables or uninsured foreign receivables.

         "Acquired  Practice   Obligation"  means  the  amount  of  Indebtedness
incurred,  assumed,  guaranteed  or which  Borrower has  otherwise  agreed to be
responsible for in connection  with a dental  practice (an "Acquired  Practice")
acquired by Borrower.

          "Affiliate" shall mean, when used with respect to a specified person,
another person that directly, or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with the person
specified.

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         "Asset  Sale" means the  transfer or other  disposition,  to the extent
consummated  after the Closing Date, by Borrower to another  person of any asset
of Borrower,  other than sales,  transfers or other dispositions in the ordinary
course of business,  including without  limitation as part of this exclusion any
sales and leasebacks of assets in the ordinary course of business.

         "Base Rate" shall mean a variable rate of interest  equal to the higher
of (i) the rate of interest  publicly  announced by the Lender from time to time
as its "prime rate," or (ii) the Federal Funds Rate plus one-half of one percent
(0.50%).  The Base Rate shall vary on a daily basis as the Lender's "prime rate"
and the Federal Funds Rate vary.

         "Base Rate Loan" shall mean any Loan that bears interest with reference
to the Base Rate.

         "Base Rate Margin" shall mean such margin as is set forth pursuant to
Section 2.6(b) of this Agreement.

         "Board" shall mean the Board of Governors of the Federal Reserve System
of the United States.

         "Borrowing" shall have the meaning set forth in Section 2.3.

         "Borrowing Base" means an amount equal to 80% of the Eligible Accounts
Receivable of Borrower.

         "Borrowing Base Certificate" has the meaning assigned to that term in
Section 5.4(d).

         "Business Day" shall mean a day (other than a Saturday or Sunday) on
which banks generally are open in Denver, Colorado for the conduct of
substantially all of their commercial lending activities.

         "Capital Expenditures" shall mean current period net fixed assets less
prior period net fixed assets, plus current period depreciation.

         "Capital Lease Obligations" of any person shall mean the obligations of
such person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such person under GAAP
and, for the purposes of this Agreement, the amount of such obligations at any
time shall be the capitalized amount thereof at such time determined in
accordance with GAAP.

         "Change in Management" shall mean any change in the management
positions of or the acceptance of a resignation or other termination, without
Lender's prior written consent, of any of the following officers of Borrower:
Dennis Genty, Fred Birner or Mark Birner.

         "Closing Date" shall mean December 17, 2001.

         "Code" shall mean the Internal Revenue Code of 1986, as the same may be
amended from time to time.

         "Commitment" shall mean the Commitment of Lender to make Loans
hereunder as set forth in Section 2.1.

         "Commitment Fee" shall mean a fee calculated and payable as set forth
in Section 2.5(b).

         "Contingent Obligations" means, as to any person, without duplication,
any obligation of such person guaranteeing or intended to guarantee any
indebtedness, leases, dividends or other obligations of any other person in any
manner, whether directly or indirectly. The amount of any Contingent Obligation
shall be deemed to be an amount equal to the maximum amount that such person may
be obligated to expend pursuant to the terms of such Contingent Obligation or,
if such Contingent Obligation is not so limited, the stated or determinable
amount of the primary obligation in respect to which such Contingent Obligation
is made or, if not stated or determinable, the maximum reasonably anticipated
liability in respect thereof (assuming such person is required to perform
thereunder) as determined by such person in good faith. The amount of Contingent
Obligations shall not include any amounts included in the definition of Acquired
Practice Obligations.

         "Control" shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
person, whether through the ownership of voting securities, by contract or
otherwise.

         "Default" shall mean any event or condition which upon notice, lapse of
time or both would constitute an Event of Default.

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         "Default  Rate" shall mean that rate of interest  specified  in Section
2.7.

         "dollars"  or "$"  shall  mean  lawful  money of the  United  States of
America.

         "EBITDA" means, calculated for the period of the previous four fiscal
quarters, the net earnings of Borrower plus the aggregate amounts deducted in
determining such net income in respect of interest expenses, taxes, depreciation
and amortization; but not, however, giving effect to extraordinary losses or
gains in calculating net income.

         "Eligible  Accounts  Receivable"  means,  as at any applicable  date of
determination,  the aggregate face amount of the Accounts Receivable included in
the definition of Accounts  Receivable  hereunder without  duplication,  in each
case less (without  duplication)  the aggregate  amount of all  limitations  and
deductions  with  respect  to such  Accounts  Receivable  set forth  below or as
otherwise  provided  in this  Agreement  and less the  aggregate  amount  of all
returns,  discounts,  claims, credits, charges and allowances of any nature with
respect  to  such  Accounts  Receivable  (whether  issued,   owing,  granted  or
outstanding).  Unless  otherwise  approved  in writing by the Lender in its sole
discretion,  no individual  Account Receivable shall be deemed to be an Eligible
Account Receivable if:

         (a) the  Borrower  does not have legal and valid  title to the  Account
Receivable; or

         (b)  the  Account  Receivable  is not the valid,  binding  and legally
enforceable obligation of the account debtor subject, as to enforceability, only
to (i) applicable bankruptcy, insolvency, reorganization,  moratorium or similar
laws at the time in effect  affecting the  enforceability  of creditors'  rights
generally and (ii) judicial discretion in connection with the remedy of specific
performance and other equitable remedies; or

         (c) the Account  Receivable  arises out of sale made by any Borrower to
an Affiliate of any Borrower; or

         (d) the Account  Receivable or any portion thereof is more than 90 days
past due (from the original invoice date); or

         (e)The  Account  Receivable,  when  aggregated  with all other Accounts
Receivable of the same account  debtor (or any Affiliate  thereof),  exceeds ten
percent  (10%) in face value of all Accounts  Receivable  of the  Borrower  then
outstanding, to the extent of such excess; or

         (f)(i) the account  debtor is also a creditor of the  Borrower,  to the
extent of the  amount  owed by the  Borrower  to the  account  debtor,  (ii) the
Account  Receivable  is subject to any claim on the part of the  account  debtor
disputing  liability  under such Account  Receivable in whole or in part, to the
extent of the amount of such dispute or (iii) the Account  Receivable  otherwise
is or is  reasonably  likely  to  become  subject  to any right or setoff or any
counterclaim,  claim or  defense  by the  account  debtor,  to the extent of the
amount of such setoff or counterclaim, claim or defense; or

         (g)the account  debtor has commenced a voluntary case under  applicable
bankruptcy laws, as now constituted or hereafter amended,  or made an assignment
for the benefit of creditors or if a decree or order for relief has been entered
by a court having  jurisdiction in the premises in respect of the account debtor
in an involuntary case under the federal  bankruptcy laws, as now constituted or
hereafter  amended,  or if any other  petition or other  application  for relief
under the  account  debtor,  or if the  account  debtor  has  failed,  suspended
business, ceased to be solvent, or consented to or suffered a receiver, trustee,
liquidator  or  custodian  to be  appointed  for it or for all or a  significant
portion of its assets or affairs; or

         (h) the  Lender  does not have a valid  and  perfected  first  priority
security interest in such Account Receivable; or

         (i) the sale to the account debtor is on a consignment,  bill-and-hold,
sale on approval,  guaranteed sale or  sale-and-return  basis or pursuant to any
written agreement providing for repurchase or return; or

         (j) it is from the same account  debtor (or any Affiliate  thereof) and
fifty percent (50%) or more, in face amount,  of other Accounts  Receivable from
either such account  debtor or any Affiliate  thereof are due or unpaid for more
than the  applicable  period of time after the  original  invoice  date for such
Account set forth in paragraph (d) above; or

         (k)  seventy-five  percent  (75%) or  more,  in face  amount,  of other
Accounts  Receivable  from the  same  account  debtor  are not  deemed  Eligible
Accounts Receivable hereunder; or

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         (l) the goods  giving rise to such  Account  have not been  shipped and
delivered to and accepted by the account  debtor or the services  giving rise to
such Account have not been performed by the Borrower and accepted by the account
debtor or the Account otherwise does not represent a final sale; or

         (m) the  principal  place of business of the account  debtor is located
outside of the United States; or

         (n) the Account  Receivable  does not comply in all  material  respects
with all applicable legal requirements,  including where applicable, the Federal
Consumer Credit  Protection Act, the Federal Truth in Lending Act and Regulation
Z of the Board of  Governors  of the  Federal  Reserve  System,  in each case as
amended.

         "ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as the same may be amended from time to time.

         "ERISA  Affiliate"  shall mean any trade or  business  (whether  or not
incorporated)  that is a member of a group of which the Borrower is a member and
which is treated as a single employer under Section 414 of the Code.

         "Event of Default" shall have the meaning assigned to such term in
Article VII.

         "Excess Cash Flow" means  Borrower's Net Income plus  depreciation  and
amortization,  plus other non-cash expenses,  plus tax benefits,  less principal
payments under any term loan now existing or hereafter obtained by Borrower from
Lender at any time during the term of the Loan (including but not limited to the
Term Loan), less non-financed Capital Expenditures, less Put Payments.

         "Federal Funds Rate" means,  for each day, a fluctuating  interest rate
per annum equal to the weighted average of the rates on overnight  Federal Funds
transactions  with  members of the Federal  Reserve  System  arranged by Federal
Funds brokers, as published for such day (or, if such day is not a Business Day,
for the immediately  preceding  Business Day) by the Federal Reserve Bank of New
York,  or, if such rate is not so published for any day which is a Business Day,
the average of the quotations at  approximately  10:00 A.M.  Denver time on such
day on such transactions received by the Lender from three Federal Funds brokers
of recognized standing selected by the Lender in its sole discretion.

         "Fees"  shall  mean  the   Origination  Fee  and  the  Commitment  Fee.
"Financial  Officer"  of any  person  shall  mean the chief  financial  officer,
principal accounting officer, Treasurer or Controller of such person.

         "Financing  Proceeds"  means the cash  (other  than Net Cash  Proceeds)
received by the Borrower directly or indirectly,  from any financing transaction
of whatever kind or nature.

         "Fixed  Charges"  means  interest  expense,  plus lease  expense,  plus
current  maturities of long-term  debt and current  maturities of capital leases
(calculated for the preceding twelve-month period).

         "GAAP" shall mean generally accepted accounting principles.

         "Governmental  Authority"  shall  mean  any  Federal,  state,  local or
foreign court or governmental agency,  authority,  instrumentality or regulatory
body.

