SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No.)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
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[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
BIRNER DENTAL MANAGEMENT SERVICES, INC.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
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BIRNER DENTAL MANAGEMENT SERVICES, INC.
3801 EAST FLORIDA AVENUE, SUITE 508
DENVER, COLORADO 80210
April 29, 2005
TO THE SHAREHOLDERS OF BIRNER
DENTAL MANAGEMENT SERVICES, INC.:
You are cordially invited to attend the 2005 Annual Meeting of Shareholders (the
"Meeting") of Birner Dental Management Services, Inc. (the "Company"), to be
held on Tuesday, June 7, 2005, at 10:00 a.m., Mountain Time, at the Company's
offices, 3801 East Florida Avenue, Suite 508, Denver, Colorado 80210.
Please read the enclosed Proxy Statement for the Meeting. Whether or not you
plan to attend the Meeting, please sign, date and return the proxy card in the
enclosed envelope to Computershare Trust Company, Inc. as soon as possible so
that your vote will be recorded. If you attend the Meeting, you may withdraw
your proxy and vote your shares in person.
Very truly yours,
BIRNER DENTAL MANAGEMENT SERVICES, INC.
By: /s/ Frederic W. J. Birner
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Name: Frederic W.J. Birner
Title: Chairman of the Board and Chief Executive Officer
BIRNER DENTAL MANAGEMENT SERVICES, INC.
3801 EAST FLORIDA AVENUE, SUITE 508
DENVER, COLORADO 80210
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NOTICE OF ANNUAL MEETING OF
SHAREHOLDERS
TO BE HELD JUNE 7, 2005
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TO OUR SHAREHOLDERS:
The 2005 Annual Meeting of Shareholders (the "Meeting") of Birner Dental
Management Services, Inc., a Colorado corporation (the "Company"), will be held
on Tuesday, June 7, 2005, at 10:00 a.m., Mountain Time, at the Company's
offices, 3801 East Florida Avenue, Suite 508, Denver, Colorado 80210, for the
following purposes:
(1) to elect one Class II director to serve for a term of three years or until a
successor is duly elected and qualified; (2) to consider and vote upon a
proposal to approve the Company's 2005 Equity Incentive Plan; (3) to consider
such other matters as may properly come before the Meeting and at any and all
adjournments thereof.
As fixed by the Board of Directors, only shareholders of record at the close of
business on April 11, 2005 are entitled to notice of and to vote at the Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Dennis N. Genty
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Name: Dennis N. Genty
Title: Chief Financial Officer, Secretary and Treasurer
Denver, Colorado
April 29, 2005
A PROXY CARD IS ENCLOSED. YOUR VOTE IS IMPORTANT NO MATTER HOW MANY SHARES YOU
OWN. TO ASSURE THAT YOUR SHARES WILL BE VOTED AT THE MEETING, PLEASE COMPLETE
AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED, POSTAGE
PREPAID, ADDRESSED ENVELOPE TO COMPUTERSHARE TRUST COMPANY, INC. NO ADDITIONAL
POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. THE GIVING OF A PROXY WILL
NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND THE MEETING.
BIRNER DENTAL MANAGEMENT SERVICES, INC.
3801 EAST FLORIDA AVENUE, SUITE 508
DENVER, COLORADO 80210
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
To be held June 7, 2005
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GENERAL INFORMATION
The enclosed proxy is solicited by and on behalf of the Board of Directors of
Birner Dental Management Services, Inc., a Colorado corporation (the "Company"),
for use at the Company's 2005 Annual Meeting of Shareholders (the "Meeting") to
be held at 10:00 a.m., Mountain Time, on Tuesday, June 7, 2005, at the Company's
offices, 3801 East Florida Avenue, Suite 508, Denver, Colorado 80210, and at any
and all adjournments thereof. This Proxy Statement and the accompanying form of
proxy are first being mailed or given to the shareholders of the Company on or
about April 29, 2005.
The Company's Annual Report on Form 10-K (the "Annual Report"), which includes
audited financial statements for the fiscal year ended December 31, 2004, is
being mailed to shareholders of the Company simultaneously with this Proxy
Statement. The Annual Report is not part of the Company's proxy soliciting
materials.
INFORMATION CONCERNING SOLICITATION AND VOTING
All voting rights are vested exclusively in the holders of the Company's Common
Stock, without par value. Each share of the Company's Common Stock is entitled
to one vote. Cumulative voting in the election of directors is not permitted.
Holders of a majority of shares entitled to vote at the Meeting, when present in
person or by proxy, constitute a quorum. On April 11, 2005, the record date for
shareholders entitled to vote at the Meeting, 1,121,161 shares of the Company's
Common Stock, without par value, were issued and outstanding.
Proxies in the enclosed form will be effective if properly executed and returned
prior to the Meeting in the enclosed envelope to Computershare Trust Company,
Inc., Proxy Department, P.O. Box 1596, Denver, Colorado 80201-1596. The Common
Stock represented by each effective proxy will be voted at the Meeting in
accordance with the instructions on the proxy. If no instructions are indicated
on a proxy, all Common Stock represented by such proxy will be voted FOR
election of the nominee named in the proxy as Class II director, FOR approval of
the 2005 Equity Incentive Plan and, as to any other matters of business which
properly come before the Meeting, by the named proxies at their discretion.
Any shareholder signing and mailing the enclosed proxy may revoke it at any time
before it is voted by giving written notice of the revocation to the Company, by
voting in person at the Meeting or by filing at the Meeting a later executed
proxy.
1
When a quorum is present, in the election of directors, the nominees having the
highest number of votes cast in favor of their election will be elected to the
Company's Board of Directors. With respect to any other matter that may properly
come before the Meeting, unless a greater number of votes are required by law or
by the Company's Amended and Restated Articles of Incorporation, a matter will
be approved by the shareholders by the affirmative vote of a majority of the
shares present in person or represented by proxy at the meeting.
Abstentions, broker non-votes (i.e., shares held by brokers or nominees as to
which the broker or nominee indicates on a proxy that it does not have
discretionary authority to vote) and any other shares not voted will be treated
as shares that are present for purposes of determining the presence of a quorum.
However, for purposes of determining the outcome of the election of the Class II
director, or of any other matter which properly may come before the Meeting,
abstentions, broker non-votes and any other shares not voted will not be
considered as votes cast. Thus, abstentions, broker non-votes and any other
shares not voted will have no impact in the election of the Class II director,
or any other matter which properly may come before the Meeting so long as a
quorum is present.
The Company will pay the cost of soliciting proxies in the accompanying form.
