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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO
13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO 13d-2(a)
COMPLETE WELLNESS CENTERS, INC.
(Name of Issuer)
Common Stock, par value $.0001665 per share
(Title of Class and Securities)
20452H4-10-3
(CUSIP Number of Class of Securities)
Joseph Raymond, Jr.
4074 Scarlet Iris Place
Winter Park, Florida 32792
(407) 678-6300
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
Copy to:
Hank Gracin, Esq.
Lehman & Eilen LLP
50 Charles Lindbergh Blvd.
Uniondale, New York 11553
(516) 222-0888
February 26, 1999
(Date of Event Which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Statement because of Rule
13d-1(b)(3) or (4), check the following: [ ]
See Rule 13d-1(a) for other parties to whom copies are to be sent.
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CUSIP No. 20452H4-10-3 13D Page 2 of 12 Pages
1. NAME OF REPORTING PERSON, S.S. OR I.R.S. IDENTIFICATION NO. OF
ABOVE PERSON: RVR Consulting Group, Inc.
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*: (a) |X|
(b) |_|
3. SEC USE ONLY
4. SOURCE OF FUNDS WC
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) |_|
6. CITIZENSHIP OR PLACE OF ORGANIZATION: Florida
NUMBER OF 7. SOLE VOTING POWER: - 0 -
SHARES
BENEFICIALLY 8. SHARED VOTING POWER: 313,400
OWNED BY
EACH 9. SOLE DISPOSITIVE POWER: - 0 -
REPORTING
PERSON WITH 10. SHARED DISPOSITIVE POWER: 313,400
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY
EACH REPORTING PERSON: 313,400
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES: |_|
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.6% (based on 2,416,635 shares of Common Stock outstanding on
September 30, 1998 and 3,163,914 shares of Common Stock issuable to the
Reporting Persons filing this Schedule 13D and the other persons who
own certain securities of the Issuer). See Items 5 and 6.
14. TYPE OF REPORTING PERSON: CO
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CUSIP No. 20452H4-10-3 13D Page 3 of 12 Pages
1. NAME OF REPORTING PERSON, S.S. OR I.R.S. IDENTIFICATION NO. OF
ABOVE PERSON: Joseph Raymond, Jr.
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*: (a) |X|
(b) |_|
3. SEC USE ONLY
4. SOURCE OF FUNDS WC
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) |_|
6. CITIZENSHIP OR PLACE OF ORGANIZATION: United States of America
NUMBER OF 7. SOLE VOTING POWER: - 0 -
SHARES
BENEFICIALLY 8. SHARED VOTING POWER: 313,400
OWNED BY
EACH 9. SOLE DISPOSITIVE POWER: - 0 -
REPORTING
PERSON WITH 10. SHARED DISPOSITIVE POWER: 313,400
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY
EACH REPORTING PERSON: 313,400
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES: |_|
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.6% (based on 2,416,635 shares of Common Stock outstanding on
September 30, 1998 and 3,163,914 shares of Common Stock issuable to the
Reporting Persons filing this Schedule 13D and the other persons who
own certain securities of the Issuer). See Items 5 and 6.
14. TYPE OF REPORTING PERSON: IN
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CUSIP No. 20452H4-10-3 13D Page 4 of 12 Pages
1. NAME OF REPORTING PERSON, S.S. OR I.R.S. IDENTIFICATION NO. OF
ABOVE PERSON: Sergio Vallejo
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*: (a) |X|
(b) |_|
3. SEC USE ONLY
4. SOURCE OF FUNDS WC
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) |_|
6. CITIZENSHIP OR PLACE OF ORGANIZATION: United States of America
NUMBER OF 7. SOLE VOTING POWER: - 0 -
SHARES
BENEFICIALLY 8. SHARED VOTING POWER: 313,400
OWNED BY
EACH 9. SOLE DISPOSITIVE POWER: - 0 -
REPORTING
PERSON WITH 10. SHARED DISPOSITIVE POWER: 313,400
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY
EACH REPORTING PERSON: 313,400
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES: |_|
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.6% (based on 2,416,635 shares of Common Stock outstanding on
September 30, 1998 and 3,163,914 shares of Common Stock issuable to the
Reporting Persons filing this Schedule 13D and the other persons who
own certain securities of the Issuer). See Items 5 and 6.
14. TYPE OF REPORTING PERSON: IN
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* See Instructions before filling out!
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CUSIP No. 20452H4-10-3 13D Page 5 of 12 Pages
1. NAME OF REPORTING PERSON, S.S. OR I.R.S. IDENTIFICATION NO. OF
ABOVE PERSON: Joseph Raymond, Sr.
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*: (a) |X|
(b) |_|
3. SEC USE ONLY
4. SOURCE OF FUNDS WC
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) |_|
6. CITIZENSHIP OR PLACE OF ORGANIZATION: United States of America
NUMBER OF 7. SOLE VOTING POWER: - 0 -
SHARES
BENEFICIALLY 8. SHARED VOTING POWER: 313,400
OWNED BY
EACH 9. SOLE DISPOSITIVE POWER: - 0 -
REPORTING
PERSON WITH 10. SHARED DISPOSITIVE POWER: 313,400
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY
EACH REPORTING PERSON: 313,400
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES: |_|
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.6% (based on 2,416,635 shares of Common Stock outstanding on
September 30, 1998 and 3,163,914 shares of Common Stock issuable to the
Reporting Persons filing this Schedule 13D and the other persons who
own certain securities of the Issuer). See Items 5 and 6.
14. TYPE OF REPORTING PERSON: IN
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* See Instructions before filling out!
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CUSIP No. 20452H4-10-3 13D Page 6 of 12 Pages
Item 1. Security and Issuer.
This statement relates to the shares of common stock, par value
$.0001665 per share (the "Common Stock"), of Complete Wellness Centers, Inc., a
Delaware corporation (the "Company"). The Company has its principal executive
offices at 725 Independence Avenue, Washington, D.C.
20003.
Item 2. Identity and Background.
(a) This statement is being filed by (i) RVR Consulting Group,
Inc., a corporation organized under the laws of the State of
Florida ("RVR"), (ii) Joseph Raymond, Jr., (iii) Sergio
Vallejo, and (iv) Joseph Raymond, Sr. (the individuals and
entity referred to above, collectively, the "Reporting
Persons") with respect to shares of Common Stock beneficially
owned by the Reporting Persons.
(b) The principal business and office address for the Reporting
Persons is c/o RVR Consulting Group, Inc., 4074 Scarlet Iris
Place, Winter Park, Florida 32792.
(c) RVR is a Florida corporation. The principal business of RVR is
business consulting.
Joseph Raymond, Jr. is President, Treasurer and a shareholder
of RVR. Mr. Raymond's principal occupation is Chief Executive
Officer of the Company. The principal business of the Company
is the management and operation of integrated health care
practices and its address is 725 Independence Avenue,
Washington, D.C.
Sergio Vallejo is a Vice President, Secretary and a
shareholder of RVR. Mr. Vallejo is a partner in Jones Wilson
Vallejo, P.A., a partnership which engages in the practice of
dentistry. The address of Jones Wilson Vallejo P.A. is 4335
Highland Park Boulevard, Lakeland, Florida 33813.
Joseph Raymond, Sr. is a Vice President and a shareholder of
RVR. Mr. Raymond's principal occupation is Chairman and Chief
Executive Officer of Stratus Services Group, Inc. ("Stratus").
The principal business of Stratus is the provision of
temporary employment services and its address is 500 Craig
Road, Suite 201, Manalapan, New Jersey 07726.
(d) None of the Reporting Persons has during the last five years
been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors).
(e) None of the Reporting Persons was a party to a civil
proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is
subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject
to, federal or state securities laws or finding any violation
with respect to such laws.