         "Intangible  Assets" means, with respect to any Person, at any time for
the determination  thereof, the amount of (i) all write-ups in the book value of
any asset owned by such  Person,  (ii) any  amount,  however  designated  on the
balance sheet,  representing the excess of the purchase price paid for assets or
equity  interests over the value  assigned  thereto on the books of such Person,
(iii) all unamortized  debt discount,  goodwill,  patents,  trademarks,  service
marks, trade names,  copyrights,  organization or development expenses and other
intangible items and (iv) all items that would be considered  intangible  assets
under GAAP.

         "Lien" shall mean, with respect to any asset, (a) any mortgage, deed of
trust,  lien,  pledge,  encumbrance,  charge or security  interest in or on such
asset,  (b) the  interest  of a vendor or a lessor  under any  conditional  sale
agreement, capital lease or title retention agreement relating to such asset and
(c) in the case of securities,  any purchase option,  call or similar right of a
third party with respect to such securities.

         "Loans" shall mean the loans made by Lender pursuant to Section 2.1.

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         "Loan Documents" shall mean this Agreement,  the Revolving Credit Note,
the Term Loan Note, the Amended and Restated Security Agreement, UCC-3 Financing
Statements,  and any other  instruments  or  documents  evidencing,  securing or
relating to the Loans.

         "Margin Stock" shall have the meaning given such term under  Regulation
U.

         "Material Adverse Change" shall mean (a) a materially adverse effect on
the  business,  assets,  operations,   prospects  or  condition,   financial  or
otherwise,  of the Borrower and the consolidated  Subsidiaries taken as a whole,
(b) material  impairment  of the ability of the  Borrower  and the  consolidated
Subsidiaries  taken as a whole to perform any of its obligations  under any Loan
Document  to which it is or will be a party or (c)  material  impairment  of the
rights of or benefits available to the Lender under any Loan Document.

         "Net Cash Proceeds" means with respect to any Asset Sale, the aggregate
cash payments received by the Borrower and any consolidated Subsidiary, from
such Asset Sale, net of direct expenses of sale.

         "Net Equity Proceeds" means the proceeds of any offering of equity in
any person net of all costs and expenses incurred in connection with such
offering.

         "Net Income" for any person means,  for any period,  the net income (or
loss) of such person and its consolidated  subsidiaries for such period taken in
a single  accounting  period  determined  for such  person and its  consolidated
subsidiaries in conformity with GAAP;  provided that there shall be excluded (i)
the income (or loss) of any other person (other than  consolidated  subsidiaries
of such person) in which any third person  (other than such person or any of its
consolidated  subsidiaries)  has a joint  interest,  except to the extent of the
amount of dividends or other  distributions  actually paid to such person or any
of its consolidated  subsidiaries by such other person during such period,  (ii)
the income (or loss) of any other person  accrued prior to the date it becomes a
consolidated  subsidiary of such person or is merged into or  consolidated  with
such  person or any of its  consolidated  subsidiaries  or such  other  person's
assets are acquired by such person or any of its consolidated subsidiaries,  and
(iii) the income of any  consolidated  subsidiary  of such  person to the extent
that the  declaration or payment of dividends or similar  distributions  by that
subsidiary of that income is not at the time permitted by operation of the terms
of its charter or any agreement, instruments,  judgment, decree, order, statute,
rule or governmental regulation applicable to that subsidiary.

         "Note" shall mean collectively, the Revolving Credit Note and the Term
Loan Note.

         "Origination Fee" shall have the meaning assigned to such term in
Section 2.5 (a).

         "Operating Cash Flow" shall mean net income after taxes and exclusive
of extraordinary gains, gains on sale of fixed assets, and other income; plus
depreciation, amortization, interest expense and lease expense; less dividends
and distributions.

         "PBGC" shall mean the Pension Benefit Guarantee Corporation referred to
and defined in ERISA and any successor thereto.

         "person" shall mean any natural person, corporation, business trust,
joint venture, association, company, partnership, other entity or government, or
any agency or political subdivision thereof.

         "Plan" shall mean any pension plan subject to the provisions of Title
IV of ERISA or Section 412 of the Code which is maintained for employees of the
Borrower or any ERISA Affiliate.

         "Professional Corporations" shall mean those professional corporations
organized for the practice of dentistry of which Borrower initially acquires
that stock, but thereafter transfers the entirety of such stock to an individual
licensed dentist within thirty (30) days following the date of acquisition and
with which Borrower has entered into a management agreement in the standard form
which has been previously approved by Lender.

         "Put Payments" means those certain bullet payments owed to certain
Professional Corporations by Borrower pursuant to the terms and conditions of
written agreements, copies of which will be or have been provided to Lender.

         "Regulation G" shall mean Regulation G of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.

         "Regulation U" shall mean Regulation U of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.

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         "Regulation  X" shall  mean  Regulation  X of the Board as from time to
time in effect  and all  official  rulings  and  interpretations  thereunder  or
thereof.

         "Reportable  Event"  shall  mean any  reportable  event as  defined  in
Section 4043(b) of ERISA or the regulations  issued thereunder with respect to a
Plan (other than a Plan  maintained by an ERISA Affiliate which is considered an
ERISA  Affiliate  only pursuant to  subsection  (m) or (o) of Section 414 of the
Code).

         "Responsible Officer" of any person shall mean any executive officer or
financial officer of such person and any other officer or similar official
thereof responsible for the administration of the obligations of such person in
respect of this Agreement.

         "Revolving Credit Maturity Date" shall mean April 30, 2002.

         "Revolving Credit Note" shall mean a promissory note of the Borrower
evidencing the Revolving Loans.

         "Revolving Loans" shall mean the revolving loans made by Lender to the
Borrower pursuant to Section 2.1.

         "Revolving Loan Commitment" shall mean the commitment of Lender to make
Revolving Loans hereunder as set forth in Section 2.1.

         "Statutory  Reserves"  shall mean a fraction  (expressed as a decimal),
the  numerator  of which is the number one and the  denominator  of which is the
number one minus the aggregate of the maximum reserve percentages (including any
marginal,  special,  emergency or supplemental  reserves) expressed as a decimal
established by the Board and any other banking  authority to which the Lender is
subject.  Such reserve  percentages shall include those imposed pursuant to such
Regulation D. Statutory  Reserves shall be adjusted  automatically  on and as of
the effective date of any change in any reserve percentage.

         "Subordinated Debt" shall mean the indebtedness and liabilities of
Borrower which have been subordinated by written agreement to indebtedness owed
by Borrower to Lender in form and substance acceptable to Lender.

         "subsidiary" shall mean, with respect to any person (herein referred to
as the "parent"),  any corporation,  partnership,  association or other business
entity of which securities or other ownership  interests  representing more than
50% of the equity or more than 50% of the ordinary voting power or more than 50%
of the general partnership interests are, at the time any determination is being
made, owned, controlled or held by the parent or one or more subsidiaries of the
parent or by the parent and one or more subsidiaries of the parent.

         "Subsidiary" shall mean any subsidiary of the Borrower.

         "Term Loan" shall mean the term loan made by Lender to the Borrower
pursuant to Section 2.1.

         "Term Loan Commitment" shall mean the commitment of Lender to make the
Term Loan hereunder as set forth in Section 2.1.

         "Term Loan Maturity Date" shall mean April 30, 2003.

         "Term Loan Note" shall mean a promissory note of the Borrower
evidencing the Term Loan.

          "Total Fixed Charges" shall mean Fixed Charges plus Put Payments.

         "Total Funded Debt" shall mean the sum without duplication for Borrower
and/or any of its subsidiaries of all  indebtedness for borrowed money,  whether
maturing in less than or more than one year, plus all bonds,  notes,  debentures
or similar debt  instruments  plus all capitalized  lease  obligations  plus the
present value of all basic rental  obligations  under any synthetic lease,  plus
the stated value, or liquidation  value, if higher,  of all redeemable  stock of
such person.

         "Transactions"  shall have the meaning assigned to such term in Section
3.2.

         b. Terms Generally. The definitions in Section 1.1. shall apply equally
to both the singular and plural forms of the terms defined. Whenever the context
may require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. The words "include", "includes" and "including" shall be deemed to
be  followed  by the  phrase  "without  limitation."  All  references  herein to
Articles,  Sections,  Exhibits  and  Schedules  shall be  deemed  references  to
Articles and Sections of, and Exhibits and Schedules to, this  Agreement  unless
the context shall  otherwise  require.

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Except as otherwise  expressly  provided  herein,  all terms of an accounting or
financial  nature shall be construed in accordance  with GAAP, as in effect from
time to time; provided,  however,  that, for purposes of determining  compliance
with any  covenant  set forth in Article VI, such terms  shall be  construed  in
accordance  with GAAP as in effect on the date of this  Agreement  applied  on a
basis consistent with the application used in the Borrower's  audited  financial
statements referred to in Section 3.5.

2.         THE CREDIT

         a. Commitment. Subject to the terms and conditions and relying upon the
representations  and  warranties  herein  set forth,  Lender  agrees to make (a)
Revolving Loans to the Borrower, at any time and from time to time and until the
earlier  of the  Revolving  Credit  Maturity  Date  and the  termination  of the
Revolving Loan Commitment in accordance with the terms hereof,  in an amount not
to  exceed  the  Revolving  Loans  and (b) a Term  Loan to the  Borrower  in the
aggregate  principal  amount not to exceed the Term Loan.  Within the limits set
forth in clause (a) of the preceding  sentence,  the Borrower may borrow, pay or
prepay and  reborrow  Revolving  Loans on or after the Closing Date and prior to
the  Revolving  Credit  Maturity  Date,  subject  to the terms,  conditions  and
limitations  set forth herein.  Within the limits set forth in clause (b) of the
preceding  sentence,  the Borrower may borrow, pay or prepay the Term Loan on or
after the Closing Date and prior to the Term Loan Maturity Date,  subject to the
terms,  conditions  and  limitations  set forth  herein.  Each advance under the
Revolving  Loans  and/or a  disbursement  of the Term Loan (each such advance or
disbursement  is referred to herein as a "Loan")  shall  constitute  a Base Rate
Loan and  shall be made on such  Business  Day and in such  amount  (equal  to a
minimum of $100,000.00) as the Borrower shall request by written notice given to
the Lender,  in the case of a disbursement of the Term Loan, no later than 11:00
a.m.  (Denver,  Colorado time) on the date of disbursement of the requested Term
Loan and in the case of an advance  under the Revolving  Loans,  as set forth in
Section 2.3.

         b. Notes.  The  Revolving  Loans shall be  evidenced  by the  Revolving
Credit Note dated the date hereof.  The Revolving  Credit Note shall be a master
note,  and the principal  amount of all  Revolving  Loans  outstanding  shall be
evidenced  by the  Revolving  Credit  Note or any ledger or other  record of the
Lender, which shall be presumptive evidence of the principal owing and unpaid on
the  Revolving  Credit  Note.  The Term Loan shall be evidenced by the Term Loan
Note dated the date hereof.

         c. Notice of  Borrowings.  The Borrower  shall give the Lender  written
notice  not later  than  11:00  a.m.  (Denver,  Colorado  time) on the date of a
requested  advance under the Revolving  Loan  Commitment (a  "Borrowing").  Such
notice  shall be  irrevocable,  shall in each case refer to this  Agreement  and
shall be in the form  attached  hereto as  Exhibit A. Each  notice of  Borrowing
shall be deemed a  representation  by Borrower that all conditions  precedent to
such Borrowing have been satisfied.

d.       Notes; Repayment of Loans.