The Company has retained the services of Computershare Trust Company, Inc. to
assist in distributing proxy materials to brokerage houses, banks, custodians
and other nominee holders. The estimated cost of such services is approximately
$1,300 plus out-of-pocket expenses. Although there are no formal agreements to
do so, proxies may be solicited by officers and other regular employees of the
Company by telephone or by personal interview for which employees will not
receive additional compensation. Arrangements also may be made with brokerage
houses and other custodians, nominees and fiduciaries to forward solicitation
materials to beneficial owners of the shares held of record by such persons, and
the Company may reimburse such persons for reasonable out-of-pocket expenses
incurred by them in so doing.
PROPOSAL ONE: ELECTION OF CLASS II DIRECTOR
General
The Company's Amended and Restated Articles of Incorporation provide for the
classification of the Company's Board of Directors. The Board of Directors is
divided into three classes. One class stands for re-election at each annual
meeting of shareholders. The Board of Directors has set the size of the Board at
five members. The Board of Directors currently is classified into two Class I
directors whose terms will expire upon the election and qualification of
directors at the annual meeting of shareholders held in 2007 (Thomas D. Wolf and
Paul E. Valuck, D.D.S.), one Class II director whose term will expire upon the
election and qualification of a director at the annual meeting of shareholders
held in 2005 (Brooks G. O'Neil) and two Class III directors whose terms will
expire upon the election and qualification of directors at the annual meeting of
shareholders held in 2006 (Frederic W.J. Birner and Mark A. Birner, D.D.S). At
each annual meeting of shareholders, directors will be elected by the
shareholders of the Company for a full term of three years to succeed those
directors whose terms are expiring. The powers and responsibilities of each
class of directors are identical. All directors will serve until their
successors are duly elected and qualified, subject, however, to prior death,
resignation, retirement, disqualification or removal from office. Mr. O'Neil was
appointed to the Board of Directors on January 23, 2003 and has not yet been
elected by shareholders. On June 8, 2004, Mr. Wolf was appointed to the Board of
Directors and Mr. Dennis N. Genty resigned from the Board of Directors. The
appointment of Mr. Wolf and the resignation of Mr. Genty enabled the Company to
be in compliance with applicable Nasdaq rules that require that a majority of
the Company's directors must be independent according to specified criteria.
Shareholders have not yet elected Mr. Wolf. The Company's Chief Executive
Officer submits nominees for director to the Board of Directors. The Company's
nomination procedures require that an independent committee of the Board of
Directors evaluate the nominees for director and then, by majority vote,
recommend to the entire Board of Directors a nominee for appointment to the
Company's Board of Directors.
2
Proxies cannot be voted for a greater number of persons than the number of
nominees named therein. Unless authority to vote is withheld, the persons named
in the enclosed form of proxy will vote the shares represented by such proxy FOR
the election of the nominee for director named below. If, at the time of the
Meeting, the nominee shall have become unavailable for any reason for election
as a director, the persons entitled to vote the proxy will vote for such
substitute nominee, if any, as they determine in their discretion. If elected,
the nominee will hold office until the year 2008 annual meeting of shareholders
or until a successor is elected and qualified.
Class II Director Nominee
The Board of Directors unanimously recommends that the shareholders vote FOR
election of the following nominee as a Class II director of the Company.
Name Age Director Since
---- --- --------------
Brooks G. O'Neil 48 2003
Mr. O'Neil's biography is set forth in "Directors and Executive Officers" below.
Continuing Directors
The persons named below will continue to serve as directors of the Company until
the annual meeting of shareholders in the year indicated below and until their
successors are elected and take office. Shareholders are not voting on the
election of the Class I and Class III directors. The following table shows the
names, ages and positions of each continuing director. Each of the directors'
biographies is set forth in "Directors and Executive Officers" below.
The Company does not have a standing nominating committee, and nominations for
director are made by the Company's independent directors (as defined in Nasdaq
Rule 4200(a)(15)). The Board of Directors believes that, considering the size of
the Company and the Board of Directors, nominating decisions can be made
effectively on a case-by-case basis and there is no need for the added formality
of a nominating committee.
The Board of Directors does not have an express policy with regard to the
consideration of any director candidates recommended by our shareholders since
the Board believes that it can adequately evaluate any such nominees on a
case-by-case basis. The Board will consider director candidates proposed on a
timely basis as described under "Shareholder Proposals", and will evaluate
shareholder-recommended candidates under the same criteria as internally
generated candidates. Shareholders must include sufficient information about
candidates nominated as for director to enable the Company's independent
directors to consider the candidate's qualifications and suitability for service
on the Board. Although the Board does not currently have formal minimum criteria
for nominees, substantial relevant business and industry experience would
generally be considered important qualifying criteria, as would the ability to
attend and prepare for board, committee and shareholder meetings. Any candidate
must state in advance his or her willingness and interest in serving on the
Board and its Committees.
The Company's Board does not presently provide a formal process for shareholders
to send communications to the Board. Shareholders and other interested parties
wishing to contact any member (or all members) of the board of Directors or any
committee of the Board may do so by mail, addressed, either by name of title, to
the Board of Directors or to any such individual director or group or committee
of the directors, and such correspondence should be sent to the Company's
principal office. The Board of Directors intends to continuously evaluate its
communication process with the Company's shareholders, and may adopt additional
procedures to facilitate shareholder communications with the Company's Board,
consistent with standards of the professionalism and the Company's
administrative resources.
3
Class I - Term Expires in 2007
Name Age Director Since
---- --- --------------
Thomas D. Wolf 50 2004
Paul E. Valuck, D.D.S. 48 2001
Class III - Term Expires in 2006
Name Age Director Since
---- --- --------------
Frederic W.J. Birner 47 1995
Mark A. Birner, D.D.S. 45 1995
Directors' Meetings and Committees
The entire Board of Directors met 18 times during the year ended December 31,
2004, including eight actions by unanimous consent. Each incumbent director
attended 100% of the board meetings. The Audit Committee is comprised of outside
directors and the full Board of Directors currently acts as the Company's
Compensation Committee.
Audit Committee
The Audit Committee has as its primary responsibilities the sole responsibility
to select, engage, compensate, and oversee the Company's independent registered
public accounting firm and pre-approve all services to be performed by them: (1)
the Company's financial reporting process generally, (2) the integrity of the
financial statements of the Company, (3) the independent registered public
accounting firm's qualifications and independence, (4) the performance of the
Company's internal audit function and of the independent registered public
accounting firm, and (5) the compliance by the Company with legal and regulatory
requirements. The Audit Committee is comprised of outside directors. The current
members of the Audit Committee are Brooks G. O'Neil, Paul E. Valuck, D.D.S and
Thomas D. Wolf (Chairman). The Board of Directors has reviewed Rule 4200(a)(14)
of the National Association of Securities Dealers and has determined that
Messrs. O'Neil, Valuck and Wolf are independent directors as defined in that
Rule. The Board has determined that Mr. O'Neil has accounting and related
financial management expertise and is qualified as an audit committee financial
expert within the meaning of SEC regulations. The designation of this audit
committee financial expert is a SEC disclosure requirement related to his
experience and understanding of certain accounting and auditing matters. The
designation does not impose any greater duties, obligations, or liability upon
this member than are generally imposed on Audit Committee members. The Board of
Directors has adopted a written charter for the Audit Committee. The Audit
Committee met four times in 2004 at which all members were present.
