ARTICLES OF AMENDMENT
TO THE ARTICLES OF INCORPORATION
OF
INTERNATIONAL COSMETICS MARKETING CO.
Pursuant to Section 607.1006 of the Business Corporation Act of the
State of Florida, the undersigned, being the President of INTERNATIONAL
COSMETICS MARKETING CO., a corporation organized and existing under and by
virtue of the Business Corporation Act of the State of Florida (the
"Corporation"), bearing document number P95000054666, does hereby certify that
the following resolutions were adopted pursuant to the authority of the Board of
Directors as required by Section 602.0602 of the Florida Business Corporation
Act:
RESOLVED, that pursuant to the authority granted to and vested in the
Board of Directors of this Corporation (the "Board of Directors" or the "Board")
in accordance with the provisions of its Articles of Incorporation and Bylaws,
each as amended through the date hereof, the Board of Directors hereby
authorizes a series of the Corporation's previously authorized preferred stock,
par value $.001 per share, and hereby sets forth, to be added to Article IV of
the Articles of Incorporation of the Corporation, the designation and number of
shares, and fixes the relative rights, preferences, privileges, powers and
restrictions thereof as follows:
ARTICLE IV
CAPITAL STOCK
The maximum number of shares that this Corporation shall be authorized
to issue and have outstanding at any one time shall be 25,000,000 shares of
common stock, par value $.001 per share (the "Common Stock") and 5,000,000
shares of preferred stock, par value $.001 per share (the "Preferred Stock").
Series of the Preferred Stock may be created and issued from time to time, with
such designations, preferences, conversion rights, cumulative, relative,
participating, optional or other rights, including voting rights,
qualifications, limitations or restrictions thereof as shall be stated and
expressed in the resolution or resolutions providing for the creation and
issuance of such series of Preferred Stock as adopted by the Board of Directors
pursuant to the authority in this paragraph given.
The Board of Directors of the Corporation hereby designates 226,000 of
the authorized shares of Preferred Stock as Series A Convertible Preferred
Stock. The rights, preferences, privileges, restrictions and other matters
relating to the Series A Convertible Preferred Stock are as follows:
ROXANNE K. BEILLY, ESQ., FLA. BAR #851450
Atlas Pearlman, P.A.
350 East Las Olas Boulevard, Suite 1700
Fort Lauderdale, Florida 33301
Phone No.: (954) 763-1200
Rights, Preferences and Designations
of
Series A Convertible Preferred Stock
1. Designation and Dividends. The designation of this series, which
consists of 226,000 shares of Preferred Stock, is the Series A Convertible
Preferred Stock (the "Series A Preferred Stock") and the stated value shall be
$2.50 per share. The holders of shares of Series A Convertible Preferred Stock
shall not be entitled to receive dividends.
2. Liquidation Preference.
(a) In the event of any liquidation, dissolution or winding up
of this Corporation, either voluntary or involuntary, the holders of
Series A Preferred Stock may at their sole option elect to receive,
prior and in preference to any distribution of any of the assets of
this Corporation to the holders of Common Stock by reason of their
ownership thereof, an amount per share equal to $2.50 for each
outstanding share of Series A Preferred Stock (the "Original Series A
Issue Price"). If upon the occurrence of such event, the assets and
funds thus distributed among the holders of the Series A Preferred
Stock shall be insufficient to permit the payment to such holders of
the full aforesaid preferential amount, then, the entire assets and
funds of the Corporation legally available for distribution shall be
distributed ratably among the holders of the Series A Preferred Stock
in proportion to the amount of such stock owned by each such holder.
(b) Upon the completion of the distribution required by
subparagraph (a) of this Section 2 and any other distribution that may
be required with respect to series of preferred stock of this
Corporation that may from time to time come into existence, if assets
remain in this Corporation, the holders of the Common Stock of this
Corporation, shall receive all of the remaining assets of this
Corporation.
