FIRST AMENDMENT TO
SECOND AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT
This Amendment, dated as of May 16, 1997, is made by and between HEALTH
FITNESS PHYSICAL THERAPY, INC., a Minnesota corporation (the "Borrower"), and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, a National Banking Association
(the "Lender").
Recitals
The Borrower and the Lender have entered into a Second Amended and Restated
Credit and Security Agreement dated as of February 4, 1997 (the "Credit
Agreement").
Due to the proposed stock acquisition of Xxxxx & Associates Physical
Therapy, P.C., an Iowa corporation ("Xxxxx") by Health Fitness Rehab of Iowa,
Inc., an Iowa corporation ("HFRI"), a subsidiary of the Borrower, the Borrower
has requested that certain amendments be made to the Credit Agreement. The
Lender is willing to make such amendments pursuant to the terms and conditions
set forth herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, it is agreed as follows:
1. Defined Terms. Capitalized terms used in this Amendment shall have the
same meanings given them in the Credit Agreement, unless otherwise defined
herein. In addition, Section 1.1 of the Credit Agreement is amended by adding or
amending, as the case may be, the following definitions:
"`Affiliate' or `Affiliates' means Sports & Orthopedic Physical
Therapy, Inc., Health Fitness Physical Therapy of Tahoe, Inc., Fitness
Centers of America, Health Fitness Rehab, Inc., Preferred Companies, HFRI,
Xxxxx and any other Person Controlled by, Controlling or under common
Control with the Borrower, including (without limitation) any Subsidiary of
the Borrower."
"`Corporate Guarantors' means Sports & Orthopedic Physical Therapy,
Inc., Health Fitness Physical Therapy of Tahoe, Inc., Fitness Centers of
America, Preferred Companies, Health Fitness Rehab, Inc., HFRI, and Xxxxx."
"`Xxxxx' means Xxxxx & Associates Physical Therapy Corp., an Iowa
corporation."
"`First Amendment' means that certain First Amendment to Second
Amended and Restated Credit and Security Agreement, dated as of May
16, 1997, by and between the Borrower and the Lender."
"`First Amendment Date' means the date on which the First
Amendment becomes effective."
"`Subsidiary' means any corporation, including without
limitation, Sports & Orthopedic Physical Therapy, Inc., Health Fitness
Physical Therapy of Tahoe, Inc., Fitness Centers of America, Health
Fitness Rehab, Inc., Preferred Companies, HFRI, and Xxxxx (a
subsidiary of HFRI), of which more than 50% of the outstanding shares
of capital stock having general voting power under ordinary
circumstances to elect a majority of the board of directors of such
corporation, irrespective of whether or not at the time stock of any
other class or classes shall have or might have voting power by reason
of the happening of any contingency, is at the time directly or
indirectly owned by the Borrower, by the Borrower and one or more
other Subsidiaries, or by one or more other Subsidiaries."
"`Term Note' means the Borrower's first replacement term note
dated as of May 16, 1997, payable to the order of the Lender,
substantially in the form of Exhibit A to the First Amendment, and any
note or notes issued in substitution or replacement therefor, as the
same may hereafter be amended, supplemented or restated from time to
time."
2. Term Advances. Section 2.3 of the Credit Agreement is amended in its
entirety and replaced with the following new section:
"Section 2.3 Term Advances. The Lender agrees, on the terms and
subject to the conditions herein set forth, to make (a) an initial
advance to the Borrower on the Funding Date in the amount of
$1,250,000 less the amount of Existing Term Advances then outstanding
(the "Initial Term Advance"), (b) a second advance to the Borrower in
the amount of $250,000 upon the satisfaction of all conditions set
forth in Section 4.3 hereof (the "Second Term Advance"), (c) a third
advance to the Borrower in the amount of $1,000,000 upon the
satisfaction of all conditions set forth in Section 4.4 hereof (the
"Third Term Advance"), and (d) a fourth advance to the Borrower in the
amount of $350,000 on the First Amendment Date (the "Fourth Term
Advance", and together with the Initial Term Advance, the Second Term
Advance and the Third Term Advance, the "Term Advances"). If the
Second Term Advance is not made on or before March 31, 1997, the
Lender's obligation to make the Second Term Advance shall be
terminated, and no Second Term Advance shall be made. If the Third
Term Advance is not made on or before March 31, 1997, the Lender's
obligation to make the Third Term Advance shall be terminated, and no
Third Term Advance shall be made. If the Fourth Term Advance is not
made on or before May 31, 1997, the Lender's obligation to make the
Fourth Term Advance shall be terminated, and no Fourth Term Advance
shall be made. The Borrower's obligation to pay the Term Advances
shall be evidenced by the Term Note and shall be secured by the
Collateral as provided in Article III."