Compensation Committee
Currently, the full Board of Directors is acting as the Compensation Committee.
The Compensation Committee determines officers' salaries and bonuses and
administers the grant of stock options and other awards pursuant to the Birner
Dental Management Services, Inc. 1995 Employee Plan (the "Employee Plan") and
the Birner Dental Management Services, Inc. 1995 Stock Option Plan for Managed
Dental Centers. Compensation for Frederic W.J. Birner, the Chief Executive
Officer, and the other executive officers is determined by a majority of the
independent directors of the Board of Directors. Frederic W.J. Birner, who is
also a director, did not participate in discussions regarding his individual
compensation. The Compensation Committee met five times in 2004 at which all
members were present.
4
Audit Committee Report(1)
The Audit Committee has reviewed and discussed the audited financial statements
of the Company with management and has discussed with Hein & Associates LLP
("Hein"), the Company's independent registered public accounting firm, the
matters required to be discussed under Statements on Auditing Standards No. 61
("SAS 61"). In addition, the Audit Committee has received from Hein the written
disclosures and the letter required to be delivered by Hein under Independence
Standards Board Standard No. 1 ("ISB Standard No. 1") addressing all
relationships between the independent auditor and the Company that might bear on
their independence. The Audit Committee has reviewed the materials received from
Hein and has met with representatives of Hein to discuss the independence of
their firm.
In connection with the new standards for independence of the Company's
independent registered public accounting firm promulgated by the Securities and
Exchange Commission, the Audit Committee has reviewed the non-audit services
currently provided by the Company's independent registered public accounting
firm and has considered whether the provision of such services is compatible
with maintaining the independence of the Company's independent registered public
accounting firm.
The Audit Committee discussed with the Company's independent registered public
accounting firm the overall scope and plan for their audit. The Audit Committee
also discussed with the independent registered public accounting firm the
results of their examination, their evaluation of the Company's internal
controls, and the overall quality of the Company's financial reports.
Based on the Audit Committee's review of the financial statements, its
discussion with Hein regarding SAS 61, and the written materials provided by
Hein under ISB Standard No. 1 and the related discussion with Hein of their
independence, the Audit Committee has recommended to the Board of Directors that
the audited financial statements of the Company be included in its Annual Report
on Form 10-K for the fiscal year ended December 31, 2004, for filing with the
Securities and Exchange Commission.
THE AUDIT COMMITTEE
Brooks G. O'Neil
Paul E. Valuck D.D.S.
Thomas D. Wolf (Chairman)
PROPOSAL TWO: APPROVAL OF 2005 EQUITY INCENTIVE PLAN
The Board of Directors of the Company has adopted a new equity incentive plan
called the Birner Dental Management Services, Inc. 2005 Equity Incentive Plan,
or "2005 Plan." Adoption of the 2005 Plan is subject to shareholder approval at
the Meeting. The 2005 Plan is intended to replace the Company's previous stock
option plans and provide a plan under which the Company may grant options,
shares of restricted stock or other types of equity-based compensation. The 2005
Plan is also intended to provide a plan under which the Company may compensate
its non-employee directors. If the 2005 Plan is approved, no new awards will be
granted under the Company's previous stock option plans.
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1 This Section is not "soliciting material", is not deemed "filed" with the SEC
and is not to be incorporated by reference in any filing of the Company under
the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934,
as amended, whether made before or after the date hereof and irrespective of any
general incorporation language in any such filing.
5
The Company's Board of Directors believes that the Company must offer a
competitive equity incentive program if it is to continue to successfully
attract and retain the best possible candidates for positions of responsibility.
The Company expects that the 2005 Plan will be an important factor in
attracting, retaining and rewarding the high caliber employees, consultants and
directors essential to the Company's success, and in motivating these
individuals to strive to enhance its growth and profitability. The 2005 Plan is
intended to ensure that the Company will continue to have available a reasonable
number of shares to meet these goals.
The Company's directors, officers, employees and consultants and prospective
directors, officers, employees and consultants, as well as those of the
Company's affiliates and managed dental centers, are eligible to participate in
the 2005 Plan. As of March 31, 2005, there were approximately 514 employees of
the Company and the Company's affiliates and managed dental centers, plus the
Company's non-executive directors, who would have been eligible to participate
in the 2005 Plan.
The following summary of the 2005 Plan is qualified in its entirety by the
specific language of the 2005 Plan, a copy of which is included as Appendix A to
this proxy statement.
Administration
The 2005 Plan will be administered by a committee of two or more outside
directors from the Company's Board of Directors. The committee will determine
the eligible individuals to whom awards under the 2005 Plan may be granted, as
well as the time or times at which awards will be granted, the number of shares
subject to awards to be granted to any eligible individual, the life of any
award, and any other terms and conditions of the grant in addition to those
contained in the 2005 Plan. Each grant under the 2005 Plan will be confirmed by
and subject to the terms of an award agreement.
Authorized Shares
The maximum number of shares of common stock that may be delivered to
participants and their beneficiaries under the 2005 Plan will be 150,000. No
participant may receive awards for any calendar year in excess of 75,000, and
all awards for all participants in any calendar year may not exceed 125,000.
Shares that may be issued under the 2005 Plan may be authorized but unissued
shares or shares re-acquired and held in treasury. In addition, any shares
subject to an award that expires or for any reason is terminated unexercised,
and any shares of stock withheld for the payment of taxes or received by the
Company as payment of the exercise price of an option or otherwise as
contemplated by the 2005 Plan, will automatically become available for use under
the plan.
If an award entitles the holder to receive or purchase shares, the number of
shares covered by the award will be counted on the date of grant of the award
against the aggregate number of shares available for granting awards under the
2005 Plan. Any shares that are used by a participant as full or partial payment
to the Company of the purchase price relating to an award, including in
connection with the satisfaction of tax obligations relating to an award, will
again be available for granting awards (other than incentive stock options)
under the 2005 Plan. In addition, if any shares covered by an award or to which
an award relates are not purchased or are forfeited, or if an award otherwise
terminates without delivery of any shares, then the number of shares counted
against the aggregate number of shares available under the 2005 Plan to the
extent of any such forfeiture or termination will again be available for
granting awards under the plan.