(c) For purposes of this Section 2, a liquidation, dissolution
or winding up of this Corporation shall be deemed to be occasioned by,
or to include, (i) the acquisition of the Corporation by another entity
by means of any transaction or series of related transactions
(including, without limitation, any reorganization, merger or
consolidation but, excluding any merger effected exclusively for the
purpose of changing the domicile of the Corporation) or (ii) a sale of
all or substantially all of the assets of the Corporation; unless the
Corporation's shareholders of record as constituted immediately prior
to such transaction will, immediately after such transaction (by virtue
of securities issued as consideration in the transaction) hold at least
50% of the voting power of the surviving or acquiring entity. This
Corporation shall give each holder of record of Series A Preferred
Stock written notice of such impending transaction not later than
twenty (20) days prior to the shareholders' meeting called to approve
such transaction, or twenty (20) days prior to the closing of such
transaction, whichever is earlier, and shall also notify such holders
in writing of the final approval of such transaction. The first of such
notices shall describe the material terms and conditions of the
impending
2
transaction and the provisions of this Section 2, and the Corporation
shall thereafter give such holders prompt notice of any material
changes. The transaction shall in no event take place sooner than
twenty (20) days after the Corporation has given the first notice
provided for herein or sooner than ten (10) days after the Corporation
has given notice of any material changes provided for herein; provided,
however, that such periods may be shortened upon the written consent of
the holders of Series A Preferred Stock that are entitled to such
notice rights or similar notice rights and that represent at least a
majority of the voting power of all then outstanding shares of such
Series A Preferred Stock.
(d) Whenever a distribution provided for in this Section 2
shall be payable in securities or property other than cash, the value
of such distribution shall be the fair market value of such securities
or other property as mutually determined and agreed to in writing by
the board of directors of this Corporation and the holders of a
majority of the voting power of all then outstanding shares of such
Series A Preferred Stock.
3. Redemption. The Series A Preferred Stock is not redeemable without
the prior express written consent of the holders of a majority of the voting
power of all then outstanding shares of such Series A Preferred Stock.
Notwithstanding the foregoing, in the event the holders of the Series A
Preferred Stock have not converted their Series A Preferred Stock into Common
Stock of the Company by September 30, 2005, the Company shall have the option to
redeem the Series A Preferred Stock at a price of SEVEN DOLLARS AND 50/100
($7.50) per share.
4. Conversion. The holders of the Series A Preferred Stock shall have
conversion rights as follows (the "Conversion Rights"):
(a) Right to Convert. Each share of Series A Preferred Stock
shall be convertible, at the sole option of the holder thereof, at any
time, or from time to time, after the date of issuance of such share at
the office of this Corporation into such number of fully paid and
non-assessable shares of Common Stock as is determined by dividing the
Original Series A Issue Price by the Conversion Price applicable to
such share, determined as hereafter provided, in effect on the date the
Conversion Notice (as defined below) is received by this Corporation.
The initial Conversion Price per share of Series A Preferred Stock
shall be the Original Series A Issue Price; provided, however, that the
Conversion Price for the Series A Preferred Stock shall be subject to
adjustment as set forth in subsection 4(c).
(b) Mechanics of Conversion. Before any holder of Series A
Preferred Stock shall be entitled to convert the same into shares of
Common Stock he shall give written notice to this Corporation at its
principal corporate office of the election to convert the same and
shall state therein the name or names in which the certificate or
certificates for shares of Common Stock are to be issued (the
"Conversion Notice"). This Corporation shall, within three (3) business
days thereafter, issue and deliver at such office to such holder of
Series A Preferred
3
Stock, or to the nominee or nominees of such holder, a certificate or
certificates for the number of shares of Common Stock to which such
holder shall be entitled as aforesaid. Such conversion shall be deemed
to have been made immediately prior to the close of business on the
date of such Conversion Notice, and the person or persons entitled to
receive the shares of Common Stock issuable upon such conversion shall
be treated for all purposes as the record holder or holders of such
shares of Common Stock as of such date.
