Exhibit 4.4
Certificate of Designation of the Rights and Preferences of the Series A
Convertible Preferred Stock of National Beauty Corp.
CERTIFICATE OF DESIGNATION OF THE RIGHTS
AND PREFERENCES OF THE SERIES A
CONVERTIBLE PREFERRED STOCK OF NATIONAL BEAUTY CORP.
WE, Edward Roth and Alisha Roth, being the President and Secretary,
respectively, of National Beauty Corp., a corporation organized and existing
under the laws of Nevada (the "Corporation"), DO HEREBY CERTIFY that, pursuant
to the authority conferred on the Board of Directors by the Certificate of
Incorporation and Section 78.195 of the Corporation Law of Nevada, the Board of
Directors, by unanimous written consent on October 26, 1998, adopted the
following resolution providing for the issuance of a series of Preferred Stock:
WHEREAS, the Articles of Incorporation of the Corporation, as amended,
provide that the Corporation has authorized One Hundred Million (100,000,000)
shares of $.001 par value common stock ("Common Stock") and Fifty Million
(50,000,000) shares of $.001 par value preferred stock (?Preferred Stock@). The
Bylaws and the Articles of Incorporation of the Corporation, as amended, further
provide that the designation, powers, preferences and relative participating,
option or other special rights and qualification, limitations or restrictions of
the shares of such Preferred Stock may be issued from to time in one or more
series, each of such series to have such voting powers, designation,
preferences, and relative participating, optional or other special rights and
the qualifications, limitations or restrictions thereof, as expressed herein or
in a resolution or resolutions, providing for the issuance of such series,
adopted by the Board of Directors; and
NOW, THEREFORE, BE IT:
RESOLVED, that pursuant to the authority vested in the Board of Directors
of this Corporation by its Articles of Incorporation, a series of preferred
stock of the Corporation, be and is hereby created out of the Preferred Stock,
such series to be designated Series A Convertible Preferred Stock (the "Series A
Preferred Stock"), to consist of Fifty Million (50,000,000) shares of which the
preferences and relative other rights, and the qualifications, limitations or
restrictions thereof (in addition to those set forth in the Corporation's
Articles of Incorporation), shall be as follows:
The powers, preferences and rights granted to the Series A Preferred (as
defined below) or the holders thereof are as follows:
1. Designation and Rank. The series of Preferred Stock shall be designated
--------------------
the "Series A Convertible Preferred Stock" ("Series A Preferred") and shall
consist of 50,000,000 shares. The Series A Preferred and any other series of
Preferred Stock authorized by the Board of Directors of this Corporation are
hereinafter referred to as "Preferred Stock" or "Preferred." The Series A
Preferred shall be senior to the common stock and all other shares of Preferred
Stock that may be later authorized.
2. Dividend Rate and Rights. The holders of the Series A Preferred shall be
------------------------
entitled to receive Common Stock dividends or other distributions when, as, and
if declared by the directors of the Corporation, with the holders of the Common
Stock on an as converted basis.
3. Conversion intoCommon Stock.
---------------------------
(a) Right to Convert. Each share of Series A Preferred shall be
----------------
convertible, at the option of the holder thereof, at any time after the date of
---
issuance (the "Conversion Date") into ten (10) shares of fully paid and
nonassessable shares of Common Stock (the "Conversion Ratio").
(b) Mechanics of Conversion. Before any holder shall be entitled to
-----------------------
convert, he shall surrender the certificate or certificates representing Series
A Preferred to be converted, duly endorsed or accompanied by proper instruments
of transfer, at the office of the Corporation or of any transfer agent, and
shall give written notice to the Corporation at such office that he elects to
convert the same. The Corporation shall, as soon as practicable thereafter,
issue a certificate or certificates for the number of shares of Common Stock to
which the holder shall be entitled. The Corporation shall, as soon as
practicable after delivery of such certificates, or such agreement and
indemnification in the case of a lost, stolen or destroyed certificate, issue
and deliver to such holder of Series A Preferred a certificate or certificates
for the number of shares of Common Stock to which such holder is entitled as
aforesaid and a check payable to the holder in the amount of any cash amounts
payable as the result of a conversion into fractional shares of Common Stock.