6
Stock Options
The committee may grant stock options, which may be non-qualified stock options
or incentive stock options (ISOs), to eligible individuals. The exercise price
per share purchasable under a stock option will be determined by the committee,
but the exercise price will not be less than 100 percent of the fair market
value of a share on the date of grant. The aggregate fair market value,
determined on the date of grant of any option, of shares with respect to which
ISOs under the 2005 Plan or otherwise are exercisable for the first time by an
option holder in any year may not exceed $100,000. The term of each stock option
will be fixed by the committee at the time of grant, but in no event may it be
more than 10 years from the date of grant. The committee will determine the time
or times at which a stock option may be exercised in whole or in part and the
method or methods by which, and the form or forms in which, payment of the
exercise price may be made or deemed to have been made. Any ISO authorized under
the 2005 Plan will contain such provisions as the committee deems advisable, but
will contain all provisions required in order to qualify the stock option as an
ISO.
Restricted Stock
Shares of restricted stock will be subject to restrictions as the committee may
impose, which may lapse separately or in combination at such time or times, in
installments or otherwise as the committee may deem appropriate. The grant or
vesting of restricted stock may be performance-based or time-based or both.
Restricted stock grants may be "qualified performance-based awards," in which
the grant or vesting of such restricted stock will be conditioned upon the
attainment of performance goals. These goals may be established on a
Company-wide basis or with respect to one or more affiliated corporations,
managed dental centers or other business units, and can be on an absolute or
relative basis. A "qualified performance-based award" is a grant of restricted
stock designated as such by the committee at the time of grant based upon a
determination that (A) the recipient is or may be a "covered employee" within
the meaning of Section 162(m)(3) of the Internal Revenue Code in the year in
which the Company would expect to be able to claim a tax deduction with respect
to such restricted stock awards and (B) the committee wishes such grant to
qualify for the exemption from the limitation on deductibility of compensation
with respect to any covered employee imposed by Section 162(m) of the Internal
Revenue Code. The committee will specify the performance goals to which any
"qualified performance-based award" will be subject. These may include cash
flow; earnings per share; earnings before interest, taxes, depreciation and
amortization; return on equity; total shareholder return; share price
performance; return on capital; return on assets or net assets; total dental
group practice revenue, revenue or net revenue, including net revenue per
office; income or net income; operating income or net operating income;
operating profit or net operating profit; operating margin or profit margin;
return on total dental group practice revenue, revenue or net revenue; return on
invested capital; and contribution from dental offices.
The provisions of restricted stock including any applicable performance goals
need not be the same with respect to each participant. During the restriction
period, the committee may require that stock certificates evidencing restricted
shares be held by the Company. Other than these restrictions on transfer and any
other restrictions the committee may impose, the participant will have all the
rights of a holder of stock holding the class or series of stock that is the
subject of the restricted stock award. Except as otherwise determined by the
committee, upon a participant's termination of employment (as determined under
criteria established by the committee) during the restriction period, all shares
of restricted stock subject to restriction will be forfeited and reacquired by
the Company.
Restricted Stock Units
A restricted stock unit is a measurement component equal to the fair market
value of one share of the Company's common stock on the date for which a
determination is made pursuant to the provisions of the 2005 Plan. The number of
restricted stock units granted to a participant, the vesting schedule and the
goals and objectives to be satisfied with respect to each grant of restricted
stock units, and other terms and conditions applicable to a grant of restricted
stock units will be determined by the committee. As soon as administratively
practicable following vesting of restricted stock units (but no later than 60
days), shares equal to the number of restricted stock units will be distributed
to the participant.
7
Other Stock-Based Awards
Other awards of common stock and other awards that are valued by reference to,
or otherwise based upon common stock, including without limitation dividend
equivalents and convertible debentures, may also be granted under the 2005 Plan,
either alone or in conjunction with other awards.
Transferability of Awards
Awards are nontransferable other than by will or the laws of descent and
distribution. However, in the discretion of the committee, nonqualified stock
options may be transferred to members of the holder's immediate family. The
transfer may be made directly or indirectly or by means of a trust, partnership
or otherwise. Stock options may be exercised only by the initial holder, any
such permitted transferee or a guardian, legal representative or beneficiary.
Change of Control
Notwithstanding any exercise dates or vesting provisions stated in any agreement
pertaining to any award, upon the occurrence of a change in control (as defined
in the 2005 Plan) all exercise dates of any outstanding award shall accelerate
and all outstanding awards shall vest.
Amendments and Termination
The Company's Board of Directors may at any time amend, alter or terminate the
2005 Plan, but no amendment may be made without the approval of the Company's
shareholders to the extent such approval is required to enable the 2005 Plan to
satisfy any applicable statutory or regulatory requirements or if the Company
determines on the advice of counsel that shareholder approval is otherwise
necessary or desirable.
Term of the Plan
Unless earlier terminated by the Company's Board of Directors, the 2005 Plan
will terminate on March 17, 2015.
Summary of Federal Income Tax Consequences
The 2005 Plan is designed to preserve the Company's ability to deduct in full
for federal income tax purposes the compensation recognized by its executive
officers in connection with certain awards granted under the 2005 Plan. Section
162(m) of the Code generally denies a corporate tax deduction for annual
compensation exceeding $1 million paid to the chief executive officer or to any
of the four other most highly compensated officers of a publicly held company.
However, certain types of compensation, including performance-based
compensation, are generally excluded from this deductibility limit. To enable
compensation in connection with stock options, certain restricted stock grants,
performance shares and performance units awarded under the 2005 Plan to qualify
as "performance-based" within the meaning of Section 162(m), the 2005 Plan
limits the sizes of such awards as described in "Authorized Shares" above. While
the Company believes that for federal income tax purposes it will generally be
able to deduct the compensation expense related to awards under the 2005 Plan,
under certain circumstances, such as a change of control of the Company,
compensation paid in settlement of performance share and performance unit awards
may not qualify as "performance-based." By approving the 2005 Plan, the
shareholders will be approving, among other things, eligibility requirements for
participation in the 2005 Plan, financial performance measures upon which
specific performance goals applicable to certain awards may be based, limits on
the numbers of shares or compensation that could be made subject to certain
awards, and the other material terms of the awards described above.
