Exhibit VIII
SECOND SUPPLEMENT TO INVESTMENT AGREEMENT
SECOND SUPPLEMENT TO INVESTMENT AGREEMENT, dated as of July 2,
1998 (this "Second Supplement"), among Complete Wellness Centers, Inc., a
Delaware corporation (the "Company"), Imprimis Investors LLC ("Imprimis")
and Wexford Spectrum Investors LLC (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 such Investment
Agreement, as supplemented by the First Supplement, the "Investment
Agreement"). Capitalized terms used in this Second Supplement without
definition shall have the meanings ascribed to them in the Investment
Agreement; and
WHEREAS, in order to permit the Company to meet certain
requirements for the continued listing of the Common Stock on the NASDAQ
SmallCap Market, the Company and the Investors desire to restructure the
Investors' investment in the Company in the manner provided in this Second
Supplement.
1. The Certificate of Designations, Preferences and Rights
providing for the terms of a new series of Senior Convertible Preferred
Stock (the "New Preferred Stock") in the form of Exhibit A hereto shall be
filed with the Secretary of State of the State of Delaware on the date
hereof (the "New Certificate"), the New Certificate having been approved by
the Board of Directors of the Company and by the Investors as the holders
of all outstanding shares of the Senior Preferred Stock of the Company (the
"Old Preferred Stock"). New certificates representing validly issued,
fully paid and nonassessable shares of New Preferred Stock with accrued
dividends as provided in the New Certificate are being issued to the
Investors, with a certificate representing 80,000 shares of the New
Preferred Stock being issued to Imprimis and a certificate representing
20,000 shares of New Preferred Stock being issued to Wexford. The
Investors shall return to the Company the certificates representing the Old
Preferred Stock as originally issued and the Company shall file with the
Secretary of State of the State of Delaware a Certificate of Decrease to
evidence the decrease to zero the number of authorized shares of the Old
Preferred Stock.
2. The Warrants shall be cancelled and returned to the Company
by the Investors.
3. In consideration of the Investors' agreement to exchange the
Old Preferred Stock for the New Preferred Stock as provided for in Section
1 and to cancel the Warrants as provided for in Section 2, an aggregate of
100,000 validly issued, fully paid and nonassessable shares of Common Stock
(the "Issued Common Stock") are being issued to the Investors, with a
certificate representing 80,000 shares of the Issued Common Stock being
issued to Imprimis and a certificate representing 20,000 shares of Issued
Common Stock being issued to Wexford.
4. The Issued Common Stock and the Common Stock issuable upon
conversion of the New Preferred Stock as amended by Section 1 (the
"Issuable Common Stock"), together with any securities that may be issued
in respect thereof, shall constitute "Registrable Securities" for purposes
of the Registration Rights Agreement and the Registration Rights Agreement
shall be modified to increase the number of "Demand Registrations" for
which the Company pays the expenses of the holders of Registrable
Securities from two to five.
5. Matters relating to the issuance and sale of the Issued
Common Stock, the exchange of the Old Preferred Stock for the New Preferred
Stock and the issuance of the Issuable Common Stock upon conversion thereof
and the execution and delivery by the Company of this Second Supplement
shall be addressed in an opinion from Xxxxxxx Xxxxxx & Green, P.C., special
counsel to the Company, dated the date hereof and substantially in the form
of the opinion of such firm previously provided under the Investment
Agreement and otherwise acceptable to the Investors.