3. New Trade Names, Chief Executive Office, Principal Place of Business and
Locations of Collateral. Schedule 5.1 is hereby amended by deleting paragraph 7.
therein and inserting the following:
"7. Health Fitness Rehab of Iowa, Inc.
A. Trade Names and Division Names
K.A.M. Physical Therapy Services
Xxxxx & Associates Physical Therapy
B. Chief Executive Office/Principal Place of Business
Health Fitness Rehab of Iowa, Inc.
0000 Xxxx 00xx Xxxxxx
Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
C. Other Inventory and Equipment Locations
K.A.M. locations:
Mercy Hospital of Franciscan Sisters
000 0xx Xxxxxx X.X.
Xxxxxxx, Xxxx
West Union Good Samaritan Center
000 Xxxx Xxxxxx
Xxxx Xxxxx, Xxxx
Peoples Memorial Hospital
Hiway 20, East
Independence, Iowa
Central Community Hospital
Elkader, Iowa
Xxxxx & Associates Physical Therapy locations:
000 Xxxx Xxxxx Xxxxxx Xxxxxx X, X., X & L
Xxxxxxxxx'x Square Ankeny, Iowa 50021
7116, 7120 & 0000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxx, Xxxx 00000"
4. Subsidiaries. Schedule 5.4 of the Credit Agreement is hereby amended by
deleting the parenthetical "(after the acquisition of K.A.M. is completed)" and
adding the following:
"Xxxxx & Associates Physical Therapy Corp."
5. Permitted Liens. Schedule 7.1 of the Credit Agreement is hereby amended
by adding the following to the end of the Permitted Liens list:
--------------------- ------------------ ----------------------- -------------------- ---------------- --------------
Debtor Creditor Collateral Jurisdiction Filing Date Filing No.
--------------------- ------------------ ----------------------- -------------------- ---------------- --------------
Xxxxx Bankers Leasing Specific Leased Iowa Secretary of January 23, K619708
Company Equipment State 1995
--------------------- ------------------ ----------------------- -------------------- ---------------- --------------
Xxxxx Bankers Leasing Specific Leased Iowa Secretary of September 12, K675167
Company Equipment State 1995
--------------------- ------------------ ----------------------- -------------------- ---------------- --------------
6. Permitted Indebtedness. Schedule 7.2 of the Credit Agreement is hereby
amended by adding the following to the end of the Permitted Indebtedness list:
------------------------- ---------------- ---------------------- ------------------- -------------------------------
Creditor Principal Maturity Date Monthly Payment Collateral
Amount
------------------------- ---------------- ---------------------- ------------------- -------------------------------
Bankers Leasing Company $50,000.00 March 20, 1997 $2,304.75 Lease of Specific Equipment
------------------------- ---------------- ---------------------- ------------------- -------------------------------
Bankers Leasing Company $3,995.00 August 20, 1998 $138.43 Minolta 1081 Copier, Document
Feeder & Bin Sorter
------------------------- ---------------- ---------------------- ------------------- -------------------------------
7. No Other Changes. Except as explicitly amended by this Amendment, all of
the terms and conditions of the Credit Agreement shall remain in full force and
effect and shall apply to any advance or letter of credit thereunder.
8. Consent to Acquisition of Xxxxx & Associates Physical Therapy. Section
7.7 of the Credit Agreement prohibits the Borrower and its Subsidiaries from
acquiring, consolidating with or merging into any Person, provided that the
Borrower is permitted to acquire 100% of all common and preferred stock of HFRI
and HFRI is permitted to acquire 100% of K.A.M. The Borrower and HFRI have
requested that the Lender consent to HFRI's acquisition of Xxxxx, and waive any
Default arising as a result of such acquisition under Section 7.7 of the Credit
Agreement. Effective as of the First Amendment Date, and provided that the
contemplated merger occurs within 10 days thereafter, the Lender hereby consents
to such acquisition and waives any default arising under Section 7.7 as a result
of such acquisition.
9. Amendment Fee. The Borrower shall pay the Lender as of the date hereof a
fully earned, non-refundable fee in the amount of $1,750 in consideration of the
Lender's execution of this Amendment.