(f) Mr. Raymond, Mr. Vallejo and Mr. Raymond are United States
citizens.
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CUSIP No. 20452H4-10-3 13D Page 7 of 12 Pages
Item 3. Source and Amount of Funds or Other Consideration.
Pursuant to that certain stock purchase agreement dated as of
February 26, 1999 (the "Stock Purchase Agreement") by and among RVR, Imprimis
Investors LLC ("Imprimis") and Wexford Spectrum Investors LLC ("Wexford"), RVR
acquired from Imprimis and Wexford 10,969 shares of senior convertible preferred
stock, par value $.01 per share (the "Preferred Stock"), of the Company.
See Item 6 for information concerning the terms of the Preferred Stock.
To acquire the Preferred Stock, RVR made an initial payment to
Imprimis and Wexford of $250,000 on February 26, 1999 and will make additional
payments to Imprimis and Wexford consisting of six (6) equal monthly
installments of $41,666.67 commencing on May 1, 1999, with the final monthly
installment due and payable on October 1, 1999. The funds used by RVR to make
such initial payment and such additional payments, as the case may be, came from
or will come from the working capital of RVR.
Item 4. Purpose of Transaction.
RVR, Imprimis and Wexford entered into the Stock Purchase Agreement,
pursuant to which Wexford and Imprimis agreed to sell an aggregate of 10,969
shares of the Preferred Stock to RVR for a purchase price of $500,000.
The Stock Purchase Agreement provides that, if the Company is
delisted from NASDAQ on or prior to June 30, 1999 because of its failure to meet
the minimum tangible net worth test, RVR may, within ten (10) business days of
notification of such delisting, elect to demand a refund of all prior
installment payments paid to Wexford and Imprimis, and RVR's obligation to make
further installment payments will terminate. RVR will reconvey (the
"Reconveyance") to Wexford and Imprimis 50% of the shares of Preferred Stock
that it purchased upon receiving the refund payments. Wexford and Imprimis will
not be obligated to refund the initial $250,000 payment.
Wexford and Imprimis have agreed not to convert into Common Stock or
sell their remaining Preferred Stock without the consent of RVR. However,
Wexford and Imprimis may convert into Common Stock or sell (i) 10,969 shares of
Preferred Stock beginning twenty-four (24) months after the date of the sale to
RVR; (ii) an additional 10,969 shares of Preferred Stock thirty-six (36) months
after the date of the sale to RVR (or 13,711 in the event of a Reconveyance);
and (iii) an additional 10,969 shares of Preferred Stock forty-eight (48) months
after the date of the sale to RVR (or 13,711 in the event of a Reconveyance).
The Stock Purchase Agreement provides that if RVR engages in a
transaction involving the shares of Preferred Stock that it purchased from
Wexford and Imprimis, including a sale of such
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CUSIP No. 20452H4-10-3 13D Page 8 of 12 Pages
shares, Wexford and Imprimis will have the right to participate in the
transaction on a pro rata basis based on their remaining aggregate 98,718 shares
of Preferred Stock.
Wexford and Imprimis also assigned to RVR all of their non-economic
rights (the "Rights") associated with their ownership of the Preferred Stock,
including the right to designate a majority of the Board of Directors of the
Company. RVR has agreed to designate one individual specified by Wexford and
Imprimis to the Company's Board.
RVR intends to exercise the Rights to designate a majority of the
Board of Directors of the Company. Such exercise of the Rights will result in a
change in control of the Company.
Upon the earlier of (i) five years from the date of the sale to RVR
or (ii) the date on which the closing price for the Company's Common Stock has
equaled or exceeded ten ($10.00) for twenty (20) consecutive trading days, RVR
will reassign to Wexford and Imprimis the Rights and the Preferred Stock will
cease to be subject to restrictions on transfer.
The Stock Purchase Agreement also provides that Wexford and Imprimis
will restructure and extend the payment terms of loans in an aggregate principal
amount of $475,000 to the Company.
Except as described above, the Reporting Persons do not have any
plans or proposals, other than those described in the preceding paragraphs,
which relate to or would result in any of the actions or transactions specified
in clauses (a) through (j) of Item 4 of Schedule 13D. The Reporting Persons
reserve the right to acquire or dispose of Common Stock or the Preferred Stock
or to formulate other purposes, plans or proposals regarding the Company or the
Common Stock or the Preferred Stock held by the Reporting Persons to the extent
deemed advisable in light of general investment policies, market conditions and
other factors.
Item 5. Interest in Securities of the Issuer.
The Reporting Persons may be deemed to beneficially own the
respective percentages and numbers of outstanding shares of Common Stock set
forth below. Such percentages have been calculated using information obtained
from the Company's quarterly report on Form 10-QSB for the period ended
September 30, 1998, on the basis of 2,416,635 shares of Common Stock issued and
outstanding on September 30, 1998 and based on an assumed 3,133,914 shares of
Common Stock issuable upon conversion of the Preferred Stock (the "Issuable
Common Stock") at an assumed conversion price of $1.75 per share of Common Stock
which are issuable to the Reporting Persons filing this Schedule 13D and to
Wexford and Imprimis.
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CUSIP No. 20452H4-10-3 13D Page 9 of 12 Pages
A. RVR Consulting Group, Inc.
(a) Aggregate number of shares of Common Stock
beneficially owned: 313,400 (all of which is
attributable to the Preferred Stock) Percentage: 5.6%
(b) 1. Sole power to vote or to direct the vote: - 0 -
2. Shared power to vote or to direct the vote:
313,400
3. Sole power to dispose or to direct the
disposition: - 0 -
4. Shared power to dispose or to direct the
disposition: 313,400
(c) Other than the transactions described in Item 4 of
this Schedule 13D, there were no transactions by RVR
during the past 60 days.
(d) Not applicable.
(e) Not applicable.
B. Joseph Raymond, Jr.
(a) Aggregate number of shares of Common Stock
beneficially owned: 313,400 (all of which is
attributable to the Preferred Stock) Percentage: 5.6%
(b) 1. Sole power to vote or to direct the vote: - 0 -
2. Shared power to vote or to direct the vote:
313,400
3. Sole power to dispose or to direct the
disposition: - 0 -
4. Shared power to dispose or to direct the
disposition: 313,400
(c) Other than the transactions described in Item 4 of
this Schedule 13D, there were no transactions by Mr.
Raymond during the past 60 days.
(d) Not applicable.
(e) Not applicable.
C. Sergio Vallejo
(a) Aggregate number of shares of Common Stock
beneficially owned: 313,400 (all of which is
attributable to the Preferred Stock) Percentage: 5.6%
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CUSIP No. 20452H4-10-3 13D Page 10 of 12 Pages
(b) 1. Sole power to vote or to direct the vote: - 0 -
2. Shared power to vote or to direct the vote:
313,400
3. Sole power to dispose or to direct the
disposition: - 0 -
4. Shared power to dispose or to direct the
disposition: 313,400
(c) Other than the transactions described in Item 4 of
this Schedule 13D, there were no transactions by Mr.
Vallejo during the past 60 days.
(d) Not applicable.
(e) Not applicable.
D. Joseph Raymond, Sr.
(a) Aggregate number of shares of Common Stock
beneficially owned: 313,400 (all of which is
attributable to the Preferred Stock) Percentage: 5.6%
(b) 1. Sole power to vote or to direct the vote: - 0 -
2. Shared power to vote or to direct the vote:
313,400
3. Sole power to dispose or to direct the
disposition: - 0 -
4. Shared power to dispose or to direct the
disposition: 313,400
(c) Other than the transactions described in Item 4 of
this Schedule 13D, there were no transactions by Mr.
Raymond during the past 60 days.
(d) Not applicable.
(e) Not applicable.