8
Stock Options
The tax consequences of options granted under the plan are complex and depend,
in large part, on the surrounding facts and circumstances. This section provides
a brief summary of certain significant federal income tax consequences of the
2005 Plan, under existing U.S. law. This summary is not a complete statement of
applicable law and is based upon the Code, as well as administrative and
judicial interpretations of the Code as in effect on the date of this
description. If federal tax laws, or interpretations of such laws, change in the
future, the information provided here may no longer be accurate. This section
does not consider state, local, or foreign tax consequences nor does it discuss
the effect of gift, estate, or inheritance taxes, except with respect to
transferred options.
No later than the date as of which an amount first becomes includible in the
gross income of a participant for federal income tax purposes with respect to
any award under the 2005 Plan, the participant must pay the Company, or make
arrangements satisfactory to the Company regarding the payment of, any federal,
state, local or foreign taxes of any kind required by law to be withheld with
respect to such amount. The Company's obligations under the 2005 Plan are
conditional on such payment or arrangements, and the Company will, to the extent
permitted by law, be entitled to take such action and establish such procedures
as the committee deems appropriate to withhold or collect all applicable
payroll, withholding, income or other taxes from a participant.
A participant will not recognize any taxable income and the Company will not be
entitled to a deduction when a non-qualified option is granted. When a
non-qualified option is exercised, the excess of the fair market value of the
shares acquired on the exercise of the option over the exercise price will be
taxable to a participant as ordinary income. The Company, in computing its U.S.
federal income tax, will generally be entitled to a deduction in an amount equal
to the compensation taxable to the participant, subject to certain limitations.
When a participant sells his or her shares of stock, the participant generally
will have a capital gain (or loss), depending on the difference between the sale
price and the fair market value of the stock on the date the participant
exercised his or her option. The capital gain (or loss) is considered "long
term" or "short term" depending on how long the participant has held such stock.
A participant will not recognize taxable income on the grant or exercise of an
ISO. However, the spread at exercise (i.e., the excess of the fair market value
of the shares acquired on the exercise of the option over the option exercise
price) will be includible in alternative minimum taxable income, and, thereby,
may subject the participant to the alternative minimum tax. Upon the disposition
of shares of stock acquired pursuant to the exercise of an ISO, after the later
of (A) two years from the date of grant of the ISO or (B) one year after the
transfer of the shares to the participant (the "ISO Holding Period"), the
participant will recognize long-term capital gain or loss, as the case may be,
measured by the difference between the stock's selling price and the exercise
price. The Company is not entitled to any tax deduction by reason of the grant
or exercise of an ISO, or by reason of a disposition of stock received upon
exercise of an ISO if the ISO Holding Period is satisfied. Different rules apply
if a participant disposes of the shares of stock acquired pursuant to the
exercise of an ISO before the expiration of the ISO Holding Period.
Restricted Stock and Restricted Stock Units
Unless the participant files an election to be taxed under Section 83(b) of the
Code, (A) the participant will not realize income upon the grant of restricted
stock or restricted stock units that are subject to a substantial risk of
forfeiture, (B) the participant will realize ordinary income and the Company
will be entitled to a corresponding deduction when the restrictions have been
removed or expire or shares of stock underlying restricted stock units are
issued, and (C) the amount of such ordinary income and deduction will be the
fair market value of the restricted stock on the date the restrictions are
removed or expire or, if the restricted stock is not subject to a substantial
risk of forfeiture, the date the restricted stock is issued. If the recipient
files an election to be taxed under Section 83(b) of the Code, the tax
consequences to the participant and the Company will be determined as of the
date of the grant of the restricted stock or restricted stock unit rather than
as of the date of the removal or expiration of the restrictions.
9
When the participant disposes of restricted stock, including restricted stock
issued in connection with a restricted stock unit, the difference between the
amount received upon such disposition and the fair market value of such shares
on the date the recipient realizes ordinary income will be treated as a capital
gain or loss. Such capital gain (or loss) will be considered "long-term" or
"short-term" depending on how long the participant has held the restricted
stock.
Award Information
It is not possible at this time to determine future awards that will be made
pursuant to the 2005 Plan, although the Company expects the committee to
consider making awards during 2005.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock as of April 11, 2005, by (i)
all persons known by the Company to be the beneficial owners of 5% or more of
the Common Stock, (ii) each director, (iii) each of the executive officers
listed on the summary compensation table, and (iv) all executive officers and
directors as a group. Unless otherwise indicated, the address of each of the
persons named below is the Company's address, 3801 East Florida Avenue, Suite
508, Denver, Colorado 80210.
Number of Shares
Name of Beneficial Owner Beneficially Owned Percent of Class (1)(2)
------------------------ ------------------ -----------------------
Frederic W.J. Birner (3).................... 149,099 12.7%
Mark A. Birner, D.D.S. (4).................. 221,505 19.0%
Dennis N. Genty (5)......................... 164,751 14.1%
Brooks G. O'Neil (6)........................ 22,273 2.0%
Lee Schlessman (7)......................... 134,078 12.0%
Paul E. Valuck, D.D.S (8)..................... 21,273 1.9%
Thomas D. Wolf (9).......................... 25,456 2.2%
All executive officers and directors (six
persons) (10)............................... 608,357 46.3%
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Shares of Common Stock
subject to options or warrants currently exercisable or exercisable
within 60 days of April 11, 2005, are deemed outstanding for computing
the percentage of the person or entity holding such securities but are
not outstanding for computing the percentage of any other person or
entity. Except as indicated by footnote, and subject to community
property laws where applicable, the persons named in the table above have
sole voting and investment power with respect to all shares of Common
Stock shown as beneficially owned by them.
(2) Percentage of ownership for each beneficial owner is based on shares of
Common Stock outstanding at April 11, 2005 plus any options or warrants
currently exercisable or exercisable within 60 days of April 11, 2005,
computed separately for each beneficial owner using information provided
in the following footnotes.
(3) Includes 46,667 shares of Common Stock that are issuable upon the
exercise of options that are currently exercisable and 5,000 shares of
Common Stock that are issuable upon the exercise of warrants that are
currently exercisable.
(4) Includes 33,333 shares of Common Stock that are issuable upon the
exercise of options that are currently exercisable and 10,000 shares of
Common Stock that are issuable upon the exercise of warrants that are
currently exercisable.
(5) Includes 33,333 shares of Common Stock that are issuable upon the
exercise of options that are currently exercisable and 10,000 shares of
Common Stock that are issuable upon the exercise of warrants that are
currently exercisable. Includes 59,693 shares of Common Stock owned by
Mr. Genty's wife. Mr. Genty disclaims beneficial ownership of all shares
held by his wife.
(6) Includes 18,000 shares of Common Stock that are issuable upon the
exercise of options that are currently exercisable.
