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EXHIBIT 10.5
FIFTH AMENDMENT TO
SECOND AMENDED AND RESTATED LOAN AGREEMENT
THIS FIFTH AMENDMENT TO SECOND AMENDED AND RESTATED LOAN AGREEMENT
(this "Amendment") is executed as of September 1, 2000, by and among MONARCH
DENTAL CORPORATION, a Delaware corporation ("Borrower"), BANK OF AMERICA, N.A.,
a national banking association ("Administrative Agent"), as administrative
agent, and the entities from time to time designated as "Lenders" under the Loan
Agreement (herein defined) ("Lenders"), and is consented to by the GUARANTORS
listed on the signature pages attached hereto.
WITNESSETH:
WHEREAS, Borrower, Administrative Agent and Lenders entered into that
certain Second Amended and Restated Loan Agreement, dated as of June 30, 1999,
pursuant to which Lenders agreed to make the Credit Facility (as therein
defined) available to Borrower (as heretofore or hereafter amended, the "Loan
Agreement")(each capitalized term used but not otherwise defined herein shall
have the same meaning given to it in the Loan Agreement); and
WHEREAS, Borrower, Administrative Agent and Lenders amended the Loan
Agreement pursuant to that certain Third Amendment to Second Amended and
Restated Loan Agreement dated as of June 30, 2000 (the "Third Amendment") which
(i) extended the deadline for Borrower to raise the Required Institutional Debt
and (ii) permitted the sale of all of the outstanding capital stock of Borrower
to the Proposed Purchaser identified therein; and
WHEREAS, Borrower, Administrative Agent and Lenders amended the Loan
Agreement pursuant to that certain Fourth Amendment to Second Amended and
Restated Loan Agreement dated as of August 11, 2000 (the "Fourth Amendment")
which provided for a substitute Proposed Purchaser, and extended the timeframe
for certain delivery requirements contained in the Third Amendment; and
WHEREAS, Borrower has requested that such delivery requirements be
restructured and extended; and
WHEREAS, subject to the terms and conditions contained herein,
Administrative Agent and the Lenders have agreed to such request.
NOW, THEREFORE, in consideration of the covenants, conditions and
agreements hereinafter set forth, and for other good and valuable consideration,
the receipt and adequacy of
FIFTH AMENDMENT TO SECOND AMENDED
AND RESTATED LOAN AGREEMENT (Monarch Dental) Page 1
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which are all hereby acknowledged, Borrower, Administrative Agent and Lenders
hereby covenant and agree as follows:
ARTICLE I - AMENDMENTS
Section 1.1. Corporate Restructure. Borrower has requested, and
Administrative Agent and the Lenders hereby agree, that Section 8.1(m) of the
Loan Agreement shall be deleted in its entirety. In lieu of the requirements
previously set forth in Section 8.1(m), Borrower hereby covenants and agrees
that:
(a) On or before October 2, 2000, Borrower shall deliver to
Administrative Agent a written proposal (the "Financing Proposal") to
refinance the Credit Facility and the Short Term Loan in full, which
proposal shall include, without limitation, (i) an engagement letter
(with term sheet) in form and substance acceptable to the Required
Lenders authorizing an agent to obtain mezzanine financing (the
"Subordinate Debt") for Borrower of at least $15,000,000, and (ii) an
engagement letter (with term sheet) in form and substance acceptable to
Required Lenders appointing a syndication agent on behalf of Borrower
which is authorized to obtain commitments to refinance the balance of
the Credit Facility and the Short Term Loan after reducing the Credit
Facility and the Short Term Loan by the proceeds of the Subordinate
Debt. Additionally, on or before October 2, 2000, Borrower shall
deliver to Administrative Agent a time line in detail satisfactory to
Required Lenders (the "Time Line") of the significant actions (e.g.
execution of a definitive financing agreement, a due diligence
schedule, and obtaining sufficient commitments from a bank group) which
will be necessary to cause the Financing Proposal to be consummated on
or before December 15, 2000.
(b) Borrower has notified Administrative Agent and Lenders
that Borrower is continuing to pursue strategic alternatives, including
a potential sale of Borrower, however, Borrower covenants and agrees
that Borrower shall not enter into any exclusivity agreement or other
binding agreement for the sale of all or substantially all of the
assets or stock of Borrower, or for any merger or other consolidation
of Borrower with any other company, without the prior written consent
of Required Lenders.