(c) Conversion Price Adjustments of Series A Preferred Stock
for Certain Dilutive Issuances, Splits and Combinations. The Conversion
Price of the Series A Preferred Stock shall be subject to adjustment
from time to time as follows:
(i) (A) If the Corporation shall issue, after the
date of the purchase agreement for the shares of Series A
Preferred Stock (the "Purchase Date"), any Additional Stock
(as defined below) without consideration or for a
consideration per share less than the Conversion Price in
effect immediately prior to the issuance of such Additional
Stock, the Conversion Price in effect immediately prior to
each such issuance shall forthwith (except as otherwise
provided in this clause (i)) be adjusted to a price equal to
the price paid per share for such Additional Stock.
(B) No adjustment of the Conversion Price for the
Series A Preferred Stock shall be made in an amount less than
one cent per share, provided that any adjustments which are
not required to be made by reason of this sentence shall be
carried forward and shall be either taken into account in any
subsequent adjustment made prior to 3 years from the date of
the event giving rise to the adjustment being carried forward,
or shall be made at the end of 3 years from the date of the
event giving rise to the adjustment being carried forward.
Except to the limited extent provided for in subsections
(E)(3) and (E)(4), no adjustment of such Conversion Price
pursuant to this subsection 4(c)(i) shall have the effect of
increasing the Conversion Price above the Conversion Price in
effect immediately prior to such adjustment.
(C) In the case of the issuance of Common Stock for
cash, the consideration shall be deemed to be the amount of
cash paid therefor before deducting any reasonable discounts,
commissions or other expenses allowed, paid or incurred by
this Corporation for any underwriting or otherwise in
connection with the issuance and sale thereof.
(D) In the case of the issuance of the Common Stock
for a consideration in whole or in part other than cash, for
the purposes of this Section the consideration other than cash
shall be deemed to be the fair value thereof as mutually
determined and agreed to in writing by the board of directors
of this Corporation and the holders of at least a majority of
the voting power of all then outstanding shares of such Series
A Preferred Stock, irrespective of any accounting treatment.
4
(E) In the case of the issuance (whether on or after
the applicable Purchase Date) of options to purchase or rights
to subscribe for Common Stock, securities by their terms
convertible into or exchangeable for Common Stock or options
to purchase or rights to subscribe for such convertible or
exchangeable securities, the following provisions shall apply
for all purposes of this subsection 4(c)(i) and subsection
4(c)(ii):
(1) The aggregate maximum number of shares
of Common Stock deliverable upon exercise (assuming
the satisfaction of any conditions to
exerciseability, including without limitation, the
passage of time, but without taking into account
potential anti-dilution adjustments) of such options
to purchase or rights to subscribe for Common Stock
shall be deemed to have been issued at the time such
options or rights were issued and for a consideration
equal to the consideration (determined in the manner
provided in subsections 4(c)(i)(C) and (c)(i)(D)), if
any, received by the Corporation upon the issuance of
such options or rights plus the minimum exercise
price provided in such options or rights (without
taking into account potential anti-dilution
adjustments) for the Common Stock covered thereby.
(2) The aggregate maximum number of shares
of Common Stock deliverable upon conversion of or in
exchange (assuming the satisfaction of any conditions
to convertibility or exchangeability including,
without limitation, the passage of time, but without
taking into account potential anti-dilution
adjustments) for any such convertible or exchangeable
securities or upon the exercise of options to
purchase or rights to subscribe for such convertible
or exchangeable securities and subsequent conversion
or exchange thereof shall be deemed to have been
issued at the time such securities were issued or
such options or rights were issued and for a
consideration equal to the consideration, if any,
received by the Corporation for any such securities
and related options or rights (excluding any cash
received on account of accrued interest or accrued
dividends), plus the minimum additional
consideration, if any, to be received by the
Corporation (without taking into account potential
anti-dilution adjustments) upon the conversion or
exchange of such securities or the exercise of any
related options or rights (the consideration in each
case to be determined in the manner provided in
subsections 4(c)(i)(C) and (c)(i)(D)).
