HEALTH FITNESS CORP /MN/
AMENDMENT NO. 2 TO SECURITIES PURCHASE AGREEMENT
<DOCUMENT>
<TYPE>EX-10.17
<SEQUENCE>3
<FILENAME>c85581exv10w17.txt
<DESCRIPTION>AMENDMENT NO. 2 TO SECURITIES PURCHASE AGREEMENT
<TEXT>
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                                                                   EXHIBIT 10.17

                                 AMENDMENT NO. 2
                                       TO
                          SECURITIES PURCHASE AGREEMENT

         This Amendment No. 2 to Securities Purchase Agreement ("Amendment No.
2") is made as of April 2, 2004 by and among HEALTH FITNESS CORPORATION, a
Minnesota corporation (the "Company"), HEALTH FITNESS REHAB, INC., a Minnesota
corporation ("Rehab"), FITNESS CENTERS OF AMERICA, a California corporation
("Fitness"), HEALTH FITNESS CORPORATION OF CANADA, INC., an Alberta, Canada
corporation ("HFC Canada"), and BAYVIEW CAPITAL PARTNERS LP, a Delaware limited
partnership ( the "Purchaser"). The Company, Rehab, Fitness, and HFC Canada are
referred to in this Amendment No. 2 each individually as a "Loan Party" and
collectively as the "Loan Parties."

                                   BACKGROUND

         A. The Loan Parties and the Purchaser entered into a Securities
Purchase Agreement dated as of August 25, 2003, as amended by Amendment No. 1
dated as of December 5, 2003 (the "Agreement").

         B. Section 9.01(p) of the Agreement provides that it is an Event of
Default if any financial covenant set forth in the Financial Covenants Rider
becomes inapplicable due to the lapse of time and the failure to amend any such
covenant to cover future periods. The Senior Cash Flow Leverage covenant and the
Senior Leverage Ratio covenant became inapplicable as of March 31, 2004.

         C. The Loan Parties have requested, and the Purchaser has agreed, to
amend Section 9.01(p) of the Agreement to provide an additional period of time
to mutually agree upon the financial covenants for future periods, as set forth
in this Amendment No. 2.

         NOW, THEREFORE, in consideration of the foregoing and the mutual
promises set forth below, the parties agree as follows:

         1. Capitalized Terms. Except as specified in this Amendment No. 2, all
terms of the Agreement remain unchanged. Capitalized terms used in this
Amendment No. 2 and not otherwise defined have the meanings given to them in the
Agreement.

         2. Amendment to the Agreement. Section 9.01(p) of the Agreement is
amended and restated in its entirety by the following:

                           "(p) The Loan Parties and the Purchaser do not
         mutually agree to an amended and restated Financial Covenants Rider on
         or prior to April 30, 2004, including, without limitation, the adoption
         of financial covenants covering periods after March 31, 2004."

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         3. Representations and Warranties of the Loan Parties. To induce the
Purchaser to enter into this Amendment No. 2, the Loan Parties represent and
warrant to the Purchaser as follows:

                  3.1 Reassertion of Representations and Warranties. The
representations and warranties contained in the Agreement and the Ancillary
Agreements are true and correct as of the date hereof with the same force and
effect as if such representations and warranties had been made on and as of the
date hereof.

                  3.2 No Event of Default. Each Loan Party has performed all of
its obligations under the Agreement and the Ancillary Agreements to be performed
by it on or before the date hereof and, as of the date hereof, each Loan Party
is in compliance with all applicable terms and provisions of the Agreement and
each of the Ancillary Agreements to be observed and performed by it and no Event
of Default or other event which, upon notice or lapse of time or both, would
constitute an Event of Default has occurred.

                  3.3 Authority and Consents.

                           (a) The execution, delivery and performance of this
         Amendment No. 2 by each Loan Party have been duly authorized by each
         Loan Party and do not conflict with, or result in a default, right to
         accelerate, loss of rights under, or the creation of any Lien pursuant
         to, any provision of any Loan Party's Organizational Documents, or any
         agreement, law, rule or regulation, or any order, judgment or decree to
         which any Loan Party is a party or by which any Loan Party, or its
         respective properties are bound or affected (except for any Lien
         created under the Agreement or the Ancillary Agreements).

                           (b) Each Loan Party has full power and authority to
         enter into this Amendment No. 2 and to carry out the transactions
         contemplated by this Amendment No. 2. This Amendment No. 2 has been
         duly executed and delivered on behalf of each Loan Party and
         constitutes valid and binding obligations of each Loan Party
         enforceable in accordance with their respective terms, except to the
         extent that enforcement may be limited by applicable bankruptcy,
         reorganization, moratorium or similar laws of general applicability
         affecting the enforcement of creditors' rights and subject to general
         equitable principles which may limit the right to obtain equitable
         remedies.

                           (c) No consent is required to be obtained or made by
         any Loan Party in connection with the execution, delivery and
         performance of this Amendment No. 2 by each Loan Party.

                  3.4 No Adverse Claim. No events have taken place and no
circumstances exist on the date hereof which would give the Loan Parties a basis
to assert a defense, offset or counterclaim to any claim of the Purchaser under
the Agreement or any Ancillary Agreement.

         4. Conditions Precedent. The effectiveness of this Amendment No. 2 is
subject to satisfaction of the following conditions:

                                       2

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                  4.1 Representations and Warranties True. The representations
and warranties of the Loan Parties in this Amendment No. 2 are true and correct
on and as of the date hereof.