         (i) The Revolving  Credit Note shall bear interest from the date of the
first  Borrowing on the  outstanding  principal  balance thereof as set forth in
Section  2.6. The Lender  shall,  and is hereby  authorized  by the Borrower to,
endorse  on  a  schedule  attached  to  the  Revolving  Credit  Note  (or  on  a
continuation of such schedule attached to such Note and made a part thereof), or
otherwise  to record in  Lender's  internal  records,  an  appropriate  notation
evidencing  the date  and  amount  of each  Revolving  Loan,  each  payment  and
prepayment of principal of the Revolving Loans,  each payment of interest on the
Revolving  Loans  and the  other  information  provided  for on  such  schedule;
provided, however, that the failure of the Lender to make such a notation or any
error  therein  shall not affect the  obligation  of the  Borrower  to repay the
Revolving  Loans made by Lender in accordance  with the terms of this  Agreement
and the Revolving Credit Note.

         (ii) The Term Loan Note shall bear  interest from the date of Borrowing
on the  outstanding  principal  balance thereof as set forth in Section 2.6. The
term of the Term Loan shall  commence as of the Closing  Date and, if not sooner
paid, the entire unpaid principal balance, all accrued and unpaid interest,  and
all other sums payable in connection with the Term Loan shall be due and payable
in full on the Term Loan Maturity Date.  Borrower shall make monthly payments of
interest on the unpaid  principal  balance of the Term Loan  pursuant to Section
2.6(b)(ii).  Commencing  on December 31, 2001,  Borrower  shall make a principal
payment on the outstanding  principal  balance of the Term Loan in the amount of
$125,000 and on the last day of each  subsequent  quarter  thereafter,  Borrower
shall make principal  payments on the outstanding  principal balance of the Term
Loan in the amount of $250,000 until the Term Loan Maturity Date.

         (iii) In addition to the foregoing,  within forty-five (45) days of the
end of each fiscal quarter and within ninety (90) days following the end of each
fiscal year, Borrower shall make principal reduction payments on the outstanding
principal  balance of the Term Loan in an amount equal to 75% of the Excess Cash
Flow calculated at such time for the preceding fiscal quarter.  Borrower, at the
time of such payment, shall provide to Lender any written evidence and financial
documentation used in calculating the Excess Cash Flow.

                                      A-7
<PAGE>

e.       Fees.

         (a) The Borrower  agrees to pay an  origination  fee (the  "Origination
Fee") in an amount  equal to $60,000,  one-half of which has been paid to Lender
and the other half of which shall be paid on the Closing Date.

         (b) A commitment  fee (the  "Commitment  Fee") of .50% per annum on the
average daily unused amount of the  Revolving  Loans during the preceding  month
shall be payable, in arrears, on the last day of each month, commencing December
31, 2001,  and  continuing  on the last day of each month  thereafter  until the
Revolving  Credit  Maturity  Date.  The  Commitment Fee shall be computed on the
basis of the actual number of days elapsed in a year of 360 days. The Commitment
Fee due December 31,  2001,  shall be prorated  based on the number of days from
the Closing Date through December 31, 2001, divided by the number of days in the
month ending December 31, 2001.

         (c) All Fees shall be paid on the dates due, in  immediately  available
funds.  Once paid,  none of the Fees shall be  refundable  (absent a calculation
error) under any circumstances.

f.       Interest on Loans.

         The Borrower shall pay interest on the unpaid  principal amount of each
Loan from the date such Loan is made until such  principal  amount shall be paid
in full as follows:

(a)  With respect to any Base Rate Loan, at a rate per annum equal to the sum
of the Base Rate and the Base Rate Margin specified in subpart (b)(i) below,
which rate shall change when and as the Base Rate changes in accordance with
this Agreement.
<TABLE>
<CAPTION>

                  (b)      (i)
                                                                  Base Rate Margin
<S>                                                               <C>
                                    Revolving Loan                200 Basis Points
                                    ----------------------------- --------------------------
                                    Term Loan                     200 Basis Points
                                    ----------------------------- --------------------------
                          (ii)      The Borrower shall pay to the Lender
                                    accrued interest on the unpaid principal
                                    balance of each Base Rate Loan on the last
                                    day of each month.
</TABLE>

         g. Default  Interest.  If the Borrower  shall default in the payment of
the  principal  of or interest on the Loans or any other  amount due or becoming
due hereunder,  by acceleration or otherwise,  the Borrower shall on demand from
time to time pay  interest,  to the extent  permitted by law, on such  defaulted
amount up to (but not  including)  the date of actual  payment (after as well as
before judgment) at a rate per annum (computed on the basis of the actual number
of days  elapsed  over a year of 360  days)  equal to the Base Rate plus 4% (the
"Default Rate") From and after any Event of Default,  the outstanding  principal
balance of the Loans shall accrue interest at the Default Rate.

h.       Termination of Commitments.

         (a)      The  Revolving   Loan   Commitment   shall  be   automatically
                  terminated  at  5:00  p.m.,  Denver,  Colorado  time,  on  the
                  Revolving Credit Maturity Date.

         (b)      The Term Loan shall terminate at 5:00 p.m.,  Denver,  Colorado
                  time, on the Term Loan Maturity Date.

         (c)      The  Borrower  shall  pay  to  the  Lender,  on  the  date  of
                  termination, the Commitment Fee on the amount of the Revolving
                  Loan Commitment so terminated accrued through the date of such
                  termination.

i.       Prepayment.

         (a)      The  Borrower  may prepay  any Base Rate Loan in whole,  or in
                  part, at any time or times.

         (b)      Without  notice  or  demand,  if the  sum  of the  outstanding
                  principal  balance of the Loans  shall at any time  exceed the
                  Borrowing  Base,  the Borrower  shall  immediately  prepay the
                  Loans to the extent  necessary to eliminate  such excess.  Any
                  payment  received by the Lender under this Section  2.9(b) may
                  be applied to the Borrower indebtedness,  in such order and in
                  such amounts as the Lender,  in its discretion,  may from time
                  to time determine.
                                      A-8
<PAGE>

         (c)      The Borrower  shall give prior written notice to Lender before
                  a proposed  borrowing (a "Borrowing")  pursuant to Section 2.3
                  hereof.  Such notice  shall be  irrevocable  and shall in each
                  case refer to this  Agreement.  Each notice of Borrowing shall
                  be deemed a  representation  by Borrower  that all  conditions
                  precedent to such Borrowing have been satisfied.

         j. Additional  Costs. If either (i) any change in any law or regulation
(or its  interpretation),  or (ii) the compliance  with any guideline or request
from any central lender or other  governmental  authority (whether or not having
the force of law),  affects or would  affect the amount of capital  required  or
expected  to be  maintained  by the Lender or any  corporation  controlling  the
Lender and the Lender determines that the amount of such capital is increased by
or based upon the  existence  of the Loan (or  commitment  to make the Loan) and
other  extensions of credit (or  commitments  to extend credit) of similar type,
then, upon demand by the Lender,  the Borrower shall pay to the Lender from time
to time as specified by the Lender additional  amounts  sufficient to compensate
the Lender in the light of such  circumstances,  to the  extent  that the Lender
reasonably  determines such increase in capital to be allocable to the existence
of the Lender's  Loan (or  commitment to make the Loan).  A  certificate  of the
Lender  submitted  to the Borrower as to such amounts  shall be  conclusive  and
binding for all purposes,  absent manifest error.  Upon notice from the Borrower
to the Lender  within  five (5)  Business  Days after the  Lender  notifies  the
Borrower  of any such  additional  costs  pursuant  to this  Section  2.10,  the
Borrower  may either (A) prepay in full the Loan if so affected,  together  with
interest accrued thereon to the date of such prepayment, or (B) convert the Loan
if so affected  into a Loan of any other type not so affected upon not less than
four (4) Business Days' notice to the Lender.

k.       Payments.

         (a)      The Borrower shall make each payment  (including  principal of
                  or interest  on any  Borrowing  or any Fees or other  amounts)
                  hereunder  and under any other  Loan  Document  not later than
                  12:00 (noon),  Denver,  Colorado time, on the date when due in
                  dollars to the Lender at its offices at 1675  Broadway,  Suite
                  500, Denver, Colorado 80202, in immediately available funds.

         (b)      Whenever  any payment  (including  principal of or interest on
                  any Borrowing or any Fees or other amounts) hereunder or under
                  any other Loan Document  shall become due, or otherwise  would
                  occur,  on a day that is not a Business  Day, such payment may
                  be  made  on  the  next  succeeding  Business  Day,  and  such
                  extension  of time  shall  in such  case  be  included  in the
                  computation of interest or Fees, if applicable.

3.       REPRESENTATIONS AND WARRANTIES

         The Borrower represents and warrants to Lender that:

         a. Organization; Powers. (a) Birner Dental Management Services, Inc. is
a corporation,  duly organized,  validly existing and in good standing under the
laws of the  jurisdiction of its respective  organization,  (b) the Borrower has
all requisite power and authority to own its property and assets and to carry on
its business as now conducted and as proposed to be conducted,  (c) the Borrower
is qualified to do business in every  jurisdiction  where such  qualification is
required,  except  where the  failure to qualify  would not result in a Material
Adverse  Change,  and (d) the Borrower  has the power and  authority to execute,
deliver and perform its  obligations  under each of the Loan  Documents and each
other agreement or instrument  contemplated  thereby to which it is or will be a
party and to borrow hereunder.

         b.  Authorization.  The  execution,  delivery  and  performance  by the
Borrower  of  each  of  the  Loan   Documents  and  the   borrowings   hereunder
(collectively,  the  "Transactions")  (a)  have  been  duly  authorized  by  all
requisite action and (b) will not (i) violate (A) any provision of law, statute,
rule or regulation, or of the certificate or articles of incorporation, articles
of organization,  operating agreement or other constitutive documents or by-laws
of the Borrower or any Subsidiary,  (B) any order of any Governmental  Authority
or (C) as of the Closing  Date,  any  provision of any  indenture,  agreement or
other  instrument to which the Borrower or any Subsidiary is a party or by which
any of them or any of their  property is or may be bound which could result in a
Material  Adverse  Change,  (ii) as of the Closing  Date,  be in conflict  with,
result in a breach of or  constitute  (alone or with  notice or lapse of time or
both) a default under any such indenture,  agreement or other  instrument  which
could  result in a Material  Adverse  Change or (iii)  result in the creation or
imposition  of any Lien  upon any  property  or assets  of the  Borrower  or any
subsidiary.

         c. Enforceability.  This Agreement has been duly executed and delivered
by the Borrower and constitutes,  and each other Loan Document when executed and
delivered by the Borrower will constitute, a legal, valid and binding obligation
of the Borrower  enforceable  against the Borrower in accordance with its terms,
subject   to   applicable   bankruptcy,    insolvency,    fraudulent   transfer,
reorganization,  moratorium and other similar laws affecting  creditors'  rights
generally and subject,  as to  enforceability,  to general  principles of equity
(regardless  of  whether  enforcement  is  sought in a  proceeding  at law or in
equity).