10. Conditions Precedent. This First Amendment shall be effective when the
Lender shall have received an executed original hereof, together with each of
the following, each in substance and form acceptable to the Lender in its sole
discretion:
( a) The first replacement term note, substantially in the form of
Exhibit A hereto, duly executed on behalf of the Borrower (the "Replacement
Note").
( b) The Acknowledgment and Agreement of Guarantors set forth at the
end of this Amendment, duly executed by each Guarantor.
( c) A Certificate of the Secretary of the Borrower certifying as to (
i) the resolutions of the board of directors of the Borrower approving the
execution and delivery of this Amendment and the Replacement Note, ( ii)
the fact that the Articles of Incorporation and Bylaws of the Borrower,
which were certified and delivered to the Lender pursuant to the
Certificate of Authority of the Borrower's Secretary dated as of February
4, 1997 in connection with the execution and delivery of the Credit
Agreement continue in full force and effect and have not been amended or
otherwise modified except as set forth in the Certificate to be delivered,
and ( iii) certifying that the officers and agents of the Borrower who have
been certified to the Lender, pursuant to the Certificate of Authority of
the Borrower's Secretary dated as of February 4, 1997, as being authorized
to sign and to act on behalf of the Borrower continue to be so authorized
or setting forth the sample signatures of each of the officers and agents
of the Borrower authorized to execute and deliver this Amendment, the
Replacement Note, and all other documents, agreements and certificates on
behalf of the Borrower.
( d) An opinion of the Borrower's counsel as to the matters set forth
in paragraphs 9(a) and 9(b) hereof and as to such other matters as the
Lender shall require.
( e) The Agreement of Purchase and Sale by and among Xxxxx, Xxxxxx X.
Xxxxx, the sole shareholder of Xxxxx, the Borrower and HFRI, pursuant to
which HFRI acquires and controls 100% of the common and preferred stock of
Xxxxx, and such other documents and evidence of a successful purchase as
the Lender may reasonably require.
( f) An opinion of counsel to Xxxxx, addressed to HFRI and the
Borrower, opining as to the acquisition of Xxxxx by HFRI.
( g) Evidence that the Borrower owns and controls 100% of the capital
stock of HFRI and that HFRI owns and controls 100% of the capital stock of
Xxxxx.
( h) Evidence that the legal name of Xxxxx has been changed to Xxxxx &
Associates Physical Therapy Corp.
( i) A separate guaranty, substantially in the form of the guaranties
executed by the other Corporate Guarantors, properly executed by Xxxxx
pursuant to which Xxxxx unconditionally guaranties the full and prompt
payment of all Obligations.
( j) A separate Corporate Guarantor Security Agreement, substantially
in the form of the security agreements executed by the other Corporate
Guarantors, duly executed by Xxxxx.
( k) A certificate of the Secretary or Assistant Secretary of Xxxxx
certifying as to (i) the resolutions of the directors and, if required,
shareholders, of Xxxxx authorizing the execution, delivery and performance
of the guaranty executed and delivered to the Lender by Xxxxx; (ii) Xxxxx'x
articles of incorporation and bylaws; and (iii) the signatures of the
officers or agents authorized to execute and deliver such guaranty on
behalf of Xxxxx.
( l) Current searches of appropriate filing offices showing that ( i)
no state or federal tax or judgment liens have been filed and remain in
effect against Xxxxxx X. Xxxxx, Xxxxx or HFRI, ( ii) no financing
statements have been filed and remain in effect against Xxxxxx X. Xxxxx,
Xxxxx or HFRI except financing statements acceptable to the Lender in its
sole discretion, and ( iii) the Lender has duly filed all financing
statements necessary to perfect its security interests in the property of
HFRI, to the extent such security interests are capable of being perfected
by filing.
( m) An opinion of counsel to the Borrower and Xxxxx, addressed to the
Lender.
( n) Payment of the fee described in Paragraph 9.
( o) Such other matters as the Lender may reasonably require.
11. Representations and Warranties. The Borrower hereby represents and
warrants to the Lender as follows:
(a) The Borrower has all requisite power and authority to execute this
Amendment and the Replacement Note and to perform all of its obligations
hereunder, and this Amendment and the Replacement Note have been duly
executed and delivered by the Borrower and constitute the legal, valid and
binding obligation of the Borrower, enforceable in accordance with its
terms (subject to laws generally affecting the enforcement of creditors'
rights).