Each of Joseph Raymond, Jr., Sergio Vallejo and Joseph Raymond, Sr.
may, by reason of his status as a controlling person of RVR, be deemed to own
beneficially the Common Stock of which RVR possesses beneficial ownership.
Each of Joseph Raymond, Jr., Sergio Vallejo, Joseph Raymond, Sr.
and RVR shares the power to vote and to dispose of the shares of Common Stock
RVR beneficially owns.
Item 6. Contracts, Arrangements, Understandings or Relationships With
Respect to Securities of the Issuer.
See Items 2, 3, 4, and 5 above.
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CUSIP No. 20452H4-10-3 13D Page 11 of 12 Pages
The rights of holders of the Preferred Stock are set forth in the
certificate of designation of the Company which designates the rights, powers
and preferences of the Preferred Stock (the "Certificate of Designation"). The
Preferred Stock ranks prior to the Common Stock or any other class of stock of
the Company, has an initial aggregate Liquidation Preference (as defined below)
of fifty ($50.00) Dollars per share and provides for the payment of quarterly
dividends. Dividends accruing through December 31, 2000 will be payable at a per
annum rate of eight (8%) percent of the Liquidation Preference if payable in
cash or a per annum rate of ten (10%) percent of the Liquidation Preference if
payable in additional shares of Preferred Stock. Dividends accruing after
December 31, 2000 will be payable at a per annum rate of twelve (12%) percent of
the Liquidation Preference. "Liquidation Preference" is fifty ($50.00) Dollars
per share (or proportionate amount thereof in the case of any fractional shares
of Preferred Stock) plus an amount equal to all dividends (whether or not earned
or declared) accumulated and unpaid on the shares of Preferred Stock to the date
of final distribution, such determination to be made, in the event that
dividends remain unpaid as to one or more dividend payment dates, by deeming the
amount of any dividend not paid on the relevant dividend payment date as having
been added to the stated amount of the underlying share as of such dividend
payment date.
At the option of the holder thereof and upon surrender thereof for
conversion to the Company at its corporate headquarters at any time on or after
January 3, 1999 or, should the Company fail to receive the required shareholder
approval on or prior to August 31, 1998, on or after August 31, 1998, each share
of Preferred Stock will be convertible into such number of fully paid and
nonassessable shares of Common Stock as determined by dividing the (x)
Liquidation Preference of such shares determined as of the date of conversion by
(y) the lower of $1.75 and seventy-five (75%) percent of the Current Market
Price Per Share (as defined below) determined as of the trading day immediately
prior to the date of conversion. The "Current Market Price Per Share" of Common
Stock at any date shall be deemed to be before the day in question. The closing
sale price for each day shall be reported by the NASDAQ Stock Market or as
reported by any successor central market system. The conversion rate is subject
to adjustment as per the Certificate of Designation.
The shares of Preferred Stock are optionally redeemable in whole but
not in part on or before January 3, 1999. The price for the redemption is the
Liquidation Preference for the shares being redeemed determined as if the date
of final distribution were the date on which the payment of the redemption price
is made and as if the dividends thereon shall have accrued thereon at a rate of
twelve (12%) percent per annum since the last dividend payment date on which
dividends were paid.
The Stock Purchase Agreement and the Certificate of Designation have
been filed as exhibits to this Schedule 13D and are hereby incorporated by
reference.
Except as described above, there are no contracts, arrangements,
understandings or relationships (legal or otherwise) among the persons named in
Item 2 or between such persons and
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CUSIP No. 20452H4-10-3 13D Page 12 of 12 Pages
any other person with respect to any securities of the Company, including but
not limited to, transfer or voting of any such securities, finder's fees, joint
ventures, loan or option arrangements, puts or calls, guarantees of profits,
division of profits or loss, or the giving or withholding of proxies.
Item 7. Material to be Filed as Exhibits.
Exhibit I -- Stock Purchase Agreement dated as of February 26,
1999, with Exhibits
Exhibit II -- Certificate of Designation, Preferences and
Rights of the Senior Convertible Preferred Stock
($.01 Par Value) of Complete Wellness Centers, Inc.,
filed with the Secretary of State of Delaware on July
2, 1998.
SIGNATURES
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: March 12, 1999
RVR CONSULTING GROUP, INC.
By:/s/Joseph Raymond, Jr.
Name: Joseph Raymond, Jr.
Title: President
/s/Joseph Raymond, Jr.
Joseph Raymond, Jr.
/s/Sergio Vallejo
Sergio Vallejo
/s/Joseph Raymond, Sr.
Joseph Raymond, Sr.
Exhibit I
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is made and
entered into as of this 26th day of February, 1999, by and among IMPRIMIS
INVESTORS LLC, a Delaware limited liability company, having its principal
place of business at c/o Wexford Management LLC, 411 West Putnam Avenue,
Greenwich, Connecticut 06830 ("Imprimis"); WEXFORD SPECTRUM INVESTORS LLC,
a Delaware limited liability company, having its principal place of
business at c/o Wexford Management LLC, 411 West Putnam Avenue, Greenwich,
Connecticut 06830 (collectively, with Imprimis, the "Seller"); and RVR
CONSULTING GROUP, INC., a Florida corporation having an address at c/o P.O.
Box 2148, Goldenrod, Florida 92733 (the "Purchaser").
W I T N E S S E T H:
WHEREAS, the Seller owns 109,687 shares of the Senior Convertible
Preferred Stock of Complete Wellness Centers, Inc., a Delaware corporation
(the "Company"), par value $.01 per share (the "Preferred Stock");
WHEREAS, the Seller desires to sell, assign and convey to the
Purchaser 10,969 shares of the Preferred Stock (the "Shares"), and the
Purchaser desires to purchase and acquire such Shares from the Seller on
and subject to the terms and conditions of this Agreement.
<PAGE>
NOW, THEREFORE, in consideration of the respective
representations and warranties hereinafter set forth and of the mutual
covenants and agreements contained herein and other good and valuable
consideration the receipt and sufficiency of which is hereby acknowledged,
and intending to be legally bound, the parties hereto agree as follows:
1. Sale and Purchase. Subject to the terms and conditions
contained herein, the Seller hereby sells, transfers, assigns, conveys and
delivers to the Purchaser, and the Purchaser hereby purchases and accepts
from the Seller, all of the Seller's right, title and interest in and to
the Shares, free and clear of any liens, pledges, security interests,
claims or encumbrance of any kind.
2. Purchase Price; Guarantee of Payment.
(1) The purchase price for the Shares (the "Purchase
Price") shall be Five Hundred Thousand ($500,000) Dollars. On the date
hereof (the "Closing Date"), the Purchaser shall deliver to Seller via wire
transfer of immediately available funds the amount of Two Hundred Fifty
Thousand ($250,000) Dollars as partial payment of the Purchase Price (the
"Initial Payment"). The balance of the Purchase Price shall be payable by
the Purchaser to Seller in six (6) equal monthly installments of Forty-One
Thousand Six Hundred Sixty-Six and 67/100 ($41,666.67) Dollars each,
commencing on May 1, 1999 with the final monthly installment due and
payable on October 1, 1999 (the "Installment Payments"). The Installment
Payments shall be paid by wire transfer of immediately available funds to
an account (or accounts) designated by Seller.
(2) The full and timely payment of the Installment Payments
is hereby jointly and severally guaranteed by Messrs. Joseph Raymond, Jr.,
Sergio Vallejo and Joseph Raymond, Sr. (the "Guarantors"). The Guarantors
are the shareholders of Purchaser. The foregoing guarantee shall be deemed
to be absolute and unconditional, and shall continue until all of the
guaranteed obligations have been paid in full. Notwithstanding the
foregoing, the Seller may not proceed to enforce the guarantee unless and
until following a default in payment of an Installment Payment by
Purchaser, the Purchaser has failed to cure such default within five (5)
days following its receipt of written notice of default from Seller.