                                      A-9
<PAGE>

         d.  Governmental   Approvals.   No  action,  consent  or  approval  of,
registration or filing with or any other action by any Governmental Authority is
or will be required in  connection  with the  Transactions,  except such as have
been made or obtained and are in full force and effect.

         e.  Financial  Statements.  The  Borrower has  heretofore  furnished to
Lender its  consolidated  and  consolidating  balance  sheets and  statements of
income and  changes  in  financial  condition  as of and for the  quarter  ended
September  30, 2001.  Such  financial  statements  present  fairly the financial
condition  and  results  of  operations  of the  Borrower  and its  consolidated
subsidiaries as of such dates and for such periods.  Such balance sheets and the
notes thereto disclose all material  liabilities,  direct or contingent,  of the
Borrower  and  its  consolidated  subsidiaries  as of the  dates  thereof.  Such
financial  statements  were  prepared  in  accordance  with  GAAP  applied  on a
consistent basis, except for any omission of notes.

         f. No  Material  Adverse  Change.  There has been no  Material  Adverse
Change in the business, assets, operations, prospects or condition, financial or
otherwise,  of the  Borrower  and the  Subsidiaries,  taken  as a  whole,  since
September 30, 2001.

         g. Title to Properties; Possession Under Leases.


         (a)      The  Borrower  and  each  of the  Subsidiaries  has  good  and
                  marketable title to, or valid leasehold  interests in, all its
                  material  properties  and assets,  except for minor defects in
                  title that do not  interfere  with its  ability to conduct its
                  business as currently  conducted or to utilize such properties
                  and  assets for their  intended  purposes.  As of the  Closing
                  Date,  all  of  Borrower's   material  properties  and  assets
                  securing  the  Loans  hereunder  are free and  clear of Liens,
                  other than Liens expressly permitted by Section 6.2.

         (b)      The Borrower and each of the  Subsidiaries  has complied  with
                  all  obligations  under all  material  leases to which it is a
                  party and all such  leases are in full force and  effect.  The
                  Borrower  and each of the  Subsidiaries  enjoys  peaceful  and
                  undisturbed possession under all such material leases.

         h. Subsidiaries. As of the Closing Date, Borrower has no Subsidiaries.

         i. Litigation; Compliance with Laws.

         (a)      As of the Closing  Date,  there are not any actions,  suits or
                  proceedings   at  law  or  in  equity  or  by  or  before  any
                  Governmental Authority now pending or, to the knowledge of the
                  Borrower, threatened against the Borrower or any Subsidiary or
                  any business,  property or rights of any such person (i) which
                  involve any Loan  Document or the  Transactions  or (ii) as to
                  which  there  is  a  reasonable   possibility  of  an  adverse
                  determination  and  which,  if  adversely  determined,  could,
                  individually or in the aggregate, result in a Material Adverse
                  Change.

         (b)      Neither  the  Borrower  nor  any  of  the  Subsidiaries  is in
                  violation of any law, rule or  regulation,  or in default with
                  respect to any  judgment,  writ,  injunction  or decree of any
                  Governmental Authority,  where such violation or default could
                  result in a Material Adverse Change.

j.       Agreements.

         (a)      Neither the Borrower nor any of the Subsidiaries is a party to
                  any  agreement  or  instrument  or  subject  to any  corporate
                  restriction  that  because of onerous  terms has  resulted  or
                  could result in a Material Adverse Change.

         (b)      Neither the Borrower nor any of its Subsidiaries is in default
                  in any manner under any  provision  of any  indenture or other
                  agreement or instrument evidencing indebtedness,  or any other
                  material  agreement or instrument to which it is a party or by
                  which  it or any of its  properties  or  assets  are or may be
                  bound,  where such default could result in a Material  Adverse
                  Change.

k.       Federal Reserve Regulations.

         (a)      Neither the  Borrower nor any of the  Subsidiaries  is engaged
                  principally,  or as one of its  important  activities,  in the
                  business of extending  credit for the purpose of purchasing or
                  carrying Margin Stock.

         (b)      No part of the  proceeds  of any Loan  will be  used,  whether
                  directly or indirectly, and whether immediately,  incidentally
                  or  ultimately,  (i) to purchase or carry  Margin  Stock or to
                  extend  credit to others  for the  purpose  of  purchasing  or
                  carrying  Margin  Stock or to refund  indebtedness  originally
                  incurred  for  such  purpose,  or (ii) for any  purpose  which
                  entails a violation  of, or which is  inconsistent  with,  the
                  provisions  of  the   Regulations  of  the  Board,   including
                  Regulation G, U or X.

                                      A-10
<PAGE>

         l. Intentionally Deleted.

         m. Tax Returns.  The Borrower and its Subsidiaries have filed or caused
to be filed all Federal, state and local tax returns required to have been filed
by it and has paid or caused to be paid all taxes shown to be due and payable on
such returns or on any  assessments  received by it, except taxes that are being
contested in accordance with Section 5.3.

         n. No Material Misstatements. No written information, report, financial
statement,  exhibit or schedule furnished by or on behalf of the Borrower to the
Lender in  connection  with the  negotiation  of any Loan  Document  or included
therein or delivered  pursuant thereto  contained,  contains or will contain any
material  misstatement  of fact or  omitted,  omits or will  omit to  state  any
material  fact  necessary to make the  statements  therein,  in the light of the
circumstances under which they were, are or will be made, not misleading.

         o.  Employee  Benefit  Plans.  The  Borrower  and  each  of  its  ERISA
Affiliates  is in  compliance  in all  material  respects  with  the  applicable
provisions  of  ERISA  and  the   regulations   and  published   interpretations
thereunder.  No  Reportable  Event has  occurred as to which the Borrower or any
ERISA  Affiliate  was  required to file a report with the PBGC,  and the present
value of all benefit  liabilities  under each Plan  (based on those  assumptions
used to fund such Plan) did not, as of the last annual valuation date applicable
thereto, exceed by a material amount the value of the assets of such Plan.

         p. Operation of Business. The Borrower possesses all licenses, permits,
franchises, patents, copyrights, trademarks, and trade names, or rights thereto,
to conduct  its  effective  businesses  substantially  as now  conducted  and as
presently proposed to be conducted and the Borrower is not in material violation
of any valid rights of others with respect to any of the foregoing.

         q.  Laws;  Environment.   The  Borrower  has  duly  complied,  and  its
businesses,  operations,  assets,  equipment,  property,  leaseholds,  or  other
facilities are in compliance,  in all material respects,  with the provisions of
all federal,  state,  and local statutes,  laws,  codes,  and ordinances and all
rules and regulations promulgated thereunder (including without limitation those
relating to the  environment,  health and safety) . The Borrower has been issued
and will maintain all required  federal,  state,  and local  permits,  licenses,
certificates,  and approvals  relating to (1) air  emissions;  (2) discharges to
surface water or  groundwater;  (3) noise  emissions;  (4) solid or liquid waste
disposal; (5) the use, generation, storage, transportation, or disposal of toxic
or hazardous  substances or hazardous  wastes  (intended hereby and hereafter to
include any and all such materials  listed in any federal,  state, or local law,
code,  or ordinance  and all rules and  regulations  promulgated  thereunder  as
hazardous);  or (6) other  environmental,  health or safety matters,  other than
such as would not have a Material  Adverse Change or result in a fine,  penalty,
judgment or other  liability  in excess of $50,000.  During the past five years,
the  Borrower  has not  received  notice  of,  or has  actual  knowledge  of any
violations of any federal,  state,  or local  environmental,  health,  or safety
laws,  codes or ordinances or any rules or  regulations  promulgated  thereunder
with  respect  to  its  businesses,  operations,  assets,  equipment,  property,
leaseholds,  or other facilities which would result in a Material Adverse Change
or result in a fine, penalty,  judgment or other liability in excess of $50,000.
Except in accordance with a valid governmental permit,  license,  certificate or
approval,  during  the past five  years,  there has been no  material  emission,
spill,  release,  or  discharge  into or upon (1) the  air;  (2)  soils,  or any
improvements  located  thereon;  (3) surface  water or  groundwater;  or (4) the
sewer,  septic system or waste  treatment,  storage or disposal system servicing
any premises owned or leased by Borrower,  of any toxic or hazardous  substances
or  hazardous  wastes at or from any  premises  owned or operated  by  Borrower.
During  the past five  years,  there has been no  complaint,  order,  directive,
claim,  action, or notice by any governmental  authority or any Person or entity
with respect to  violations  of law or damages by reason of  Borrower's  (1) air
emissions;  (2) spills, releases, or discharges to soils or improvements located
thereon,  surface  water,  groundwater  or the  sewer,  septic  system  or waste
treatment,  storage  or  disposal  systems  servicing  the  premises;  (3) noise
emissions;  (4) solid or liquid waste disposal;  (5) use,  generation,  storage,
transportation, or disposal of toxic or hazardous substances or hazardous waste;
or (6) other  environmental,  health or safety matters affecting the Borrower or
its business,  operations,  assets,  equipment,  property,  leaseholds, or other
facilities,  other  than such as would  not have a  Material  Adverse  Change or
result in a fine,  penalty,  judgment or other  liability  in excess of $50,000.
Borrower  does not have any material  indebtedness,  obligation,  or  liability,
absolute or  contingent,  matured or not  matured,  with respect to the storage,
treatment,  cleanup, or disposal of any solid wastes, hazardous wastes, or other
toxic  or  hazardous   substances   including   without   limitation   any  such
indebtedness,  obligation,  or liability with respect to any current regulation,
law, or statute regarding such storage,  treatment,  cleanup, or disposal, other
than  obligations  in the ordinary  course of  Borrower's  business.