(b) The execution, delivery and performance by the Borrower of this
Amendment and the Replacement Note have been duly authorized by all
necessary corporate action and do not ( i) require any authorization,
consent or approval by any governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, ( ii) violate any
provision of any law, rule or regulation or of any order, writ, injunction
or decree presently in effect, having applicability to the Borrower, or the
articles of incorporation or by-laws of the Borrower, or ( iii) result in a
breach of or constitute a default under any indenture or loan or credit
agreement or any other agreement, lease or instrument to which the Borrower
is a party or by which it or its properties may be bound or affected.
(c) All of the representations and warranties contained in Article V
of the Credit Agreement are correct on and as of the date hereof as though
made on and as of such date, except to the extent that such representations
and warranties relate solely to an earlier date.
12. References. All references in the Credit Agreement to "this Agreement"
shall be deemed to refer to the Credit Agreement as amended hereby; and any and
all references in the Security Documents to the Credit Agreement shall be deemed
to refer to the Credit Agreement as amended hereby. Upon the satisfaction of
each of the conditions set forth in paragraph 9 hereof, the definition of "Term
Note" and all references thereto in the Credit Agreement shall be deemed amended
to describe the Replacement Note, which Replacement Note shall be issued by the
Borrower to the Lender in replacement, renewal and amendment, but not in
repayment, of the original Note in the principal amount of $250,000.
13. No Waiver. The execution of this Amendment and acceptance of the
Replacement Note and any documents related hereto shall not be deemed to be a
waiver of any Default or Event of Default under the Credit Agreement or breach,
default or event of default under any Security Document or other document held
by the Lender, whether or not known to the Lender and whether or not existing on
the date of this Amendment.
14. Release. The Borrower, and each Guarantor by signing the Acknowledgment
and Agreement of Guarantors set forth below, each hereby absolutely and
unconditionally releases and forever discharges the Lender, and any and all
participants, parent corporations, subsidiary corporations, affiliated
corporations, insurers, indemnitors, successors and assigns thereof, together
with all of the present and former directors, officers, agents and employees of
any of the foregoing, from any and all claims, demands or causes of action of
any kind, nature or description, whether arising in law or equity or upon
contract or tort or under any state or federal law or otherwise, which the
Borrower or such Guarantor has had, now has or has made claim to have against
any such person for or by reason of any act, omission, matter, cause or thing
whatsoever arising from the beginning of time to and including the date of this
Amendment, whether such claims, demands and causes of action are matured or
unmatured or known or unknown.
15. Costs and Expenses. The Borrower hereby reaffirms its agreement under
the Credit Agreement to pay or reimburse the Lender on demand for all costs and
expenses incurred by the Lender in connection with the Credit Agreement, the
Security Documents and all other documents contemplated thereby, including
without limitation all reasonable fees and disbursements of legal counsel.
Without limiting the generality of the foregoing, the Borrower specifically
agrees to pay all fees and disbursements of counsel to the Lender for the
services performed by such counsel in connection with the preparation of this
Amendment, the Replacement Note, Xxxxx'x Guaranty, Xxxxx'x Security Agreement
and all other documents and instruments incidental hereto and thereto. The
Borrower hereby agrees that the Lender may, at any time or from time to time in
its sole discretion and without further authorization by the Borrower, make a
loan to the Borrower under the Credit Agreement, or apply the proceeds of any
loan, for the purpose of paying any such fees, disbursements, costs and expenses
and the fee required under paragraph 9 hereof.
16. Miscellaneous. This Amendment and the Acknowledgment and Agreement of
Guarantors may be executed in any number of counterparts, each of which when so
executed and delivered shall be deemed an original and all of which
counterparts, taken together, shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to
be duly executed as of the date first written above.
NORWEST BANK MINNESOTA, HEALTH FITNESS PHYSICAL THERAPY,
NATIONAL ASSOCIATION INC.
By /s/ Xxxxxxx X. Van Metre By /s/ Xxx Xxxx Xxxxxxx
Xxxxxxx L. Van Metre Xxx Xxxx Xxxxxxx
Its Vice President Its Treasurer
ACKNOWLEDGMENT AND AGREEMENT OF GUARANTORS
The undersigned, each a guarantor of the indebtedness of Health Fitness
Physical Therapy, Inc. (the "Borrower") to Norwest Bank Minnesota, National
Association (the "Lender") pursuant to separate Guaranties each dated as of
February 4, 1997 (each, a "Guaranty"), hereby (i) acknowledges receipt of the
foregoing First Amendment; (ii) consents to the terms (including without
limitation the release set forth in paragraph 14 of the Amendment) and execution
thereof; (iii) reaffirms his or its obligations to the Lender pursuant to the
terms of his or its Guaranty; and (iv) acknowledges that the Lender may amend,
restate, extend, renew or otherwise modify the Credit Agreement and any
indebtedness or agreement of the Borrower, or enter into any agreement or extend
additional or other credit accommodations, without notifying or obtaining the
consent of the undersigned and without impairing the liability of the
undersigned under his or its Guaranty for all of the Borrower's present and
future indebtedness to the Lender.