<PAGE>
3. Representations and Warranties of Seller. Seller hereby
represents and warrants to, and agreed with, the Purchaser as follows:
3.1 Organization and Good Standing. Each entity
constituting the Seller is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of
Delaware.
3.2 No Conflict.
(1) To the best of its actual knowledge, it being
understood that Seller has not engaged in any investigation of any kind,
the execution and delivery of this Agreement, and the consummation of the
transactions contemplated hereby, will not result in a breach, violation or
default or give rise to an event which with the giving of notice or after
the passage of time, or both, would result in a breach, violation or
default of any of the terms or provisions of the Company's Certificate of
Incorporation, By-Laws or of any statute, indenture, mortgage, deed of
trust, loan agreement or other agreement, instrument or restriction to
which the Company is a party or by which the Company or any of its assets
may be bound or affected, or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company.
(2) The execution and delivery of this Agreement, and the
consummation of the transactions contemplated hereby, will not result in a
breach, violation or default or give rise to an event which with the giving
of notice or after the passage of time, or both, would result in a breach,
violation or default of any of the terms or provisions of the Seller's
respective Certificates of Formation, Operating Agreements or of any
statute, indenture, mortgage, deed of trust, loan agreement or other
agreement, instrument or restriction to which the Seller is a party or by
which the Seller or any of its assets may be bound or affected, or any
order, rule or regulation of any court or governmental agency or body
having jurisdiction over the Seller.
<PAGE>
3.3 Ownership of Preferred Stock. The 109,687 shares of
Preferred Stock owned by Seller are owned free and clear of all liens,
pledges, security interests, claims or encumbrances of any kind. The
109,687 shares of Preferred Stock owned by the Seller have been duly
authorized and validly issued and are fully paid and non-assessable. There
are no outstanding preemptive, conversion or other rights, options,
warrants or agreements granted or issued by or binding upon the Seller for
the purchase or acquisition of any shares of the Preferred Stock.
4. Representations and Warranties of Purchaser. Purchaser
hereby represents and warrants to, and agrees with, the Seller as follows:
4.1 Organization and Good Standing. The Purchaser is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Florida.
4.2 No Conflict. The execution and delivery of this
Agreement, and the consummation of the transaction contemplated hereby,
will not result in a breach, violation or default or give rise to an event
which with the giving of notice or after the passage of time, or both,
would result in a breach, violation or default of any of the terms or
provisions of the Purchaser's Certificate of Incorporation, By-Laws or of
any statute, indenture, mortgage, deed of trust, loan agreement or other
agreement, instrument or restriction to which the Purchaser is a party or
by which the Purchaser or any of its assets may be bound or affected, or
any order, rule or regulation of any court or governmental agency or body
having jurisdiction over the Purchaser.
4.3 Investigation by Purchaser. Purchaser is a
sophisticated investor and has conducted its own independent review and
analysis of the business, operations, assets, liabilities, results of
operations, financial condition and prospects of the Company and
acknowledges that Seller has provided Purchaser with access to the records
of the Company for this purpose. Purchaser has acquired sufficient
knowledge about the Company to make an informed decision to enter into this
Agreement, and in making such decision is relying solely on its due
diligence and the representations and warranties contained herein.
<PAGE>
5. Acknowledgments and Agreements of the Parties.
(1) To the maximum effort permissible under applicable law,
Seller hereby assigns to Purchaser all of its non-economic rights
associated with its ownership of the Preferred Stock, including but not
limited to the power to designate a majority of the Board of Directors of
the Company (collectively, the "Rights"). To effect the election of the
Purchaser's designees to the Board of Directors of the Company, the Seller
agrees that on the date hereof it shall appoint each of Purchaser's
designees to the Board of Directors of the Company, and shall cause each of
Seller's designees to the Board of Directors of the Company to resign.
Purchaser agrees to the maximum extent permissible under applicable law to
designate one individual specified by Seller as a member of the Board of
Directors. Except as specifically provided below, Seller agrees that it
will not convert, retire, sell, hypothecate or otherwise transfer any of
the Preferred Stock, other than the Shares (collectively, the "Restrictions
on Transfer") without the prior written consent of the Purchaser. In
addition, on the date hereof Seller agrees to execute an irrevocable proxy
in favor of Purchaser substantially in the form of Exhibit A attached
hereto with respect to the shares of the Company's common stock issuable
upon the conversion of the Preferred Stock owned by Seller converted with
the consent of Purchaser pursuant to the preceding sentence.
(2) In the event Purchaser elects to convert, sell, retire,
hypothecate or transfer, or otherwise engage in any transaction with
respect to, all or any portion of the Shares, then, (i) it shall provide
Seller with ten (10) days prior written notice of such election and of
Seller's right to participate therein, and (ii) notwithstanding the
Restrictions on Transfer, Seller shall have the right to take the same
action as the Purchaser, or engage in the same transaction as the
Purchaser, as the case may be, with respect to the same pro rata portion of
the 98,718 shares of Preferred Stock retained by Seller.
<PAGE>
(3) In the event the Company is delisted from NASDAQ on or
prior to June 30, 1999 because of its failure to satisfy the minimum
tangible net worth test (whether or not additional tests are met), then
Purchaser may elect, within ten business days of its receipt of
notification of delisting, to demand a refund of all prior Installment
Payments paid to Seller. Upon its receipt of notice of such election
delivered by Purchaser, Seller shall promptly refund to Purchaser any and
all Installment Payments previously received by Seller, and the obligation
of Purchaser to make future Installment Payments shall immediately
terminate. The Seller shall not be obligated under such circumstances to
refund any portion of the Initial Payment. Upon Purchaser's receipt of
such refunded Installment Payments (or upon delivery of Purchaser's notice
of Selection if no Installment Payments were paid to Seller), Purchaser
shall simultaneously re-convey to Seller fifty (50%) percent of the Shares
(a "Reconveyance").
(4) Seller hereby agrees not to pursue, except in concert
with Purchaser, any suit, action or claim against the Company, or against
any board member, employee, consultant or entity associated or affiliated
with the Company other than claims for contribution or indemnity. At the
request of Purchaser and in exchange for reciprocal releases, Seller shall
release the Company and any affiliate of the Company from any claims based
on disputes arising prior to the Closing Date, other than claims for
contribution or indemnity.
(5) Notwithstanding the Restrictions of Transfer, and in
addition to any rights it may have with respect to the sale, retirement,
hypothecation or other transfer of the Preferred Stock under Section 5(2)
hereof, Purchaser hereby agrees that Seller may convert, sell, retire,
hypothecate or transfer (i) 10,969 shares of Preferred Stock on and after
the date which is twenty-four (24) months after the Closing Date, (ii) an
additional 10,969 shares of Preferred Stock (13,711 shares in the event of
a Reconveyance) on and after the date which is thirty-six (36) months after
the Closing Date, and (iii) an additional 10,969 shares of Preferred Stock
(13,711 in the event of Reconveyance) on and after the date which is forty-
eight (48) months after the Closing Date.
<PAGE>
(6) Upon the earlier to occur of either (i) the date which
is five (5) years from the Closing Date or (ii) the date upon which the
closing price for the Company's common stock has equaled or exceeded Ten
($10) Dollars for twenty (20) consecutive trading days, the Purchaser shall
promptly reassign to Seller the Rights, and the Restrictions on Transfer
shall lapse and the Preferred Stock shall cease to be subject to the
Restrictions on Transfer.
(7) Purchaser represents that on or after February 12,
1999, the Purchaser or its designee provided not less than $250,000 in
working capital to the Company. In addition, the Purchaser agrees that it
or its designee shall provide to the Company up to an additional $500,000
over the next twelve (12) months to the extent necessary to meet the
working capital requirements of the Company.
