EXHIBIT III
PLEDGE AGREEMENT
PLEDGE AGREEMENT (this "Agreement"), dated as of December
19, 1997, made by Complete Wellness Centers, Inc., a Delaware corporation
(the "Grantor"), in favor of Imprimis Investors LLC (Imprimis) and any
subsequent holders (together with Imprimis, the "Investors") of Notes (as
defined below).
W I T N E S S E T H:
WHEREAS, Grantor, Imprimis and Wexford Spectrum Investors
LLC are parties to that certain Investment Agreement, dated as of the
date hereof (such agreement, as amended, restated, supplemented or
otherwise modified from time to time, being hereafter referred to as the
"Investment Agreement");
WHEREAS, pursuant to the Investment Agreement, Imprimis
has agreed to purchase certain debt securities (the "Notes") from the
Grantor, the proceeds of which shall be used solely (i) to pay the
transaction costs and expenses incurred in connection with the sale of
the Notes, (ii) to complete its pending acquisition of the assets of
Nutri/System, L.P. (the "Acquisition") through Complete Weight
Management, Inc. (the "Subsidiary"), a Delaware corporation, which will
hold such assets, (iii) for working capital purposes of the Subsidiary
and (iv) for general and administrative purposes of the Grantor.
WHEREAS, it is a condition precedent to the effectiveness
of the Investment Agreement and Imprimis' purchasing the Notes 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;
NOW, THEREFORE, in consideration of the premises and the
agreements herein and in order to induce Imprimis to purchase the Notes
from the Grantor pursuant to the Investment Agreement, the Grantor hereby
agrees with Imprimis 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 Subsidiary, described in Schedule I hereto 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 Subsidiary from time to time acquired by
the Grantor in any manner (including, without limitation, any
shares of preferred stock issued by the Subsidiary) 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 other rights appurtenant to the property
described in clauses (a) and (b) above (including, without
limitation, voting rights); and
(d) all cash and noncash proceeds of any and all of
the foregoing Collateral.
Certificates representing the Pledged Shares set forth on
Schedule I hereto, accompanied by proper instruments of assignment duly
executed in blank by the Grantor, are herewith delivered to Imprimis.
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 its 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 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.
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
Pledged Shares 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
Pledged Shares. No effective financing statement or other
instrument similar in effect covering all or any part of the
Pledged Shares is on file in any recording or filing office.
(e) The Pledged Shares have been duly authorized
and validly issued by the Subsidiary, and are fully paid and
non-assessable, and the Grantor has the right and all requisite
corporate authority to pledge, assign, grant a security interest
in, transfer and deliver the Pledged Shares to the Investors as
provided herein.
(f) Upon the delivery to the Investors of the
certificates representing the Pledged Shares, 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 Subsidiary 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 Subsidiary, except as set forth on Schedule I
hereto. The Pledged Shares constitute the percentage of the
issued and outstanding shares of stock of the Subsidiary
indicated on Schedule I.
(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 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.
(i) The financing statements described in Schedule
III hereto have been or will be duly filed under the Code and are
or upon filing will be in full force and effect.
(j) 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 will 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.
(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) 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) (i) the dissolution or
liquidation, in whole or in part, of the Subsidiary, (ii)
the consolidation or merger of the Subsidiary with any
corporation, (iii) the sale, disposition or encumbrance of
all or substantially all of the assets of the Subsidiary,
(iv) any change in the authorized number of shares, the
stated capital or the authorized share capital of the
Subsidiary, or the issuance of any additional capital
shares of the Subsidiary, or (v) the alteration of the
voting rights with respect to the shares of the
Subsidiary.
(B) 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).
(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
Subsidiary not to issue any stock or other securities in addition
to or in substitution for the Pledged Shares issued by the
Subsidiary, 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 Subsidiary.
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 its designee on behalf of the Investors the
Grantor's attorney-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, xxx
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:
(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, xxx 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 its 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.
(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 its possession if the
Collateral is accorded treatment substantially equal to that
which it accords its 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.
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 Subsidiary
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 Subsidiary to make available to its
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.
SECTION 9. Indemnity and Expenses.
(a) The Grantor agrees to indemnify and hold the
Investors, its Affiliates and each officer, director and agent of
the Investors or any of its 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 it at its 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 communications
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 its
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 hereunder, to the benefit of the Investors and
its 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 its 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 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.
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/ E. Xxxxxx Xxxxxx
Name:
Title:
Accepted and Agreed:
IMPRIMIS INVESTORS LLC
By: Wexford Management LLC
By: /s/ Xxxxx Xxxxxxxx
Name: Xxxxx Xxxxxxxx
Title: VP
Schedule I
PLEDGED SHARES
Schedule II
ADDRESS OF GRANTOR
Chief Place of Business, 000 Xxxxxxxxxxxx Xxxxxx, X.X.
Chief Executive Office Washington, D.C. 20003
and Location of Records
Schedule III
UCC-1 FINANCING STATEMENTS