SPORTS & ORTHOPEDIC PHYSICAL
THERAPY, INC.
/s/ Xxxxx X. Xxxxx By /s/ Xxx Xxxx Xxxxxxx
Xxxxx Xxxxx Xxxxx Xxx Xxxx Xxxxxxx
Its Treasurer and Chief Financial Officer
HEALTH FITNESS PHYSICAL THERAPY FITNESS CENTERS OF AMERICA
OF TAHOE, INC.
By /s/ Xxx Xxxx Xxxxxxx By /s/ Xxx Xxxx Xxxxxxx
Xxx Xxxx Xxxxxxx Xxx Xxxx Xxxxxxx
Its Treasurer and Chief Its Treasurer and Chief Financial Officer
Financial Officer
HEALTH FITNESS REHAB, INC. THE PREFERRED COMPANIES, INC.
By /s/ Xxx Xxxx Xxxxxxx By /s/ Xxx Xxxx Xxxxxxx
Xxx Xxxx Xxxxxxx Xxx Xxxx Xxxxxxx
Its Treasurer and Chief Its Treasurer and Chief Financial Officer
Financial Officer
HEALTH FITNESS REHAB OF IOWA, INC.
By /s/ Xxx Xxxx Xxxxxxx
Xxx Xxxx Xxxxxxx
Its Treasurer and Chief Financial Officer
Exhibit A to
First Amendment
to Second Amended
& Restated Credit and
Security Agreement
FIRST REPLACEMENT TERM NOTE
$2,850,000 Bloomington, Minnesota
May 16, 1997
For value received, the undersigned, HEALTH FITNESS PHYSICAL THERAPY, INC.,
a Minnesota corporation (the "Borrower"), hereby promises to pay on the
Termination Date under the Credit Agreement (defined below), to the order of
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, a national banking association
(the "Lender"), at its office in Bloomington, Minnesota, or at any other place
designated at any time by the holder hereof, in lawful money of the United
States of America and in immediately available funds, the principal sum of Two
Million Eight Hundred Fifty Thousand Dollars ($2,850,000) or, if less, the
unpaid principal amount of the Term Advances made by the Lender to the Borrower
under the Credit Agreement (defined below), together with interest on the
principal amount hereunder remaining unpaid from time to time, computed on the
basis of the actual number of days elapsed and a 360-day year, from the date
hereof until this Note is fully paid at the rate from time to time in effect
under the Second Amended and Restated Credit and Security Agreement of even date
herewith (as the same may hereafter be amended, supplemented or restated from
time to time, the "Credit Agreement") by and between the Lender and the
Borrower. The principal hereof and interest accruing thereon shall be due and
payable as provided in the Credit Agreement. This Note may be prepaid only in
accordance with the Credit Agreement.
This Note is issued pursuant, and is subject, to the Credit Agreement,
which provides, among other things, for acceleration hereof. This Note is the
Term Note referred to in the Credit Agreement. To the extent this Note evidences
the Borrower's obligation to pay the Term Advances prior to the First Amendment
Date, this Note is issued in substitution for and replacement of but not in
payment of the Borrower's promissory note dated as of February 4, 1997, payable
to the order of the Lender in the original principal amount of $2,500,000.
This Note is secured, among other things, pursuant to the Credit Agreement
and the Security Documents as therein defined, and may now or hereafter be
secured by one or more other security agreements, mortgages, deeds of trust,
assignments or other instruments or agreements.
The Borrower hereby agrees to pay all costs of collection, including
attorneys' fees and legal expenses in the event this Note is not paid when due,
whether or not legal proceedings are commenced.
Presentment or other demand for payment, notice of dishonor and protest are
expressly waived.
HEALTH FITNESS PHYSICAL THERAPY, INC.
By /s/ Xxx Xxxx Xxxxxxx
Xxx Xxxx Xxxxxxx
Its Treasurer