Borrower understands and agrees that Borrower's failure to consummate
the actions above set forth by the date indicated or to comply with the terms of
this Section 1.1 or the Time Line once approved by the Required Lenders shall
constitute a default under the Credit Facility and the Short Term Loan for which
Borrower shall not be entitled to a cure period.
ARTICLE II - MISCELLANEOUS
Section 2.1. Closing. The closing (the "Closing") of the transactions
contemplated by this Amendment shall occur on and as of the date that all
conditions hereto contained in Section 2.2 of this Amendment have been satisfied
(the "Modification Closing Date").
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AND RESTATED LOAN AGREEMENT (Monarch Dental) Page 2
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Section 2.2. Conditions to the Closing. As conditions precedent to the
Closing, Borrower, each Guarantor and Required Lenders shall have executed and
delivered this Amendment.
Section 2.3. Continuing Effect. Except as modified and amended hereby,
the Loan Agreement and other Loan Documents are and shall remain in full force
and effect in accordance with their terms.
Section 2.4. Representations and Warranties. Borrower hereby represents
and warrants to Administrative Agent and the Lenders that (i) except as has been
disclosed by Borrower to Administrative Agent in writing, all representations
and warranties made by Borrower in the Loan Agreement as of the date thereof are
true and correct as of the date hereof, as if such representations and
warranties were recited herein in their entirety and (ii) Borrower is not in
default of any covenant or agreement contained in the Loan Agreement.
Section 2.5. Payment of Expenses. Borrower agrees to pay to
Administrative Agent the reasonable attorneys' fees and expenses of
Administrative Agent's counsel and other expenses incurred by Administrative
Agent in connection with this Amendment.
Section 2.6. Binding Agreement. This Amendment shall be binding upon,
and shall inure to the benefit of, the parties' respective representatives,
successors and assigns.
Section 2.7. Ratification. Except as otherwise expressly modified by
this Amendment, all terms and provisions of the Loan Agreement, the Notes and
the other Loan Documents, shall remain unchanged and hereby are ratified and
confirmed and shall be and shall remain in full force and effect, enforceable in
accordance with their terms.
Section 2.8. No Defenses. Borrower and each Guarantor, by its execution
of this Amendment, hereby declares that it has no set-offs, counterclaims,
defenses or other causes of action against Administrative Agent or any Lender
arising out of the Credit Facility, the modification of the Credit Facility, any
documents mentioned herein or otherwise; and, to the extent any such set-offs,
counterclaims, defenses or other causes of action may exist, whether known or
unknown, such items are hereby waived by Borrower and each Guarantor.
Section 2.9. Further Assurances. The parties hereto shall execute such
other documents as may be necessary or as may be required, in the opinion of
counsel to Administrative Agent, to effect the transactions contemplated hereby
and the liens and/or security interests of all other collateral instruments, as
modified by this Amendment. Borrower also agrees to provide to Administrative
Agent such other documents and instruments as Lenders reasonably may request in
connection with the modification of the Credit Facility effected hereby.
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AND RESTATED LOAN AGREEMENT (Monarch Dental) Page 3
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Section 2.10. Usury Savings Clause. Notwithstanding anything to the
contrary in this Amendment, the Notes or any other Loan Document, or in any
other agreement entered into in connection with the Notes or securing the
indebtedness evidenced by the Notes, whether now existing or hereafter arising
and whether written or oral, it is agreed that the aggregate of all interest and
other charges constituting interest, or adjudicated as constituting interest,
and contracted for, chargeable or receivable under the Notes or otherwise in
connection with the Notes shall under no circumstances exceed the maximum rate
of interest permitted by applicable law. In the event the maturity of the Notes
is accelerated by reason of an election by any of the holders thereof resulting
from a default thereunder or under any other document executed as security
therefor or in connection therewith, or by voluntary prepayment by the maker, or
otherwise, then earned interest may never include more than the maximum rate of
interest permitted by applicable law. If from any circumstance any holder of any
of the Notes shall ever receive interest or any other charges constituting
interest, or adjudicated as constituting interest, the amount, if any, which
would exceed the maximum rate of interest permitted by applicable law shall be
applied to the reduction of the principal amount owing on such Notes or on
account of any other principal indebtedness of the maker to the holders of such
Notes, and not to the payment of interest, or if such excessive interest exceeds
the unpaid balance of principal thereof and such other indebtedness, the amount
of such excessive interest that exceeds the unpaid balance of principal thereof
and such other indebtedness shall be refunded to the maker. All sums paid or
agreed to be paid to the holders of the Notes for the use, forbearance or
detention of the indebtedness of the maker to the holders of such Notes shall be
amortized, prorated, allocated and spread throughout the full term of such
indebtedness until payment in full for the purpose of determining the actual
rate on such indebtedness is uniform throughout the term thereof.