10
(7) Includes 64,046 shares of Common Stock over which Mr. Schlessman has sole
voting power pursuant to certain powers of attorney, but for which he
disclaims beneficial ownership, based on SEC Schedule 13G filed April 24,
2003. The address for Mr. Schlessman is 1301 Pennsylvania Street, Suite
800, Denver, CO 80203.
(8) Includes 16,000 shares of Common Stock that are issuable upon the
exercise of options that are currently exercisable.
(9) Includes 12,000 shares of Common Stock that are issuable upon the
exercise of options that are currently exercisable. Includes 2,180 shares
of Common Stock of the total 4,360 shares of Common Stock held by Gorge
Investment LLC, representing Mr. Wolf's 50% ownership interest.
(10) Includes 184,333 shares of Common Stock issuable upon the exercise of
options and warrants held by all executive officers and directors as a
group that are currently exercisable or are exercisable within 60 days of
April 11, 2005.
There has been no change in control of the Company since the beginning of its
last fiscal year, and there are no arrangements known to the Company, including
any pledge of securities of the Company, the operation of which may at a
subsequent date result in a change in control of the Company.
Equity Compensation Plan Information
The following table sets forth information concerning options, warrants and
rights outstanding and available for granting as of December 31, 2004:
(a) (b) (c)
Number of securities remaining
Number of securities to be Weighted-average exercise available for future issuance
issued upon exercise of price of outstanding under equity compensation
outstanding options, options, warrants plans (excluding securities
Plan category warrants and rights and rights reflected in column (a))
- ------------- -------------------------- ------------------------- -------------------------------
Equity compensation plans
approved by security holders 263,707 $10.22 231,369
Equity compensation plans
not approved by security
holders - - -
------- ------ ------- -
Total 263,707 $10.22 231,369
======= ====== =======
Options and warrants issued are generally for a period of five years and
generally vest 33% each year for three years, provided however, that upon a
change in control of the Company, all options and warrants shall automatically
become vested.
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth information concerning each of the directors and
executive officers of the Company. All directors will serve until their
successors are duly elected and qualified, subject, however, to prior death,
resignation, retirement, disqualification or removal from office. Officers are
appointed by and serve at the discretion of the Board of Directors.
Name Age Position
---- --- --------
Frederic W.J. Birner 47 Chairman of the Board, Chief Executive Officer
and Director
Mark A. Birner, D.D.S. 45 President and Director
Dennis N. Genty 47 Chief Financial Officer, Secretary and Treasurer
Brooks G. O'Neil 48 Director
Paul E. Valuck, D.D.S. 48 Director
Thomas D. Wolf 50 Director
Business Biographies
Frederic W.J. Birner is a founder of the Company and has served as Chairman of
the Board and Chief Executive Officer since the Company's
inception in May 1995. Mr. Birner is the brother of Mark A. Birner, D.D.S.
Mark A. Birner, D.D.S. is a founder of the Company and has served as President,
and as a director, since the Company's inception in May 1995. Dr. Birner is the
brother of Frederic W.J. Birner.
Dennis N. Genty is a founder of the Company and has served as Secretary since
May 1995, and as Chief Financial Officer and Treasurer since September 1995.
Brooks G. O'Neil was appointed as a director of the Company on January 23, 2003.
Mr. O'Neil joined Dougherty & Co. as Senior Research Analyst for health care on
January 20, 2004. From March 2001 until January 2003, he served as a principal
of TripleTree, LLC, an investment-banking firm focused on information technology
and health care. Prior to this, Mr. O'Neil was a Managing Director of Piper
Jaffray for 15 years where he was an institutional equity salesman, health care
research analyst and investment banker.
Paul E. Valuck, D.D.S. has been in private dental practice in Denver since
January 1998.
Thomas D. Wolf was appointed as a director of the Company on June 8, 2004. Mr.
Wolf is currently the CEO and CFO of Security Systems, Inc., a privately held
company in the security business, and has extensive experience in institutional
lending, corporate finance and venture capital.
11
DIRECTOR AND EXECUTIVE COMPENSATION
Director Compensation
Prior to October 1, 2002, directors did not receive cash compensation from the
Company for their services as directors nor were they reimbursed for expenses in
connection with attendance at Board of Directors and committee meetings. Outside
directors are currently entitled to: 1) a $1,000 per calendar quarter retainer,
2) $1,000 per Board of Directors meeting if attended in person, 3) $750 per
Board of Directors meeting if attended by telephone, 4) $200 per quarterly Audit
Committee meeting, 5) $1,000 per annual Audit Committee meeting and 6) $1,000
quarterly retainer for the Chairman of the Audit committee. During 2004,
director compensation consisted of $7,900 paid to Mr. O'Neil, $8,150 paid to Dr.
Valuck and $3,200 paid to Mr. Wolf.
Executive Compensation
Summary Compensation
The following table sets forth the compensation paid by the Company to the Chief
Executive Officer and each of the executive officers of the Company who were
paid total salary and bonus exceeding $100,000 during the fiscal year ended
December 31, 2004 (the "Named Executive Officers").
Summary Compensation Table
Long-Term
Annual Compensation Compensation
--------------------------------------- ----------------
Securities
Underlying All Other
Name and Principal Position Fiscal Year Salary Bonus Options/Warrants Compensation
- --------------------------- ----------- -------- -------- ---------------- ------------
Frederic W.J. Birner 2002 $225,000 $140,622 10,000 (1) -
Chairman of the Board, 2003 $260,000 $234,508 33,334 (2) -
Chief Executive Officer and Director 2004 $260,000 $187,000 - -
Mark A. Birner, D.D.S. 2002 $150,000 $140,622 10,000 (1) -
President and Director 2003 $185,000 $234,507 33,333 (2) -
2004 $185,000 $231,554 - -
Dennis N. Genty 2002 $150,000 $140,622 10,000 (1) -
Chief Financial Officer 2003 $185,000 $234,506 33,333 (2) -
Treasurer and Secretary 2004 $185,000 $231,554 - -
- ---------------------
(1) Represents shares of Common Stock issuable upon exercise of warrants that
were granted on February 11, 2002 with an exercise price of $5.06 per
share.
(2) Represents shares of Common Stock issuable upon exercise of options that
were granted on January 2, 2003 with an exercise price of $11.68 per share.
12
Option/ Warrant Grants
No options or warrants were granted to any of the Named Executive Officers
during the fiscal year ended December 31, 2004.
Option Exercises and Holdings
The following table sets forth for the Named Executive Officers the number and
value of securities underlying unexercised in-the-money options and warrants
held as of December 31, 2004. None of the Named Executive Officers exercised any
options or warrants during the fiscal year ended December 31, 2004.