                                      A-11
<PAGE>

         r. Foreign  Person.  The Borrower is not a "foreign  person" within the
meaning of Section 1445(f)(3) of the Code.

         s. Put Payments.  The only Professional  Corporations that are owed Put
Payments from Borrower  pursuant to certain  written and/or oral agreements with
Borrower are: Glendale Dental Group and Mississippi Dental Associates,  P.C., in
the amounts and in accordance  with the terms and  conditions of the  respective
agreements referenced in Article VII (m) hereof.

4.       CONDITIONS OF LENDING

         The obligations of Lender to make the Loan hereunder are subject to the
satisfaction of the following conditions:

a.       All Borrowings.  On the date of each Borrowing:

         i. The  Lender  shall  have  received  a notice  of such  borrowing  as
required by Section 2.3.

         ii. The  representations and warranties set forth in Article III hereof
shall be true and correct in all material respects on and as of the date of such
Borrowing with the same effect as though made on and as of such date,  except to
the extent such  representations  and warranties  expressly relate to an earlier
date.

         iii.  The  Borrower  shall  be in  compliance  with all the  terms  and
provisions  set forth  herein and in each other Loan  Document on its part to be
observed or performed,  and at the time of and immediately  after such Borrowing
no Event of Default or Default  shall have occurred and be  continuing.  Without
limiting the  foregoing,  as of the date of each  Borrowing,  Borrower must have
furnished to Lender all of the financial information required by Section 5.4.

         Each  Borrowing  shall be deemed to  constitute  a  representation  and
warranty  by the  Borrower  on the  date of  such  borrowing  as to the  matters
specified in paragraphs (b) and (c) of this Section 4.1.

b.       Closing Date.  On the Closing Date:

         i. Lender shall have received a duly executed Revolving Credit Note and
Term Loan Note  complying with the provisions of Section 2.4, and all other Loan
Documents required herein.

         ii. Lender shall have received a favorable written opinion from counsel
for the Borrower, dated as of the Closing Date and addressed to the Lender, in a
form satisfactory to Lender.

         iii. All legal matters  incident to this  Agreement and the  borrowings
hereunder shall be satisfactory to the Lender and its counsel.

         iv. The Lender  shall have  received (i) a copy of the  certificate  or
articles of incorporation or articles of organization,  including all amendments
thereto,  of the  Borrower,  certified  as of a recent date by the  Secretary of
State  of the  state  of its  organization,  and a  certificate  as to the  good
standing of the Borrower as of a recent date, from such Secretary of State; (ii)
a  certificate  of the  President,  Secretary,  Assistant  Secretary,  or  other
authorized  officer,  of the Borrower  dated the Closing Date and certifying (A)
that attached thereto is a true and complete copy of the by-laws of the Borrower
as in effect on the Closing Date and at all times since a date prior to the date
of the resolutions described in clause (B) below, (B) that attached thereto is a
true and complete copy of resolutions  duly adopted by the Board of Directors of
the Borrower  authorizing  the execution,  delivery and  performance of the Loan
Documents and the borrowings hereunder,  and that such resolutions have not been
modified,  rescinded  or amended and are in full force and effect,  (C) that the
certificate or articles of  incorporation  of the Borrower have not been amended
since the date of the last amendment thereto shown on the certificate  furnished
pursuant  to  clause  (i)  above,  and  (D) as to the  incumbency  and  specimen
signature  of each officer  executing  any Loan  Document or any other  document
delivered in connection herewith on behalf of the Borrower;  (iii) a certificate
of another officer as to the incumbency and specimen  signature of the Secretary
or Assistant  Secretary  executing the certificate  pursuant to (ii) above;  and
(iv) such other  documents as Lender or counsel for the Lender,  may  reasonably
request.

         v. The Lender shall have received a certificate, dated the Closing Date
and signed by the President or a Financial  Officer of the Borrower,  confirming
compliance with the conditions  precedent set forth in paragraphs (b) and (c) of
Section 4.1 and shall have received a Borrowing Base  Certificate  for the month
of October, 2001.

         vi. The Lender shall have  received  satisfactory  evidence  confirming
that it will have a first lien on all Accounts  Receivable  and all other assets
of Borrower.

         vii. The Lender shall have received insurance  certificates  evidencing
adequate  insurance on the property of  Borrower,  with Lender as an  additional
insured, in such amounts and in such form acceptable to Lender.

                                      A-12
<PAGE>

         Unless  otherwise  expressly  agreed to by Borrower and Lender,  in the
event any of the  conditions  set forth in this  Section 4.2 above have not been
met on or before the Closing Date, Lender will not be obligated to make any Loan
to Borrower  and both  parties  shall be released  from any further  obligations
hereunder.

5.       AFFIRMATIVE COVENANTS

         The  Borrower  covenants  and agrees  with  Lender that so long as this
Agreement  shall  remain in effect or the  principal of or interest on any Loan,
any Fees or any other expenses or amounts  payable under any Loan Document shall
be unpaid,  unless the Lender shall otherwise  consent in writing,  the Borrower
will, and will cause each of the Subsidiaries to:

a.       Existence; Businesses and Properties.

         i. Do or cause to be done all things  necessary to preserve,  renew and
keep in full force and effect its legal existence.

         ii. Do or cause to be done all things  necessary  to obtain,  preserve,
renew, extend and keep in full force and effect the rights,  licenses,  permits,
franchises,  authorizations,  patents,  copyrights,  trademarks  and trade names
material to the conduct of its  business;  maintain and operate such business in
substantially the manner in which it is presently conducted and operated; comply
in all material respects with all applicable laws, rules, regulations and orders
of any Governmental  Authority,  whether now in effect or hereafter enacted; and
at all times maintain and preserve all property  material to the conduct of such
business and keep such property in good repair,  working order and condition and
from time to time make,  or cause to be made,  all needful  and proper  repairs,
renewals,  additions,  improvements and replacements  thereto necessary in order
that the business carried on in connection  therewith may be properly  conducted
at all times.

         b. Insurance.  Keep its insurable properties  adequately insured at all
times  by  financially  sound  and  reputable  insurers;   maintain  such  other
insurance, to such extent and against such risks, including fire and other risks
insured against by extended coverage, as is customary with companies in the same
or similar  businesses,  including public liability insurance against claims for
personal  injury or death or property  damage  occurring  upon,  in, about or in
connection  with the use of any properties  owned,  occupied or controlled by it
and maintain such other insurance as may be required by law.

         c. Obligations and Taxes.  Pay its  indebtedness and other  obligations
promptly and in accordance  with their terms and pay and discharge  promptly all
taxes,  assessments and  governmental  charges or levies imposed upon it or upon
its  income or profits  or in  respect  of its  property,  before the same shall
become  delinquent  or in  default,  as well as all  lawful  claims  for  labor,
materials and supplies or otherwise which, if unpaid,  might give rise to a Lien
upon such properties or any part thereof;  provided,  however, that such payment
and discharge  shall not be required  with respect to any such tax,  assessment,
charge,  levy or  claim  so long as the  validity  or  amount  thereof  shall be
contested in good faith by  appropriate  proceedings  and the Borrower shall set
aside on its books  reserves,  if any,  believed  to be  adequate  with  respect
thereto.

         d.  Financial  Statements,  Reports,  etc. In the case of the  Borrower
shall furnish to Lender:

         i. within 90 days after the end of each fiscal year,  its  consolidated
and consolidating balance sheets and related statements of income and changes in
financial  position,  showing the  financial  condition  of the Borrower and its
consolidated subsidiaries as of the close of such fiscal year and the results of
its  operations and the  operations of such  subsidiaries  during such year, all
audited by an  independent  public  accountant of recognized  national  standing
acceptable  to the Lender  and  accompanied  by an  opinion of such  accountants
(which shall not be  qualified in any material  respect) to the effect that such
consolidated  financial  statements  fairly present the financial  condition and
results of operations of the Borrower on a consolidated basis in accordance with
GAAP consistently applied;

         ii. within 45 days after the end of each fiscal  quarter of each fiscal
year and within 30 days after the end of each month,  its  consolidated  balance
sheets and related statements of income and within 45 days after the end of each
fiscal  quarter of each  fiscal  year its  statements  of  changes in  financial
position,  all such statements  showing the financial  condition of the Borrower
and its  consolidated  subsidiaries  as of the  close of such  month  or  fiscal
quarter, as applicable,  and the results of its operations and the operations of
such subsidiaries  during such month or fiscal quarter,  all certified by one of
its Financial Officers as fairly presenting the financial  condition and results
of operations of the Borrower on a  consolidated  basis in accordance  with GAAP
consistently applied,  subject to normal year-end audit adjustments and omission
of notes;


                                      A-13
<PAGE>

         iii.  concurrently  with any  delivery  of the  quarterly  or  year-end
financial  statements  under (a) or (b) above,  a  certificate  of the Financial
Officer opining on or certifying such statements (i) certifying that no Event of
Default or Default has  occurred  or, if such an Event of Default or Default has
occurred,  specifying the nature and extent  thereof and any  corrective  action
taken or  proposed  to be taken with  respect  thereto  and (ii)  setting  forth
computations  in  reasonable  detail  satisfactory  to the Lender  demonstrating
compliance with the covenants contained in Sections 6.9 through 6.12, inclusive;

         iv. Within thirty (30) days after the end of each month,  the Borrowers
shall deliver to Lender a borrowing  base  certificate  in the form of Exhibit B
hereto (the  "Borrowing  Base  Certificate")  detailing the Borrowers'  Eligible
Accounts Receivable as of the last day of such month,  certified as complete and
correct  on  behalf  of the  Borrower  by the  chief  executive  officer,  chief
financial  officer,  controller  or other  Responsible  Officer of the Borrower,
respectively.  In addition,  each Borrowing Base Certificate shall have attached
to it such  additional  schedules  and/or  other  information  as the Lender may
reasonably request including,  without limitation,  an accounts receivable aging
report.  If the Borrower fails to deliver any such  Borrowing  Base  Certificate
within ten (10) days after  receiving  notice from Lender that  Borrower has not
delivered a Borrowing Base  Certificate  within the time period described above,
then the Borrowing Base shall be deemed to be $0 until such time as the Borrower
delivers such required Borrowing Base Certificate;

         v. promptly after the same become  publicly  available,  if applicable,
copies of all periodic and other reports,  proxy  statements and other materials
filed by it with the Securities  and Exchange  Commission,  or any  governmental
authority succeeding to any of or all the functions of said Commission,  or with
any national  securities  exchange,  or distributed to its shareholders,  as the
case may be; and

         vi. promptly,  from time to time, such other information  regarding the
operations,  business  affairs and  financial  condition  of the Borrower or any
subsidiary, or compliance with the terms of any Loan Document, as the Lender may
reasonably  request,  including,  but not  limited to (i) an annual  budget with
respect to the operations of Borrower, delivered within 90 days after the end of
each  fiscal year and (ii) the  performance  of an annual  collateral  exam by a
collateral examiner designated by Lender.