The terms "maximum amount" or "maximum rate" as used in this
Amendment or the Notes, or in any other agreement entered into in connection
with the Notes or securing the indebtedness evidenced by the Notes, whether now
existing or hereafter arising and whether written or oral, include, as to
Chapter 303 of the Texas Finance Code (and as same may be incorporated by
reference in other statutes of the State of Texas), but otherwise without
limitation, that rate based upon the "weekly ceiling"; provided, however, that
this designation shall not preclude the rate of interest contracted for, charged
or received in connection with the Credit Facility from being governed by, or
construed in accordance with, any other state or federal law, including but not
limited to, Public Law 96-221.
Section 2.11. Non-Waiver of Events of Default. Neither this Amendment
nor any other document executed in connection herewith constitutes or shall be
deemed (a) a waiver of, or consent by Administrative Agent or any Lender to, any
default or event of default which may exist or hereafter occur under any of the
Loan Documents, (b) a waiver by Administrative Agent or any Lender of any of
Borrower's obligations under the Loan Documents, or (c) a waiver by
Administrative Agent or any Lender of any rights, offsets, claims, or other
causes of action that any Lender may have against Borrower.
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AND RESTATED LOAN AGREEMENT (Monarch Dental) Page 4
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Section 2.12. Enforceability. In the event the enforceability or
validity of any portion of this Amendment, the Loan Agreement, the Notes, or any
of the other Loan Documents is challenged or questioned, such provision shall be
construed in accordance with, and shall be governed by, whichever applicable
federal or Texas law would uphold or would enforce such challenged or questioned
provision.
Section 2.13. Counterparts. This Amendment may be executed in several
counterparts, all of which are identical, each of which shall be deemed an
original, and all of which counterparts together shall constitute one and the
same instrument, it being understood and agreed that the signature pages may be
detached from one or more of such counterparts and combined with the signature
pages from any other counterpart in order that one or more fully executed
originals may be assembled.
Section 2.14. Choice of Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS, EXCEPT TO THE
EXTENT FEDERAL LAWS PREEMPT THE LAWS OF THE STATE OF TEXAS.
Section 2.15. Entire Agreement. This Amendment and the other Loan
Documents, contain the entire agreements between the parties relating to the
subject matter hereof and thereof. This Amendment and the other Loan Documents
may be amended, revised, waived, discharged, released or terminated only by a
written instrument or instruments, executed by the party against which
enforcement of the amendment, revision, waiver, discharge, release or
termination is asserted. Any alleged amendment, revision, waiver, discharge,
release or termination which is not so documented shall not be effective as to
any party.
Section 2.16. Partial Execution. This Amendment shall be effective for
all purposes upon execution by Borrower, Guarantors, and Required Lenders (as
defined in the Loan Agreement). If a particular provision of this Amendment is
of the nature described in subsection (b) of the definition of Required Lenders
(a "Material Change"), then that provision shall only be effective upon
execution of all of the Lenders, but the failure of all of the Lenders to so
execute this Amendment shall not affect the effectiveness of those portions of
this Amendment which do not constitute a Material Change.
THIS AMENDMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES RELATED TO THE SUBJECT MATTER HEREIN CONTAINED AND
MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
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AND RESTATED LOAN AGREEMENT (Monarch Dental) Page 5
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IN WITNESS WHEREOF, this Amendment is executed effective as of the date
first written above.