(8) The Seller hereby agrees to restructure and extend the
payment terms of its $475,000 principal amount senior secured loan to the
Company as follows: during the period from the Closing Date to December
31, 1999 interest only will be payable by the Company to Seller with
respect to such loan. During the period January 1, 2000 to December 31,
2001 the Company will make equal quarterly payments to Seller with respect
to such loan to repay the unpaid principal and accrued interest based on a
five year amortization schedule. The Company will make a balloon payment
to Seller equal to the full unpaid principal balance and all accrued
interest on January 31, 2002.
(9) In the event Purchaser defaults in the performance of
any of its material obligations set forth in this Agreement, Purchaser
shall promptly reassign to Seller the Rights, and the Restrictions on
Transfer shall lapse and the Preferred Stock shall cease to be subject to
the Restrictions on Transfer.
6. Survival; Indemnification.
6.1 Survival; Remedy for Breach. The covenants,
agreements, representations, warranties and indemnities of the parties
hereto contained herein or in any certificate, Schedule or other writing
attached hereto, or required by the terms hereof to be delivered by
Purchaser or Seller or their respective affiliates, shall survive the
Closing for a period from the Closing Date until the expiration of the
applicable statutory period of limitations (giving effect to any waiver or
extension thereof). Notwithstanding the preceding sentence, any
representation, warranty, covenant or agreement in respect of which
indemnity may be sought under Section 6 hereof shall survive the time at
which it would otherwise terminate if notice of the inaccuracy or breach
thereof, which shall include with reasonable specificity the elements of
such claim, shall have been given to the party against whom such indemnity
may be sought prior to such time.
<PAGE>
6.2 Indemnification by Seller.
(1) Each of the entities comprising the Seller hereby
jointly and severally indemnify the Purchaser, its shareholders, officers,
directors and affiliates (collectively, the "Indemnitees") against and
agree to hold each of them harmless from any and all damage, loss,
liability, expense (including, without limitation, reasonable out-of-pocket
expense of investigation and attorneys' fees and expenses in connection
with any action, suit or proceeding brought against or involving any
indemnitee) and cost (collectively, "Indemnified Amounts") incurred or
suffered by any Indemnitee arising out of any misrepresentation or breach
of warranty, covenant or agreement made or to be performed by Seller
pursuant to this Agreement.
(2) The agreements and indemnities of the Seller contained
herein shall be cumulative, except that an Indemnitee shall not recover
more than once for the same Indemnified Amount.
(3) The Indemnitees agree to give notice to the Seller
promptly after learning of the assertion of any claim, or the commencement
of any suit, action or proceeding, in respect of which indemnity may be
sought hereunder; provided, however, that the failure of any Indemnitee to
give such notice shall not constitute a waiver of its rights hereunder in
respect of the claim, suit, action or proceeding with respect to which such
notice was required to have been given hereunder.
(4) The Seller shall not be liable under this Section 6.2
for any settlement effected without its consent of any claim, litigation or
proceeding in respect of which indemnity may be sought hereunder. No
investigation by Purchaser at or prior to the Closing shall relieve Seller
of any liability hereunder.
(5) The amount required to be paid to an Indemnitee by the
Seller for any Indemnified Amounts shall be paid not later than thirty (30)
days after receipt by the Seller of written notice from an Indemnitee
stating that such Indemnified Amounts have been incurred and the amount
thereof and of the related indemnity payment.
<PAGE>
6.3 Indemnification by the Purchaser.
(1) The Purchaser hereby indemnifies the Seller against and
agrees to hold it harmless from any and all damages, loss, liability,
expense (including, without limitation, reasonable out-of-pocket expenses
of investigation and reasonable attorneys fees and expenses in connection
with any action, suit or proceeding brought against or involving the
Seller) and cost incurred or suffered by the Seller (collectively,
"Indemnified Amounts") arising out of (i) any misrepresentation or breach
of warranty, covenant or agreement made or to be performed by the Purchaser
pursuant to this Agreement or (ii) any and all exercise of the Rights by
Purchaser. The agreements and indemnities of the Purchaser contained
herein shall be cumulative, except that the Seller shall not recover more
than once for the same Indemnified Amount.
(2) The Seller agrees to give notice to the Purchaser
promptly after learning of the assertion of any claim, or the commencement
of any suit, action or proceeding, in respect of which indemnity may be
sought hereunder; provided, however, that the failure of the Seller to give
such notice shall not constitute a waiver of its rights hereunder in
respect of the claim, suit, action or proceeding with respect to which such
notice was required to have been given hereunder.
(3) The Purchaser shall not be liable under this Section
6.3 for any settlement effected without its consent of any claim,
litigation or proceeding in respect of which indemnity may be sought.
(4) The amount required to be paid to the Seller by the
Purchaser for any Indemnified Amounts hereunder shall be paid not later
than thirty (30) days after receipt by the Purchaser of written notice from
the Seller, stating that such Indemnified Amounts have been incurred and
the amount thereof and of the related indemnity payment.
<PAGE>
7. Notices. Any notices or other communications required or
permitted hereunder shall be sufficiently given if sent by facsimile
transmission and confirmed by registered or certified mail, postage
prepaid, addressed as follows:
To purchaser:
RVR Consulting Group, Inc.
P.O. Box 2148
Goldenrod, FL 32733
Attention: Joseph Raymond, Jr.
Facsimile No.: (407) 657-1132
To Seller:
Imprimis Investors LLC
Wexford Spectrum Investors LLC
c/o Wexford Management LLC
411 West Putnam Avenue
Greenwich, Connecticut 06830
Attention: Kenneth Rubin
Facsimile No.: (203) 862-7471
With a Copy To:
Arthur Amron, Esq.
Facsimile: (203) 862-7312
To the Guarantors:
Mr. Joseph Raymond, Jr.
c/o RVR Consulting Group, Inc.
P.O. Box 2148
Goldenrod, FL 32733
Facsimile No.: (407) 657-1132
Sergio Vallejo
c/o RVR Consulting Group, Inc.
P.O. Box 2148
Goldenrod, FL 32733
Facsimile No.: (407) 657-1132
Joseph Raymond, Sr.
c/o RVR Consulting Group, Inc.
P.O. Box 2148
Goldenrod, FL 32733
Facsimile No.: (407) 657-1132
or to such other addresses as shall be furnished by like notice by such
party. Any such notice or communication given by mail shall be effective
upon receipt thereof.
<PAGE>
8. Arbitration. Any dispute arising out of or relating to this
Agreement, which cannot be settlement amicably without undue delay by the
parties hereto, shall be resolved by binding arbitration of one arbitrator
selected by the parties hereto under the rules of arbitration of the
American Arbitration Association. The award rendered by the arbitrator
shall be final and binding upon both parties. Such arbitration shall be
conducted in New York City, or such other location as the parties may
agree. The costs of such arbitration shall be borne equally by the parties
unless the arbitrator otherwise determines. All parties hereby submit to
the jurisdiction of the State of New York in connection with the foregoing.
9. Further Assurances. Seller agrees that, at any time after
the date hereof, upon the request of the Purchaser, it will do, execute,
acknowledge and deliver, or will cause to be done, executed, acknowledged
and delivered, all such further acknowledgments, deeds, assignments, bills
of sale, transfers, conveyances, instruments, consents and assurances as
may reasonably be required for the better assuring and confirming to the
Purchaser, its successors and assigns, absolute ownership to the Shares to
be sold to the Purchaser hereunder.
10. Modification. This Agreement and the Schedules annexed
hereto contain the entire agreement between the parties hereto and there
are no agreements, warranties or representations which are not set forth
herein. All prior negotiations, representations, warranties, agreements
and understandings are superseded hereby. This Agreement may not be
modified or amended except by an instrument in writing duly signed by or on
behalf of the parties hereto and dated on or subsequent to the date hereof.
11. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New York
applicable to agreements made and to be performed entirely within the
State.
