SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13G
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. __)*
Health Fitness Corporation
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(Name of Issuer)
Common Stock
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(Title of Class of Securities)
42217V102
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(CUSIP Number)
December 8, 2003
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(Date of Event Which Requires Filing of this Statement)
Check the appropriate box to designate the rule pursuant to which this Schedule
is filed:
[ ] Rule 13d-1(b)
[X] Rule 13d-1(c)
[ ] Rule 13d-1(d)
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class
of securities, and for any subsequent amendment containing information
which would alter the disclosures provided in a prior cover page.
The information required in the remainder of this cover page shall not
be deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of
that section of the Act but shall be subject to all other provisions of
the Act.
Page 1 of 5 Pages
CUSIP No. 42217V102 13G PAGE 2 OF 6 PAGES
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1. Names Of Reporting Persons.
I.R.S. Identification Nos. of Above Persons (Entities Only).
Bayview Capital Partners LP
41-1290848
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2. Check the Appropriate Box if a Member of a Group (See Instructions)
(a)
(b)
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3. SEC Use Only
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4. Source of Funds (See Instructions)
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5. Check if Disclosure of Legal Proceedings Is Required Pursuant
to Items 2(d) OR 2(e)
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6. Citizenship or Place of Organization
Bayview Capital Partners is a limited partnership formed under the laws
of the State of Delaware.
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7. Sole Voting Power
Number of
3,210,320
Shares -----------------------------------------------------------------
8. Shared Voting Power
Beneficially
0
Owned by Each -----------------------------------------------------------------
9. Sole Dispositive Power
Reporting
3,210,320
Person -----------------------------------------------------------------
10. Shared Dispositive Power
With
0
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11. Aggregate Amount Beneficially Owned by Each Reporting Person
3,210,320
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12. Check if the Aggregate Amount in Row (11) Excludes
Certain Shares (See Instructions)
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13. Percent of Class Represented by Amount in Row (11)
18.7%
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14. Type of Reporting Person (See Instructions)
PN
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PAGE 3 OF 6 PAGES
ITEM 1.
(a) Name of Issuer
The name of the issuer is Health Fitness Corporation (the
"Issuer")
(b) Address of Issuer's Principal Executive Offices
The address of the principal executive offices of the Issuer
is 3500 West 80th Street Bloomington, MN 55431
ITEM 2.
(a) Name of Person Filing. This statement is being filed by
Bayview Capital Partners LP (the "Reporting Person")
(b) Address of Principal Business Office or, if none, Residence.
The principal address of the Reporting Persons is 641 East
Lake Street, Suite 230, Wayzata, Minnesota 55391
(c) Citizenship. The Reporting Person is formed under the laws of
the State of Delaware.
(d) Title of Class of Securities.
Common Stock
(e) CUSIP Number.
42217V102
ITEM 3. IF THIS STATEMENT IS FILED PURSUANT TO RULE 13D-1(b), OR
13D-2(b), CHECK WHETHER THE PERSON FILING IS A:
(a) [ ] Broker or Dealer registered under Section 15 of the Act
(b) [ ] Bank as defined in Section 3(a)(6) of the Act
(c) [ ] Insurance Company as defined in Section 3(a)(19) of the
Act
(d) [ ] Investment Company registered under Section 8 of the
Investment Company Act
(e) [ ] Investment Adviser registered under Section 203 of the
Investment Advisers Act of 1940
PAGE 4 OF 6 PAGES
(f) [ ] Employee Benefit Plan, Pension Fund which is subject to
the provisions of the Employee Retirement Income
Security Act of 1974 or Endowment Fund; see Section
240.13d-1(b)(1)(ii)(F)
(g) [ ] Parent Holding Company, in accordance with Section
240.13d-1(b)(ii)(G) (Note: See Item 7)
(h) [ ] Group, in accordance with Section 240.13d-1(b)(ii)(H)
ITEM 4. OWNERSHIP
(a) Amount beneficially owned: 3,210,320
(b) Percent of class: 18.7%
(c) Number of shares as to which the person has:
(i) Sole power to vote or direct the vote: 3,210,320
(ii) Shared power to vote or direct the vote: 0
(iii) Sole power to dispose or direct the disposition of:
3,210,320
(iv) Shared power to dispose or direct the disposition of:
0
On August 25, 2003, the Health Fitness Corporation (the "Company")
signed an agreement to acquire the business assets of the Health &
Fitness Services Division (the "HFS Division") of Johnson & Johnson
Health Care Systems Inc. ("JJHCS"). The Company placed the purchase
price in escrow pending the closing of the acquisition (the
"Acquisition Closing").
