-----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, W09C8wMtlEg3Q1hvN+Kn1PicCXWPG7ohdI+FyhUMHywJQ823c18fhrgI3e3lRzs0 XNKHqF3KdVcfJycehkm9Ew== 0000950133-98-004047.txt : 19981204 0000950133-98-004047.hdr.sgml : 19981204 ACCESSION NUMBER: 0000950133-98-004047 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19981201 ITEM INFORMATION: FILED AS OF DATE: 19981203 FILER: 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: 8-K SEC ACT: SEC FILE NUMBER: 000-22115 FILM NUMBER: 98763673 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 8-K 1 FORM 8-K 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT: DECEMBER 1, 1998 Complete Wellness Centers, Inc. - -------------------------------------------------------------------------------- (Exact Name of Registrant as specified in its Charter) Delaware 0-22115 52-1910135 - -------------------------------------------------------------------------------- (State or other jurisdiction (Commission File No.) (I.R.S. Employer or corporation) Identification No.) 666 11th Street, NW, Suite 200 Washington, D.C. 20001 - -------------------------------------------------------------------------------- (Address of Principal (Zip Code) Executive Offices) Registrant's telephone number, including area code: (202) 639-9700 -------------- - -------------------------------------------------------------------------------- (Former name or former address, if changed since last report) Item 5. OTHER EVENTS On October 19, 1998, the Company executed the Third Supplement to the Investment Agreement with Wexford Spectrum Investors LLC and Imprimis Investors LLC (together the "Investors") in order to permit the Company to meet its working capital obligations and to acquire additional facilities. The Company sold to the Investors $475,000 in aggregate principal amount of Senior Secured Floating Rate Bridge Notes due February 1, 1999. Of the $475,000 in aggregate principal amount of the Notes, $350,000 represents term loans being made on the date above to the Company by the Investors and $125,000 represents revolving loans which may be made by the Investors to the Company pursuant to their respective revolving loan commitments. Exhibit I. Third Supplement to the Investment Agreement Exhibit II. Pledge and Security Agreement Exhibit III. Imprimis Promissory Note Exhibit IV. Wexford Promissory Note 2 SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned thereto duly authorized. Date: December 1, 1998. Complete Wellness Centers, Inc. By: /s/ E. EUGENE SHARER -------------------------------- E. Eugene Sharer, Vice Chairman EX-99.1 2 THIRD SUPPLEMENT TO INVESTMENT AGREEMENT 1 EXHIBIT I THIRD SUPPLEMENT TO INVESTMENT AGREEMENT THIRD SUPPLEMENT TO INVESTMENT AGREEMENT, dated as of October 19, 1998 (this "Third Supplement"), among Complete Wellness Centers, Inc., a Delaware corporation (the "Company"), Imprimis Investors LLC ("Imprimis") and Wexford Spectrum Investors LLC ("Wexford" and, together with Imprimis, the "Investors"). WHEREAS, the Company and the Investors are parties to the Investment Agreement, dated as of December 19, 1997, as previously supplemented by the Supplement to Investment Agreement, dated as of January 12, 1998 (such Supplement, the "First Supplement") and the Second Supplement to Investment Agreement, dated as of July 2, 1998 (such Second Supplement, the "Second Supplement" and such Investment Agreement, as supplemented by the First Supplement and the Second Supplement, the "Investment Agreement"). Capitalized terms used in this Third Supplement without definition shall have the meanings ascribed to them in the Investment Agreement; and WHEREAS, in order to permit the Company to meet its working capital obligations and to acquire additional facilities, the Company and the Investors desire that the Investors extend to the Company certain secured short term loans in the manner provided in this Third Supplement. 1. The Company has authorized the issue and sale to the Investors of $475,000 in aggregate principal amount of Senior Secured Floating Rate Bridge Notes due February 1, 1999 (such Notes and any such Notes issued in substitution therefor being, collectively, the "Notes"). Of the $475,000 in aggregate principal amount of the Notes, $350,0000 represents term loans being made on the date hereof to the Company by the Investors (collectively, the "Term Loans") and $125,000 represents revolving loans which may be made by the Investors to the Company pursuant to their respective revolving loan commitments (the "Revolving Loan Commitments") under this Third Supplement (collectively, the "Revolving Loans"). A Note in the principal amount of $380,000 is being issued to Imprimis and represents a Term Loan of $280,000 being made by Imprimis and up to $100,000 of Revolving 2 Loans that may be made by Imprimis. A Note in the principal amount of $95,000 is being issued to Wexford and represents a Term Loan of $70,000 being made by Wexford and up to $25,000 of Revolving Loans that may be made by Wexford. 2. The Investors' respective obligations to make Revolving Loans shall be limited to their respective Revolving Loan Commitments, shall be extinguished upon the earliest to occur of (i) December 31, 1998, (ii) the maturity (which will be February 1, 1999) of the Notes or (iii) earlier prepayment of the Notes and shall be subject to (a) the Investors having approved the facility acquisitions proposed to be made by the Company with the proceeds of such Revolving Loan (the "Qualifying Acquisitions"), (b) there being no uncured event of default (or event which with the passage of time could become an event of default) at the time of the extension of the Revolving Loan, and (c) the Investors having received a written request from the Company to make such Revolving Loan not fewer than five business days prior to the proposed borrowing date in which the Company certifies that there is no then uncured event of default (or event which with the passage of time could become an event of default) and that the representations and warranties of the Company contained in Section 5 of this Third Supplement remain true and correct in all material respects. 3. The Notes will bear interest and will mature as provided in the Notes. The Notes will be subject to mandatory redemption by the Company in full at their then outstanding principal amounts, together with accrued and unpaid interest thereon to the date of redemption, upon the earlier to occur of a Change of Control or the redemption in full of the New Preferred Stock (as defined in the Second Supplement). The Notes will also be subject to voluntary redemption by the Company, in whole or in part, at their then outstanding principal amounts, together with accrued and unpaid interest thereon to the date of redemption, any such partial redemption to be made pro rata to the Investors. 4. The Notes will be secured by the Pledge Agreement (the "Pledge Agreement") and the various Security Agreements (the "Security Agreements"), each dated as of the date of this Third Supplement, being delivered by the Company or subsidiaries of the Company contempora- 2 3 neously with the issuance of the Notes. The Company represents and warrants that it has ordered current UCC searches (the "Searches") covering the assets of the various parties to the Security Agreements (the "Covered Assets") and has provided to the Investors complete and accurate copies of all of such results of the Searches that it has received through the date hereof. The Company agrees that it will provide to the Investors complete and accurate copies of all remaining results of the Searches promptly following receipt by the Company or its counsel. In the event that the Investors shall fail to receive the results from all of the Searches on or prior to October 15, 1998 or any Search results indicate that one or more other creditors have a security interest in any of the Covered Assets that is prior to the security interest provided by the Security Agreements, an event of default shall be deemed to have occurred with respect to the Notes unless within five business days the Company shall have provided additional collateral to secure the Notes and the other Obligations satisfactory to the Investors. 5. The Company hereby confirms that (a) the Company's representations and warranties contained in the Investment Agreement were true and complete in all material respects when given and that, apart from information contained in SEC Reports filed prior to the date hereof or other written information that has been provided by the Company to the Investors prior to the date hereof, there are no matters that would require any material changes to such representations and warranties were they being deemed to be given as of the date hereof, with such representations and warranties deemed to refer to the Notes being issued pursuant to this Third Supplement and the Pledge Agreement and the Security Agreements being delivered pursuant to this Third Supplement, and (b) all information provided by the Company to the Investors since January 12, 1998, including without limitation all SEC Reports, all historical or projected financial information, and all information relating to any governmental investigation of or affecting the Company, its practices or its employees, has been true and complete in all material respects. 6. The Company hereby represents and warrants that as of August 31, 1998, the list of receivables of the Company's subsidiaries attached as Annex A hereto is 3 4 complete and accurate in all respects. Since August 31, 1998, there have been no changes in the amounts or status of the receivables listed that would, individually or in the aggregate, be reasonably likely to result in a material adverse change in the business, financial condition or results of operations or prospects of the Company or any of its subsidiaries. 