Exhibit 10.2 Warrant to Purchase Common Stock of National Beauty Corp.
VOID AFTER 5:00 P.M., NEW YORK TIME ON AUGUST___, 2007
WARRANT TO PURCHASE 3,000,000 SHARES OF COMMON STOCK
WARRANT TO PURCHASE COMMON STOCK
OF
NATIONAL BEAUTY CORP.
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE PURSUANT TO THIS WARRANT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND ARE BEING ISSUED PURSUANT TO RULE 504 OF REGULATION D
PROMULGATED UNDER THE SECURITIES ACT.
FOR VALUE RECEIVED, NATIONAL BEAUTY CORP., a Nevada corporation (the
"Company"), grants the following rights to HEM Mutual Assurance LLC, a Colorado
limited liability company and/or its assigns (the "Holder"):
ARTICLE 1. DEFINITIONS
Capitalized terms used and not otherwise defined herein shall have the
meanings given such terms in the Agreement and Plan of Merger between the
Company and Zzyzx Zzazx Zzozx, Inc. and entered into on August 20, 2002 (the
"Merger Agreement"). As used in this Agreement, the following terms shall have
the following meanings:
"Common Stock" means shares now or hereafter authorized of the class of common
stock, par value $.001 per shares, of the Company and stock of any other class
into which such shares may hereafter have been reclassified or changes.
"Corporate Office" shall mean the office of the Company (or its successor) at
which at any particular time its principal business shall be administered.
"Exercise Date" shall mean any date on which the Holder gives the Company a
Notice of Exercise in compliance with the terms of Exhibit 2.2(b) to the Merger
Agreement.
"Exercise Price" shall mean the Fixed Price per share of Common Stock, subject
to adjustment as provided herein.
"Expiration Date" shall mean 5:00 p.m. (New York time) on August ___, 2007.
"Fixed Price" shall mean US$.001.
"Per Share Market Value" of the Common Stock means on any particular date
(a) the last sale price of shares of Common Stock on such date or, if no such
sale takes place on such date, the last sale price on the most recent prior
date, in each case as officially reported on the principal national securities
exchange on which the Common Stock is then listed or admitted to trading, or (b)
if the Common Stock is not then listed or admitted to trading on any national
securities exchange, the closing bid price per share as reported by Nasdaq, or
(c) if the Common Stock is not then listed or admitted to trading on the Nasdaq,
the closing bid price per share of the Common Stock on such date as reported on
the NASD over-the counter Bulletin Board ("OTCBB") or if there is no such price
on such date, then the last bid price on the date nearest preceding such date,
or (d) if the Common Stock is not quoted on the OTCBB, the closing bid price for
a share of Common Stock on such date in the over-the-counter market as reported
by the Pinksheets LLC (or similar organization or agency succeeding to its
functions of reporting prices) or if there is no such price on such date, then
the last bid price on the date nearest preceding such date, or (e) if the Common
Stock is no longer publicly traded, the fair market value of a share of the
Common Stock as determined by an Appraiser (as defined in the Certificate of
Designation) selected in good faith by the holders of a majority of the Company
Preferred Stock Shares; provided, however, that the Company, after receipt of
-------- -------
the determination by such Appraiser, shall have the right to select an
additional Appraiser, in which case, the fair market value shall be equal to the
average of the determinations by each such Appraiser, in each case as reported
by Bloomberg Financial Markets, or if not available, a comparable reporting
service chosen by the Company reasonably acceptable to the Holder of a majority
of the outstanding Company Preferred Stock Shares.
"SEC" shall mean the United States Securities and Exchange Commission.
"Warrant Shares" shall mean the shares of the Common Stock issuable upon
exercise of this Warrant.
ARTICLE 2. EXERCISE AND AGREEMENTS
2.1 Exercise of Warrant. This Warrant shall entitle the Holder to
---------------------
purchase, at the Exercise Price, 3,000,000 shares of Common Stock. This Warrant
shall be exercisable at any time and from time to time from the date hereof and
prior to the Expiration Date (the "Exercise Period"). This Warrant and the
right to purchase Warrant Shares hereunder shall expire and become void on the
Expiration Date.