(3) In the event of any change in the number
of shares of Common Stock deliverable or in the
consideration payable to this Corporation upon
exercise of such options or rights or upon conversion
of or in exchange for such convertible or
exchangeable securities including, but not limited
to, a change resulting from the
5
anti-dilution provisions thereof, the Conversion
Price of the Series A Preferred Stock, to the extent
in any way affected by or computed using such
options, rights or securities, shall be recomputed to
reflect such change, but no further adjustment shall
be made for the actual issuance of Common Stock or
any payment of such consideration upon the exercise
of any such options or rights or the conversion or
exchange of such securities.
(4) Upon the expiration of any such options
or rights, the termination of any such rights to
convert or exchange or the expiration of any options
or rights related to such convertible or exchangeable
securities, the Conversion Price of the Series A
Preferred Stock, to the extent in any way affected by
or computed using such options, rights or securities
or options or rights related to such securities,
shall be recomputed to reflect the issuance of only
the number of shares of Common Stock (and convertible
or exchangeable securities which remain in effect)
actually issued upon the exercise of such options or
rights, upon the conversion or exchange of such
securities or upon the exercise of the options or
rights related to such securities.
(5) The number of shares of Common Stock
deemed issued and the consideration deemed paid
therefor pursuant to subsections 4(c)(i)(E)(1) and
(2) shall be appropriately adjusted to reflect any
change, termination or expiration of the type
described in either subsection 4(c)(i)(E)(3) or (4).
(ii) "Additional Stock" shall mean any shares of
Common Stock issued (or deemed to have been issued pursuant to
subsection 4(c)(i)(E)) by this Corporation after the Purchase
Date other than (A) Common Stock issued pursuant to a
transaction described in subsection 4(c)(iii) hereof, (B)
shares of Common Stock issuable or issued to employees and
directors of this Corporation directly or pursuant to a stock
option plan or restricted stock plan approved by the
shareholders and board of directors of this Corporation, or
(C) up to an aggregate of 4,850,000 shares of Common Stock
issuable upon the exercise of options beneficially owned by
Elan Sassoon, Beverly Sassoon and their affiliates granted on
August 19, 1999.
(iii) In the event the Corporation should at any time
or from time to time after the Purchase Date fix a record date
for the effectuation of a split or subdivision of the
outstanding shares of Common Stock or the determination of
holders of Common Stock entitled to receive a dividend or
other distribution payable in additional shares of Common
Stock or other securities or rights convertible into, or
entitling the holder thereof to receive directly or
indirectly, additional shares of Common Stock (hereinafter
referred to as "Common Stock Equivalents") without payment of
any consideration by such holder for the additional shares of
Common Stock or the Common
6
Stock Equivalents (including the additional shares of Common
Stock issuable upon conversion or exercise thereof), then, as
of such record date (or the date of such dividend
distribution, split or subdivision if no record date is
fixed), the Conversion Price of the Series A Preferred Stock
shall be appropriately decreased so that the number of shares
of Common Stock issuable on conversion of each share of Series
A Preferred Stock shall be increased in proportion to such
increase of the aggregate of shares of Common Stock
outstanding and those issuable with respect to such Common
Stock Equivalents with the number of shares issuable with
respect to Common Stock Equivalents determined from time to
time in the manner provided for deemed issuances in subsection
4(c)(i)(E).
(iv) If the number of shares of Common Stock
outstanding at any time after the Purchase Date is decreased
by a combination of the outstanding shares of Common Stock,
then, following the record date of such combination, the
Conversion Price for the Series A Preferred Stock shall be
appropriately increased so that the number of shares of Common
Stock issuable on conversion of each share of such series
shall be decreased in proportion to such decrease in
outstanding shares.