<PAGE>
12. Binding Effect; Assignment. This Agreement shall be binding
upon the parties and inure to the benefits of the successors and assigns of
the respective parties hereto.
13. Counterparts. This Agreement may be executed simultaneously
in any number of counterparts, each of which shall be deemed an original
but all of which together shall constitute one and the same instrument.
14. Paragraph Headings. The paragraph headings in this
Agreement are for convenience of reference only and shall not be deemed to
alter or affect any provision hereof.
15. Transaction Expenses. Notwithstanding anything else in this
Agreement to the contrary, the parties hereto shall each be responsible for
the payment of (and shall indemnify and hold the other parties hereto
harmless against) any and all of its or his own expenses, including,
without limitation, the fees and expenses of counsel, accountants and other
advisers, arising out of or relating directly or indirectly to the
transactions contemplated by this Agreement, whether or not such
transactions are consummated in whole or in part.
16. Severability. If any provision of this Agreement is
invalid, illegal, or unenforceable, the balance of this Agreement shall
remain in effect, and if any provision is inapplicable to any person or
circumstance, it shall nevertheless remain applicable to all other persons
and circumstances.
17. Waiver. The waiver of one breach or default hereunder shall
not constitute the waiver of any other or subsequent breach or default.
18. No Agency. This Agreement shall not constitute any party
the legal representative or agent of the other, nor shall any party have
the right or authority to assume, create, or incur any liability or any
obligation of any kind, express or implied, against or in the name of or on
behalf of the other party.
<PAGE>
IN WITNESS WHEREOF, the parties hereto duly executed this
Agreement the day and date first above written.
IMPRIMIS INVESTORS LLC
By: /s/ Arthur Amron
--------------------------------
Title: Vice President
WEXFORD SPECTRUM INVESTORS LLC
By: /s/ Arthur Amron
--------------------------------
Title: Vice President
-----------------------------
RVR CONSULTING GROUP, INC.
By: /s/ Joseph Raymond, Jr.
-------------------------------
Title:
-----------------------------
As to Section 2(b) and Sections 7 through 18 inclusive, only:
/s/ Joseph Raymond, Jr.
-------------------------------
Joseph Raymond, Jr.
-------------------------------
Sergio Vallejo
/s/ Joseph Raymond, Sr.
- --------------------------------
Joseph Raymond, Sr.
<PAGE>
IRREVOCABLE PROXY
The undersigned, Imprimis Investors LLC, hereby irrevocably
appoints RVR Consulting Group, Inc., or its nominee ("RVR"), with full
power of substitution as proxy for the undersigned, and hereby authorizes
RVR to vote all shares of Common Stock of COMPLETE WELLNESS CENTERS, INC.
(the "Company") acquired by Seller upon conversion of the Preferred Stock
and registered in the name of the undersigned, at any meeting of the
stockholders of the Company, and to execute a consent with respect to such
shares, as to any and all matters upon which action is to be taken or
consent to be given by the stockholders of the Company, in such manner as
RVR may from time to time determine. This Irrevocable Proxy shall be
deemed to be coupled with an interest in favor of RVR and as such, shall be
irrevocable and shall survive the death, bankruptcy or incompetency of the
undersigned.
The irrevocable proxy is executed by the undersigned pursuant to
the terms of that certain Stock Purchase Agreement dated as of February 26,
1999 by and among the undersigned, RVR and Wexford Spectrum Investors LLC
(the "Agreement"). Capitalized terms utilized herein and not defined
herein shall have the respective meanings accorded to them in the
Agreement.
Notwithstanding anything to the contrary contained herein, this
proxy shall terminate on the earlier to occur of (i) the transfer by the
undersigned, in accordance with the terms of the Agreement, of any shares
of Common Stock of the Company acquired by Seller upon conversion of the
Preferred Stock (but only with respect to such transferred shares of Common
Stock); (ii) the fifth anniversary of the date hereof; or (iii) the date
upon which the closing price for the Company's common stock has equaled or
exceeded Ten ($10.00) Dollars for twenty (20) consecutive trading days.
<PAGE>
The validity of this proxy and the rights, obligations and
relations of the parties hereunder shall be construed and determined under
and in accordance with the laws of the State of New York without giving
effect to the conflict of laws rules of such State. ANY CLAIM OR
CONTROVERSY PERTAINING TO OR ARISING UNDER THIS PROXY OR THE RELATIONSHIP
BETWEEN THE PARTIES SHALL BE SETTLED BY A SINGLE ARBITRATOR BEFORE THE
AMERICAN ARBITRATION ASSOCIATION IN NEW YORK, NEW YORK, THE COSTS OF WHICH
SHALL BE BORNE EQUALLY BY THE PARTIES UNLESS THE ARBITRATOR OTHERWISE
DETERMINES. ALL PARTIES HEREBY SUBMIT TO THE JURISDICTION OF THE STATE OF
NEW YORK IN CONNECTION WITH THE FOREGOING.
Date: February 26, 1999
IMPRIMIS INVESTORS LLC
By: /s/ Arthur Amron
__________________________________
Title: Vice President
<PAGE>
IRREVOCABLE PROXY
The undersigned, Wexford Spectrum Investors LLC, hereby
irrevocably appoints RVR Consulting Group, Inc., or its nominee ("RVR"),
with full power of substitution as proxy for the undersigned, and hereby
authorizes RVR to vote all shares of Common Stock of COMPLETE WELLNESS
CENTERS, INC. (the "Company") acquired by Seller upon conversion of the
Preferred Stock and registered in the name of the undersigned, at any
meeting of the stockholders of the Company, and to execute a consent with
respect to such shares, as to any and all matters upon which action is to
be taken or consent to be given by the stockholders of the Company, in such
manner as RVR may from time to time determine. This Irrevocable Proxy
shall be deemed to be coupled with an interest in favor of RVR and as such,
shall be irrevocable and shall survive the death, bankruptcy or
incompetency of the undersigned.
This irrevocable proxy is executed by the undersigned pursuant to
the terms of that certain Stock Purchaser Agreement dated as of February
26, 1999 by and among the undersigned, RVR and Imprimis Investors LLC (the
"Agreement"). Capitalized terms utilized herein and not defined herein
shall have the respective meanings accorded to them in the Agreement.
Notwithstanding anything to the contrary contained herein, this
proxy shall terminate on the earlier to occur of: (i) the transfer by the
undersigned, in accordance with the terms of the Agreement, of any shares
of Common Stock of the Company acquired by Seller upon conversion of the
Preferred Stock (but only with respect to such transferred shares of Common
Stock); (ii) the fifth anniversary of the date hereof; or (iii) the date
upon which the closing price for the Company's common stock has equaled or
exceeded Ten ($10.00) Dollars for twenty (20) consecutive trading days.
<PAGE>
The validity of this proxy and the rights, obligations and
relations of the parties hereunder shall be construed and determined under
and in accordance with the laws of the State of New York without giving
effect to the conflict of laws rules of such State. ANY CLAIM OR
CONTROVERSY PERTAINING TO OR ARISING UNDER THIS PROXY OR THE RELATIONSHIP
BETWEEN THE PARTIES SHALL BE SETTLED BY A SINGLE ARBITRATOR BEFORE THE
AMERICAN ARBITRATION ASSOCIATION IN NEW YORK, NEW YORK, THE COSTS OF WHICH
SHALL BE BORNE EQUALLY BY THE PARTIES UNLESS THE ARBITRATOR OTHERWISE
DETERMINES. ALL PARTIES HEREBY SUBMIT TO THE JURISDICTION OF THE STATE OF
NEW YORK IN CONNECTION WITH THE FOREGOING.
Dated: February 26, 1999
WEXFORD SPECTRUM INVESTORS, INC.