2.2 Manner of Exercise.
--------------------
(a) The Holder may exercise this Warrant at any time and from time to
time during the Exercise Period, in whole or in part (but not in denominations
of fewer than 10,000 Warrant Shares, except upon an exercise of this Warrant
with respect to the remaining balance of Warrant Shares purchasable hereunder at
the time of exercise), by delivering to the Escrow Agent pursuant to the Escrow
Agreement annexed to the Merger Agreement as Exhibit 2.2(a) and incorporated
herein by reference (i) a duly executed Notice of Exercise in substantially the
form attached as Appendix I hereto, (ii) the certificate representing the
Warrants, (iii) a bank cashier's or certified check for the aggregate Exercise
Price of the Warrant Shares being purchased, and (iv) a bank cashier's or
certified check or wire transfer of $350 to the Escrow Agent for the exercise
fee pursuant to the Escrow Agreement.
(b) The Holder may, at its option, in lieu of paying cash for the Warrant
Shares, exercise this Warrant by an exchange, in whole or in part (a "Warrant
Exchange"), by delivery to the Escrow Agent of (i) a duly executed Notice of
Exercise electing a Warrant Exchange, (ii) the certificate representing this
Warrant, and (iii) a bank cashier's or certified check or wire transfer for $350
to the Escrow Agent as and for the exercise fee pursuant to the Escrow
Agreement. In connection with any Warrant Exchange, the Holder shall be deemed
to surrender or exchange for the total number of Warrant Shares to be issued to
it, the quotient obtained by dividing (A) the product of the difference between
the Per Share Market Value of a share of Common Stock and the Exercise Price
multiplied by the total number of Warrant Shares for which the Warrant is then
being exercised, by (B) the average Per Share Market Value of a share of Common
--
Stock for the ten (10) Trading Days ending on the Exercise Date.
2.3 Termination. All rights of the Holder in this Warrant, to the extent
-----------
they have not been exercised, shall terminate on the Expiration Date.
2.4 No Rights Prior to Exercise. This Warrant shall not entitle the Holder
----------------------------
to any voting or other rights as a stockholder of the Company.
2.5 Fractional Shares. No fractional shares shall be issuable upon exercise
-----------------
of this Warrant, and the number of Warrant Shares to be issued shall be rounded
up to the nearest whole number. If, upon exercise of this Warrant, the Holder
hereof would be entitled to receive any fractional share, the Company shall
issue to the Holder one additional share of Common Stock in lieu of such
fractional share.
2.6 Escrow. The Company agrees to enter into the Escrow Agreement and to
------
deposit with the Escrow Agent thereunder stock certificates registered in the
name of the Holder, without any restrictions and freely tradable upon resale
pursuant to Rule 504 of Regulation D under the Securities Act, and each
representing a number of shares of Common Stock (in denominations of 10,000
shares) equal, in the aggregate, to the total number of Warrant Shares for which
this Warrant is exercisable, assuming exercise of this Warrant in full on the
date hereof. The Company shall deposit additional certificates for Warrant
Shares upon request by the escrow Agent pursuant to the Escrow Agreement.
2.7 Adjustments to Exercise Price and Number of Securities.
-------------------------------------------------------------
(a) Computation of Adjusted Exercise Price. In case the Company shall
---------------------------------------
at any time after the date hereof issue or sell any shares of Common Stock
(other than the issuances or sales referred to in Section 2.7 (f) hereof),
including shares held in the Company's treasury and shares of Common Stock
issued upon the exercise of any options, rights or warrants to subscribe for
shares of Common Stock and shares of Common Stock issued upon the direct or
indirect conversion or exchange of securities for shares of Common Stock
(excluding shares of Common Stock issuable upon exercise of options, warrants or
conversion rights granted as of the date hereof), for a consideration per share
less than the Exercise Price on the date immediately prior to the issuance or
sale of such shares, or without consideration, then forthwith upon such issuance
or sale, the Exercise Price shall (until another such issuance or sale) be
reduced to the price equal to the quotient derived by dividing (A) an amount
equal to the sum of (X) the product of (a) the Exercise Price on the date
immediately prior to the issuance or sale of such shares, multiplied by (b) the
total number of shares of Common Stock outstanding immediately prior to such
issuance or sale plus, (Y) the aggregate of the amount of all consideration, if
any, received by the Company upon such issuance or sale, by (B) the total number
of shares of Common Stock outstanding immediately after such issuance or sale;
provided, however, that in no event shall the Exercise Price be adjusted
pursuant to this computation to an amount in excess of the Exercise Price in
effect immediately prior to such computation, except in the case of a
combination of outstanding shares of Common Stock, as provided by Section 2.7
(c) hereof.