(d) Other Distributions. In the event this Corporation shall
declare a distribution payable in securities of other persons,
evidences of indebtedness issued by this Corporation or other persons,
assets (excluding cash dividends) or options or rights not referred to
in subsection 4(c)(iii), then, in each such case for the purpose of
this subsection 4(d), the holders of the Series A Preferred Stock shall
be entitled to a proportionate share of any such distribution as though
they were the holders of the number of shares of Common Stock of the
Corporation into which their shares of Series A Preferred Stock are
convertible as of the record date fixed for the determination of the
holders of Common Stock of the Corporation entitled to receive such
distribution.
(e) Rights to Purchase Other Securities. In case of any
merger, consolidation or acquisition with or into another Corporation,
or in case of any sale, lease or conveyance to another Corporation of
the assets of this Corporation as an entirety or substantially as an
entirety, each share of Series A Preferred Stock shall, at the sole
option of the holder thereof, after the date of such transaction be
convertible into the number of shares of stock or other securities or
property (including cash) to which the Common Stock issuable (at the
time of such consolidation, merger, sale, lease or conveyance) upon
conversion of such share of Series A Preferred Stock would have been
entitled upon such consolidation, merger, sale, lease or conveyance. In
any such case, appropriate adjustment shall be made in the application
of the provisions of this Section 4 with respect to the rights of the
holders of the Series A Preferred Stock after the transaction to the
end that the provisions of this Section 4 (including adjustment of the
Conversion Price then in effect and the number of shares purchasable
upon conversion of the
7
Series A Preferred Stock) shall be applicable after that event as
nearly equivalent as may be practicable.
(f) No Impairment. This Corporation will not, by amendment of
its Articles of Incorporation or through any reorganization,
recapitalization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the
terms to be observed or performed hereunder by this Corporation, but
will at all times in good faith assist in the carrying out of all the
provisions of this Section 4 and in the taking of all such action as
may be necessary or appropriate in order to protect the Conversion
Rights of the holders of the Series A Preferred Stock against
impairment.
(g) No Fractional Shares and Certificate as to Adjustments.
(i) No fractional shares shall be issued upon the
conversion of any share or shares of the Series A Preferred
Stock, and the number of shares of Common Stock to be issued
shall be rounded up to the nearest whole share. Whether or not
fractional shares are issuable upon such conversion shall be
determined on the basis of the total number of shares of
Series A Preferred Stock the holder is at the time converting
into Common Stock and the number of shares of Common Stock
issuable upon such aggregate conversion.
(ii) Upon the occurrence of each adjustment or
readjustment of the Conversion Price of Series A Preferred
Stock pursuant to this Section 4, this Corporation, at its
expense, shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and prepare
and furnish to each holder of Series A Preferred Stock a
certificate setting forth such adjustment or readjustment and
showing in detail the facts upon which such adjustment or
readjustment is based. This Corporation shall, upon the
written request at any time of any holder of Series A
Preferred Stock, furnish or cause to be furnished to such
holder a like certificate setting forth (A) such adjustment
and readjustment, (B) the Conversion Price for such series of
Series A Preferred Stock at the time in effect, and (C) the
number of shares of Common Stock and the amount, if any, of
other property which at the time would be received upon the
conversion of a share of Series A Preferred Stock.
(h) Notices of Record Date. In the event of any taking by this
Corporation of a record of the holders of any class of securities for
the purpose of determining the holders thereof who are entitled to
receive any dividend (other than a cash dividend) or other
distribution, any right to subscribe for, purchase or otherwise acquire
any shares of stock of any class or any other securities or property,
or to receive any other right, this Corporation shall mail to each
holder of Series A Preferred Stock, at least 20 days prior to the date
specified therein, a notice
8
specifying the date on which any such record is to be taken for the
purpose of such dividend, distribution or right, and the amount and
character of such dividend, distribution or right.
