Exhibit 4.5 Amended Certificate of Designation of the Rights and Preferences of
the Series A Convertible Preferred Stock of National Beauty Corp.
CERTIFICATE OF AMENDMENT TO THE
CERTIFICATE OF DESIGNATION OF THE RIGHTS
AND PREFERENCES OF THE SERIES A
CONVERTIBLE PREFERRED STOCK OF NATIONAL BEAUTY CORP.
Pursuant to NRS. 78.1955 Paragraph 4.
(a) the original designation of the rights and preferences of the Series A
Convertible Preferred Stock of National Beauty Corp. was adopted by the board of
directors on October 26, 1998 and the original designation of the rights and
preferences of the Series A Convertible Preferred Stock of National Beauty Corp.
was previously filed with the Nevada Secretary of State. National Beauty Corp.
and the holders of the outstanding Series A Convertible Preferred desire to
reduce the number of shares in the Series A Convertible Preferred from
50,000,000 to 40,000,000 shares in order to allow the creation of the Series B
2% Convertible Preferred Stock.
(b) not applicable.
(c) the holders of all issued and outstanding shares of the Series A Convertible
Preferred Stock of National Beauty Corp by unanimous written consent approved
the reduction in the number of shares in the Series A Convertible Preferred from
50,000,000 to 40,000,000 shares in order to allow the creation of the Series B
2% Convertible Preferred Stock on August 19, 2002.
THE ORIGINAL DESIGNATION READS:
The powers, preferences and rights granted to the Series A Preferred (as
defined below) or the holders thereof are as follows:
Designation and Rank. The series of Preferred Stock shall be designated the
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"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.
Dividend Rate and Rights. The holders of the Series A Preferred shall be
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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.
Conversion into Common Stock.
Right to Convert. Each share of Series A Preferred shall be convertible, at the
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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").
Mechanics of Conversion. Before any holder shall be entitled to convert, he
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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.
Adjustments to Conversion Ratio.
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Merger or Reorganization. In case of any consolidation or merger of the
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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.
No Impairment. The Corporation will not, by amendment of its Articles of
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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.
Certificate as to Adjustments. Upon the occurrence of each adjustment or
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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.
Notices of Record Date. In the event of any taking by the Corporation of a
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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.
Common Stock Reserved. The Corporation shall reserve and keep available out of
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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.
Liquidation Preference.
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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:
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.
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.
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).
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.
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.
Voting Rights. Except as otherwise required by law, the holders of Series A
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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.
Covenants.
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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:
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;
increase the size of any equity incentive plan(s) or arrangements;
make fundamental changes to the business of the Corporation;
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;
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;
accrue any indebtedness in excess of $1,000,000;
make any change in the size or number of authorized directors;
repurchase any of the Corporation's Common Stock;
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;
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
make any sale of additional Preferred Stock.
Reissuance. No share or shares of Series A Preferred acquired by the
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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.
Directors. The holders of Series A Preferred and Common Stock voting together
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as a class shall be entitled to elect the directors comprising the Board of
Directors (and to fill any vacancies with respect thereto).
THE NEW DESIGNATION SHALL READ:
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
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the "Series A Convertible Preferred Stock" ("Series A Preferred") and shall
consist of 40,000,000 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.
Dividend Rate and Rights. The holders of the Series A Preferred shall be
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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.
Conversion into Common Stock.
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Right to Convert. Each share of Series A Preferred shall be convertible, at the
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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").
Mechanics of Conversion. Before any holder shall be entitled to convert, he
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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.
Adjustments to Conversion Ratio.
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Merger or Reorganization. In case of any consolidation or merger of the
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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.
No Impairment. The Corporation will not, by amendment of its Articles of
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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.
Certificate as to Adjustments. Upon the occurrence of each adjustment or
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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.
Notices of Record Date. In the event of any taking by the Corporation of a
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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.
Common Stock Reserved. The Corporation shall reserve and keep available out of
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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.
Liquidation Preference.
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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:
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.
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.
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).
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.
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.
Voting Rights. Except as otherwise required by law, the holders of Series A
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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.
Covenants.
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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:
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;
increase the size of any equity incentive plan(s) or arrangements;
make fundamental changes to the business of the Corporation;
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;
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;
accrue any indebtedness in excess of $1,000,000;
make any change in the size or number of authorized directors;
repurchase any of the Corporation's Common Stock;
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;
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
make any sale of additional Preferred Stock.
Reissuance. No share or shares of Series A Preferred acquired by the
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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
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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
Amended 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 August 19, 2002 and duly approved by unanimous
written consent of the holders of all issued and outstanding shares of the
Series A Convertible Preferred Stock of National Beauty Corp
Dated: August 21, 2002
By: /s/Edward Roth
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Name: Edward Roth
Title: President
By: /s/Alisha Roth
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Name: Alisha Roth
Title: Secretary