BORROWER:
MONARCH DENTAL CORPORATION,
a Delaware corporation
By:
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Name:
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Title:
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ADMINISTRATIVE AGENT:
BANK OF AMERICA, N.A., a national banking
association, as Administrative Agent
By:
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Name:
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Title:
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LENDERS:
BANK OF AMERICA, N.A., a national banking
association,
By:
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Name:
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Title:
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AND RESTATED LOAN AGREEMENT (Monarch Dental) Page 6
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FLEET NATIONAL BANK,
a national banking association
By:
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Name:
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Title:
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COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK B.A., "Rabobank Nederland",
New York Branch
By:
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Name:
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Title:
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By:
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Name:
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Title:
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AND RESTATED LOAN AGREEMENT (Monarch Dental) Page 7
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CONSENT OF GUARANTORS
Each Guarantor hereby (a) acknowledges its consent to this Agreement and the
changes to the Credit Facility effected hereby, (b) ratifies and confirms all
terms and provisions of its respective Guaranty and the security instruments
relating to the Collateral , (c) agrees that such Guaranty and security
instruments are and shall remain in full force and effect, (d) acknowledges that
there are no claims or offsets against, or defenses or counterclaims to, the
terms and provisions of and the obligations created and evidenced by such
Guaranty or security instruments, (e) reaffirms all agreements and obligations
under such Guaranty and such security instruments with respect to the Credit
Facility, the Notes, this Agreement and all other documents, instruments or
agreements governing, securing or pertaining to the Credit Facility, as the same
may be modified by this Agreement, (f) and acknowledges that the Obligations
described in this Agreement are the guaranteed obligations under such Guaranty
and are the obligations secured by such security instruments and (g) represents
and warrants that all requisite corporate or partnership action necessary for it
to execute this Agreement has been taken.
EXECUTED as of the 1st day of September, 2000.
GUARANTORS:
Managed Dental Care Centers, Inc., a Texas corporation
Monarch Dental Associates (Arkansas), Inc., an Arkansas
corporation (f/k/a United Dental Care, Inc.)
Dental Care One (Monarch), Inc., an Ohio corporation
Midwest Dental Management, Inc., a Wisconsin corporation
Dental Centers of Indiana (Monarch), Inc., an Indiana
corporation;
Midwest Dental Care, Mondovi, Inc., a Wisconsin
corporation;
Midwest Dental Care, Sheboygan, Inc., a Wisconsin
corporation;
Monarch Dental Management, Inc., a Texas corporation;
Three Peaks Dental Management, Inc., a Colorado
corporation;
Monarch Dental Associates (Utah), Inc., a Utah corporation
By:
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Name:
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Title:
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MacGregor Dental Associates, L.P., a Texas limited
partnership
By: Monarch Dental Management, Inc., a Texas
corporation, its general partner
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AND RESTATED LOAN AGREEMENT (Monarch Dental) Page 8
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By:
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Name:
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Title:
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AND RESTATED LOAN AGREEMENT (Monarch Dental) Page 9
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Monarch Dental Associates, L.P., a Texas limited
partnership
By: Monarch Dental Management, Inc., a Texas
corporation, its general partner
By:
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Name:
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Title:
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Monarch Dental (Press) Associates, L.P., a Texas
limited partnership
By: Monarch Dental Management, Inc., a Texas
corporation, its general partner
By:
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Name:
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Title:
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Monarch Dental Associates (Midland/Odessa), L.P.,
a Texas limited partnership
By: Monarch Dental Management, Inc., a Texas
corporation, its general partner
By:
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Name:
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Title:
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Monarch Dental Associates (Abilene), L.P., a Texas
limited partnership
By: Monarch Dental Management, Inc., a Texas
corporation, its general partner
By:
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Name:
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Title:
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AND RESTATED LOAN AGREEMENT (Monarch Dental) Page 10
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Monarch Dental Associates (Arizona), L.L.C.,
an Arizona limited liability company
By: Monarch Dental Associates (Utah), Inc.,
a Utah corporation, its manager
By:
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Name:
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Title:
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Partners Dental Corporation,
a Delaware corporation
By:
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Name:
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Title:
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Valley Forge Dental Associates, Inc.,
a Delaware corporation
By:
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Name:
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Title:
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VFD of Pennsylvania, Inc.,
a Delaware corporation
By:
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Name:
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Title:
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Horizon Group International, Inc.,
an Ohio corporation
By:
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Name:
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Title:
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AND RESTATED LOAN AGREEMENT (Monarch Dental) Page 11
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Precise Dental Lab, Inc.,
an Ohio corporation
By:
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Name:
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Title:
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VFD of Georgia, Inc.,
a Delaware corporation
By:
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Name:
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Title:
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VFD of Pittsburgh, Inc.,
a Pennsylvania corporation
By:
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Name:
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Title:
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Pro Dent, Inc.,
a Pennsylvania corporation
By:
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Name:
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Title:
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VFD Realty, Inc.,
a Delaware corporation
By:
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Name:
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Title:
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AND RESTATED LOAN AGREEMENT (Monarch Dental) Page 12