(i) Reservation of Stock Issuable Upon Conversion. This
Corporation shall at all times reserve and keep available out of its
authorized but unissued shares of Common Stock, solely for the purpose
of effecting the conversion of the shares of the Series A Preferred
Stock, such number of its shares of Common Stock as shall from time to
time be sufficient to effect the conversion of all outstanding shares
of the Series A Preferred Stock; and if at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient
to effect the conversion of all then outstanding shares of the Series A
Preferred Stock, in addition to such other remedies as shall be
available to the holder of such Series A Preferred Stock, this
Corporation will take such corporate action as may, in the opinion of
its counsel, be necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as shall be sufficient
for such purposes including, without limitation, engaging in best
efforts to obtain the requisite shareholder approval of any necessary
amendment to these articles.
(j) Notices. Any notice required by the provisions of this
Section 4 to be given to the holders of shares of Series A Preferred
Stock shall be deemed given if delivered by a recognized overnight
courier and addressed to each holder of record at his address appearing
on the books of this Corporation.
5. Voting Rights. Each share of Series A Preferred Stock shall entitle
the holder thereof to seventy-five (75) votes for each one vote per share of
Common Stock, and with respect to such vote, shall be entitled, notwithstanding
any provision hereof, to notice of any shareholders' meeting in accordance with
the bylaws of this Corporation, and shall be entitled to vote, together as a
single class with holders of Common Stock, with respect to any question or
matter upon which holders of Common Stock have the right to vote. Series A
Preferred Stock shall also entitle the holders thereof to vote as a separate
class as set forth herein and as required by law.
6. Protective Provisions. So long as any shares of Series A Preferred
Stock are outstanding, this Corporation shall not without first obtaining the
written approval of the holders of at least a majority of the voting power of
the then outstanding shares of such Series A Preferred Stock:
(a) sell, convey, or otherwise dispose of or encumber all or
substantially all of its property or business or merge into or
consolidate with any other corporation (other than a wholly-owned
subsidiary Corporation) or effect any transaction or series of related
transactions in which more than fifty percent (50%) of the voting power
of the Corporation is transferred or disposed of;
(b) alter or change the rights, preferences or privileges of
the Series A Preferred Stock;
9
(c) increase or decrease the total number of authorized shares
of Series A Preferred Stock;
(d) authorize or issue, or obligate itself to issue, any other
equity security, including any other security convertible into or
exercisable for any equity security having rights, preferences or
privileges over, or being on a parity with or similar to, the Series A
Preferred Stock; or
(e) redeem, purchase or otherwise acquire (or pay into or set
aside for a sinking fund for such purpose) any security of this
Corporation;
(f) amend this Corporation's Articles of Incorporation or
bylaws;
(g) change the authorized number of directors of the
Corporation;
(i) declare, order or pay any dividends on any class of
securities;
(j) adjust the salary of executive officers, directors,
executive level independent contractors and key employees of this
Corporation;
(k) make any capital expenditures in excess of $15,000;
(l) issue new shares of capital stock of this Corporation;
(m) enter into or approve any agreement or contract for the
purchase of goods, services or other items between this Corporation, a
shareholder or a member of a shareholder's immediate family; or
(n) make any commission payment to any independent business
associate in excess of $15,000.
7. Status of Converted or Redeemed Stock. In the event any shares of
Series A Preferred Stock shall be converted or redeemed pursuant to Section 4
hereof, the shares so converted or redeemed shall be cancelled and shall not be
issuable by the Corporation. The Articles of Incorporation of this Corporation
shall be appropriately amended to effect the corresponding reduction in the
Corporation's authorized capital stock.
8. Taxes. This Corporation will pay all taxes (other than taxes based
upon income) and other governmental charges that may be imposed with respect to
the issue or delivery of shares of Series A Preferred Stock and Common Stock
upon conversion of shares of Series A Preferred Stock, excluding any tax or
other charge imposed in connection with any transfer involved in the issue and
delivery of shares of Common Stock in a name other than that in which the shares
of Series A Preferred Stock so converted were registered.
10
IN WITNESS WHEREOF, the undersigned, being the President of this
Corporation, has executed these Articles of Amendment as of September 27,
2000
INTERNATIONAL COSMETICS MARKETING CO.
By: /s/ Stephanie McAnly
------------------------------------
Stephanie McAnly, President