Aggregated Option/Warrant Exercises in Last Fiscal Year
and Fiscal Year End Option/Warrant Values
Number of Securities
Options/Warrants Underlying Unexercised Value of Unexercised,
Exercised During Options/Warrants Held at In-the-Money Options/Warrants
Fiscal Year 2004 December 31, 2004 at December 31, 2004 (1)
-------------------------- --------------------------- --------------------------
Shares Acquired Value
Name On Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- -------------- -------- ------------ ------------- ----------- ----------------
Frederic W.J. Birner - - 40,001 3,333 $ 366,943 $ 48,962
Mark A. Birner, D.D.S. - - 40,000 3,333 $ 366,935 $ 48,962
Dennis N. Genty - - 40,000 3,333 $ 366,935 $ 48,962
- ----------
(1) In-the-money value is based on the difference between the stock option /
warrant exercise price and the closing price of the Common Stock on the
Nasdaq SmallCap Market on December 31, 2004 of $19.75 per share.
Compensation Committee Interlocks and Insider Participation
No executive officer of the Company currently serves as a member of the board of
directors or compensation committee of any entity that has one or more executive
officers serving as a member of the Board of Directors or as an executive
officer of the Company. See "Director and Executive Compensation" and "Certain
Transactions" for a description of transactions between the Company and members
of the Board of Directors.
Compensation Committee Report on Executive Compensation (2)
Currently, a majority of the independent Board members make determinations with
respect to the compensation of the Chief Executive Officer and other executive
officers. Messrs. Frederic W.J. Birner and Mark A. Birner, Board members who are
also executive officers of the Company, did not participate in discussions
regarding their individual compensation. The following report is submitted by
the Board of Directors of the Company, in its capacity as Compensation
Committee, pursuant to rules established by the Securities and Exchange
Commission, and provides certain information regarding compensation of the
Company's executive officers.
- -----------------
2 This Section is not "soliciting material", is not deemed "filed" with the SEC
and is not to be incorporated by reference in any filing of the Company under
the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934,
as amended, whether made before or after the date hereof and irrespective of any
general incorporation language in any such filing.
13
The Compensation Committee is responsible for establishing and administering a
general compensation policy and program for the Company. The Compensation
Committee also possesses all of the powers of administration under the Company's
employee benefit plans, including all stock option plans and other employee
benefit plans. Subject to the provisions of those plans, the Compensation
Committee must determine the individuals eligible to participate in the plans,
the extent of such participation and the terms and conditions under which
benefits may be vested, received or exercised.
Compensation Policies. The Company's executive compensation policies are
designed to complement the Company's business objectives by motivating and
retaining quality members of senior management, by aligning management's
interests with those of the Company's shareholders and by linking total
compensation to the performance of the Company. The Company's executive
compensation policies generally consist of equity-based long-term incentives,
short-term cash bonus incentives and competitive base salaries. The Compensation
Committee will continue to monitor the performance of the Company and its
executive officers in reassessing executive compensation.
Base Salary. The Compensation Committee reviews the base salaries of the
Company's executive officers on an annual basis. Base salaries are determined
based upon a subjective assessment of the nature and responsibilities of the
position involved, the performance of the particular officer and of the Company,
the officer's experience and tenure with the Company and base salaries paid to
persons in similar positions with companies comparable to the Company.
Quarterly Bonus. Quarterly cash bonuses may be paid to the Company's executive
officers based on the Company's financial performance. The Compensation
Committee granted bonuses of $187,000, $231,554 and $231,554 to Mr. Frederic
W.J. Birner, Mark A. Birner, D.D.S. and Mr. Dennis N. Genty, respectively,
during 2004.
Long-Term Incentives. The Company's long-term compensation strategy has been
focused on the grant of stock options under the stock option plans and warrants,
which the Compensation Committee believes rewards executive officers for their
efforts in improving long-term performance of the Common Stock and creating
value for the Company's shareholders, and which the Compensation Committee
believes aligns the financial interests of management with those of the
Company's shareholders. During 2004, the Compensation Committee did not grant
any options to any of the Named Executive Officers. If the 2005 Equity Incentive
Plan is approved, the Compensation Committee will consider making awards of
options, restricted stock or other interests permitted under the plan.
Chief Executive Officer Compensation for 2004. The compensation for Frederic
W.J. Birner during 2004 consisted of his $260,000 base salary, which was
established in 2003, and cash bonuses of $187,000. The Compensation Committee
determined Mr. Birner's compensation based on the policies described above.
Although the Compensation committee did not award Mr. Birner any equity-based
incentives in 2004, it may do so in the future to further align his financial
interests with those of the Company's shareholders.
BOARD OF DIRECTORS ACTING AS
COMPENSATION COMMITTEE
Frederic W.J. Birner
Mark A. Birner, D.D.S.
Brooks G. O'Neil
Paul E. Valuck D.D.S.
Thomas D. Wolf
14
PERFORMANCE GRAPH (3)
The following line graph compares the percentage change from December 31, 1999
through December 31, 2004 for (i) the Common Stock, (ii) a peer group (the "Peer
Group") of companies selected by the Company that are predominantly dental
management companies located in the United States, (iii) the Nasdaq Composite
Index and (iv) the S&P 500 Composite Index. The companies in the Peer Group are
American Dental Partners, Inc., Coast Dental Services, Inc. and OCA, Inc.
Historical stock price performance is not necessarily indicative of future stock
price performance.
Comparison of 5-Year Cumulative Total Return
Assumes Initial Investment of $100
[INSERT PERFORMANCE GRAPH HERE]
12/31/99 12/31/00 12/31/01 12/31/02 12/31/03 12/31/04
Description -------- -------- -------- -------- -------- --------
- -----------
Birner Dental Management
Services, Inc. $100.00 $ 34.10 $ 80.91 $ 176.89 $ 238.01 $360.45
Peer Group 100.00 243.62 236.45 92.25 74.73 69.17
Nasdaq Composite Index 100.00 60.82 48.18 33.13 49.95 54.53
S&P 500 Composite Index 100.00 90.90 80.10 62.39 80.29 89.02
- ------------------
*Total return based on $100 initial investment and reinvestment of dividends
- -----------------
3 This Section is not "soliciting material", is not deemed "filed" with the SEC
and is not to be incorporated by reference in any filing of the Company under
the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934,
as amended, whether made before or after the date hereof and irrespective of any
general incorporation language in any such filing.
15
RELATIONSHIP WITH INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Independent Registered Public Accounting Firm
Hein has acted as the Company's independent registered public accounting firm
since November 2001. The Company expects that representatives of Hein will be
present at the Annual Meeting and will have the opportunity to make a statement
if they so desire. These representatives will be available to respond to
appropriate questions from shareholders at the meeting.