As part of the acquisition of the JJHCS business assets, on August 25,
2003, the Company entered into a Securities Purchase Agreement, as
amended by Amendment No. 1 dated December 8, 2003 (the "Securities
Purchase Agreement"), with Bayview Capital Partners LP ("Bayview") to
provide the Company with $3,000,000 of acquisition financing and
general working capital (the "Bayview Investment"). The Bayview
Investment is secured by a subordinated security interest in
substantially all of the Company's assets. The Bayview Investment was
structured as a bridge note (the "Bridge Note"), the proceeds of which
the Company placed into escrow to fund a portion of the purchase price
that was payable to JJHCS at the Acquisition Closing. The Bridge Note
bears interest at 12% per year, payable monthly, with the principal due
and payable on the earliest to occur of (i) the Acquisition Closing,
and (ii) December 10, 2003. In the event the Acquisition Closing did
not occur prior to December 9, 2003, the Company's repayment of
principal on December 10, 2003 must be accompanied by a 5% premium. The
Company was required to comply with certain monthly financial
covenants, including a senior cash flow leverage ratio and senior
leverage ratio.
On December 8, 2003, the Acquisition Closing occurred and the Bridge
Note converted into a $2,000,000 term note (the "Term Note"),
$1,000,000 in Series A Convertible Preferred Stock of the Company (the
"Preferred Stock") and a warrant to purchase common stock of the
Company (the "Warrant"). The Term Note bears interest at 12%
PAGE 5 OF 6 PAGES
per year, payable monthly, and will mature on the fifth anniversary of
the Acquisition Closing. The Term Note may be prepaid, in whole or in
part, at any time, provided that the prepayment is accompanied by a
premium ranging from 5% in year 1 to 1% in year 5. The Company is
required to continue to comply under the Term Note with the same
monthly financial covenants, including a senior cash flow leverage
ratio and senior leverage ratio, required under the Bridge Note.
The Preferred Stock was issued to Bayview at a price of $1.00 per
share, resulting in 1,000,000 shares issued at the Acquisition Closing.
The Preferred Stock has a stated dividend rate of 6% per year, computed
on a simple interest basis, paid in kind in the form of additional
shares of Preferred Stock using a price of $1.00 per share ("PIK
Dividends"). At the option of the holder, the Preferred Stock,
including any PIK Dividends, may be converted into common stock of the
Company at a price of $0.50 per share. Upon the occurrence of a change
in control or an event of default under the Securities Purchase
Agreement, the holders of the Preferred Stock may require the Company
to redeem the Preferred Stock at a price equal to the greater of the
liquidation preference and fair market value.
The Warrant issued to Bayview represents the right to purchase 8% of
the Company's common stock outstanding on a fully diluted basis,
excluding the common stock issuable to Bayview upon conversion of the
Preferred Stock. The number of shares contingently issuable under this
Warrant is 1,210,320. The Warrant will be exercisable at any time for a
period of ten years at an exercise price equal to $0.50 per share. Upon
the occurrence of a change in control or an event of default under the
Securities Purchase Agreement, the holders of the Warrant may require
the Company to redeem the Warrant and any shares of common stock issued
upon the exercise of the Warrant at a price equal to fair market value.
The holders of the Warrant and any shares of common stock issued upon
the exercise of the Warrant have a preemptive right to participate in
future issuances of common stock and common stock equivalents by the
Company.
The Company has agreed to register, upon the request of Bayview, the
sale of all shares of common stock issuable upon conversion of the
Preferred Stock and upon exercise of the Warrant under the Securities
Act of 1933, as amended, within 360 days following the date of the
Acquisition Closing.
ITEM 5. OWNERSHIP OF FIVE PERCENT OR LESS OF A CLASS
Not Applicable.
ITEM 6. OWNERSHIP OF MORE THAN FIVE PERCENT ON BEHALF OF ANOTHER
PERSON
Not Applicable.
PAGE 6 OF 6 PAGES
ITEM 7. IDENTIFICATION AND CLASSIFICATION OF THE SUBSIDIARY WHICH
ACQUIRED THE SECURITY REPORTED ON BY THE PARENT HOLDING
COMPANY.
Not Applicable.
ITEM 8. IDENTIFICATION AND CLASSIFICATION OF MEMBERS OF THE GROUP
Not Applicable.
ITEM 9. NOTICE OF DISSOLUTION OF GROUP
Not Applicable.
ITEM 10. CERTIFICATION
By signing below I certify that, to the best of my knowledge
and belief, the securities referred to above were not acquired
and are not held for the purpose of or with the effect of
changing or influencing the control of the issuer of the
securities and were not acquired and are not held in
connection with or as a participant in any transaction having
that purpose or effect.
ITEM 11. EXHIBITS
None.
PAGE 7 OF 6 PAGES
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: December 8, 2003 BAYVIEW CAPITAL PARTNERS LP
By: Bayview Capital Management LLC
Its: Managing Director
By: /s/ Cary Musech
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Name: Cary Musech
Its: Managing Director