AMENDMENT NO. 6 TO LOAN AND SECURITY AGREEMENT
AMENDMENT dated as of January 8, 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 Xxxxxxxxx L.L.C., a New York limited
liability company ("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 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) All references to the term "Special Availability Reserve" are
hereby deleted.
(c) The term "Supplemental Loans" as used herein shall mean the
Loans at any time made by Lender to or for the benefit of Borrower on a
revolving basis (involving advances, repayments and readvances) in excess of the
amount of the Borrowing Base as set forth in Section 3 hereof.
(d) All references to the term "Loans" in the Loan Agreement shall
be deemed and each such reference is hereby amended to include, in addition and
not in limitation, the Supplemental Loans.
2. Borrowing Base.
(a) Section 1.8(a)(i) of the Loan Agreement is hereby deleted in
its entirety and the following substituted therefor: "$7,200,000, as reduced by
an amount equal to $20,000 on Tuesday of each week, commencing Tuesday, February
16, 1999,"
(b) Section 1.8(b) of the Loan Agreement is hereby amended by
deleting the following at the end thereof: "and including the Special
Availability Reserve."
3. Supplemental Loans.
(a) In addition to the Loans which may be made by Lender to
Borrower pursuant to Section 2.1 of the Loan Agreement, subject to the other
terms and conditions of the Loan Agreement, Lender may from time to time make
Supplemental Loans to Borrower, provided, that, the aggregate amount of the
Loans up to the amount of the Borrowing Base plus the Supplemental Loans
outstanding at any time shall not exceed the amount equal to $7,200,000 as
reduced by an amount equal to $20,000 on Tuesday of each week, commencing
Tuesday, February 16, 1999.
(b) Borrower acknowledges and agrees that, notwithstanding
anything to the contrary contained in the Loan Agreement or the other Financing
Agreements, the failure of Borrower to pay the Obligations arising pursuant to
the Supplemental Loans on the effective date of any reduction in the limit as
set forth in Section 3(a) above in the amount of the excess, if any, of the
aggregate unpaid principal amount of the Supplemental Loans over the amount of
the limit as so reduced shall constitute an Event of Default.
4. Waivers.
(a) Subject to the terms and conditions contained herein, Lender
hereby waives the Event of Default arising under Section 9.1(b) of the Loan
Agreement as a result of the failure of Borrower to comply with Section 8.10 and
Section 8.10A of the Loan Agreement as of November 30, 1998, provided, that, (i)
such waiver shall only apply to the failure of Borrower to comply with such
Sections for the period from January 1, 1998 through and including November 30,
1998 (and not as of the end of any month thereafter) and (ii) such waiver shall
not be effective unless and until Lender shall have received an original of this
Amendment duly executed and delivered by Borrower and Guarantors.
(b) Lender has not waived, is not by this Amendment waiving, and
has no intention of waiving any other Event of Default which may have occurred
on or prior to the date hereof, whether or not continuing on the date hereof, or
which may occur after the date hereof (whether the same or similar to the Events
of Default referred to above), other than the Event of Default specifically
referred to in Section 4(a) for the period ending November 30, 1998. Upon the
occurrence of any other Event of Default, whether or not continuing on the date
hereof, or which may occur on or after the date hereof (whether the same or
similar to the Event of Default described above, including an Event of Default
pursuant to the failure of Borrower and Guarantors to comply with Section 8.10
or 8.10A of the Loan Agreement as of the last day of any month after November
30, 1998), Lender shall have and hereby specifically reserves the right in its
discretion, to exercise any and all of its rights and remedies under the Loan
Agreement, the other Financing Agreements, applicable law or otherwise.
(c) The foregoing waiver shall not be construed as a bar to or a
waiver of any other or further Event of Default on any future occasion, whether
similar in kind or otherwise and shall not constitute a waiver, express or
implied of any of the rights and remedies of Lender arising under the terms of
the Financing Agreements of any future occasion or otherwise.
5. Indebtedness. Section 8.6(g) of the Loan Agreement is hereby deleted
in its entirety and the following substituted therefor:
"(g) Indebtedness of Borrower or any Guarantor or Subsidiary
arising after the date hereof secured by purchase money liens or
security interests permitted under Section 8.5(h) hereof upon specific
fitness equipment hereafter acquired by Borrower or such Guarantor or
Subsidiary, provided, that, the aggregate amount of such Indebtedness
of Borrower to CFC Funding Corporation (or its assignee) arising under
the Lease Agreement, dated December 22, 1998 between Borrower and CFC
Funding Corporation (or its assignee) shall not exceed $237,739 (as
reduced by all payments in respect thereof) and the aggregate amount of
all other such Indebtedness incurred in any fiscal year of Borrower
shall not exceed $100,000 in such fiscal year of Borrower; and"
6 Fee. In consideration of the terms hereof, Borrower shall pay to
Lender a fee in the amount of $10,000, which fee is fully earned as of the date
hereof and shall be payable upon the earliest of the occurrence of an Event of
Default, or termination or non-renewal of the financing arrangements between
Lender and Borrower under the Loan Agreement or the Final Maturity Date. Lender
may, at its option, charge such fee to the loan account of Borrower maintained
by Lender.
7. 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.
8. 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.
9. 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.
10. 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.
11. 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).
12. 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.
13. 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
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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
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.
By: /s/ Xxxxxxx X. Xxxxxxx
Title: Chief Financial Officer
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XXXXXXXXX L.L.C.
By: /s/ Xxxxxx Xxxx
Title: Managing Director