7. Notwithstanding anything in either the First Supplement or the Second Supplement to the contrary, from and after the date hereof and for so long as any amount remains outstanding under the Notes, (a) all of the "Affirmative Covenants" provided for in Section VII of the Investment Agreement and all of the "Negative Covenants" provided for in Section VIII of the Investment Agreement shall be reinstated and remain in full force and effect, except that the exercise of the Company's optional redemption right under the New Preferred Stock shall not be prohibited under Section VIII(E), (b) all of the events of default provided for in Section IX of the Investment Agreement shall be reinstated and remain in full force and effect with all references therein to the "Notes" to be deemed to refer to the Notes being issued under this Third Supplement and all references to Note Documents or Collateral Documents to be deemed to refer to the Notes being issued under this Third Supplement and the Pledge Agreement and the Security Agreements being delivered pursuant to this Third Supplement, and (c) all of the provisions in Sections X through XVII of the Investment Agreement shall be reinstated and remain in full force and effect with all references therein to the "Notes" to be deemed to refer to the Notes being issued under this Third Supplement and all references to Note Documents or Collateral Documents to be deemed to refer to the Notes being issued under this Third Supplement and the Pledge Agreement and the Security Agreements being delivered pursuant to this Third Supplement. 8. The Company agrees that the proceeds received by it from the Term Loans and from any Revolving Loans will be used by it in a manner consistent with the Consolidated Cash Flow Forecast (the "Forecast") annexed as Annex B to this Third Supplement, which the Company hereby represents and warrants to be complete and accurate in all respects, and, in the case of proceeds from any Revolving Loans, only for Qualifying Acquisitions. Not later than Noon, Eastern Time, on each alternate 4 5 Wednesday, commencing on October 21, 1998, the Company shall provide by telecopy to the Investors a summary, certified by its Chief Financial Officer as complete and accurate, of the Company's cash position as of the opening of business on the immediately preceding Monday as compared to the budgeted cash position for such date as shown on the Forecast and a certification from the Chief Financial Officer to the effect that such use of proceeds agreement shall have been complied with by the Company through the date of such certification. The Company represents and warrants that each such summary will be complete and accurate in all respects. Any failure by the Company to timely provide such report and certification or any $32,500 or greater shortfall of the Company's cash position (after deducting from such cash position the net proceeds received by the Company from the Term Notes and the Revolving Loans) as reflected in a report as compared to the forecasted cash position in the Forecast for the same date shall be deemed to be an event of default. 9. Matters relating to the issuance and sale of the Notes pursuant to this Third Supplement and the execution and delivery by the Company or subsidiaries of this Third Supplement, the Pledge Agreement and the Security Agreements shall be addressed in opinions from Epstein Becker & Green, P.C. and Jacob & Weingarten, special counsel to the Company, each dated the date hereof and substantially in the forms of the opinion of such firms previously provided under the Investment Agreement and otherwise acceptable to the Investors. 10. The issuance and sale of the Notes shall take place as soon as practicable after execution of this Third Supplement, subject to (a) the execution and delivery by the Company and appropriate subsidiaries of the Company to the Investors of the Notes, the Pledge Agreement, the Security Agreements and such UCC-ls as are requested by the Investors, (b) the delivery to the Investors of the opinions referenced in Section 9, (c) the delivery by the Company of a Secretary's Certificate, a Compliance Certificate, an Officer's Certificate and a Solvency Certificate, in each case substantially in the forms of the certificates previously provided under the Investment Agreement and otherwise acceptable to the Investors, (d) delivery by the Company of good standing certificates requested by the Investors, (e) delivery by 5 6 the Investors of $309,312, representing the aggregate principal amount of the Term Loans, net of the fee and expense reimbursement provided for in Section 11 and (f) delivery by the Company to the Investors of evidence satisfactory to the Investors that the collateral to secure the Notes has not been pledged to any other party. 11. The Company agrees that a loan/commitment fee of $9,500 is payable by the Company in connection with the issuance of the Notes pursuant to this Third Supplement and that such fee and $25,000 for the estimated fees and expenses of the Investors' legal counsel in connection with this Third Supplement, and $6,188, representing past due legal fees, will be deducted by the Investors from the proceeds of the Term Loans. The Company also confirms that it will promptly reimburse the Investors for any additional reasonable fees and expenses of their legal counsel in connection with this Third Supplement, the transactions contemplated hereby and the discussions between the Company and the Investors through the date hereof arising out of the Investment Agreement. 12. The Company hereby acknowledges and agrees (a) that any and all actions taken by the Investors in respect of the Company, including without limitation in respect of their investment therein and their agreements with the Company, have in all cases been appropriate, have not given the Company any basis for legal or other objection and will not be asserted by the Company or anyone on its behalf as giving the Company any claim or right of action and (b) to indemnify and hold harmless the Investors and their affiliates for any damages or costs that they may incur by reason of any such claims or causes of action being asserted. The Company also hereby acknowledges and agrees that, by entering into this Third Supplement, the Investors have not waived any rights or claims that they may have, including without limitation their rights in respect of the New Preferred Stock and any failure by the failure by the Company to redeem the New Preferred Stock. 6 7 13. The address of the Company, to which all notices should be sent, is: 666 11th Street N.W. Suite 200 Washington, D.C. 20001 14. Except as modified pursuant to this Third Supplement, all terms and provision of the Investment Agreement shall remain in full force and effect. Any approvals required are at the sole and absolute discretion of the Investors. 7 8 IN WITNESS WHEREOF, the parties hereto have caused this Third Supplement to be duly executed as of the date first written above. COMPLETE WELLNESS CENTERS, INC. BY /s/ C. THOMAS MCMILLEN -------------------------- Name: C. Thomas McMillen Title: CEO IMPRIMIS INVESTORS LLC BY /s/ FREDERICK SIMON -------------------------- Name: Frederick Simon Title: Senior Vice President WEXFORD SPECTRUM INVESTORS LLC BY /s/ FREDERICK SIMON -------------------------- Name: Frederick Simon Title: Senior Vice President 8 EX-99.2 3 PLEDGE AND SECURITY AGREEMENT 1 EXHIBIT II PLEDGE AND SECURITY AGREEMENT PLEDGE AND SECURITY AGREEMENT (this "Agreement"), dated as of October 19, 1998, made by Complete Wellness Centers, Inc., a Delaware corporation (the "Grantor"), in favor of Wexford Spectrum Investors LLC ("Wexford"). Imprimis Investors LLC ("Imprimis") and any subsequent holders (together with Wexford and Imprimis, the "Investors") of Notes (as defined below). WITNESSETH: WHEREAS, Grantor, Wexford and Imprimis are parties to the Investment Agreement, dated as of December 19, 1997, as supplemented through and including the date of this Pledge Agreement (as supplemented, amended or otherwise modified from time to time, the "Investment Agreement"; capitalized terms not otherwise defined herein have the same meanings as specified in the Investment Agreement), among the Grantor and the Investors, including without limitation pursuant to the Third Supplement to Investment Agreement, dated as of the date of this Pledge Agreement (the "Third Supplement"); WHEREAS, pursuant to the Third Supplement, the Investors have agreed to purchase certain Floating Rate Bridge Notes due February 1, 1999 (the "Notes") from the Grantor, the proceeds of which shall be used solely (i) in accordance with the Third Supplement, in a manner consistent with the Forecast attached thereto, (ii) for the Qualifying Acquisitions, in the case of the proceeds from the Revolving Loans, and (iii) for the payment of the loan/commitment fee and reimbursement of the Investors' legal expenses pursuant to Section 10 of the Third Supplement; and WHEREAS, it is a condition precedent to the issuance by Grantor and purchase of the Notes by the Investors from the Grantor that the Grantor shall have executed and delivered to the Investors a security agreement providing for the grant to the Investors of a security interest in certain property of the Grantor; 2 NOW, THEREFORE, in consideration of the premises and the agreements herein and in order to induce the Investors to purchase the Notes from the Grantor pursuant to the Third Supplement, the