         e.  Litigation and Other Notices.  Furnish to the Lender prompt written
notice of the following:

         i. any Event of Default or  Default,  specifying  the nature and extent
thereof and the  corrective  action (if any)  proposed to be taken with  respect
thereto;

         ii. the filing or commencement of, or any threat or notice of intention
of any person to file or commence,  any action,  suit or proceeding,  whether at
law or in  equity  or by or  before  any  Governmental  Authority,  against  the
Borrower or any Affiliate thereof which, if adversely  determined,  could result
in a Material Adverse Change; and

         iii.  any  development  that has resulted  in, or could  reasonably  be
anticipated to result in, a Material Adverse Change.

         f.  ERISA.  (a) Comply in all  material  respects  with the  applicable
provisions  of ERISA and (b) furnish to the Lender (i) as soon as possible,  and
in any event within 30 days after any Responsible Officer of the Borrower either
knows or has reason to know that any Reportable Event has occurred that alone or
together with any other  Reportable Event could reasonably be expected to result
in  liability  of the  Borrower  to the PBGC in an  aggregate  amount  exceeding
$50,000,  a statement of a Financial  Officer  setting  forth details as to such
Reportable  Event and the  action  proposed  to be taken with  respect  thereto,
together with a copy of the notice,  if any, of such  Reportable  Event given to
the PBGC, (ii) promptly after receipt thereof, a copy of any notice the Borrower
may receive from the PBGC relating to the intention of the PBGC to terminate any
Plan or Plans  (other  than a Plan  maintained  by an ERISA  Affiliate  which is
considered an ERISA  Affiliate only pursuant to subsection (m) or (o) of Section
412 of the Code) or to appoint a trustee to  administer  any Plan or Plans,  and
(iii) within 10 days after a filing with the PBGC pursuant to Section  412(n) of
the Code of a notice of failure to make a required  installment or other payment
with  respect to a Plan,,  a statement  of a  Financial  officer  setting  forth
details as to such  failure  and the action  proposed  to be taken with  respect
thereto, together with a copy of such notice given to the PBGC.

g.       Maintaining Records; Access to Properties and Inspections.

         Maintain all financial  records in accordance  with GAAP and permit any
representatives  designated by Lender to visit and inspect the financial records
and the properties of the Borrower or any  Subsidiary at reasonable  times after
reasonable  advance  notice  by  Lender  and as often as  requested  and to make
extracts   from  and  copies  of  such   financial   records,   and  permit  any
representatives  designated  by Lender to  discuss  the  affairs,  finances  and
condition  of the  Borrower  or any  Subsidiary  with the  officers  thereof and
independent accountants therefor.


                                      A-14
<PAGE>

         h. Use of Proceeds. Use the proceeds of the Loans only for the purposes
set forth in the preamble to this Agreement.

         i.  Environment.  Be and remain in compliance in all material  respects
with the provisions of all federal, state, and local environmental,  health, and
safety  laws,  codes  and  ordinances,  and all  rules  and  regulations  issued
thereunder; notify the Lender promptly of any notice of a hazardous discharge or
environmental complaint received from any governmental agency or any other party
which  could  have a  Material  Adverse  Change or result  in a  penalty,  fine,
judgment or other liability in excess of $50,000;  notify the Lender promptly of
any  hazardous  discharge  from or  affecting  its  premises  which could have a
Material  Adverse  Change  or  result  in a  penalty,  fine,  judgment  or other
liability  in excess of $50,000;  promptly  contain and remove the same,  to the
extent  required  by  applicable  laws;  and  promptly  pay any fine or  penalty
assessed in connection therewith.

6.       NEGATIVE COVENANTS

         The Borrower covenants and agrees with Lender that, so long as this
Agreement shall remain in effect or the principal of or interest on any Loan,
any Fees or any other expenses or amounts payable under any Loan Document shall
be unpaid, unless the Lender shall otherwise consent in writing, the Borrower
will not, and will not cause or permit any of the Subsidiaries to:

         a.  Indebtedness.   Incur,  create,  assume  or  permit  to  exist  any
indebtedness, except:

i.       Indebtedness represented by the Note;

         ii.  Indebtedness  for which the Financing  Proceeds are paid solely to
Lender for application against, and to reduce the outstanding  principal balance
of,  the  Loans;  provided  that if the Loans are not paid in full,  the  lender
providing  such new loan proceeds will execute a  subordination  and  standstill
agreement in favor of Lender and in such form reasonably acceptable to Lender;

         iii. Indebtedness subordinated to the Loans pursuant to a subordination
and standstill  agreement  satisfactory to Lender; and iv. Any Acquired Practice
Obligations  existing as of the date of this  Agreement or any notes relating to
Put Payments owing to Glendale and Mississippi  (as defined in Subparagraph  (m)
of Article VII).

         b.  Liens.  Create,  incur,  assume  or permit to exist any Lien on any
property or assets of Borrower or any of its Subsidiaries  which is now owned or
hereafter  acquired by it or on any income or rights in respect of any  thereof,
or enter  into any  agreement  in favor of another  party not to create,  incur,
assume or permit any such Lien, except:

         i. liens for taxes and other obligations not yet due or which are being
contested in compliance with Section 5.3;

         ii.  pledges and deposits  made in the  ordinary  course of business in
compliance with workmen's compensation,  unemployment insurance and other social
security laws or regulations;

         iii. zoning restrictions, easements, rights-of-way, restrictions on use
of real property and other similar encumbrances  incurred in the ordinary course
of business  which,  in the aggregate,  are not substantial in amount and do not
materially  detract from the value of the property  subject thereto or interfere
with  the  ordinary  conduct  of  the  business  of the  Borrower  or any of its
Subsidiaries; and

         iv. liens which arise in the  ordinary  course of business for sums not
due or sums which the  Company is  contesting  in good faith and by  appropriate
proceedings and with respect to which the Company has made adequate  reserves in
accordance  with GAAP,  but which do not  involve  any  deposits  or advances or
borrowed money or the deferred purchase price of property or services.

         c.  Sale  and  Lease-Back  Transactions.   Except  for  any  sales  and
leasebacks  of  assets  in the  ordinary  course  of  business,  enter  into any
arrangement,  directly or  indirectly,  with any person whereby it shall sell or
transfer any property, real or personal, used or useful in its business, whether
now owned or hereafter  acquired,  and thereafter rent or lease such property or
other  property  which it intends to use for  substantially  the same purpose or
purposes as the property being sold or transferred.

         d.  Investments,  Loans and  Advances.  Purchase,  hold or acquire  any
capital stock,  evidences of indebtedness or other securities of, make or permit
to  exist  any  loans  or  advances  to  shareholders,  officers,  directors  or
Affiliates of Borrower,  without  Lender's prior approval,  or make or permit to
exist any  investment or any other  interest in, any other person,  except (1) a
direct  obligation of the United States or any agency thereof with maturities of


                                      A-15
<PAGE>

one  year or less  from  the  date of  acquisition;  (2)  commercial  paper of a
domestic  issuer rated at least "A-1" by Standard & Poor's  Corporation of "P-1"
by Moody's Investors Service,  Inc.; (3) certificates of deposit with maturities
of one year or less from the date of acquisition issued by any commercial lender
or federal savings lender having capital and surplus in excess of  $250,000,000;
(4) stocks,  obligations, or securities received in settlement of debts (created
in the ordinary course of business) owing to the Borrower; and (5) those certain
loans or expense  advances  made to employees  as of the date of this  Agreement
which do not exceed, as of December 31, 2001,  principal and accrued interest in
the aggregate amount of $288,000, together with any further interest accruing on
such loans thereafter;  and (6) advances or loans (the "Dentist Advances") to an
Acquired Practice in an amount not to exceed $50,000 in the aggregate,  provided
that the Dental  Advances are evidenced by negotiable  promissory  notes,  which
shall be pledged to Lender as further security for the Loans, in form reasonably
satisfactory to Lender.

         e.  Mergers,   Consolidations  and  Sales  of  Assets.  Merge  into  or
consolidate  with any other person,  or permit any other person to merge into or
consolidate with it, or sell,  transfer,  lease or otherwise  dispose of (in one
transaction or in a series of  transactions)  all or any substantial part of its
assets  (whether  now owned or hereafter  acquired) or any capital  stock of any
Subsidiary,  or purchase,  lease or otherwise  acquire (in one  transaction or a
series of  transactions)  all or any substantial part of the assets of any other
person,  except that (a) the Borrower  may  purchase  and sell  inventory in the
ordinary  course of  business  and (b) the  Borrower  may enter into one or more
Asset  Sales  provided  that the Net Cash  Proceeds  are paid over to Lender for
application  against  the  Loans,  first to the  payment of  interest  and other
charges due thereunder, and thereafter, against the principal payments due under
the Loans in the inverse order of payment dates.

         f. Dividends and Distributions. Declare or pay, directly or indirectly,
any  dividend  or make any  other  distribution  (by  reduction  of  capital  or
otherwise), whether in cash, property, securities or a combination thereof, with
respect to any shares of its capital  stock or directly  or  indirectly  redeem,
purchase,  repurchase,  retire or  otherwise  acquire  for value (or  permit any
Subsidiary  to purchase or acquire) any shares of any class of its capital stock
or set  aside any  amount  for any such  purpose;  provided,  however,  that any
Subsidiary  may declare and pay  dividends  or make other  distributions  to the
Borrower.

         g.  Transactions  with  Affiliates.  Sell or transfer  any  property or
assets to, or purchase or acquire any property or assets of, or otherwise engage
in any other transactions with, any of its Affiliates, except that as long as no
Default or Event of Default shall have occurred and be continuing,  the Borrower
or any  Subsidiary  may  engage  in any of  the  foregoing  transactions  in the
ordinary  course of  business  at prices  and on terms and  conditions  not less
favorable  to the  Borrower  or such  Subsidiary  than could be  obtained  on an
arm's-length basis from unrelated third parties.

         h. Business of Borrower. Engage at any time in any business or business
activity  other  than  the  business  currently  conducted  by it  and  business
activities reasonably incidental thereto and, if Borrower is in violation of any
of  the  financial  covenants  set  forth  herein,  further  expand  as  to  the
acquisition of any Acquired Practices relating to its current business.

         i. Total Funded Debt to EBITDA Ratio. The Borrower shall not permit the
ratio of its Total Funded Debt to its EBITDA, measured at the end of each fiscal
quarter,  calculated on a rolling four quarter basis, to be greater than 2.00 to
1.00 through maturity of the Loans.

         j.   Capital   Expenditures.   Borrower   shall  not   permit   Capital
Expenditures, excluding Put Payments, to exceed $1,250,000, tested quarterly and
calculated on a rolling four quarter basis.

         k. Total Fixed Charge  Coverage Ratio.  Borrower shall not permit,  the
ratio of Operating Cash Flow to Total Fixed Charges to be less than 1.10 through
maturity  of the  Loans,  to be  tested  at  the  end of  each  fiscal  quarter,
calculated on a rolling four quarter basis.

         l. Fixed Charge Covenant Ratio.  Borrower shall not permit the ratio of
Operating  Cash Flow to Fixed  Charges to be less than 1.25 through  maturity of
the  Loans,  to be tested at the end of each  fiscal  quarter,  calculated  on a
rolling four quarter basis.

         m.  Change in  Management.  Borrower  shall not  permit  any  Change in
Management.