Hein was selected by the Audit Committee to perform the audit function for 2004.
No independent registered public accounting firm has been selected to perform
the audit function for 2005. It is expected that the Audit Committee will
approve the engagement of an independent registered public accounting firm later
in 2005.
Audit Fees
For the year ended December 31, 2004, the aggregate fees billed by Hein for
professional services rendered for the audit of the Company's annual financial
statements and the reviews of the financial statements included in the Company's
Quarterly Reports on Form 10-Q filed during the fiscal year ended December 31,
2004 were $49,000.
For the year ended December 31, 2003, the aggregate fees billed by Hein for
professional services rendered for the audit of the Company's annual financial
statements and the reviews of the financial statements included in the Company's
Quarterly Reports on Form 10-Q filed during the fiscal year ended December 31,
2003 were $46,597.
Audit Related Fees
For the year ended December 31, 2004, the aggregate fees billed by Hein for
professional services rendered to the Company were $7,500 for the audit of the
401(k) retirement savings plan and $375 for the review of the 2004 proxy
statement. For the year ended December 31, 2003, the aggregate fees billed by
Hein for professional services rendered to the Company were $7,000 for the audit
of the 401(k) retirement savings plan. The Audit Committee reviews and
pre-approves audit-related and permissible non-audit services to be performed by
our independent registered public accounting firm. The fees shown above for 2004
were approved in advance by the Audit Committee.
Tax Fees
None.
All Other Fees
None.
SECTION 16 REPORTS
Section 16(a) of the Securities Exchange Act of 1934, requires directors,
executive officers and beneficial owners of more than 10% of the outstanding
shares of the Company to file with the Securities and Exchange Commission
initial reports of ownership and reports regarding changes in their beneficial
ownership of shares in the Company. To the Company's knowledge and based solely
on a review of the Section 16(a) reports furnished to the Company, Mr. O'Neil
was late in filing his Statement of Changes in Beneficial Ownership on Form 4
for an August 10, 2004 transaction, Mr. Valuck was late in filing his Statement
of Changes in Beneficial Ownership on Form 4 for an August 10, 2004 transaction
and Mr. Wolf was late in filing his Initial Statement of Beneficial Ownership of
Securities on Form 3 and his Statement of Changes in Beneficial Ownership on
Form 4 for an August 10, 2004 transaction. All other Section 16(a) reports were
filed on a timely basis.
16
SHAREHOLDER PROPOSALS
The Company must receive shareholder proposals for inclusion in the Company's
proxy materials relating to the next annual meeting of shareholders on or before
December 16, 2005. Proposals received after March 1, 2006 will be deemed
untimely and will not be considered at the meeting.
2004 ANNUAL REPORT ON FORM 10-K
THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2004
ACCOMPANIES THIS PROXY STATEMENT AND WAS FILED ELECTRONICALLY WITH THE
SECURITIES AND EXCHANGE COMMISSION. THIS REPORT IS NOT PART OF THE COMPANY'S
PROXY SOLICITING MATERIALS. SHAREHOLDERS WHO WISH TO OBTAIN, WITHOUT CHARGE, A
COPY OF THE COMPANY'S ANNUAL REPORT (WITHOUT EXHIBITS) ON FORM 10-K SHOULD
ADDRESS A WRITTEN REQUEST TO DENNIS N. GENTY, CHIEF FINANCIAL OFFICER, SECRETARY
AND TREASURER, BIRNER DENTAL MANAGEMENT SERVICES, INC., 3801 EAST FLORIDA
AVENUE, SUITE 508, DENVER, COLORADO 80210 OR THEY CAN OBTAIN THE INFORMATION ON
THE COMPANY'S WEBSITE AT WWW.BDMS-PERFECTTEETH.COM. THE COMPANY WILL PROVIDE
COPIES OF THE EXHIBITS TO THE FORM 10-K UPON PAYMENT OF A REASONABLE FEE.
OTHER BUSINESS
As of the date of this Proxy Statement, management was not aware of any business
not described above which would be presented for consideration at the meeting.
If any other business properly comes before the meeting, it is intended that the
shares represented by proxies will be voted in respect thereto in accordance
with the judgment of the persons voting them.
The above Notice and Proxy Statement are sent by order of the Board of
Directors.
/s/ Dennis N. Genty
-------------------
Dennis N. Genty
Chief Financial Officer, Secretary and Treasurer
Denver, Colorado
April 29, 2005
17
PROXY PROXY
Proxy Solicited by the Board of Directors for the Annual Meeting of Shareholders
To be held June 7, 2005
The undersigned hereby appoints Frederic W.J. Birner, Mark A. Birner, D.D.S. and
Dennis N. Genty, and each of them, proxies of the undersigned, with full power
of substitution, to vote all shares of Common Stock of Birner Dental Management
Services, Inc., which the undersigned is entitled to vote, at the Annual Meeting
of Shareholders (the "Meeting") to be held on Tuesday, June 7, 2005, at 10:00
a.m., Mountain Time, at the Company's offices, 3801 East Florida Avenue, Suite
508, Denver, Colorado, and at any and all adjournments thereof for the following
purposes:
(1) Election of Class II Director:
[ ] FOR the nominee listed below
[ ] WITHHOLD AUTHORITY to vote for the nominee listed below
Brooks G. O'Neil
(2) Approval of 2005 Equity Incentive Plan:
[ ] FOR
[ ] AGAINST
[ ] ABSTAIN
(3) In their discretion, the proxies are authorized to vote upon such other
business as properly may come before the Meeting.
(back of card)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS INDICATED, THE SHARES
REPRESENTED BY THIS PROXY WILL BE VOTED AT THE MEETING "FOR" ELECTION OF THE
NOMINEE FOR DIRECTOR AS SELECTED BY THE BOARD OF DIRECTORS AND "FOR" APPROVAL OF
THE 2005 EQUITY INCENTIVE PLAN.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of
Shareholders and the Proxy Statement furnished therewith. The undersigned hereby
revokes any proxies given prior to the date reflected below.
Dated
___________________________, 2005
________________________________
________________________________
SIGNATURE (S) OF SHAREHOLDER (S)
Please complete, date and
sign exactly as your name
appears hereon. If shares
are held jointly, each
holder should sign. When
signing as attorney,
executor, administrator,
trustee, guardian or
corporate official, please
add your title.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. PLEASE SIGN AND
RETURN THIS PROXY IN THE ENCLOSED, SELF-ADDRESSED ENVELOPE TO COMPUTERSHARE
TRUST COMPANY, INC., AS AGENT FOR THE COMPANY. THE GIVING OF A PROXY WILL NOT
AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND THE MEETING.