Grantor hereby agrees with the Investors as follows: SECTION 1. Definitions. Reference is hereby made to the Investment Agreement for a statement of the terms thereof. All terms used in this Agreement which are defined in the Investment Agreement or in Article 9 of the Uniform Commercial Code (the "Code") currently in effect in the State of New York, and which are not otherwise defined herein, shall have the same meanings herein as set forth therein. SECTION 2. Grant of Security Interest. As collateral security for all of the Obligations (as defined in Section 3 hereof), the Grantor hereby pledges and assigns to the Investors, and grants to the Investors, a continuing security interest in the collateral set forth below (the "Collateral"): (a) all of the Grantor's right, title and interest in and to all shares (the "Pledged Shares") of capital stock of the corporations identified on Schedule I hereto (the "Subsidiaries") and the certificates, if any, representing the Pledged Shares, and all dividends, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the Pledged Shares; (b) all additional shares (the "Additional Shares") of capital stock of the Subsidiaries from time to time acquired by the Grantor in any manner (including, without limitation, any shares of preferred stock issued by the Subsidiaries) and the certificates, if any, representing such additional shares), and all dividends, cash instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such shares; (c) all rights, title and interest to and under the management and security agreements listed on Schedule IV hereto; (d) all other rights appurtenant to the property described in clauses (a), (b) and (c) above (including, without limitation, voting rights); and 2 3 (e) all cash and noncash proceeds of any and all of the foregoing Collateral. Certificates representing those Pledged Shares set forth on Schedule IA hereto, accompanied by proper instruments of assignment duly executed in blank by the Grantor, are herewith delivered to the Investors. Promptly upon the Grantor's acquisition of any Additional Shares, the Grantor will (i) deliver proper instruments of assignment duly executed in blank by the Grantor together with any certificates representing such Additional Shares, whereupon such Additional Shares shall be Pledged Shares, and (ii) amend Schedule I to include such Additional Shares. The Investors shall have the right, at any time in their discretion and without notice to the Grantor, to transfer to or register in their names or the name of any of their nominees any or all of the Pledged Shares, subject only to the revocable rights specified in Section 5(f). In addition, the Investors shall have the right at any time to exchange certificates or instruments representing or evidencing any of the Pledged Shares for certificates or instruments of small or larger denominations. SECTION 3. Security for Obligations. The security interest created hereby in the Collateral constitutes continuing collateral security for all of the following obligations, whether now existing or hereafter incurred (the "Obligations"): (a) The prompt payment by the Grantor, as and when due and payable, of all amounts from time to time owing by the Grantor to the Investors in respect of the Investment Agreement, the Notes and the other Note Documents, including, without limitation, principal of and interest on the Notes (including, without limitation, all interest that accrues after the commencement of any case, proceeding or other action relating to bankruptcy, insolvency or reorganization of the Grantor whether or not the payment of such interest is unenforceable or is not allowable due to the existence of such case, proceeding or other action), all fees, commissions, expense reimbursements, indemnifications and all other amounts due or to become due under the Investment Agreement, the Notes and any other Note Document; and (b) The due performance and observance by the Grantor of all of their other obligations from time to time existing in respect of the Investment Agreement and all other Note Documents. 3 4 SECTION 4. Representations and Warranties. The Grantor represents and warrants as follows: (a) There is no pending or threatened action, suit, proceeding or claim before any court or other Governmental Authority or any arbitrator, or any order, judgment or award by any court or other Governmental Authority or arbitrator, that may adversely affect the pledge or the grants by the Grantor, or the perfection or priority, of the security interest purported to be created hereby in the Collateral, or the exercise by the Investors of any of their rights or remedies hereunder. (b) All taxes, assessments and other governmental charges imposed upon the Grantor or any property of the Grantor (including, without limitation, all federal income and social security taxes on employees' wages) and which have become due and payable on or prior to the date hereof have been paid, except to the extent contested in good faith by proper proceedings which stay the imposition of any penalty, fine or lien resulting from the non-payment thereof and with respect to which adequate reserves in accordance with GAAP, have been established for the payment thereof. (c) The chief place of business and chief executive office of the Grantor and the place where the Grantor keeps its records concerning the Collateral are located at the addresses specified therefor in Schedule II hereto. (d) The Grantor is and will be at all times the sole and exclusive holder of record and beneficial owner of the Collateral free and clear of any Lien, claim, security interest, charge or other encumbrance of any kind with full authority to sell, transfer and grant a security interest in, the Collateral. No effective financing statement or other instrument similar in effect covering all or any part of the Collateral is on file in any recording or filing office. The Grantor has not executed any stock power or other instrument of assignment with respect to any of the Pledged Shares. (e) The Pledged Shares have been duly authorized and validly issued by the Subsidiaries, and are fully paid and non-assessable, and the Grantor has the right and all requisite corporate authority to pledge, 4 5 assign, grant a security interest in, transfer and deliver the Pledged Shares to the Investors as provided herein. (f) Upon the filing of UCC-1 financing statements described in Schedule II hereto, the Investors will have a valid and perfected security interest therein subject to no prior Lien. The authorized, issued and outstanding capital shares of the Subsidiaries is set forth on Schedule I, and there are no existing options, warrants, calls or commitments of any character whatsoever relating to any of the unissued capital shares of the Subsidiaries, except as set forth on Schedule I hereto. The Pledged Shares constitute the percentage of the issued and outstanding shares of stock of the Subsidiaries indicated on Schedule I. Neither the Grantor nor any of its Subsidiaries owns any capital stock or other equity interest in any corporation, partnership, limited liability company, trust or other entity other than the Subsidiaries listed on Schedule I hereto. The Grantor has not entered into any management and security agreements contracts other than those set forth on Schedule IV hereto. (g) The exercise by the Investors of any of their rights and remedies hereunder will not contravene law or any contractual restriction binding on or otherwise affecting the Grantor or any of its properties and will not result in or require the creation of any Lien, claim, security interest, charge or other encumbrance upon or with respect to any of its properties. (h) No authorization or approval or other action by, and no notice to or filing with, any Governmental Authority or other regulatory body, or any other Person, is required for (i) the pledge by the Grantor of the Collateral or the perfection or maintenance of the pledge, or the grant by the Grantor, or the perfection, of the security interest purported to be created hereby in the Collateral or (ii) the exercise by the Investors of any of their voting rights or any other rights and remedies hereunder, except the filing under the Uniform Commercial Code as in effect in the applicable jurisdiction of the financing statements described in Schedule III hereto, all of which financing statements have been or will be duly filed and are or upon filing will be in full force and effect, or except as may be required in connection with the disposition of any portion of the Collateral by laws affecting the offer and sale of securities generally. 