By: /s/ Arthur Amron
___________________________________
Title: Vice President
<PAGE>
Exhibit II
CERTIFICATE OF DESIGNATION,
PREFERENCES AND RIGHTS
OF THE
SENIOR CONVERTIBLE PREFERRED STOCK
($.01 Par Value)
OF
COMPLETE WELLNESS CENTERS, INC.
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
The undersigned DOES HEREBY CERTIFY that the following resolution
was duly adopted on July 2, 1998 by the Board of Directors (the "Board") of
Complete Wellness Centers, Inc., a Delaware corporation (hereinafter called
the "Corporation"), in accordance with the provisions of Section 151 of the
General Corporation Law of the State of Delaware:
RESOLVED that pursuant to authority expressly granted to and
vested in the Board by provisions of the Certificate of Incorporation
of the Corporation (the "Certificate of Incorporation"), the issuance
of a series of Preferred Stock, par value $.01 per share (the
"Preferred Stock"), which shall consist of up to 134,500 of the
2,000,000 shares of Preferred Stock which the Corporation now has
authority to issue, be, and the same hereby is, authorized, and the
powers, designations, preferences and relative, participating,
optional or other special rights, and the qualifications, limitations
or restrictions thereof, of the shares of such series (in addition to
the powers, designations, preferences and relative, participating,
optional or other special rights, and the qualifications, limitations
or restrictions thereof, set forth in the Certificate of Incorporation
which may be applicable to the Preferred Stock) are fixed as follows:
<PAGE>
(i) The designation of such series of the Preferred Stock
authorized by this resolution shall be the Senior Convertible Preferred
Stock (the "Senior Convertible Preferred Stock"). The total number of
shares of the Senior Convertible Preferred Stock shall be 134,500.
(ii) Holders of shares of Senior Convertible Preferred Stock
will be entitled to receive, when and as declared by the Board out of
assets of the Corporation legally available for payment, an annual cash
dividend per share equal to (A) in the case of dividends accruing on or
prior to December 31, 2000, 8% of the Liquidation Preference (as defined
below) thereof on the relevant dividend payment date payable in cash or, if
such payment in cash is not then made, 10% of the Liquidation Preference
thereof on the relevant dividend payment date payable in additional shares
of Senior Convertible Preferred Stock (which may include fractional shares)
and (B) in the case of dividends accruing after December 31, 2000, 12% of
the Liquidation Preference thereof on the relevant payment date payable in
cash, in each case accruing, with respect to 20,000 shares of Senior
Convertible Preferred Stock outstanding, from January 12, 1998, and with
respect to 80,000 of Senior Convertible Preferred Stock outstanding, from
January 27, 1998, and payable in quarterly installments on March 31, June
30, September 30 and December 31, commencing March 31, 1998 (each a
"dividend payment date"). Unless full dividends on the Senior Convertible
Preferred Stock have been paid, no dividends (other than in Common Stock of
the Corporation) may be paid or declared and set aside for payment or other
distribution made upon the Common Stock or on any other stock of the
Corporation, nor may any Common Stock or any other stock of the Corporation
be redeemed, purchased or otherwise acquired for any consideration (or any
payment made to or available for a sinking fund for the redemption of any
shares of such stock). Dividends payable on the Senior Convertible
Preferred Stock for any period less than the full dividend period will be
computed on the basis of a 360-day year consisting of twelve 30-day months.
For purposes of this paragraph (ii), "Liquidation Preference" shall have
the meaning set forth in paragraph (iii) below with the relevant dividend
payment date being deemed to be the date of final distribution.
(iii) The shares of Senior Convertible Preferred Stock shall
rank prior to the shares of Common Stock and of any other class of stock of
the Corporation, so that in the event of any liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary, the
holders of the Senior Convertible Preferred Stock shall be entitled to
receive out of the assets of the Corporation available for distribution to
its stockholders, whether from capital, surplus or earnings, before any
distribution is made to holders of shares of Common Stock or any other such
stock, an amount equal to the stated amount thereof of $50 per share (or
proportionate amount thereof in the case of any fractional shares of Senior
Convertible Preferred Stock) plus an amount equal to all dividends (whether
or not earned or declared) accumulated and unpaid on the shares of Senior
Convertible Preferred Stock to the date of final distribution, such
determination to be made, in the event that dividends remain unpaid as to
one or more dividend payment dates, by deeming the amount of any dividend
not paid on the relevant dividend payment date as having been added to the
stated amount of the underlying share as of such dividend payment date (the
amount as so determined, the "Liquidation Preference" of a share of Senior
Convertible Preferred Stock). After payment of the full amount of the
Liquidation Preference, the holders of shares of Senior Convertible
Preferred Stock will not be entitled to any further participation in any
distribution of assets by the Corporation. If, upon any liquidation,
dissolution or winding up of the Corporation, the assets of the
Corporation, or proceeds thereof, distributable among the holders of shares
of Senior Convertible Preferred Stock shall be insufficient to pay in full
the preferential amount aforesaid, then such assets, or the proceeds
thereof, shall be distributable among such holders ratably in accordance
with the respective amounts which would be payable on such shares if all
amounts payable thereon were payable in full. For the purposes hereof,
neither a consolidation or merger of the Corporation with or into any other
corporation, nor a merger of any other corporation with or into the
Corporation, nor a sale or transfer of all or any part of the Corporation's
assets for cash or securities shall be considered a liquidation,
dissolution or winding up of the Corporation.
<PAGE>
(iv) The shares of Senior Convertible Preferred Stock will be
optionally redeemable by the Corporation as provided in this paragraph (iv):
(A) The shares of Senior Convertible Preferred Stock shall
be optionally redeemable in whole but not in part during the
period from July 2, 1998 through January 3, 1999.
(B) The redemption price for shares of Senior Convertible
Preferred Stock being redeemed shall be the Liquidation
Preference for the shares being redeemed determined as if the
date of final distribution were the date on which the payment of
the redemption price is made and as if the dividends thereon
shall have accrued thereon at a rate of 12% per annum, with
respect to 20,000 shares of Senior Convertible Preferred Stock
outstanding, from January 12, 1998, and with respect to 80,000 of
Senior Convertible Preferred Stock outstanding, from January 27,
1998.
(v) At the option of the holder thereof and upon surrender
thereof for conversion to the Corporation at its corporate headquarters at
any time on or after January 3, 1999 or, should the Corporation fail to
receive the Shareholder Approval (as defined below) on or prior to August
31, 1998, on or after August 31, 1998, each share of Senior Convertible
Preferred Stock will be convertible into such number of fully paid and
nonassessable shares of Common Stock as is determined by dividing the (x)
the Liquidation Preference of such share determined as of the date of
conversion by (y) the lower of $1.75 and 75% of the Current Market Price
Per Share determined as of the trading day immediately prior to the date of
conversion, the Conversion Rate being subject to adjustment as hereinafter
provided:
(A) In case the Corporation shall on or after January 12,
1998(1) pay a dividend in shares of its capital stock, (2)
subdivide its outstanding shares of Common Stock into a greater
number of shares, (3) combine its outstanding shares of Common
Stock into a smaller number of shares, or (4) issue by
reclassification of its shares of Common Stock any shares of its
capital stock, the Conversion Rate in effect immediately prior
thereto shall be adjusted so that the holder of a share of Senior
Convertible Preferred Stock surrendered for conversion after the
record date fixing stockholders to be affected by such event,
shall be entitled to receive upon conversion the number of such
shares of Common Stock which such holder would have been
entitled to receive after the happening of such event had such
share of Senior Convertible Preferred Stock been converted
immediately prior to such record date. Such adjustment shall be
made whenever any of such events shall happen, but shall also be
effective retroactively as to shares of Senior Convertible
Preferred Stock converted between such record date and the date
of the happening of any such event.