For the purposes of any computation to be made in accordance with this Section
2.7(a), the following provisions shall be applicable:
(i) In case of the issuance or sale of shares of Common Stock for a
consideration part or all of which shall be cash, the amount of cash
consideration therefor shall be deemed to be the amount of cash received by the
Company for such shares (or, if shares of Common Stock are offered by the
Company for subscription, the subscription price, or if either of such
securities shall be sold to underwriters or dealers for public offering without
a subscription offering, the initial public offering price) before deducting
therefrom any compensation paid or discount allowed in the sale, underwriting or
purchase thereof by underwriters or dealers or others performing similar
services, or any expenses incurred in connection therewith.
(ii) In case of the issuance or sale (otherwise than as a dividend or other
distribution on any stock of the Company) of shares of Common Stock for a
consideration part or all of which shall be other than cash, the amount of the
consideration therefor other than cash shall be deemed to be the value of such
consideration as determined in good faith by the Board of Directors of the
Company.
(iii) Shares of Common Stock issuable by way of dividend or other
distribution on any stock of the Company shall be deemed to have been issued
immediately after the opening of business on the day following the record date
for the determination of stockholders entitled to receive such dividend or other
distribution and shall be deemed to have been issued without consideration.
(iv) The reclassification of securities of the Company other than shares of
the Common Stock into securities including shares of Common Stock shall be
deemed to involve the issuance of such shares of Common Stock for a
consideration other than cash immediately prior to the close of business on the
date fixed for the determination of security holders entitled to receive such
shares, and the value of the consideration allocable to such shares of Common
Stock shall be determined as provided in subsection (ii) of this Section 2.7(a).
(v) The number of shares of Common Stock at any one time outstanding shall
include the aggregate number of shares issued or issuable (subject to
readjustment upon the actual issuance thereof) upon the exercise of options,
rights, warrants and upon the conversion or exchange of convertible or
exchangeable securities; provided, however, that shares issuable upon the
exercise of the Warrants shall not be included in such calculation.
(b) Options, Rights, Warrants and Convertible and Exchangeable
----------------------------------------------------------------
Securities. In case the Company shall at any time after the date hereof issue
options, rights or warrants to subscribe for shares of Common Stock, or issue
any securities convertible into or exchangeable for shares of Common Stock, for
a consideration per share less than the Exercise Price immediately prior to the
issuance of such options, rights or warrants (excluding shares of Common Stock
issuable upon exercise of options, warrants or conversion rights granted as of
the date hereof and shares of Common Stock issuable upon exercise of stock
options at or above the closing market price per share of Common Stock under any
stock option plan of the Company), or such convertible or exchangeable
securities, or without consideration, the Exercise Price in effect immediately
prior to the issuance of such options, rights or warrants, or such convertible
or exchangeable securities, as the case may be, shall be reduced to a price
determined by making a computation in accordance with the provision of Section
2.7(a) hereof, provided that:
(i) The aggregate maximum number of shares of Common Stock, as the case
may be, issuable under such options, rights or warrants shall be deemed to be
issued and outstanding at the time such options, rights or warranties were
issued, and for a consideration equal to the minimum purchase price per share
provided for in such options, rights or warrants at the time of issuance, plus
the consideration (determined in the same manner as consideration received on
the issue or sale of shares in accordance with the terms of the Warrants), if
any, received by the Company for such options, rights or warrants.