5 6 (i) There are no conditions precedent to the effectiveness of this Agreement that have not been satisfied or waived. SECTION 5. Covenants as to the Collateral. So long as any of the Obligations shall remain outstanding, unless the Investors shall otherwise consent in writing: (a) The Grantor wilt at its expense, at any time and from time to time, promptly execute and deliver all further instruments and documents and take all further action that may be necessary or desirable or that the Investors may request in order (i) to perfect and protect the pledge and security interest purported to be created hereby; (ii) to enable the Investors to exercise and enforce their rights and remedies hereunder in respect of the Collateral; or (iii) otherwise to effect the purposes of this Agreement, including, without limitation: (A) marking conspicuously each of its records pertaining to the Collateral with a legend, in form and substance satisfactory to the Investors, indicating that such Collateral is subject to the pledge and security interest created hereby and (B) executing and filing such financing or continuation statements, or amendments thereto, as may be necessary or desirable or that the Investors may request in order to perfect and preserve the pledge and security interest purported to be created hereby. (b) Unless the Grantor shall have given the Investors not less than 30 days' prior notice thereof, the Grantor will not change (i) its name, identity or corporate structure in any manner or (ii) the location of its chief executive office. (c) The Grantor will defend the title to the Collateral and the Lien of the Investors thereon against the claim of any Person claiming against or through the Grantor and will maintain and preserve such Lien as long as this Agreement shall remain in effect. (d) The Grantor will not create or suffer to exist any Lien, claim, security interest, charge or other encumbrance upon or with respect to any Collateral except for the security interests permitted pursuant to the terms of the Investment Agreement. 6 7 (e) The Grantor shall permit the Investors, or any agents or representatives of the Investors or such professionals or other Persons as the Investors may designate (i) to examine and inspect the books and records of the Grantor and take copies and extracts therefrom, and (ii) to discuss the affairs, finances and accounts of the Grantor, with, and be advised as to the same by, their officers, directors and independent accountants (and, by this subsection (d), the Grantor authorize each such officer, director and independent accountant to discuss the affairs, finances and accounts of the Grantor with such Person), provided that, in the absence of a continuing Event of Default, all such actions described in clauses (i) and (ii) above shall be conducted at reasonable times and during normal business hours. In addition, the Grantor shall forward to the Investors copies of any notices or communications received or made by the Grantor with respect to the Collateral, all in such manner as the Investors may reasonably require. (f) Provisions Relating to the Collateral. (i) So long as no Event of Default or event which, with the giving of notice or the lapse of time, or both, would become an Event of Default shall have occurred and be continuing: (A) Upon demand by the Investors, the Grantor will deliver stock certificates representing any of the Pledged Shares not delivered herewith, accompanied by proper instruments of assignment duly executed in blank by the Grantor. (B) The Grantor shall be entitled to exercise any and all voting and other consensual rights pertaining to the Collateral or any part thereof for any purpose not inconsistent with the terms of this Agreement or the Investment Agreement; provided, that the Grantor shall not exercise or refrain from exercising such right if, in the Investors' judgment, such action would have a material adverse effect on the value of the Collateral or any part thereof, and provided, further, that the Grantor shall give the Investors at least five days' prior written notice of the manner in which it intends to exercise, or the reasons for refraining from exercising, any such right. The Grantor shall not exercise or refrain from exercising such right in a manner which would authorize or effect (except as and to the extent expressly permitted by the Investment Agreement) 7 8 (i) the dissolution or liquidation, in whole or in part, of any of the Subsidiaries, (ii) the consolidation or merger of any of the Subsidiaries with any corporation, (iii) the sale, disposition or encumbrance of all or substantially all of the assets of any of the Subsidiaries, (iv) any change in the authorized number of shares, the stated capital or the authorized share capital of any of the Subsidiaries, or the issuance of any additional capital shares of any of the Subsidiaries, or (v) the alteration of the voting rights with respect to the shares of any of the Subsidiaries. (C) The Grantor shall be entitled, from time to time, to collect and receive for its own use dividends paid, payable or otherwise distributed on the Pledged Shares; provided, that until actually paid, all rights to such dividends shall remain subject to the Lien of this Agreement, provided, further, that (i) all dividends paid or payable other than in cash in respect of, and instruments and other property received, receivable or otherwise distributed in respect of, or in exchange for, any Pledged Shares, (ii) all dividends and other distributions paid or payable in cash in respect of any Pledged Shares in connection with a partial or total liquidation or dissolution or in connection with a reduction of capital, capital surplus or paid-in-surplus, and (iii) cash paid, payable or otherwise distributed in respect of principal of, or in redemption of, or in exchange for, any Pledged Shares, shall be, and shall be forthwith delivered to the Investors to hold as, Collateral and shall, if received by the Grantor, be received in trust for the benefit of the Investors, be segregated from the other property or funds of the Grantor, and be forthwith delivered to the Investors as Collateral in the same form as so received (with any necessary indorsement or assignment). 8 9 (ii) Upon the occurrence and during the continuance of an Event of Default or an event which, with the giving of notice or the lapse of time, or both, would become an Event of Default: (A) All rights of the Grantor (x) to exercise or refrain from exercising the voting and other consensual rights which it would otherwise be entitled to exercise pursuant to Section 5(f)(i)(A) shall, upon notice to the Grantor by the Investors, cease and (y) to receive the dividends payments which it would otherwise be authorized to receive and retain pursuant to Section 5(f)(i)(B) shall automatically cease, and all such rights shall thereupon become vested in the Investors who shall thereupon have the sole right to exercise or refrain from exercising such voting and other consensual rights and to receive and hold as Collateral such dividends. (B) All dividends which are received by the Grantor contrary to the provisions of paragraph (A) of this Section 5(f)(ii) shall be received in trust for the benefit of the Investors, shall be segregated from other funds of the Grantor and shall be forthwith paid over to the Investors as Collateral in the same form as so received (with any necessary indorsement). (g) The Grantor agrees that it will (i) cause the Subsidiaries not to issue any stock or other securities in addition to or in substitution for the Pledged Shares issued by the Subsidiaries, except to the Grantor and (ii) pledge hereunder, immediately upon its acquisition (directly or indirectly) thereof, any and all additional shares of stock or other securities of Subsidiaries. SECTION 6. Additional Provisions Concerning the Collateral. (a) The Grantor hereby authorizes the Investors to file, without the signature of the Grantor where permitted by law, one or more financing or continuation statements, and amendments thereto, relating to the Collateral. (b) The Grantor hereby irrevocably appoints the Investors or their designee on behalf of the Investors the Grantor's attor- 9 10 ney-in-fact and proxy, with full authority in the place and stead of the Grantor and in the name of the Grantor or otherwise, from time to time in the Investors's discretion, to take any action and to execute any instrument which the Investors may deem necessary or advisable to accomplish the purposes of this Agreement including, without limitation, (i) upon the occurrence of an Event of Default, to ask, demand, collect, sue for, recover, compound, receive and give acquittance and receipts for moneys due and to become due under or in respect of any Collateral, and (ii) to receive, endorse, assign and collect any drafts or other instruments, documents and chattel paper in connection with clause (i) above, and (iii) to file any claims or take any action or institute any proceedings which the Investors may deem necessary or desirable for the collection of any Collateral or otherwise to enforce the rights of the Investors with respect to any Collateral. All acts of said attorney or designee are hereby ratified and approved, and said attorney or designee shall not be liable for any acts of omission or commission (other than acts or omissions constituting gross negligence or willful misconduct as determined by a final judgment or a court of competent jurisdiction), nor for any error of judgment or mistake of fact or law. This power is coupled with an interest and is irrevocable until all of the Obligations are paid in full and the Investment Agreement is terminated. (c) If the Grantor fails to perform any agreement contained herein, the Investors may itself perform, or cause performance of, such agreement or obligation, in the name of the Grantor or the Investors, and the expenses of the Investors incurred in connection therewith shall be payable by the Grantor pursuant to Section 7 and 9. (d) The powers conferred on the Investors hereunder are solely to protect their interest in the Collateral and shall not impose any duty upon it to exercise any such powers. Except for the safe custody of any Collateral in their possession and the accounting for moneys actually received by it hereunder, the Investors shall have no duty as to any Collateral or as to the taking of any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral. SECTION 7. Remedies Upon Default. If any Event of Default shall have occurred and be continuing: 10 11 (a) The Investors may exercise in respect of the Collateral, or any part thereof, in addition to other rights