<PAGE>
(B) In case the Corporation shall on or after January 12,
1998 issue rights or warrants to all holders of its Common Stock
entitling them to subscribe for or purchase shares of Common
Stock at a price per share less than the Current Market Price Per
Share of Common Stock at the record date mentioned below, the
number of shares of Common Stock into which each share of Senior
Convertible Preferred Stock shall thereafter be convertible shall
be determined by multiplying the number of shares of Common Stock
into which such share of Senior Convertible Preferred Stock was
theretofore convertible by a fraction, the numerator of which
shall be the number of shares of Common Stock outstanding on the
date of issuance of such rights or warrants plus the number of
additional shares of Common Stock offered for subscription or
purchase, and the denominator of which shall be the number of the
shares of Common Stock outstanding on the date of issuance of
such rights or warrants plus the number of shares which the
aggregate offering price of the total number of shares so offered
would purchase at such Current Market Price Per Share. Such
adjustment shall be made whenever such rights or warrants are
issued, but shall also be effected retroactively as to shares of
Senior Convertible Preferred Stock converted between the record
date for the determination of stockholders entitled to receive
such rights or warrants and the date such rights or warrants are
issued.
(C) In case the Corporation shall on or after January 12,
1998 distribute to all holders of its Common Stock evidences of
its indebtedness or assets (excluding any cash dividend or
distribution made out of current or retained earnings) or rights
to subscribe other than as set forth in subparagraph (B) above,
then in each such case the number of shares of Common Stock into
which each share of Senior Convertible Preferred Stock shall
thereafter be convertible shall be determined by multiplying the
number of shares of Common Stock into which such share was
theretofore convertible by a fraction, the numerator of which
shall be the Current Market Price Per Share of the Common Stock
on the record date fixed by the Board for such distribution, and
the denominator of which shall be such Current Market Price Per
Share of the Common Stock less the then fair market value (as
determined by the Board, whose determination shall be conclusive)
of the portion of the assets, evidences of indebtedness or
subscription rights so distributed applicable to one share of the
Common Stock. Such adjustment shall be made whenever any such
distribution is made, but shall also be effective retroactively
as to shares of Senior Convertible Preferred Stock converted
between the record date for the determination of stockholders
entitled to receive such distribution and the date such
distribution is made.
(D) For the purpose of any computation under this paragraph
(v), the "Current Market Price Per Share" of Common Stock at any
date shall be deemed to be the average of the closing sale prices
for the 20 consecutive trading days before the day in question.
The closing sale price for each day shall be reported by the
NASDAQ Stock Market or as reported by any successor central
market system.
(E) No adjustment in the conversion rate shall be required
unless such adjustment would require an increase or decrease of
at least 1% in such rate; provided, however, that any adjustments
which by reason of this subparagraph (E) are not required to be
made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this paragraph (v)
shall be made to the nearest one-hundredth of a share.
(F) No fractional shares or scrip representing fractional
shares of Common Stock shall be issued upon the conversion of any
share of Senior Convertible Preferred Stock. If the conversion
thereof results in a fraction, an amount equal to such fraction
multiplied by the Current Market Price Per Share of Common Stock
as of the conversion date shall he paid to such holder in cash by
the Corporation.
<PAGE>
(G) In case the Corporation shall on or after January 12,
1998 enter into any consolidation, merger or other transaction in
which the shares of Common Stock are exchanged for or changed
into other stock or securities, cash and/or any other property,
then in each such case each share of Senior Convertible Preferred
Stock remaining outstanding at the time of consummation of such
transaction shall thereafter be convertible into the kind and
amount of such stock or securities, cash and/or other property
receivable upon consummation of such transaction by a holder of
the number of shares of Common Stock into which such shares of
Senior Convertible Preferred Stock might have been converted
immediately prior to consummation of such transaction, assuming
in each case that such holder of Common Stock failed to exercise
rights of election, if any, as to the kind or amount of
securities, cash or other property receivable upon consummation
of such transaction (provided that if the kind or amount of
securities, cash or other property receivable upon consummation
of such transaction is not the same for each non-electing share,
then the kind and amount of securities, cash or other property
receivable upon consummation of such transaction for each non-
electing share shall be deemed to be the kind and amount as
receivable per share by a plurality of the non-electing shares).
(H) As used in this Certificate, "Shareholder Approval"
means any and all requisite approval of the shareholders of the
Corporation of the increase in its authorized shares of Common
Stock to 50,000,000 and the issuance of the Common Stock upon
conversion of the Senior Convertible Preferred Stock or as
contemplated by the Second Supplement to Investment Agreement,
dated as of July 2, 1998, among the Corporation, Imprimis
Investors LLC and Wexford Spectrum Investors LLC.
(vi) For so long as any shares of Senior Convertible Preferred
Stock remain outstanding, the Corporation will not, either directly or
indirectly or through merger or consolidation with any other corporation,
without the affirmative vote at a meeting or the written consent with or
without a meeting of the holders of at least 66-2/3 percent in number of
shares of the Senior Convertible Preferred Stock then outstanding, amend,
alter or repeal any of the provisions of the Certificate of Incorporation
(including this resolution) so as to affect adversely the preferences,
special rights or powers of the Senior Convertible Preferred Stock or of
the holders thereof.
(vii) To convert any Senior Convertible Preferred Stock into
Common Stock, the holder shall give written notice to the Company (which
notice may be given by facsimile transmission) that the holder elects to
convert the same. Promptly thereafter such holder shall surrender the
Senior Convertible Preferred Stock at the office of the Company or of any
transfer agent for such stock. The Company shall, as soon as practicable
after receipt of such notice, issue and deliver to or upon the order of
such holder a certificate or certificates for the number of shares of
Common Stock to which the holder shall be entitled, and a new stock
certificate representing the remaining shares of Senior Convertible
Preferred Stock (if any) not converted. The Company shall use its
reasonable best efforts to effectuate any such issuance within 72 hours and
to transmit the shares of Common Stock by messenger or overnight delivery
service to the address designated by such holder. Such conversion shall be
deemed to have been made immediately prior to the close of business on the
date such notice of conversion is received by the Company. The person or
persons entitled to receive the shares of Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder or
holders of such shares at the close of business on such date.
<PAGE>
(viii) The holders of shares of Senior Convertible Preferred
Stock will be entitled to representation on the Corporation's Board of
Directors as provided in this paragraph (viii):
(A) For so long as any shares of Senior Convertible
Preferred Stock remain outstanding, the Corporation shall take
such action as shall be necessary to ensure that at least one
designee of the holders of Senior Convertible Preferred Stock
shall be duly elected to serve as a director of the Corporation.
Thereafter, such holders shall no longer be entitled for a
designee to serve as a director of the Corporation.
(B) In the event that the Corporation shall fail either to
(a) receive the Shareholder Approval on or prior to August 31,
1998, or (b) redeem all of the Senior Convertible Preferred Stock
pursuant to paragraph (iv) hereof on or prior to January 3, 1999,
the Corporation shall, if and when requested by the holders of a
majority of the outstanding shares of the Senior Convertible
Preferred Stock to do so, take any action necessary, including
calling a special meeting, to elect designees of the holders of a
majority of the outstanding shares of the Senior Convertible
Preferred Stock to the Board of Directors such that such
designees shall constitute a majority of such Board of Directors.
Thereafter, for so long as any shares of Senior Convertible
Preferred Stock remain outstanding, the Corporation shall take
such action as shall be necessary to ensure that such designees
or successor designees shall be duly elected to serve as
directors of the Corporation.
IN WITNESS WHEREOF, Complete Wellness Centers, Inc. has caused
this Certificate to be made under the seal of the Corporation and signed by
C. Thomas McMillen, Chairman, and attested by E. Eugene Sharer, President,
this 2nd day of July, 1998.
COMPLETE WELLNESS CENTERS,
INC.
Attest: By: /s/ C. Thomas McMillen
________________________
/s/ E. Eugene Sharer
_____________________