(ii) The aggregate maximum number of shares of Common Stock issuable upon
conversion or exchange of any convertible or exchangeable securities shall be
deemed to be issued and outstanding at the time of issuance of such securities,
and for a consideration equal to the consideration (determined in the same
manner as consideration received on the issue or sale of shares of Common Stock
in accordance with the terms of the Warrants) received by the Company for such
securities, plus the minimum consideration, if any, receivable by the Company
upon the conversion or exchange thereof.
(iii) If any change shall occur in the price per share provided for in any
of the options, rights or warrants referred to in subsection (a) of this Section
2.7, or in the price per share at which the securities referred to in subsection
(b) of this Section 2.7 are convertible or exchangeable, such options, rights or
warrants or conversion or exchange rights, as the case may be, shall be deemed
to have expired or terminated on the date when such price change became
effective in respect of shares not theretofore issued pursuant to the exercise
or conversion or exchange thereof, and the Company shall be deemed to have
issued upon such date new options, rights or warrants or convertible or
exchangeable securities at the new price in respect of the number of shares
issuable upon the exercise of such options, rights or warrants or the conversion
or exchange of such convertible or exchangeable securities.
(iv) If any options, rights or warrants referred to in subsection (a) of
this Section 2.7, or any convertible or exchangeable securities referred to in
subsection (b) of this Section 2.7, expire or terminate without exercise or
conversion, as the case may be, then the Exercise Price of the remaining
outstanding Warrant shall be readjusted as if such options, rights or warrants
or convertible or exchangeable securities, as the case may be, had never been
issued.
(c) Subdivision and Combination. In case the Company shall at any time
---------------------------
subdivide or combine the outstanding shares of Common Stock, the Exercise Price
shall forthwith be proportionately decreased in the case of subdivision or
increased in the case of combination.
(d) Adjustment in Number of Securities. Upon each adjustment of the
--------------------------------------
Exercise Price pursuant to the provisions of this Section 2.7, the number of
Warrant Shares issuable upon the exercise of each Warrant shall be adjusted to
the nearest whole number by multiplying a number equal to the Exercise Price in
effect immediately prior to such adjustment by the number of Warrant Shares
issuable upon exercise of the Warrants immediately prior to such adjustment and
dividing the product so obtained by the adjusted Exercise Price.
(e) Merger or Consolidation. In case of any consolidation of the Company
-------------------------
with, or merger of the Company with, or merger of the Company into, another
corporation (other than a consolidation or merger which does not result in any
reclassification or change of the outstanding Common Stock), the corporation
formed by such consolidation or merger shall execute and deliver to the Holder a
supplemental warrant agreement providing that the Holder of each Warrant then
outstanding or to be outstanding shall have the right thereafter (until the
expiration of such Warrant) to receive, upon exercise of such Warrant, the kind
and amount of shares of stock and other securities and property (except in the
event the property is cash, then the Holder shall have the right to exercise the
Warrant and receive cash in the same manner as other stockholders) receivable
upon such consolidation or merger, by a holder of the number of shares of Common
Stock of the Company for which such warrant might have been exercised
immediately prior to such consolidation, merger, sale or transfer. Such
supplemental warrant agreement shall provide for adjustments which shall be
identical to the adjustments provided in Section 2.7. The foregoing provisions
of this paragraph (e) shall similarly apply to successive consolidations or
mergers.
(f) No Adjustment of Exercise Price in Certain Cases. No adjustment of the
-------------------------------------------------
Exercise Price shall be made upon the issuance of the Warrant Shares or upon the
exercise of any options, rights, or warrants outstanding as of the date of the
Purchase Agreement and disclosed in Section 3.1(c) therein.
(g) Dividends and Other Distributions. In the event that the Company shall
----------------------------------
at any time prior to the exercise of all Warrants declare a dividend (other than
a dividend consisting solely of shares of Common Stock) or otherwise distribute
to its stockholders any assets, property, rights, evidences of indebtedness,
securities (other than shares of Common Stock), whether issued by the Company or
by another, or any other thing of value, the Holders of the unexercised Warrants
shall thereafter be entitled, in addition to the shares of Common Stock or other
securities and property receivable upon the exercise thereof, to receive, upon
the exercise of such Warrants, the same property, assets, rights, evidences of
indebtedness, securities or any other thing of value that they would have been
entitled to receive at the time of such dividend or distribution as if the
Warrants had been exercised immediately prior to such dividend or distribution.
