AMENDMENT NO. 7 TO LOAN AND SECURITY AGREEMENT
AMENDMENT dated as of February 26, 1999, by and among Health Fitness
Corporation, a Minnesota corporation ("Borrower"), Health Fitness Rehab, Inc., a
Minnesota corporation ("HF Rehab"), The Preferred Companies, Inc., an Arizona
corporation ("TPC"), Health Fitness Rehab of Iowa, Inc., an Iowa corporation
("HF Rehab Iowa"), Xxxxx & Associates Physical Therapy Corp., an Iowa
corporation ("Xxxxx"), Medlink Corporation, an Iowa corporation ("Medlink"),
Medlink Services, Inc., an Iowa corporation ("Medlink Services"), Midlands
Physical Therapy, Inc., a Nebraska corporation ("Midlands"), Fitness Centers of
America, a California corporation ("Fitness Centers"), Sports & Orthopedic
Physical Therapy, Inc., a Minnesota corporation ("Sports Therapy") and
International Fitness Club Network, Inc.. a Rhode Island corporation, formerly
known as Xxxxx. X. Xxxxxxxxx, Inc. ("IFCN," and together with Sports Therapy, HF
Rehab, TPC, HF Rehab Iowa, Xxxxx, Medlink, Medlink Services, Midlands and
Fitness Centers, collectively, "Guarantors" and sometimes referred to
individually as a "Guarantor") and Ableco Finance LLC, The Long Horizons
Overseas Fund, Ltd., Styx Partners, L.P. and Styx International, Ltd., as direct
or indirect assignees of Xxxxxxxxx L.L.C., a New York limited liability company
(individually and collectively, "Lender").
W I T N E S S E T H
WHEREAS, Lender and Borrower have entered into financing arrangements
pursuant to which Lender may make loans and advances and provide other financial
accommodations to Borrower as set forth in the Loan and Security Agreement,
dated February 17, 1998, by and among Lender, Borrower and Guarantors, as
amended by Amendment No. 1 to Loan and Security Agreement, dated February 28,
1998, Amendment No. 2 to Loan and Security Agreement, dated June 4, 1998,
Amendment No. 3 to Loan and Security Agreement, dated June 26, 1998, Amendment
No. 4 to Loan and Security Agreement, dated September 10, 1998, Amendment No. 5
to Loan and Security Agreement, dated November 2, 1998, and Amendment No. 6 to
Loan and Security Agreement, dated as of January 8, 1999 (and as amended hereby
and as the same may hereafter be further amended, modified, supplemented,
extended, renewed, restated or replaced, the "Loan Agreement") and the
agreements, documents and instruments at any time executed and/or delivered in
connection therewith or related thereto (collectively, together with the Loan
Agreement, the "Financing Agreements");
WHEREAS, Borrower and Guarantors have requested certain amendments to
the Loan Agreement and Lender is willing to agree to such amendments, subject to
the terms and conditions contained herein;
NOW, THEREFORE, in consideration of the mutual conditions and
agreements set forth herein and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
1. Definitions.
(a) For purposes of this Amendment, unless otherwise defined
herein, all terms used herein, including, but not limited to, those terms used
and/or defined in the recitals above, shall have the respective meanings
assigned to such terms in the Loan Agreement.
(b) The term "Debenture Agent" shall mean Xxxxxxx X. Xxxxxxx,
in his capacity as agent for any holder of the Subordinated Debentures, and his
successors and assigns and including any other or additional person that may at
any time act for or on behalf of any of the Junior Creditors.
(c) The term "Subordinated Debentures" shall mean,
collectively, the Secured Convertible Subordinated Debentures at any time issued
by Borrower, as the same may be amended, modified, supplemented, extended,
renewed, restated or replaced.
2. Encumbrances. Section 8.5 of the Loan Agreement is hereby amended to
add a new Section 8.5(i) as follows:
"(i) the security interests in and liens upon the
Collateral of Borrower granted to the Debenture Agent in the
Subordinated Debentures to secure the Indebtedness of Borrower
to the holders of the Subordinated Debentures permitted under
Section 8.6 below, which liens and security interests are
subject and subordinate in all respects to the liens and
security interests of Lender."
3. Indebtedness. Section 8.6 of the Loan Agreement is hereby amended to
add a new Section 8.6(i) as follows:
"(i) Indebtedness of Borrower to the holders of the
Subordinated Debentures evidenced by the Subordinated
Debentures, provided, that, (A) the terms and conditions of
such Indebtedness shall be acceptable in all respects to
Lender, (B) the aggregate amount of all such Indebtedness
shall not exceed $400,000 (less the aggregate amount of all
repayments or repurchases of principal in respect thereof)
plus interest thereon at the rate set forth in the
Subordinated Debentures as in effect on the date of the
execution thereof, (C) such Indebtedness is, in all respects,
subject to and subordinate in right of payment to, the right
of Lender to receive the prior final payment and satisfaction
in full of all of the Obligations, (D) Borrower shall not,
directly or indirectly, make any payments in respect of such
Indebtedness, including, but not limited to, any prepayments
or other non-mandatory payments, except, that, Borrower may
make regularly scheduled payments of interest, on an
unaccelerated basis, in respect of such Indebtedness in
accordance with the terms of the Subordinated Debentures as in
effect on the date of the execution thereof, unless and until
Lender sends written notice to Debenture Agent of the
occurrence of an Event of Default, (E) prior to the issuance
of any Subordinated Debenture, Borrower shall notify Lender in
writing of the person to whom such Subordinated Debenture will
be issued and shall deliver to Lender the agreement of such
person, in form and substance satisfactory to Lender, to be
bound by the terms of the Intercreditor and Subordination
Agreement by and among Lender and the holders of the
Subordinated Debentures, (F) Borrower shall not, directly or
indirectly, (1) amend, modify, alter or change any terms of
such Indebtedness or any agreement, document or instrument
related thereto as in effect on the date hereof, except, that,
Borrower may, after prior written notice to Lender, amend,
modify, alter or change the terms thereof so as to extend the
maturity thereof or defer the timing of any payments in
respect thereof, or to forgive or cancel any portion of such
Indebtedness (other than pursuant to payments thereof), or to
reduce the interest rate or any fees in connection therewith
or to make any covenants contained therein less restrictive or
burdensome as to Borrower or otherwise more favorable to
Borrower, or (2) redeem, retire, defease, purchase or
otherwise acquire such Indebtedness, or set aside or otherwise
deposit or invest any sums for such purpose and (G) Borrower
shall furnish to Lender all notices or demands in connection
with such Indebtedness either received by Borrower or on its
behalf, promptly after the receipt thereof, or sent by
Borrower or on its behalf, concurrently with the sending
thereof, as the case may be."