and remedies provided for herein, in the Investment Agreement, the Notes or in the Note Documents or otherwise available to it, all of the rights and remedies of a secured party in default under the Code (whether or not the Code applies to the affected Collateral), and are hereby authorized and empowered, at their election, (i) to (if they have not previously done so pursuant to Section 2) transfer and register in their or their nominee's name the whole or any part of the Collateral, (ii) to exercise all voting rights with respect thereto, (iii) to demand, sue for, collect, receive and give acquittance for any and all cash dividends or other distributions or monies due or to become due upon or by virtue thereof, and to settle prosecute or defend any action or proceeding with respect thereto, (iv) to otherwise to act with respect to the Collateral or the proceeds thereof as though the Investors were the outright owners thereof, Grantor hereby irrevocably constituting the Investors as their proxies and attorneys-in-fact, with full power of substitution to do so and (v) without notice, except as specified below, sell the Collateral or any part thereof in one or more parcels at public or private sale, at any of the Investors's offices or elsewhere, for cash, on credit or for future delivery, and at such price or prices and upon such other terms as the Investors may deem commercially reasonable. The Grantor agrees that, to the extent notice of sale shall be required by law, at least 10 days' notice to the Grantor of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification. The Investors shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. The Investors may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. The Grantor hereby waives any claims against the Investors arising by reason of the fact that the price at which the Collateral may have been sold at a private sale was less than the price which might have been obtained at a public sale or was less than the aggregate amount of the Obligations, even if the Investors accept the first offer received and does not offer the Collateral to more than one offeree and waives all rights which the Grantor may have to require that all or any part of the Collateral be marshalled upon any sale (public or private) thereof. 11 12 (b) Any cash held by the Investors as Collateral and all proceeds received by the Investors in respect of any sale or collection from, or other realization upon, all or any part of the Collateral, after payment from such proceeds of the Investors's out-of-pocket costs and expenses in connection with such sale, including, without limitation reasonable attorneys' fees and expenses, may, in the discretion of the Investors, be held by the Investors as collateral for, and/or then or at any time thereafter applied in whole or in part by the Investors against, all or any part of the Obligations in such manner as the Investors may elect in their sole discretion. (c) Other than the exercise of reasonable care in the custody and preservation of the Collateral, the Investors shall have no duty with respect thereto. The Investors shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral in their possession if the Collateral is accorded treatment substantially equal to that which it accords their own property, and shall not be liable or responsible for any loss or damage to any of the Collateral, or for any diminution in the value thereof, by reason of the act or omission of any agent or bailee selected by the Investors in good faith. (d) In the event that the proceeds of any such sale, collection or realization are insufficient to pay all amounts to which the Investors are legally entitled, the Grantor shall be liable for the deficiency, together with interest thereon at the Default Rate or such other rate as shall be fixed by applicable law, together with the costs of collection and the reasonable fees, costs, expenses and other client charges of any attorneys employed by the Investors to collect such deficiency. (e) The Investors may employ and maintain in the premises of the Grantor one or more custodians selected by the Investors who shall have full authority to do all acts necessary or desirable to protect the Investors's interests hereunder. The Grantor hereby agree to cooperate with any such custodian and to do whatever the Investors may reasonably request to preserve the Collateral. All costs and expenses incurred by the Investors, by reason of the employment of the custodian, shall be payable the Grantor pursuant to Section 9. 12 13 SECTION 8. Registration Rights. If the Investors shall determine to exercise their right to sell all or any of the Pledged Shares pursuant to Section 7, the Grantor agrees that, upon request of the Investors, the Grantor will, at its own expense: (a) Execute and deliver, and cause the Subsidiaries and the directors and officers thereof to execute and deliver, all such instruments and documents, and do or cause to be done all such other acts and things, as may be necessary or, in the opinion of the Agent, advisable to register the Pledged Shares under the provisions of the Securities Act of 1933, as from time to time amended (the "Securities Act"), and to cause the registration statement relating thereto to become effective and to remain effective for such period as prospectuses are required by law to be furnished, and to make all amendments and supplements thereto and to the related prospectus which, in the opinion of the Investors, are necessary or advisable, all in conformity with the requirements of the Securities Act and the rules and regulations of the Securities and Exchange Commission applicable thereto; (b) Use its best efforts to qualify the Pledged Shares under the state securities or "Blue Sky" laws and to obtain all necessary governmental approvals for the sale of the Pledged Shares, as requested by the Investors; (c) Cause the Subsidiaries to make available to their security holders, as soon as practicable, an earning statement which will satisfy the provisions of Section 11(a) of the Securities Act; and (d) Do or cause to be done all such other acts and things as may be necessary to make such sale of the Pledged Shares or any part thereof valid and binding and in compliance with applicable law. The Grantor further acknowledges the impossibility of ascertaining the amount of damages which would be suffered by the Investors by reason of the failure by the Grantor to perform any of the covenants contained in this Section and, consequently, agrees that, if the Grantor shall fail to perform any of such covenants, it shall pay, as liquidated damages and not as a penalty, an amount equal to the value of the Pledged Shares on the date the Investors shall demand compliance with this Section. 13 14 SECTION 9. Indemnity and Expenses. (a) The Grantor agrees to indemnify and hold the Investors, their Affiliates and each officer, director and agent of the Investors or any of their Affiliates (the "Indemnitees") harmless from and against any and all claims, damages, losses, liabilities, obligations, penalties, costs or expenses (including, without limitation, reasonable legal fees, costs, expenses and other client charges) to the extent that they arise out of or otherwise result from this Agreement (including, without limitation, enforcement of this Agreement), except claims, losses or liabilities resulting solely and directly from an Indemnitee's gross negligence or willful misconduct as determined by a final determination of a court of competent jurisdiction. (b) Without limiting the generality of the foregoing, the Grantor will upon demand pay to each Indemnitee (i) the amount of any and all costs and expenses, including the reasonable fees, costs, expenses and other client charges of counsel for such Indemnitee and of any experts and agents (including, without limitation, any Person which may act as agent of such Indemnitee), which such Indemnitee may incur in connection with (A) the preparation, negotiation, execution, delivery, recordation, administration, amendment, waiver or other modification or termination of this Agreement, or (B) the custody, preservation, use or operation of the Collateral and (ii) the amount of any and all costs and expenses, including the reasonable fees, costs, expenses and other client charges of counsel for such Indemnitee and of any experts and agents (including, without limitation, any Person which may act as agent of such Indemnitee), which such Indemnitee may incur in connection with (A) the sale of, collection from, or other realization upon, any Collateral, (B) the exercise or enforcement of any of the rights of such Indemnitee hereunder, or (C) the failure by the Grantor to perform or observe any of the provisions hereof. SECTION 10. Notices, Etc. All notices and other communications provided for hereunder shall be in writing and shall be mailed, telecopied or delivered, if to the Grantor, to them at the addresses specified in the Investment Agreement; and if to the Investors, to them at their address specified in the Investment Agreement; or as to any such Person at such other address as shall be designated by such Person in a written notice to such other person complying as to delivery with the terms of this Section 10. All such notices and other communica- 14 15 tions shall be effective (i) if mailed, when received or three Business Days after deposited in the mail, whichever first occurs (ii) if telecopied, when transmitted and a confirmation is received, or (iii) if delivered, upon delivery. SECTION 11. Miscellaneous. (a) No amendment of any provision of this Agreement shall be effective unless it is in