7.       EVENTS OF DEFAULT

         In case of the happening of any of the following events ("Events of
Default"):

         i.  any  representation  or  warranty  made  or  deemed  made  in or in
connection  with  any  Loan  Document  or  the  borrowings  hereunder,   or  any
representation,  warranty,  statement  or  information  contained in any report,
certificate,  financial  statement or other  instrument  furnished in connection
with or  pursuant  to any  Loan  Document,  shall  prove to have  been  false or
misleading in any material respect when so made, deemed made or furnished;

                                      A-16
<PAGE>

         ii.  default  shall be made in the payment of any principal of any Loan
when and as the same  shall  become  due and  payable,  whether  at the due date
thereof or at a date fixed for prepayment thereof or by acceleration  thereof or
otherwise and such default shall  continue  unremedied for a period of three (3)
Business Days;

         iii.  default  shall be made in the payment of any interest on any Loan
or any Fee or any other amount  (other than an amount  referred to in (b) above)
due under any Loan Document,  when and as the same shall become due and payable,
and such default shall continue unremedied for a period of three Business Days;

         iv.  default shall be made in the due  observance or performance by the
Borrower or any Subsidiary of any covenant,  condition or agreement contained in
Article V or in Article VI and such  default  shall  continue  unremedied  for a
period of thirty (30) days after notice thereof from Lender to Borrower;

         v. default shall be made in the due  observance or  performance  by the
Borrower or any Subsidiary of any covenant,  condition or agreement contained in
any Loan Document (other than those specified in (b), (c) or (d) above) and such
default shall continue  unremedied for a period of thirty (30) days after notice
thereof from the Lender to the Borrower;

         vi. the Borrower or any Subsidiary  shall (i) fail to pay any principal
or interest, regardless of amount, due in respect of any indebtedness,  when and
as the same shall become due and payable, or (ii) fail to observe or perform any
other term,  covenant,  condition or agreement which would  constitute a default
under any agreement or instrument  evidencing or governing any such indebtedness
after the expiration of any applicable notice and grace periods, if any;

         vii. an  involuntary  proceeding  shall be commenced or an  involuntary
petition shall be filed in a court of competent  jurisdiction seeking (i) relief
in respect of the Borrower or any  Subsidiary,  or of a substantial  part of the
property or assets of the Borrower or a Subsidiary, under Title 11 of the United
States Code, as now  constituted or hereafter  amended,  or any other Federal or
state bankruptcy, insolvency,  receivership or similar law, (ii) the appointment
of a receiver, trustee, custodian, sequestrator, conservator or similar official
for the Borrower or any Subsidiary or for a substantial  part of the property or
assets of the Borrower or a Subsidiary or (iii) the winding-up or liquidation of
the Borrower or any  Subsidiary;  and such proceeding or petition shall continue
undismissed  for 60 days or an order or decree  approving or ordering any of the
foregoing shall be entered;

         viii. the Borrower or any Subsidiary shall (i) voluntarily commence any
proceeding  or file any  petition  seeking  relief  under Title 11 of the United
States Code, as now  constituted or hereafter  amended,  or any other Federal or
state bankruptcy,  insolvency,  receivership or similar law, (ii) consent to the
institution  of, or fail to  contest  in a timely and  appropriate  manner,  any
proceeding or the filing of any petition described in (g) above, (iii) apply for
or consent to the appointment of a receiver, trustee,  custodian,  sequestrator,
conservator  or similar  official  for the Borrower or any  Subsidiary  or for a
substantial  part of the property or assets of the  Borrower or any  Subsidiary,
(iv) file an answer  admitting  the  material  allegations  of a petition  filed
against it in any such proceeding, (v) make a general assignment for the benefit
of  creditors,  (vi)  become  unable,  admit in writing  its  inability  or fail
generally  to pay its debts as they  become due or (vii) take any action for the
purpose of effecting any of the foregoing;

         ix. one or more  judgments  for the  payment  of money in an  aggregate
amount in excess of  $100,000.00  shall be rendered  against the  Borrower,  any
Subsidiary  or  any  combination   thereof  (unless  Lender  receives   evidence
demonstrating,  to Lender's satisfaction,  that such judgment is fully insured),
subject to customary deductibles  acceptable to Lender and the same shall remain
undischarged  for a period of 30 consecutive  days during which  execution shall
not be  effectively  stayed,  or any action shall be legally taken by a judgment
creditor to levy, upon assets or properties of the Borrower or any Subsidiary to
enforce any such judgment;

         x. a  Reportable  Event or  Reportable  Events,  or a failure to make a
required payment (within the meaning of Section 412(n)(1)(A) of the Code), shall
have  occurred  with  respect  to any Plan or  Plans  that  reasonably  could be
expected to result in  liability  of the Borrower to the PBGC or to a Plan in an
aggregate amount exceeding $50,000.00 and, within 30 days after the reporting of
any such  Reportable  Event to the Lender or after the  receipt by the Lender of
the statement  required  pursuant to Section 5.6, the Lender shall have notified
the Borrower in writing that (i) the Lender have made a  determination  that, on
the basis of such Reportable Event or Reportable Events or the failure to make a
required payment,  there are reasonable  grounds (A) for the termination of such
Plan or Plans by the PBGC,  (B) for the  appointment by the  appropriate  United
States  District Court of a trustee to administer  such Plan or Plans or (C) for
the  imposition  of a lien in favor of a Plan  and (ii) as a result  thereof  an
Event of Default exists  hereunder;  or a trustee shall be appointed by a United
States  District court to administer  any such Plan or Plans;  or the PBGC shall
institute proceedings to terminate any Plan or Plans;

                                      A-17
<PAGE>

         xi. there shall have occurred a Change in Management;

         xii.  Mark  Birner has his  license to  practice  dentistry  revoked or
suspended in any manner during the term of the Loan;

         xiii. Put Payments are made by Borrower to any Professional Corporation
during the term of the Loan other than to (i) Glendale Dental Group ("Glendale")
pursuant to that certain  agreement dated February 11, 1999 between Borrower and
Glendale and (ii) Mississippi Dental Associates,  P.C.  ("Mississippi") pursuant
to that  certain  agreement  dated  September  28,  1998  between  Borrower  and
Mississippi;

         then,  and in every  such event and at any time  thereafter  during the
continuance of such event, the Lender may by notice to the Borrower, take either
or both of the following actions,  at the same or different times: (i) terminate
forthwith  the  Commitment,  (ii)  declare  the  Loans  then  outstanding  to be
forthwith due and payable,  whereupon the principal of the Loans,  together with
accrued interest  thereon and any unpaid accrued Fees and all other  liabilities
of the  Borrower  accrued  hereunder  and under any other Loan  Document,  shall
become forthwith due and payable,  without presentment,  demand,  protest or any
other  notice  of any  kind,  all of which are  hereby  expressly  waived by the
Borrower,  anything  contained  herein  or in any  other  Loan  Document  to the
contrary  notwithstanding;  and in  any  event  with  respect  to  the  Borrower
described in paragraph  (g) or (h) above,  the  Commitment  shall  automatically
terminate and the principal of the Loans then outstanding, together with accrued
interest  thereon and any unpaid  accrued Fees and all other  liabilities of the
Borrower   accrued   hereunder  and  under  any  other  Loan   Document,   shall
automatically become due and payable,  without presentment,  demand,  protest or
any other notice of any kind,  all of which are hereby  expressly  waived by the
Borrower,  anything  contained  herein  or in any  other  Loan  Document  to the
contrary notwithstanding,  and (iii) take such other actions provided for in any
of the other Loan Documents.

8.       MISCELLANEOUS

         a. Notices.  Notices and other communications provided for herein shall
be in writing  and shall be  delivered  by hand or  overnight  courier  service,
mailed or sent by telex,  graphic scanning or other  telegraphic  communications
equipment of the sending party, as follows:

         i. if to the Borrower,  to it at 3801 East Florida  Avenue,  Suite 508,
Denver,  Colorado 80210,  Attention of Dennis Genty,  Telecopy No. 303-691-0889,
with a copy to Dennis M.  Jackson,  Esq.,  Holland & Hart LLP,  Post  Office Box
8749, Denver, Colorado 80201.

         ii.  if to the  Lender,  to it at 1675  Broadway,  Suite  500,  Denver,
Colorado 80202, Attention of Michelle Bushey, Telecopy No. 720-904-4515,  with a
copy to Lea Ann T.  Groesser,  Esq.,  Brownstein  Hyatt & Farber,  P.C. 410 17th
Street, 22nd Floor, Denver, Colorado 80202, Telecopy No. 303-223-1111.

         All  notices  and other  communications  given to any  party  hereto in
accordance  with the provisions of this  Agreement  shall be deemed to have been
given on the date of receipt if delivered by hand or overnight  courier  service
or sent by telex, graphic scanning or other telegraphic communications equipment
of the sender,  or on the date five Business Days after dispatch by certified or
registered  mail if mailed,  in each case  delivered,  sent or mailed  (properly
addressed) to such party as provided in this Section 8.1 or in  accordance  with
the latest  unrevoked  direction  from such party given in accordance  with this
Section 8.1.

         b. Survival of Agreement.  All covenants,  agreements,  representations
and  warranties  made by the Borrower  herein and in the  certificates  or other
instruments  prepared  or  delivered  in  connection  with or  pursuant  to this
Agreement or any other Loan  Document  shall be  considered  to have been relied
upon by the Lender and shall  survive the making by the Lender of the Loan,  and
the  execution  and  delivery  to the Lender of the Note  evidencing  such Loan,
regardless of any investigation made by the Lender or on their behalf, and shall
continue  in full force and effect as long as the  principal  of or any  accrued
interest on any Loan or any Fee or any other amount payable under this Agreement
or any  other  Loan  Document  is  outstanding  and  unpaid  and so  long as the
Commitments have not been terminated.

         c. Binding Effect.  This Agreement shall become effective when it shall
have been  executed by the  Borrower  and the Lender,  and  thereafter  shall be
binding  upon and inure to the benefit of the  Borrower and the Lender and their
respective  successors and assigns,  except that the Borrower shall not have the
right to assign its rights  hereunder or any interest  herein  without the prior
consent of the Lender .