Such conversion shall be deemed to have been made immediately prior to the close
of business on the date of such surrender of the shares of Series A Preferred to
be converted.
(c) Adjustments to Conversion Ratio.
-------------------------------
(1) Merger or Reorganization. In case of any consolidation or merger of the
------------------------
Corporation as a result of which holders of Common Stock become entitled to
receive other stock or securities or property, or in case of any conveyance of
all or substantially all of the assets of the Corporation to another
corporation, the Corporation shall mail to each holder of Series A Preferred at
least thirty (30) days prior to the consummation of such event a notice thereof,
and each such holder shall have the option to either (i) convert such holder's
shares of Series A Preferred into shares of Common Stock pursuant to this
Section 3 and thereafter receive the number of shares of stock or other
securities or property to which a holder of the number of shares of Common Stock
of the Corporation deliverable upon conversion of such Series A Preferred would
have been entitled upon such consolidation, merger or conveyance, or (ii)
exercise such holder's rights pursuant to Section 4(a).
Unless otherwise set forth by the Board of Directors, the Conversion Ratio shall
not be affected by a stock dividend or subdivision (stock split) on the Common
Stock of the Corporation, or a stock combination (reverse stock split) or stock
consolidation by reclassification of the Common Stock. However, once the Series
A Preferred has been converted to Common Stock, it shall be subject to all
corporate actions that affect or modify the common stock.
(d) No Impairment. The Corporation will not, by amendment of its Articles
-------------
of Incorporation, this Certificate of Designation or through any reorganization,
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 the
Corporation, but will at all times in good faith assist in the carrying out of
all the provisions of this Section 3 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 against impairment.
(e) Certificate as to Adjustments. Upon the occurrence of each adjustment
-----------------------------
or readjustment of the Conversion Ratio of the Series A Preferred pursuant to
this Section 3, the Corporation at its expense shall promptly compute such
adjustment or readjustment in accordance with the terms hereof and furnish to
each holder of Series A Preferred a certificate setting forth such adjustment or
readjustment and the calculation on which such adjustment or readjustment is
based. The Corporation shall, upon the written request at any time of any
holder of Series A Preferred, furnish or cause to be furnished to such holder a
like certificate setting forth (i) such adjustments and readjustments, (ii) the
Conversion Ratio for the Series A Preferred at the time in effect and (iii) 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 the Series A Preferred.
(f) Notices of Record Date. In the event of any taking by the 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 which is the same as cash dividends paid in previous
quarter) or other distribution, the Corporation shall mail to each holder of
Series A Preferred at least ten (10) days prior to the date specified herein, a
notice specifying the date on which any such record is to be taken for the
purpose of such dividend or distribution.
(g) Common Stock Reserved. The Corporation shall reserve and keep available
---------------------
out of its authorized but unissued Common Stock such number of shares of Common
Stock as shall from time to time be sufficient to effect conversion of the
Series A Preferred.
4. Liquidation Preference.
----------------------
(a) In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary (a "Liquidation"), the assets of
the Corporation available for distribution to its stockholders shall be
distributed as follows:
(1) The holders of the Series A Preferred shall be entitled to receive,
prior to the holders of the other series of Preferred Stock and prior and in
preference to any distribution of the assets or surplus funds of the Corporation
to the holders of any other shares of stock of the corporation by reason of
their ownership of such stock, an amount equal to $1.00 per share with respect
to each share of Series A Preferred, plus all declared but unpaid dividends with
respect to such share.
(2) If upon occurrence of a Liquidation the assets and funds thus
distributed among the holders of the Series A Preferred shall be insufficient to
permit the payment to such holders of the full preferential amount, then the
entire assets and funds of the Corporation legally available for distribution
shall be distributed among the holders of the Series A Preferred ratably in
proportion to the full amounts to which they would otherwise be respectively
entitled.
(3) After payment of the full amounts to the holders of Series A Preferred
as set forth above in paragraph (1), any remaining assets of the Corporation
shall be distributed pro rata to the holders of the Preferred Stock and Common
Stock (in the case of the Preferred Stock, on an "as converted" basis into
Common Stock).