At the time of any such dividend or distribution, the Company shall make
appropriate reserves to ensure the timely performance of the provisions of this
subsection 2.7 (g). Nothing contained herein shall provide for the receipt or
accrual by a Holder of cash dividends prior to the exercise by such Holder of
the Warrants.
ARTICLE 3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY
3.1 Representations and Warranties. The Company hereby represents and
-------------------------------
warrants to the Holder as follows:
(a) All shares which may be issued upon the exercise of the purchase right
represented by this Warrant shall, upon issuance, (i) be duly authorized,
validly issued, fully-paid and non-assessable, (iii) free and clear of all
liens, claims and encumbrances, (iii) not be subject to any pre-emptive rights,
and (iv) be issued without any restrictions and be freely tradable upon resale
pursuant to Rule 504 of Regulation D under the Securities Act and Section
11-51-308 of the Colorado Revised Statutes and regulation 51-3.13B promulgated
thereunder.
(b) The Company is a corporation duly organized and validly existing under
the laws of the State of Nevada, and has the full power and authority to issue
this Warrant and to comply with the terms hereof. The execution, delivery and
performance by the Company of its obligations under this Warrant, including,
without limitation, the issuance of the Warrant Shares upon any exercise of the
Warrant, have been duly authorized by all necessary corporate action. This
Warrant has been duly executed and delivered by the Company and is a valid and
binding obligation of the Company, enforceable in accordance with its terms,
except (i) as enforcement may be limited by applicable bankruptcy, insolvency,
reorganization or similar laws affecting enforceability of creditors' rights
generally and (ii) as the availability of the remedy of specific enforcement,
injunctive relief or other equitable relief may be subject to the discretion of
any court before which any proceeding therefor may be brought.
(c) The Company is not subject to or bound by any provision of any
certificate or articles of incorporation or by-laws, mortgage, deed of trust,
lease, note, bond, indenture, other instrument or agreement, license, permit,
trust, custodianship, other restriction or any applicable provision of any law,
statute, rule, regulation, judgment, order, writ, injunction or decree of any
court, governmental body, administrative agency or arbitrator which could
prevent or be violated by or under which there would be a default (or right of
termination) as a result of the execution, delivery and performance by the
Company of this Warrant.
(d) The Company is subject to the reporting requirements of Section 13 or
Section 15(d) of the Securities Exchange Act of 1934, as amended, and is current
in the filing of all reports to be filed thereunder. The Company is eligible to
issue the Warrant and the Warrant Shares pursuant to Rule 504 of Regulation D
promulgated under the Securities Act. There are no restrictions on the resale
or transfer of the Warrant and Warrant Shares under federal securities laws or
under Colorado state securities laws.
ARTICLE 4. SHELF REGISTRATION
If any of the Warrant Shares required to be reserved for purposes of
exercise of the Warrant require registration with or approval of any
governmental authority under any federal (including but not limited to the
Securities Act or similar federal statute then in force) or state law, or
listing on any national securities exchange, before the Warrant Shares may be
resold or transferred without any restrictions on their resale or transfer for
reasons including, but not limited to, a material change in Rule 504 of
Regulation D promulgated under the Securities Act or a change to the exemption
for sales made to Accredited Investors in the state in which the Holder resides,
the Company will, at its expense, as expeditiously as possible cause the Warrant
Shares to be duly registered or approved or listed on the relevant national
securities exchange, as the case may be.