         Successors and Assigns.

         i. Whenever in this Agreement any of the parties hereto is referred to,
such  reference  shall be deemed to include the  successors  and assigns of such
party;  and all  covenants,  promises  and  agreements  by or on  behalf  of the
Borrower or the Lender that are contained in this Agreement shall bind and inure
to the benefit of their respective successors and assigns.

                                      A-18
<PAGE>

         ii. Lender may assign to one or more  assignees all or a portion of its
interests,  rights and  obligations  under this  Agreement  (including  all or a
portion of its Commitment and the Loan at the time owing to it and the Note held
by it); provided,  however,  that Lender shall furnish notice to Borrower of any
such  assignment  no less than  thirty  (30) days in  advance of making any such
assignment;

d.       Expenses; Indemnity.

         i. The Borrower agrees to pay all  out-of-pocket  expenses  incurred by
the Lender in connection  with the  preparation  of this Agreement and the other
Loan Documents or in connection with any amendments, modifications or waivers of
the  provisions  hereof  or  thereof  (whether  or not the  transactions  hereby
contemplated  shall be consummated) or incurred by the Lender in connection with
the  enforcement  or protection of its rights in connection  with this Agreement
and the other Loan Documents to the extent Lender prevails or in connection with
the Loan made or the Note issued hereunder, including the fees and disbursements
of Brownstein Hyatt & Farber,  P.C., counsel for the Lender,  and, in connection
with any such  amendment,  modification  or  waiver or any such  enforcement  or
protection,  the fees and disbursements of any other counsel for the Lender. The
Borrower  further  agrees that it shall  indemnify the Lender from and hold them
harmless  against any  documentary  taxes,  assessments  or charges  made by any
Governmental Authority by reason of the execution and delivery of this Agreement
or any of the other Loan Documents.

         ii. The  Borrower  agrees to  indemnify  the Lender and its  directors,
officers,  employees and agents (each such person being called an  "Indemnitee")
against, and to hold each Indemnitee harmless from, any and all losses,  claims,
damages, liabilities and related expenses, including reasonable counsel fees and
expenses,  incurred by or asserted against any Indemnitee arising out of, in any
way  connected  with,  or as a result of (i) the  execution  or delivery of this
Agreement or any other Loan Document or any agreement or instrument contemplated
thereby, the performance by the parties thereto of their respective  obligations
thereunder or the consummation of the transactions  contemplated  thereby,  (ii)
the  use  of  the  proceeds  of  the  Loan  or  (iii)  any  claim,   litigation,
investigation  or proceeding by a third party  relating to any of the foregoing,
whether or not any Indemnitee is a party  thereto;  provided that such indemnity
shall not, as to any  Indemnitee,  be  available to the extent that such losses,
claims,  damages,  liabilities or related  expenses are determined by a court of
competent jurisdiction by final and nonappealable judgment to have resulted from
the gross negligence or willful misconduct of any Indemnitee.

         iii. The  provisions of this Section 8.5 shall remain  operative and in
full  force  and  effect  regardless  of the  expiration  of the  term  of  this
Agreement,  the  consummation  of  the  transactions  contemplated  hereby,  the
repayment of any of the Loan, the invalidity or  unenforceability of any term or
provision of this  Agreement or any other Loan  Document,  or any  investigation
made by or on behalf of the Lender. All amounts due under this Section 8.5 shall
be payable on written demand therefor.

         e. Right of Setoff.  If an Event of Default  shall have occurred and be
continuing Lender is hereby authorized at any time and from time to time, to the
fullest  extent  permitted  by law,  to set off and apply  any and all  deposits
(general or special, time or demand,  provisional or final) at any time held and
other  indebtedness  at any time  owing by  Lender  to or for the  credit or the
account of the Borrower  against any of and all the  obligations of the Borrower
now or hereafter  existing under this Agreement and other Loan Documents held by
Lender,  irrespective  of whether or not Lender shall have made any demand under
this Agreement or such other Loan Document and although such  obligations may be
unmatured.  The rights of Lender  under this  Section  are in  addition to other
rights and remedies (including other rights of setoff) which Lender may have.

         f. Applicable Law. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF COLORADO.

         g. Waivers; Amendment.

         i. No failure or delay of the Lender in  exercising  any power or right
hereunder  shall  operate as a waiver  thereof,  nor shall any single or partial
exercise of any such right or power,  or any  abandonment or  discontinuance  of
steps to enforce such a right or power,  preclude any other or further  exercise
thereof or the exercise of any other right or power.  The rights and remedies of
Lender hereunder and under the other Loan Documents are cumulative and exclusive
of any rights or  remedies  which they would  otherwise  have.  No waiver of any
provision  of this  Agreement  or any other  Loan  Document  or  consent  to any
departure by the Borrower  therefrom shall in any event be effective  unless the
same shall be permitted by paragraph (b) below,  and then such waiver or consent
shall be effective  only in the specific  instance and for the purpose for which
given.

                                      A-19
<PAGE>

No notice or demand on the  Borrower in any case shall  entitle the  Borrower to
any other or further  notice or demand in similar or other  circumstances.  Each
holder of any of the Notes shall be bound by any amendment, modification, waiver
or consent  authorized as provided  herein,  whether or not such Note shall have
been marked to indicate such amendment, modification, waiver or consent.

         ii.  Neither this  Agreement  nor any  provision  hereof may be waived,
amended or modified  except  pursuant to an agreement or  agreements  in writing
entered into by the Borrower and the Lender.

         h. Interest Rate Limitation.  Notwithstanding anything herein or in the
Notes to the contrary,  if at any time the applicable  interest  rate,  together
with all fees and charges  which are treated as interest  under  applicable  law
(collectively  the  "Charges"),  as provided for herein or in any other document
executed in connection herewith, or otherwise contracted for, charged, received,
taken or reserved by Lender,  shall exceed the maximum lawful rate (the "Maximum
Rate") which may be  contracted  for,  charged,  taken,  received or reserved by
Lender in accordance with applicable law, the rate of interest payable under the
Note,  together  with all  Charges  payable to  Lender,  shall be limited to the
Maximum Rate.

         i.  Entire  Agreement.  This  Agreement  and the other  Loan  Documents
constitute  the entire  contract  between  the  parties  relative to the subject
matter  hereof.  Any  previous  agreement  among the parties with respect to the
subject  matter  hereof is  superseded  by this  Agreement  and the  other  Loan
Documents.  Nothing in this Agreement or in the other Loan Documents,  expressed
or implied,  is intended to confer upon any party other than the parties  hereto
any rights,  remedies,  obligations  or  liabilities  under or by reason of this
Agreement or the other Loan Documents.

         j.  Waiver of Jury  Trial.  Each party  hereto  hereby  waives,  to the
fullest extent  permitted by applicable law, any right it may have to a trial by
jury in respect of any litigation  directly or indirectly  arising out of, under
or in connection  with this Agreement or any of the other Loan  Documents.  Each
party  hereto (a)  certifies  that no  representative,  agent or attorney of any
other party has represented, expressly or otherwise, that such other party would
not, in the event of  litigation,  seek to enforce the foregoing  waiver and (b)
acknowledges  that it and the other  parties  hereto have been  induced to enter
into this Agreement and the other Loan Documents, as applicable, by, among other
things, the mutual waivers and certifications in this Section 8.11.

k.  Severability. In the event any one or more of the provisions
contained in this Agreement or in any other Loan Document should be held
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and therein shall
not in any way be affected or impaired thereby. The parties shall endeavor in
good-faith negotiations to replace the invalid, illegal or unenforceable
provisions with valid provisions the economic effect of which comes as close as
possible to that of the invalid, illegal or unenforceable provisions.

         l.  Counterparts.  This  Agreement  may be  executed  in  two  or  more
counterparts,  each of which shall  constitute an original but all of which when
taken together shall constitute but one contract,  and shall become effective as
provided in Section 8.3.

         m.  Headings.  Article and Section  headings  and the Table of Contents
used  herein  are for  convenience  of  reference  only,  are  not  part of this
Agreement  and are not to  affect  the  construction  of,  or to be  taken  into
consideration in interpreting, this Agreement.

         Jurisdiction; Consent to Service of Process.

         i. The Borrower hereby  irrevocably and  unconditionally  submits,  for
itself and its property, to the nonexclusive  jurisdiction of any Colorado State
court or  Federal  court of the  United  States of  America  sitting  in Denver,
Colorado,  and any appellate court from any thereof, in any action or proceeding
arising out of or relating to this Agreement or the other Loan Documents, or for
recognition  or  enforcement  of any  judgment,  and each of the parties  hereto
hereby irrevocably and unconditionally  agrees that all claims in respect of any
such action or proceeding may be heard and determined in such Colorado State or,
to the extent  permitted  by law,  in such  Federal  court.  Each of the parties
hereto agrees that a final  judgment in any such action or  proceeding  shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law.  Nothing in this Agreement shall affect any
right that Lender may otherwise have to bring any action or proceeding  relating
to this  Agreement  or the other Loan  Documents  against  the  Borrower  or its
properties in the courts of any jurisdiction.

         ii. The Borrower hereby irrevocably and unconditionally  waives, to the
fullest extent it may legally and  effectively do so, any objection which it may
now or hereafter  have to the laying of venue of any suit,  action or proceeding
arising out of or relating to this  agreement or the other Loan Documents in any
Colorado State or Federal court.  Each of the parties hereto hereby  irrevocably
waives,  to the fullest extent  permitted by law, the defense or an inconvenient
forum to the maintenance of such action or proceeding in any such court.



                                      A-20
<PAGE>

         iii. Each party to this  Agreement  irrevocably  consents to service of
process in the manner  provided  for  notices  in Section  8.1.  Nothing in this
Agreement  will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.

         IN WITNESS  WHEREOF,  the  Borrower  and the Lender  have  caused  this
Agreement to be duly executed by their respective  authorized officers as of the
day and year first above written.

                                BIRNER DENTAL MANAGEMENT SERVICES, INC.,
                                a Colorado corporation



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




                                KEYBANK NATIONAL ASSOCIATION,
                                a national banking association


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