(b) For purposes of this Section 4, and unless a majority of the holders of
the Series A Preferred affirmatively vote or agree by written consent to the
contrary, a Liquidation shall be deemed 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) and (ii) a sale of all or substantially all of the assets of the
Corporation, unless the Corporation's stockholders of record as constituted
immediately prior to such acquisition or sale will, immediately after such
acquisition or sale (by virtue of securities issued as consideration for the
Corporation's acquisition or sale or otherwise) hold at least fifty percent
(50%) of the voting power of the surviving or acquiring entity.
(c) If any of the assets of the Corporation are to be distributed other than
in cash under this Section 4, then the board of directors of the Corporation
shall promptly engage independent competent appraisers to determine the value of
the assets to be distributed to the holders of Preferred Stock or Common Stock.
The Corporation shall, upon receipt of such appraiser's valuation, give prompt
written notice to each holder of shares of Preferred Stock or Common Stock of
the appraiser's valuation.
5. Voting Rights. Except as otherwise required by law, the holders of
-------------
Series A Preferred and the holders of Common Stock shall be entitled to notice
of any stockholders' meeting and to vote as a single class upon any matter
submitted to the stockholders for a vote as follows: (i) the holders of each
series of Preferred Stock shall have one vote for each full share of Common
Stock into which a share of such series would be convertible on the record date
for the vote, or, if no such record date is established, at the date such vote
is taken or any written consent of stockholders is solicited; and (ii) the
holders of Common Stock shall have one vote per share of Common Stock held as of
such date.
6. Covenants.
---------
(a) In addition to any other rights provided by law, the Corporation shall
not, without first obtaining the affirmative vote or written consent of the
holders of a majority of the outstanding shares of Series A Preferred, do any of
the following:
(1) take any action which would either alter, change or affect the rights,
preferences, privileges or restrictions of the Series A Preferred or increase
the number of shares of such series authorized hereby or designate any other
series of Preferred Stock;
(2) increase the size of any equity incentive plan(s) or arrangements;
(3) make fundamental changes to the business of the Corporation;
(4) make any changes to the terms of the Series A Preferred or to the
Corporation's Articles of Incorporation or Bylaws, including by designation of
any stock;
(5) create any new class of shares having preferences over or being on a
parity with the Series A Preferred as to dividends or assets, unless the purpose
of creation of such class is, and the proceeds to be derived from the sale and
issuance thereof are to be used for, the retirement of all Series A Preferred
then outstanding;
(6) accrue any indebtedness in excess of $1,000,000;
(7) make any change in the size or number of authorized directors;
(8) repurchase any of the Corporation's Common Stock;
(9) sell, convey or otherwise dispose of, or create or incur any mortgage,
lien, charge or encumbrance on or security interest in or pledge of, or sell and
leaseback, all or substantially all of the property or business of the
Corporation or more than 50% of the stock of the Corporation;
(10) make any payment of dividends or other distributions or any redemption
or repurchase of stock or options or warrants to purchase stock of the
Corporation; or
(11) make any sale of additional Preferred Stock.
(7) Reissuance. No share or shares of Series A Preferred acquired by
----------
the Corporation by reason of conversion or otherwise shall be reissued as Series
A Preferred, and all such shares thereafter shall be returned to the status of
undesignated and unissued shares of Preferred Stock of the Corporation.
8. Directors. The holders of Series A Preferred and Common Stock voting
---------
together as a class shall be entitled to elect the directors comprising the
Board of Directors (and to fill any vacancies with respect thereto).
The undersigned being the President and Secretary of the Company hereby declare
under penalty of perjury that the foregoing is a true and correct copy of the
Certificate of Designation of the Rights and Preferences of the Series A
Convertible Preferred Stock of National Beauty Corp. duly adopted by the Board
of Directors of the Company on October 26, 1998.
By: /s/ Edward Roth
---------------
Name: Edward Roth
Title: President
By: /s/Alisha Roth
--------------
Name: Alisha Roth
Title: Secretary