ARTICLE 5. CHANGES TO FEDERAL AND STATE SECURITIES LAWS
So long as the Holder and/or its assigns owns any of the Warrant or the
Warrant Shares and the Warrant Shares would not be freely transferable without
registration, the Company agrees not to file a registration statement with the
Commission, other than on Form S-4 (except for a public reoffering or resale) or
Form S-8 without first having registered the Warrant Shares for resale with the
SEC and for resale in such states of the United States as the Holders thereof
shall reasonably request. If the Company shall propose to file with the SEC any
registration statement other than a Form S-4 (except for a public reoffering or
resale) or Form S-8 or to take any other action, other than the issuance of the
Warrant to Holder, the effect of which would be to cause the Warrant Shares to
be restricted securities (as such term is defined in Rule 144 promulgated under
the Securities Act), the Company agrees to give written notification of such to
the Holders of the Warrant or the Warrant Shares then outstanding at least two
weeks prior to such filing or taking of the proposed action. If any of the
Warrant or the Warrant Shares are then outstanding, the Company agrees to
include in such registration statement the Warrant Shares unless the Warrant
Shares would be freely transferable upon exercise of the Warrant without such
registration, so as to permit the public resale thereof. All costs and expenses
of registration shall be borne by the Company.
If the registration of which the Company gives notice is for a registered public
offering involving an underwriting, the Company will so advise the Holders. In
such event, these registration rights shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
registrable securities in the underwriting to the extent provided herein. All
Holders proposing to distribute their securities through such underwriting shall
enter into an underwriting agreement in customary form with the underwriter
selected by the Company. In the event that the lead or managing underwriter in
its good faith judgment determines that material adverse market factors require
a limitation on the number of shares to be underwritten, the underwriter may
limit the number of registrable securities. In such event, the Company shall so
advise all holders of securities requesting registration, and the number of
shares of securities that are entitled to be included in the registration and
underwriting shall be allocated pro rata among all Holders and other
participants, including the Company, in proportion, as nearly as practicable, to
the respective amounts of registrable securities and other securities which they
had requested to be included in such registration statement at the time of
filing the registration statement. If any Holder disapproves of the terms of
any such underwriting, he may elect to withdraw therefrom by written notice to
the Company and the underwriter, provided such notice is delivered within sixty
(60) days of full disclosure of such terms to such Holder, without thereby
affecting the right of such Holder to participate in subsequent offerings
hereunder.
Notwithstanding the foregoing, if the Company for any reason shall have taken
any action, other than the issuance of the Warrant to the Holder, the effect of
which would be to cause the Warrant Shares to be restricted securities (as such
term is defined in Rule 144 promulgated under the Securities Act), the Company
agrees to immediately file with the SEC and cause to become effective a
registration statement which would permit the public resale of the Warrant
Shares in such states of the United States as the Holders thereof shall
reasonably request. All costs and expenses of such registration and related Blue
Sky filings shall be borne by the Company.
ARTICLE 6. MISCELLANEOUS
6.1 Transfer. This Warrant may not be offered, sold, transferred,
--------
pledged, assigned, hypothecated or otherwise disposed of, in whole or in part,
at any time, except in compliance with applicable federal and state securities
laws by the transferor and the transferee (including, without limitation, the
delivery of an investment representation letter and a legal opinion reasonably
satisfactory to the Company); provided further, that this Warrant may not be
transferred or assigned such that either the Holder or any transferee will,
following such transfer or assignment, hold a Warrant for the right to purchase
less than 10,000 Warrant Shares.
6.2 Transfer Procedure. Subject to the provisions of Section 6.1, the
-------------------
Holder may transfer or assign this Warrant by giving the Company notice setting
forth the name, address and taxpayer identification number of the transferee or
assignee, if applicable (the "Transferee"), and surrendering this Warrant to the
Company for reissuance to the Transferee and, in the event of a transfer or
assignment of this Warrant in part, the Holder. (Each of the persons or
entities in whose name any such new Warrant shall be issued are herein referred
to as a "Holder").
6.3 Loss, Theft, Destruction or Mutilation. If this Warrant shall become
-----------------------------------------
mutilated or defaced or be destroyed, lost or stolen, the Company shall execute
and deliver a new Warrant in exchange for and upon surrender and cancellation of
such mutilated or defaced Warrant or, in lieu of and in substitution for such
Warrant so destroyed, lost or stolen, upon the Holder filing with the Company an
affidavit that such Warrant has been so mutilated, defaced, destroyed, lost or
stolen. However, the Company shall be entitled, as a condition to the execution
and delivery of such new Warrant, to demand reasonably acceptable indemnity to
it and payment of the expenses and charges incurred in connection with the
delivery of such new Warrant. Any Warrant so surrendered to the Company shall
be canceled.