writing and signed by the Grantor and the Investors, and no waiver of any provision of this Agreement, and no consent to any departure by the Grantor therefrom, shall be effective unless it is in writing and signed by the Investors, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. (b) No failure on the part of the Investors to exercise, and no delay in exercising, any right hereunder or under any other Note Document shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right. The rights and remedies of the Investors provided herein and in the other Note Documents are cumulative and are in addition to, and not exclusive of, any rights or remedies provided by law. The rights of the Investors under any Note Document against any party thereto are not conditional or contingent on any attempt by the Investors to exercise any of their rights under any other Note Document against such party or against any other Person. (c) Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining portions hereof or thereof or affecting the validity or enforceability of such provision in any other jurisdiction. (d) This Agreement shall create a continuing security interest in the Collateral and shall (i) remain in full force and effect until the payment in full or release of the Obligations and the termination of the Investment Agreement; and (ii) be binding on the Grantor, their successors and assigns, except that the Grantor may not assign or transfer any of their rights hereunder without the prior written consent of the Investors, and shall inure, together with all rights and remedies of the Investors hereun- 15 16 der, to the benefit of the Investors and their permitted successors, transferees and assigns. Without limiting the generality of clause (ii) of the immediately preceding sentence, without notice to the Grantor, the Investors may assign or otherwise transfer their rights under this Agreement and any other Note Document, to any other Person pursuant to the terms of the Investment Agreement and such other Person shall thereupon become vested with all of the benefits in respect thereof granted to the Investors herein or otherwise. Upon any such assignment or transfer, all references in this Agreement to the Investors shall mean the assignee of the Investors. None of the rights or obligations of the Grantor hereunder may be assigned or otherwise transferred without the prior written consent of the Investors, and any such assignment or transfer shall be null and void. (e) Upon the satisfaction in full of the Obligations and the termination of the Investment Agreement, (i) this Agreement and the security interests created hereby shall terminate and all rights to the Collateral shall revert to the Grantor and (ii) the Investors will, upon the Grantor's request and at the requesting Grantor's cost and expense, (A) return to the Grantor(s) such of the Collateral as shall not have been sold or otherwise disposed of or applied pursuant to the terms hereof and (B) execute and deliver to the Grantor such documents as the Grantor shall reasonably request to evidence such termination, all without any representation, warranty or recourse whatsoever. (f) This Agreement shall be governed by and construed in accordance with the law of the State of New York, except to the extent that the validity and perfection or the perfection and the effect of perfection or non-perfection of the security interest created hereby, or remedies hereunder, in respect of any particular Collateral are governed by the law of a jurisdiction other than the State of New York. (g) This Agreement supersedes all prior understandings and agreements, whether written or oral, among the parties hereto relating to the transactions provided for herein. (h) All representations and warranties of the Grantor contained herein or made in connection herewith shall survive the making of and shall not be waived by the execution and delivery of this Agreement, the Investment Agreement, the Notes or any other Note Document, any 16 17 investigation by the Investors or the purchasing of the Notes. All covenants and agreements of the Grantor contained herein shall continue in full force and effect from and after the date hereof until the indefeasible payment in full of the Obligations. (i) Section headings in this Agreement are included herein for the convenience of reference only and shall not constitute a part of this Agreement for any other purpose. (j) BY ITS EXECUTION AND DELIVERY OF THIS AGREEMENT, THE GRANTOR HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS EITHER OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH, THIS AGREEMENT, THE INVESTMENT AGREEMENT, THE NOTES OR ANY OTHER NOTE DOCUMENT, ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE INVESTORS OR The GRANTOR IN CONNECTION HEREWITH OR THEREWITH. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE INVESTORS TO ENTER INTO THIS AGREEMENT. 17 18 IN WITNESS WHEREOF, the Grantor has caused this Agreement to be executed and delivered by its officer thereunto duly authorized as of the date first above written. COMPLETE WELLNESS CENTERS, INC. By: -------------------------- Name: Title: Accepted and Agreed: WEXFORD SPECTRUM INVESTORS LLC By: -------------------------- Name: Title: IMPRIMIS INVESTORS LLC By: -------------------------- Name: Title: 18 19 Schedule I
- ------------------------------------------------------------------------------------------------------------- Number of Shares of Certifi- Common cate Name of Issuer Stock Number - ------------------------------------------------------------------------------------------------------------- Complete Wellness Medical Center of Altamonte Springs, Inc. 60 1 - ------------------------------------------------------------------------------------------------------------- Complete Wellness Medical Center of Apopka, Inc. 60 1 - ------------------------------------------------------------------------------------------------------------- Complete Wellness Medical Center of Bradenton, Inc. 200 1 - ------------------------------------------------------------------------------------------------------------- Complete Wellness Medical Center of Deland, Inc. 60 1 - ------------------------------------------------------------------------------------------------------------- Complete Wellness Medical Center of Ft. Walton Beach, Inc. 200 1 - ------------------------------------------------------------------------------------------------------------- Complete Wellness Medical Center of Longwood, Inc. 60 1 - ------------------------------------------------------------------------------------------------------------- Complete Wellness Medical Center of Miranar, Inc. 200 1 - ------------------------------------------------------------------------------------------------------------- Complete Wellness Medical Center of New Smyrna Beach, Inc. 60 1 - ------------------------------------------------------------------------------------------------------------- Complete Wellness Medical Center of North Port, Inc. 200 1 - ------------------------------------------------------------------------------------------------------------- Complete Wellness Medical Center of Ormond Beach, Inc. 60 1 - ------------------------------------------------------------------------------------------------------------- Complete Wellness Medical Center of Sanford, Inc. 60 1 - ------------------------------------------------------------------------------------------------------------- Complete Wellness Medical Center of Titusville, Inc. 60 1 - ------------------------------------------------------------------------------------------------------------- Complete Wellness Medical Center of West Colonial Drive, Orlando, Inc. 60 1 - ------------------------------------------------------------------------------------------------------------- Complete Wellness Medical Center of Winter Springs, Inc. 60 1 - ------------------------------------------------------------------------------------------------------------- Complete Wellness Medical Center of South Daytona Beach, Inc. 60 1 - ------------------------------------------------------------------------------------------------------------- Complete Wellness Medical Center of 66th Street St. Petersburg, Inc. 60 1 - ------------------------------------------------------------------------------------------------------------- Complete Wellness Medical Center of East Normandy Boulevard, Inc. 60 1 - ------------------------------------------------------------------------------------------------------------- Complete Wellness Medical Center of Toney Penna Drive, Inc. 200 1 - ------------------------------------------------------------------------------------------------------------- Complete Wellness Medical Center of Casselberry, Inc. 60 1 - ------------------------------------------------------------------------------------------------------------- Complete Wellness Medical Center of Winter Park, Inc. 60 1 - ------------------------------------------------------------------------------------------------------------- Active Health and Rehabilitation Center, Inc. 100 2 - ------------------------------------------------------------------------------------------------------------- Complete Wellness Smoking Cessation, Inc. 7,500 1 - ------------------------------------------------------------------------------------------------------------- Optimum Health Services, Inc. 6,500 2 - ------------------------------------------------------------------------------------------------------------- Complete Wellness Weight Management, Inc. 100 1 - -------------------------------------------------------------------------------------------------------------