                  4.2 Compliance with Agreement. The Loan Parties have performed
and complied with all agreements and conditions required by this Amendment No. 2
to be performed and complied with by them prior to or as of the date hereof.

                  4.3 No Event of Default. As of the date hereof, no condition
or event exists or has occurred which would constitute an Event of Default or
which, after notice or lapse of time or both, would constitute an Event of
Default.

                  4.4 Delivery of Documents and Fees. The Loan Parties, or other
appropriate Persons at the direction or request of the Loan Parties, have
delivered to the Purchaser the following, duly executed as appropriate:

                           (a) this Amendment No. 2; and

                           (b) payment of all reasonable costs and expenses
         incurred by the Purchaser in connection with the drafting, negotiation
         and closing of the transactions contemplated by this Amendment No. 2.

         5. Survival of Representations and Warranties. The representations,
warranties, covenants and agreements set forth in this Amendment No. 2 will
survive the closing of the transactions contemplated hereby and will not be
affected by any examination or knowledge of, or the acceptance of any
certificate or opinion by, the Purchaser.

         6. Governing Law. This Amendment No. 2 will be construed and enforced
in accordance with the substantive laws of the State of Minnesota without giving
effect to its conflicts of law principles.

         7. Entire Agreement. This Amendment No. 2 and the other documents
referred to herein, including but not limited to the Agreement, contain the
entire understanding of the parties hereto with respect to the subject matter
contained herein. There are no restrictions, promises, warranties, covenants, or
undertakings, other than those expressly provided for herein. The Agreement (as
amended by this Amendment No. 2) supersedes all prior agreements and
undertakings between the parties with respect to such subject matter.

         8. No Waiver. This Amendment No. 2 is not intended to operate as, and
may not be construed as, a waiver of any Event of Default whether known to the
Purchaser or unknown, and all rights and remedies of the Purchaser with respect
to any such Event of Default remain reserved.

         9. Payment of Expenses. As provided in Section 10.02(b) of the
Agreement, the Loan Parties agree to reimburse the Purchaser for all reasonable
costs and expenses incurred by such Purchaser in connection with the drafting,
negotiation and closing of the transactions contemplated hereby.

                                       3

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         10. Binding Nature of Loan Documents; Release. The Loan Parties
acknowledge and agree that the terms, conditions and provisions of the Agreement
and of each Ancillary Agreement executed and delivered in connection with the
Agreement are fully binding and enforceable agreements, and are not subject to
any defense, counterclaim, set off or other claim of any kind or nature. The
Loan Parties reaffirm and restate their duties, obligations and liabilities
under the Agreement and each Ancillary Agreement executed by them in connection
with the Agreement. The Loan Parties, on their own behalf and on behalf of their
predecessors, successors and assigns, acknowledge that as of the date hereof,
none of such parties has any claims or causes of action of any kind whatsoever
pertaining to or arising out of the transactions contemplated by the Agreement
against the Purchaser or any of its affiliates, officers, directors, employees,
agents, attorneys, representatives, predecessors, successors or assigns. Each of
the Loan Parties releases the Purchaser and each of its affiliates, officers,
directors, employees, agents, attorneys, representatives, predecessors,
successors or assigns, from any and all claims, causes of action, demands and
liabilities of any kind whatsoever pertaining to or arising out of the
transactions contemplated by the Agreement, this Amendment No. 2 and each of the
Ancillary Agreements, whether direct or indirect, fixed or contingent,
liquidated or nonliquidated, disputed or undisputed, known or unknown, which any
of the Loan Parties has or may acquire in the future relating in any way to any
event, circumstance, action or failure to act from the beginning of time through
the date hereof.

         11. Reference to the Agreement. From and after the date of this
Amendment No. 2, each reference in the Agreement to "this Agreement,"
"hereunder," "hereof," "herein," or words of similar meaning referring to the
Agreement, and each reference in any Ancillary Agreement to the Agreement or
"thereunder," "thereof," "therein" or words of similar meaning referring to the
Agreement mean and are a reference to the Agreement as amended by this Amendment
No. 2.

         12. Counterparts. This Amendment No. 2 may be executed in any number of
counterparts, each of which will be an original, but all of which will
constitute one and the same instrument. Any executed counterpart of this
Amendment No. 2 delivered by facsimile or other electronic transmission to a
party to this Amendment No. 2 will constitute an original counterpart of this
Amendment No. 2.

         13. No Other Modification. Except as expressly amended by the terms of
this Amendment No. 2, all other terms of the Agreement remain unchanged and in
full force and effect.

                                    * * * * *

                                       4

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         IN WITNESS WHEREOF, this Amendment No. 2 has been duly executed by the
parties hereto on the day and year first above written.

LOAN PARTIES:                               PURCHASER:

HEALTH FITNESS CORPORATION                  BAYVIEW CAPITAL PARTNERS LP

                                            By:   Bayview Capital Management LLC
By: /s/  Wesley W. Winnekins                      ------------------------------
   --------------------------                Its: General Partner
   Its:  CFO and Treasurer

                                            By:   /s/  Sean Epp
                                                --------------------------
HEALTH FITNESS REHAB, INC.                   Its: Director

By:   /s/  Wesley W. Winnekins
      -----------------------------
 Its: CFO and Treasurer

FITNESS CENTERS OF AMERICA

By:   /s/  Wesley W. Winnekins
      -----------------------------
 Its: CFO and Treasurer

HEALTH FITNESS CORPORATION OF CANADA, INC.

By:   /s/  Wesley W. Winnekins
      ------------------------------
 Its: CFO and Treasurer

Health Fitness Corporation

Second Amendment to Credit Agreement

                                       5

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