4. Binding Effect. This Amendment has been duly executed and delivered
by Borrower and Guarantors and is in full force and effect as of the date
hereof, and the agreements and obligations of Borrower and Guarantors contained
herein constitute the legal, valid and binding obligations of Borrower and
Guarantors enforceable against Borrower and Guarantors in accordance with their
respective terms.
5. Conditions Precedent. The effectiveness of the other provisions of
this Amendment shall be subject to the receipt by Lender of an original of this
Amendment, duly authorized, executed and delivered by Borrower and Guarantors.
6. Ableco as Agent. Borrowers and Guarantors are hereby authorized to
deal with Ableco Finance LLC as agent for itself, Long Horizons Overseas Fund,
Ltd., Styx Partners L.P. and Styx International Ltd. for all purposes in
connection with the Loan Agreement and the other Financing Agreements.
7. Effect of this Amendment. Except as modified pursuant hereto, no
other changes or modifications to the Financing Agreements are intended or
implied and in all other respects the Financing Agreements are hereby
specifically ratified, restated and confirmed by all parties hereto as of the
effective date hereof. To the extent of conflict between the terms of this
Amendment and the other Financing Agreements, the terms of this Amendment shall
control. Nothing contained herein shall be construed to limit the right of
Lender at any time and from time to time demanding payment of any Loans (and
related Obligations) outstanding in excess of the Borrowing Base and nothing
contained herein should be construed as a waiver of any Event of Default.
8. Further Assurances. The parties hereto shall execute and deliver
such additional documents and take such additional action as may be necessary or
proper to effectuate the provisions and purposes of this Amendment.
9. Governing Law. The rights and obligations hereunder of each of the
parties hereto shall be governed by and interpreted and determined in accordance
with the internal laws of the State of New York (without giving effect to
principles of conflicts of law or choice of law).
10. Binding Effect. This Amendment shall be binding upon and inure to
the benefit of each of the parties hereto and their respective successors and
assigns.
11. Counterparts. This Amendment may be executed in any number of
counterparts, but all of such counterparts shall together constitute but one and
the same agreement. In making proof of this Amendment, it shall not be necessary
to produce or account for more than one counterpart thereof signed by each of
the parties hereto.
IN WITNESS WHEREOF, each of the undersigned have caused this agreement
to be duly authorized, executed and delivered as of the day and year first above
written.
HEALTH FITNESS CORPORATION HEALTH FITNESS REHAB, INC.
By: /s/ Xxxxxxx X. Xxxxxxx By: /s/ Xxxxxxx X. Xxxxxxx
Title: Chief Financial Officer Title: Chief Financial Officer
XXXXX & ASSOCIATES PHYSICAL THE PREFERRED COMPANIES, INC.
THERAPY SERVICES CORP.
By: /s/ Xxxxxxx X. Xxxxxxx By: /s/ Xxxxxxx X. Xxxxxxx
Title: Chief Financial Officer Title: Chief Financial Officer
MEDLINK CORPORATION HEALTH FITNESS REHAB OF
IOWA, INC.
By: /s/ Xxxxxxx X. Xxxxxxx By: /s/ Xxxxxxx X. Xxxxxxx
Title: Chief Financial Officer Title: Chief Financial Officer
[SIGNATURES CONTINUE ON THE NEXT PAGE]
[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
MEDLINK SERVICES, INC. FITNESS CENTERS OF AMERICA
By: /s/ Xxxxxxx X. Xxxxxxx By: /s/ Xxxxxxx X. Xxxxxxx
Title: Chief Financial Officer Title: Chief Financial Officer
SPORTS & ORTHOPEDIC PHYSICAL INTERNATIONAL FITNESS CLUB
THERAPY, INC. NETWORK, INC.
By: /s/ Xxxxxxx X. Xxxxxxx By: /s/ Xxxxxxx X. Xxxxxxx
Title: Chief Financial Officer Title: Chief Financial Officer
MIDLANDS PHYSICAL THERAPY, INC. ABLECO FINANCE LLC, for itself and
as agent
By: /s/ Xxxxxxx X. Xxxxxxx
By: /s/ Xxxxxx X. Genda
Title: Chief Financial Officer
Title: Vice President
XXXXXXXXX, L.L.C.
By: /s/ Xxxxxx X. Genda
Title: Vice President