19 20 Schedule IA - ------------------------------------------------------------------------------------------------------------ Complete Wellness Medical Center of Apopka, Inc. 60 1 - ------------------------------------------------------------------------------------------------------------ Complete Wellness Medical Center of Longwood, Inc. 60 1 - ------------------------------------------------------------------------------------------------------------ Complete Wellness Medical Center of Sanford, Inc. 60 1 - ------------------------------------------------------------------------------------------------------------ Complete Wellness Medical Center of Winter Springs, Inc. 60 1 - ------------------------------------------------------------------------------------------------------------ Complete Wellness Weight Management, Inc. 100 1 - ------------------------------------------------------------------------------------------------------------
20 21 Schedule II ADDRESS OF GRANTOR Chief Place of Business, 666 11th Street, Chief Executive Office N.W. Suite 200 and Location of Records Washington, D.C. 20001 21 22 Schedule III UCC-l FINANCING STATEMENTS 22 23 Schedule IV Management and Security Agreements between Complete Wellness Centers, Inc. ("CWC") and each of the following corporations that are owned by a medical professional but controlled by CWC, dated as of the date set forth below: 12. Complete Wellness Medical Center of Decatur, P.A., June 30, 1997 13. Complete Wellness Medical Center of Searcy, P.A., May 1, 1998 14. Complete Wellness Medical Center of Port Hueneme, P.C., June 30, 1997 15. Complete Wellness Medical Center of Lenoir, P.A., May 1, 1997 16. Complete Wellness Medical Center of Fox River Grove, P.C., September 8, 1997 17. Complete Wellness Medical Center of Memphis, P.C., January 12, 1997 18. Complete Wellness Medical Center of Downey, P.C., October 3, 1997 19. Complete Wellness Medical Center of Savannah, L.L.C., August 10, 1998 20. Complete Wellness Medical Center of Lansing, P.C., September 8, 1997 21. Complete Wellness Medical Center of Sterling, S.C., May 1, 1998 22. Complete Wellness Medical Center of Greenwood, P.C., September 30, 1997 23. Complete Wellness Medical Center of Mineral Wells, P.C., August 2, 1997 24. Complete Wellness Medical Center of East Main Street, Carbondale, P.C., September 18, 1996 25. Complete Wellness Medical Center of Marion, P.A., October 15, 1997 26. Complete Wellness Medical Center of Tustin, P.C., December 15, 1997 27. Complete Wellness Medical Center of Golden Isles, L.L.C., December 3, 1997 28. Complete Wellness Medical Center of Hickory, P.A., May 1, 1997 29. Complete Wellness Medical Center of Corvalis, P.C., June 30, 1997 30. Complete Wellness Medical Center of Scottsdale, P.C., June 2, 1997 31. Complete Wellness Medical Center of Denton, P.C., June 30, 1997 23 24 32. Complete Wellness Medical Center of Carmel Road, P.A., August 15, 1997 33. Complete Wellness Medical Center of Charlotte, P.C., January 1, 1997 34. Complete Wellness Medical Center of Jackson, P.C., July 13, 1997 35. Complete Wellness Medical Center of Concord, P.A., January 3, 1998 36. Complete Wellness Medical Center of Belleville, P.C., September 8, 1997 37. Complete Wellness Medical Center of La Mirada, P.C., August 3, 1998 38. Complete Wellness Medical Center of Forest Park, Inc., September 12, 1997 39. Complete Wellness Medical Center of Fayetteville, P.A., March 1, 1998 40. Complete Wellness Medical Center of Gastonia, P.A., September 1, 1997 41. Complete Wellness Medical Center of Anderson, P.C., July 24, 1997 42. Complete Wellness Medical Center of West Burlington, P.C., July 30, 1997 43. Complete Wellness Medical Center of Forest City, P.A., April 14, 1997 44. Complete Wellness Medical Center of Modesto, P.C., December 15, 1997 45. Complete Wellness Medical Center of Cookeville, P.C., March 15, 1997 46. Complete Wellness Medical Center of Vincennes, P.C., July 15, 1997 47. Complete Wellness Medical Center of Sioux City, P.C., January 10, 1998 48. Complete Wellness Medical Center of Chesterton, P.C., September 12, 1997 49. Complete Wellness Medical Center of Cincinnati, P.A., June 12, 1997 50. Complete Wellness Medical Center of Orange, P.C., August 3, 1998 24 25 IN WITNESS WHEREOF, the Grantor has caused this Agreement to be executed and delivered by its officer thereunto duly authorized as of the date first above written. COMPLETE WELLNESS CENTERS, INC. By: /s/ C. THOMAS MCMILLEN -------------------- Name: C. Thomas McMillen Title: CEO Accepted and Agreed: WEXFORD SPECTRUM INVESTORS LLC By: s/ FREDERICK SIMON ----------------------- Name: Frederick Simon Title: Sr. Vice President IMPRIMIS INVESTORS LLC By: s/ FREDERICK SIMON ----------------------- Name: Frederick Simon Title: Sr. Vice President 18 EX-99.3 4 IMPRIMIS PROMISSORY NOTE 1 EXHIBIT III PROMISSORY NOTE THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED OR SOLD UNLESS IT HAS BEEN REGISTERED UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE. $380,000 October 19, 1998 FOR VALUE RECEIVED, COMPLETE WELLNESS CENTERS, INC., a Delaware corporation (the "Company"), HEREBY PROMISES TO PAY to the order of IMPRIMIS INVESTORS LLC (the "Purchaser") or its registered assigns (i) the principal sum of THREE HUNDRED EIGHTY THOUSAND DOLLARS (or such lesser amount as shall equal the aggregate unpaid principal amount of the Term Loan and the Revolving Loans made by the Purchaser to the Company under the Investment Agreement referred to below) and (ii) interest on any and all principal amounts remaining unpaid hereunder from time to time outstanding from the date hereof until such principal amount become due, pursuant to the Investment Agreement, dated as of December 19, 1997, as supplemented through and including the date of this Note (as supplemented, amended or otherwise modified from time to time, the "Investment Agreement"; capitalized terms not otherwise defined herein have the same meanings as specified in the Investment Agreement), among the Company, the Purchaser and Wexford Spectrum Investors LLC, including without limitation pursuant to the Third Supplement to Investment Agreement, dated as of the date of this Note (the "Third Supplement"). Interest on the unpaid balance of the principal amount of this Note shall be computed on the basis of a 360-day year of twelve 30-day months, shall accrue from the date of this Note and shall compound quarterly in arrears on the first day of each quarter commencing on January 1, 1999, at a rate per annum equal to the sum of the rate from time to time announced by Chase Bank as its reference rate plus 3% (the "Base Rate") until the unpaid principal balance of this Note shall be paid in full (whether by scheduled maturity or at a date fixed for prepayment, redemption or repurchase or by declaration, demand or otherwise). All such accrued interest shall be capitalized and added to the principal amount of this Note; provided however, that any overdue payment (including without limitation, any overdue prepayment redemption or repurchase) of principal and, to the extent permitted by applicable law, any overdue payment of interest and premium, if any, shall accrue interest at a rate per annum equal at all times to the sum of the Base Rate plus 4%, payable at the option of the registered holder of this Note, upon demand, until the unpaid principal balance of this Note shall be paid in full. The unpaid principal balance of this Note, together with any accrued but unpaid interest hereunder, shall be payable in full on or before February 1, 1999. Payments of principal of, and interest and premium, if any, on this Note are payable in lawful money of the United States of America at the place designated therefor as set forth in Section XI of the Investment Agreement, or at such other place as the Purchaser shall have designated by written notice to the Company as 2 provided in the Investment Agreement referred to above. Whenever any payment under this Note shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of interest. Nothing contained in this Promissory Note or the Investment Agreement shall require the Company to pay interest at a rate exceeding the maximum rate permitted by applicable law. If interest payable to the Purchaser on any date would exceed the maximum permissible amount, it shall be automatically reduced to such amount, and interest for any subsequent period, to the extent less than that permitted by applicable law, shall, to that extent, be increased by the amount of such reduction. This Note is one of a series of Senior Secured Floating Rate Notes due February 1, 1999 (collectively, the "Notes") originally issued or to be issued in an aggregate principal amount of up to $475,000 pursuant to the Investment Agreement. The holder of this Note is entitled to the benefits of the Investment Agreement and may enforce the agreement of the Company therein in accordance with the terms thereof, and may enforce the rights and remedies provided for thereby or otherwise available in respect thereof in accordance with the respective terms thereof. This Note is a registered Note and, as provided in and subject to the terms of the Investment Agreement, is transferable only upon surrender of this Note for registration of transfer or exchange (and, in the case of a surrender for registration of transfer, duly endorsed or accompanied by a written instrument of transfer, duly executed by the registered holder of this Note or his attorney duly authorized in writing), at which time a new Note for a like principal amount will be issued to, and registered in the name of, the permitted