6.4 Notices. All notices and other communications from the Company to the
-------
Holder or vice versa shall be deemed delivered and effective when given
personally, by facsimile transmission with confirmation sheet at such address
and/or facsimile number as may have been furnished to the Company or the Holder,
as the case may be, in writing by the Company or the Holder from time to time.
6.5 Waiver. This Warrant and any term hereof may be changed, waived, or
------
terminated only by an instrument in writing signed by the party against which
enforcement of such change, waiver, discharge or termination is sought.
6.6 Governing Law. This Warrant shall be governed by and construed in
--------------
accordance with the laws of the State of New York, without giving effect to its
principles regarding conflicts of law. Any action to enforce the terms of this
Warrant shall be exclusively heard in the county, state and federal Courts of
New York and Country of the United States of America.
6.7 Signature. In the event that any signature on this Warrant is delivered
---------
by facsimile transmission, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is
executed) the same, with the same force and effect as if such facsimile
signature page were an original thereof.
6.8 Legal Fees. In the event any Person commences a legal action or
-----------
proceeding to enforce its rights under this Warrant, the non-prevailing party to
such action or proceeding shall pay all reasonable costs and expenses (including
reasonable attorney's fees) incurred in enforcing such rights.
6.9 Attorney-in-Fact. To effectuate the terms and provisions of the Merger
----------------
Agreement, the Escrow Agreement, the Certificate of Designation and this
Warrant, the Company hereby agrees to grant a power of attorney to the
Attorney-in-Fact substantially in the form of Appendix I to the Escrow Agreement
(the "Power of Attorney"). All acts done under the Power of Attorney are hereby
ratified and approved and neither the Attorney-in-Fact nor any designee or agent
thereof shall be liable for any acts of commission or omission, for any error of
judgment or for any mistake of fact or law, as long as the Attorney-in-Fact is
acting within the scope of the Power of Attorney and within the scope of, and in
accordance with, this Warrant, the Merger Agreement, the Certificate of
Designation, and the Escrow Agreement. The Power of Attorney, being coupled
with an interest, shall be irrevocable while any portion of this Warrant remains
unexercised, any of the Company Preferred Stock Shares remain unconverted or any
provision of the Merger Agreement or the Escrow Agreement remains unsatisfied.
In addition, the Company shall deliver to the Attorney-in-Fact a copy of
resolutions duly adopted by the Board of Directors of the Company, as certified
by the President of the Company, (a) authorizing transfers of the Warrant and
the Company Preferred Stock Shares, (b) future issuances of shares of Common
Stock upon exercise of this Warrant and conversion of the Shares and (c) stating
that such resolutions are irrevocable while any of the Company Preferred Stock
Shares remain unconverted, any portion of this Warrant remains unexercised or
any provision of the Merger Agreement or the Escrow Agreement remains
unsatisfied.
Dated: August ___, 2002
NATIONAL BEAUTY CORP.
By:
Edward A. Roth, President
Attest:
Name:
Title:
APPENDIX I
NOTICE OF EXERCISE
------------------
1. The undersigned hereby elects (please check the appropriate box and fill
in the blank spaces):
to purchase ______ shares of Common Stock, par value $.001 per share, of
National Beauty Corp. at $.001 per share for a total of $______ and pursuant to
the terms of the attached Warrant, and tenders herewith payment of the aggregate
Exercise Price of such Warrant Shares in full; or
to purchase _______ shares of Common Stock, par value $.001 per share, of
National Beauty Corp. pursuant to the cashless exercise provision under Section
2.2 (b) of the attached Warrant, and tenders herewith the number of Warrant
Shares to purchase such Warrant Shares based upon the formula set forth in
Section 2.2 (b).
2. Please issue a certificate or certificates representing said Warrant
Shares in the name of the undersigned or in such other name as is specified
below:
Dated: By:
Name: ______________________________
Title: _______________________________