6. The issuance and sale of the Issued Common Stock, the
exchange of the Old Preferred Stock for the New Preferred Stock and
cancellation of the Warrants shall take place as soon as practicable after
execution of this Second Supplement, subject to (a) the delivery by the
Company to the Investors of a copy of the New Certificate certified by the
Secretary of State of the State of Delaware, (b) the execution and delivery
by the Company to the Investors of the certificates representing the Issued
Common Stock and the New Preferred Stock, (c) the payment by the Company to
the Investors of $25,000 in partial satisfaction of its obligation to
reimburse the Investors for the reasonable fees and expenses of their legal
counsel under Section 9, (d) the delivery to the Investors of the opinion
referenced in Section 5, (e) the delivery by the Investors to the Company
of the certificates representing the Old Preferred Stock and the Warrants,
and (f) confirmation by the Company, which it hereby makes, that 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 cover as Capital Stock the
New Preferred Stock, the Issued Common Stock and the Issuable Common Stock
and 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. Although the transactions contemplated by this Second
Supplement shall be deemed to have occurred as of the date hereof, the
delivery by the Company of the certificates pursuant to clause (b), the
payment pursuant to clause (c) and the opinion pursuant to clause (d) shall
occur not later than July 6, 1998 and the delivery by the Investors of the
certificates pursuant to clause (e) shall occur promptly following such
delivery by the Company.
7. Notwithstanding the provision in Section 7 of the First
Supplement to the contrary, from and after the date hereof and for so long
as any New Preferred Stock remains outstanding, 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).
8. The Company shall, as soon as possible, but no later than 30
days after the date hereof and in accordance with its certificate of
incorporation and by-laws and any applicable laws or rules, seek to obtain
any and all requisite shareholder approval (the "Shareholder Approval") of
the increase in its authorized shares of Common Stock to 50,000,000 and the
issuance of the Issued Common Stock and the Issuable Common Stock and
provide evidence reasonably satisfactory to the Investors that the
Shareholder Approval shall have been obtained. The Company shall submit to
the Investors for their prior approval copies of the resolutions or written
consents pursuant to which the shareholders will evidence the Shareholder
Approval and any and all other documents to be sent to shareholders in
connection with seeking the Shareholder Approval. Receipt of the
Shareholder Approval is not a condition to the transactions contemplated
by this Second Supplement and, other than as specifically contemplated by
this Second Supplement or by the Amended Certificate, a failure to obtain
the Shareholder Approval shall have no effect on the transactions
contemplated hereby or the obligations of the Company hereunder.
9. The Company confirms that it will promptly reimburse the
Investors for the reasonable fees and expenses of their legal counsel in
connection with this Second Supplement, the transactions contemplated
hereby and the discussions between the Company and the Investors through
the date hereof arising out of the Investment Agreement.
10. The Investors agree that, during the period prior to January
3, 1999, the Investors shall take no action with respect to the Company or
its affiliates, directors or employees based upon the Investors'
allegations of breach of the Investment Agreement or misrepresentations by
the Company prior to the date hereof. The Investors hereby agree to waive
any claims based on such alleged breaches and misrepresentations in the
event that all of the New Preferred Stock is redeemed by the Company within
the time frame contemplated by the New Certificate. The Company
acknowledges that, by entering into this Second Supplement, the Investors
have not waived any rights or claims that they may have relating to any
such alleged breaches or misrepresentations other than under the
circumstances contemplated by the immediately preceding sentence.
11. The Investors have acquired and shall hold the New Preferred
Stock for their own account for investment only and not with a view to, or
for resale in connection with, the public sale or distribution thereof
except pursuant to sales registered under the Securities Act of 1933, as
amended, or pursuant to an exemption from registration provided thereunder.
The Investors and their affiliates agree not to short sell or to write any
type of put options against shares of the Common Stock and the Investors
and their affiliates represent and warrant that they will not use, directly
or indirectly, any use shares of Issuable Common Stock to cover any short
sale position or put position in the Common Stock that existed prior to or
from the date hereof.
12. Except as modified pursuant to this Second Supplement, all
terms and provision of the Investment Agreement shall remain in full force
and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Second
Supplement to be duly executed as of the date first written above.
COMPLETE WELLNESS
CENTERS, INC.
BY /s/ C. Xxxxxx XxXxxxxx
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Name:
Title:
IMPRIMIS INVESTORS LLC
BY /s/ Xxxxxxxxx Xxxxx
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Name: Xxxxxxxxx Xxxxx
Title: SVP
WEXFORD SPECTRUM
INVESTORS LLC
BY /s/ Xxxxxxxxx Xxxxx
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Name: Xxxxxxxxx Xxxxx
Title: SVP
