-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, J7CSSOkPpNvBepjh7kpgJEQSq4iIFKoDKM7YFEavoDgFyPJZ/YBZanDGLL51/Ul6 BVI2MIcvR/yQ+huyoYiDhw== 0000890163-99-000090.txt : 19990315 0000890163-99-000090.hdr.sgml : 19990315 ACCESSION NUMBER: 0000890163-99-000090 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 19990312 GROUP MEMBERS: JOSEPH RAYMOND JR GROUP MEMBERS: JOSEPH RAYMOND SR GROUP MEMBERS: RVR CONSULTING GROUP INC GROUP MEMBERS: SERGIO VALLEJO SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: COMPLETE WELLNESS CENTERS INC CENTRAL INDEX KEY: 0001022828 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MISC HEALTH & ALLIED SERVICES, NEC [8090] IRS NUMBER: 521910135 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: SEC FILE NUMBER: 005-52319 FILM NUMBER: 99564274 BUSINESS ADDRESS: STREET 1: 666 11TH ST N W SUITE 200 CITY: WASHINGTON STATE: DC ZIP: 20001 BUSINESS PHONE: 2026399700 MAIL ADDRESS: STREET 1: 666 11TH STREET N W STREET 2: SUITE 200 CITY: WASHINGTON STATE: DC ZIP: 20001 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: RVR CONSULTING GROUP INC CENTRAL INDEX KEY: 0001081813 STANDARD INDUSTRIAL CLASSIFICATION: [] FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: C/O RVR CONSULTING GROUP INC STREET 2: 4074 SCARLET IRIS PLACE CITY: WINTER PARK STATE: FL ZIP: 32792 BUSINESS PHONE: 4076786300 MAIL ADDRESS: STREET 1: C/O RVR CONSULTING GROUP INC STREET 2: SCARLET IRIS PLACE CITY: WINTER PARK STATE: FL ZIP: 32792 SC 13D 1 SCHEDULE 13D 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. 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 - ------------------------------ * See Instructions before filling out! 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 - ------------------------------ * See Instructions before filling out! 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 - ------------------------------ * See Instructions before filling out! 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 - ------------------------------ * See Instructions before filling out! 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. 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 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. 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% 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. 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 $1.75 and seventy-five (75%) percent of the Current Market Price Per Share (as defined below) determined as of the trading day immediately prior to the date of conversion. The "Current Market Price Per Share" of Common Stock at any date shall be deemed to be before the day in question. The closing sale price for each day shall be reported by the NASDAQ Stock Market or as reported by any successor central market system. The conversion rate is subject to adjustment as per the Certificate of Designation. The shares of Preferred Stock are optionally redeemable in whole but not in part on or before January 3, 1999. The price for the redemption is the Liquidation Preference for the shares being redeemed determined as if the date of final distribution were the date on which the payment of the redemption price is made and as if the dividends thereon shall have accrued thereon at a rate of twelve (12%) percent per annum since the last dividend payment date on which dividends were paid. The Stock Purchase Agreement and the Certificate of Designation have been filed as exhibits to this Schedule 13D and are hereby incorporated by reference. Except as described above, there are no contracts, arrangements, understandings or relationships (legal or otherwise) among the persons named in Item 2 or between such persons and CUSIP No. 20452H4-10-3 13D Page 12 of 12 Pages any other person with respect to any securities of the Company, including but not limited to, transfer or voting of any such securities, finder's fees, joint ventures, loan or option arrangements, puts or calls, guarantees of profits, division of profits or loss, or the giving or withholding of proxies. Item 7. Material to be Filed as Exhibits. Exhibit I -- Stock Purchase Agreement dated as of February 26, 1999, with Exhibits Exhibit II -- Certificate of Designation, Preferences and Rights of the Senior Convertible Preferred Stock ($.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. EX-99.I 2 STOCK PURCHASE AGREEMENT 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. 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. 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. 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. 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. (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. (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. 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. 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. 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. 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. 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. 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. 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. 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 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 ($10.00) Dollars for twenty (20) consecutive trading days. The validity of this proxy and the rights, obligations and relations of the parties hereunder shall be construed and determined under and in accordance with the laws of the State of New York without giving effect to the conflict of laws rules of such State. ANY CLAIM OR CONTROVERSY PERTAINING TO OR ARISING UNDER THIS PROXY OR THE RELATIONSHIP BETWEEN THE PARTIES SHALL BE SETTLED BY A SINGLE ARBITRATOR BEFORE THE AMERICAN ARBITRATION ASSOCIATION IN NEW YORK, NEW YORK, THE COSTS OF WHICH SHALL BE BORNE EQUALLY BY THE PARTIES UNLESS THE ARBITRATOR OTHERWISE DETERMINES. ALL PARTIES HEREBY SUBMIT TO THE JURISDICTION OF THE STATE OF NEW YORK IN CONNECTION WITH THE FOREGOING. Dated: February 26, 1999 WEXFORD SPECTRUM INVESTORS, INC. By: /s/ Arthur Amron ___________________________________ Title: Vice President EX-99.II 3 EXHIBIT II - CERTIFICATE OF DESIGNATION Exhibit II CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS OF THE SENIOR CONVERTIBLE PREFERRED STOCK ($.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: (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. (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. (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. (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. (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 _____________________ -----END PRIVACY-ENHANCED MESSAGE-----