transferee. Reference in this Note to a "holder" shall mean the person or entity in whose name this Note is at the time registered in the register kept by the Companies as provided in Section X of the Investment Agreement and, prior to the due presentment for registration of transfer, the Company may treat such person or entity as the owner of this Note for the purpose of receiving payment and for all other purposes, and the Companies will not be affected by any notice to the contrary. The holder hereof, by acceptance of this Note, agrees that this Note shall not be transferred, sold or otherwise disposed of except to an Accredited Investor (as that term is defined in Rule 501(a) of Regulation D promulgated under the Securities Act of 1933, as amended). This Note may be transferred in whole or in part only by registration of such transfer on the register maintained for such purpose by the Companies as provided in Section X of the Investment Agreement. The Company is required to make redemptions of principal on the dates and in the amounts specified in the Second Supplement. This Note is also subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in the Second Supplement. This Note is secured by, and is entitled to the benefits of the Pledge Agreement and the Security Agreements, each dated as of October 19, 1998, and the UCC-I financing statements made by each of the Persons listed on the signature pages thereof in favor of the holders of the Notes and shall be further secured from time to time by certain property and assets of the 2 3 Obligors, pursuant to the terms of the Investment Agreement and such Pledge Agreement and Security Agreements. If an Event of Default shall occur and be continuing, the unpaid balance of principal of this Note and any accrued and unpaid interest and other amounts payable hereon may be declared or otherwise become due and payable in the manner, at the price and with the effect provided in Section IX of the Investment Agreement. This Note shall be governed by, and construed in accordance with, the internal laws of the State of Delaware applicable to contracts made and to be performed therein without consideration as to choice of law. COMPLETE WELLNESS CENTERS, INC. By: /s/ C. THOMAS MCMILLEN ---------------------------------------- Name: C. Thomas McMillen Title: CEO IMPRIMIS INVESTORS LLC By: ---------------------------------------- Name: Title: 3 EX-99.4 5 WEXFORD PROMISSORY NOTE 1 EXHIBIT IV PROMISSORY NOTE THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED OR SOLD UNLESS IT HAS BEEN REGISTERED UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE. $95,000 October 19, 1998 FOR VALUE RECEIVED, COMPLETE WELLNESS CENTERS, INC., a Delaware corporation (the "Company"), HEREBY PROMISES TO PAY to the order of WEXFORD SPECTRUM INVESTORS LLC (the "Purchaser") or its registered assigns (i) the principal sum of NINETY FIVE THOUSAND DOLLARS (or such lesser amount as shall equal the aggregate unpaid principal amount of the Term Loan and the Revolving Loans made by the Purchaser to the Company under the Investment Agreement referred to below) and (ii) interest on any and all principal amounts remaining unpaid hereunder from time to time outstanding from the date hereof until such principal amount become due, pursuant to the Investment Agreement, dated as of December 19, 1997, as supplemented through and including the date of this Note (as supplemented, amended or otherwise modified from time to time, the "Investment Agreement"; capitalized terms not otherwise defined herein have the same meanings as specified in the Investment Agreement), among the Company, the Purchaser and Wexford Spectrum Investors LLC, including without limitation pursuant to the Third Supplement to Investment Agreement, dated as of the date of this Note (the "Third Supplement"). Interest on the unpaid balance of the principal amount of this Note shall be computed on the basis of a 360-day year of twelve 30-day months, shall accrue from the date of this Note and shall compound quarterly in arrears on the first day of each quarter commencing on January 1, 1999, at a rate per annum equal to the sum of the rate from time to time announced by Chase Bank as its reference rate plus 3% (the "Base Rate") until the unpaid principal balance of this Note shall be paid in full (whether by scheduled maturity or at a date fixed for prepayment, redemption or repurchase or by declaration, demand or otherwise). All such accrued interest shall be capitalized and added to the principal amount of this Note; provided however, that any overdue payment (including without limitation, any overdue prepayment redemption or repurchase) of principal and, to the extent permitted by applicable law, any overdue payment of interest and premium, if any, shall accrue interest at a rate per annum equal at all times to the sum of the Base Rate plus 4%, payable at the option of the registered holder of this Note, upon demand, until the unpaid principal balance of this Note shall be paid in full. The unpaid principal balance of this Note, together with any accrued but unpaid interest hereunder, shall be payable in full on or before February 1, 1999. Payments of principal of, and interest and premium, if any, on this Note are payable in lawful money of the United States of America at the place designated therefor as set forth in Section XI of the Investment Agreement, or at such other place as the Purchaser shall have designated by written notice to the Company as 2 provided in the Investment Agreement referred to above. Whenever any payment under this Note shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of interest. Nothing contained in this Promissory Note or the Investment Agreement shall require the Company to pay interest at a rate exceeding the maximum rate permitted by applicable law. If interest payable to the Purchaser on any date would exceed the maximum permissible amount, it shall be automatically reduced to such amount, and interest for any subsequent period, to the extent less than that permitted by applicable law, shall, to that extent, be increased by the amount of such reduction. This Note is one of a series of Senior Secured Floating Rate Notes due February 1, 1999 (collectively, the "Notes") originally issued or to be issued in an aggregate principal amount of up to $475,000 pursuant to the Investment Agreement. The holder of this Note is entitled to the benefits of the Investment Agreement and may enforce the agreement of the Company therein in accordance with the terms thereof, and may enforce the rights and remedies provided for thereby or otherwise available in respect thereof in accordance with the respective terms thereof. This Note is a registered Note and, as provided in and subject to the terms of the Investment Agreement, is transferable only upon surrender of this Note for registration of transfer or exchange (and, in the case of a surrender for registration of transfer, duly endorsed or accompanied by a written instrument of transfer, duly executed by the registered holder of this Note or his attorney duly authorized in writing), at which time a new Note for a like principal amount will be issued to, and registered in the name of, the permitted transferee. Reference in this Note to a "holder" shall mean the person or entity in whose name this Note is at the time registered in the register kept by the Companies as provided in Section X of the Investment Agreement and, prior to the due presentment for registration of transfer, the Company may treat such person or entity as the owner of this Note for the purpose of receiving payment and for all other purposes, and the Companies will not be affected by any notice to the contrary. The holder hereof, by acceptance of this Note, agrees that this Note shall not be transferred, sold or otherwise disposed of except to an Accredited Investor (as that term is defined in Rule 501(a) of Regulation D promulgated under the Securities Act of 1933, as amended). This Note may be transferred in whole or in part only by registration of such transfer on the register maintained for such purpose by the Companies as provided in Section X of the Investment Agreement. The Company is required to make redemptions of principal on the dates and in the amounts specified in the Second Supplement. This Note is also subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in the Second Supplement. This Note is secured by, and is entitled to the benefits of the Pledge Agreement and the Security Agreements, each dated as of October 19, 1998, and the UCC-I financing statements made by each of the Persons listed on the signature pages thereof in favor of the holders of the Notes and shall be further secured from time to time by certain property and assets of the 2 3 Obligors, pursuant to the terms of the Investment Agreement and such Pledge Agreement and Security Agreements. If an Event of Default shall occur and be continuing, the unpaid balance of principal of this Note and any accrued and unpaid interest and other amounts payable hereon may be declared or otherwise become due and payable in the manner, at the price and with the effect provided in Section IX of the Investment Agreement. This Note shall be governed by, and construed in accordance with, the internal laws of the State of Delaware applicable to contracts made and to be performed therein without consideration as to choice of law. COMPLETE WELLNESS CENTERS, INC. By: /s/ C. THOMAS MCMILLEN ---------------------------------------- Name: C. Thomas McMillen Title: CEO IMPRIMIS INVESTORS LLC By: ---------------------------------------- Name: Title: 3 -----END PRIVACY-ENHANCED MESSAGE-----