Document:

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:

<PAGE>
                                   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:  _______________________________Exhibit 10.3 Certificate of Designation of the Rights And Preferences of Series
B 2% Convertible Preferred Stock of National Beauty Corp.

                           CERTIFICATE OF DESIGNATION
                          OF THE RIGHTS AND PREFERENCES
                                       OF
                     SERIES B 2% CONVERTIBLE PREFERRED STOCK
                                       OF
                              NATIONAL BEAUTY CORP.
     National  Beauty Corp., a corporation organized and existing under the laws
of  the  State  of  Nevada  (the "Company"), hereby certifies that the following
resolutions  were  adopted  by the Board of Directors of the Company pursuant to
the  authority  of  the Board of Directors as required by Section 78.1955 of the
Nevada  General  Corporation  Law  (the  "NGCL").
RESOLVED,  that  pursuant to the authority granted to and vested in the Board of
Directors  of  this  Company  (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 Company's previously authorized Preferred Stock, par value $.001
per  share (the "Preferred Stock"), and hereby states the designation and number
of  shares,  and  fixes the relative rights, preferences, privileges, powers and
restrictions  thereof  as  follows:

                             I.  CERTAIN DEFINITIONS
     Capitalized  terms  used  and  not  otherwise defined herein shall have the
meanings given such terms in the Merger Agreement by and between the Company and
the  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 the common stock of the Company, $.001 par value per share.
"Escrow  Agent"  means  the  Escrow  Agent  as  defined in the Merger Agreement.
"Issuance  Date"  means  the date of the Closing under the Merger Agreement with
respect  to  the  initial  issuance  of  the  Series  B  Preferred  Stock.
"Merger  Agreement"  means  the  Agreement  and Plan of Merger, dated August 20,
2002,  between  the  Company  and  Zzyzx  Zzazx  Zzozx,  Inc.  ("Zzyzx").
"Per  Share Market Value" means on any particular date (a) the closing bid price
per share of the Common Stock on such date on the NASD over-the-counter bulletin
board  ("OTCBB")  or  other  stock  exchange  on which the Common Stock has been
listed  or  if  there  is no such price on such date, then the last bid price on
such  exchange  on  the  date  nearest preceding such date, or (b) if the Common
Stock  is not listed on OTCBB or any stock exchange, the closing bid price for a
share of Common Stock in the over-the-counter market, as reported by the NASD at
the  close of business on such date, or (c) if the Common Stock is not quoted by
the  NASD,  the  closing  bid  price  for  a  share  of  Common  Stock  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 (d)
if  the  Common  Stock  is  no longer publicly traded the fair market value of a
share  of  Common  Stock  as  determined  by an Appraiser (as defined in Section
IV(c)(iv))  selected  in  good  faith  by  the  Holders  of  a  majority  of the
outstanding 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.
"Person"  means an individual or a corporation, partnership, trust, incorporated
or  unincorporated  association, joint venture, limited liability company, joint
stock  company,  government  (or  an agency or political subdivision thereof) or
other  entity  of  any  kind.
"Trading  Day"  means (a) a day on which the Common Stock is quoted on the OTCBB
or principal stock exchange on which the Common Stock has been listed, or (b) if
the  Common  Stock  is  not  quoted on the OTCBB or any stock exchange, a day on
which  the Common Stock is quoted in the over-the-counter market, as reported by
the  National  Association  of  Securities Dealers, Inc. ("NASD"), or (c) if the
Common  Stock  is  not  quoted  on  the NASD, a day on which the Common Stock is
quoted  in the over-the-counter market as reported by the Pinksheets LLC (or any
similar  organization  or  agency succeeding its functions of reporting prices).

                           II.  DESIGNATION AND AMOUNT
     The  designation  of  this  series,  which consists of One Thousand (1,000)
shares  of  Preferred Stock, is the Series B 2% Convertible Preferred Stock (the
"Series  B  Preferred  Stock")  and  the stated value shall be One Thousand U.S.
Dollars  ($1,000.00)  per  share  (the  "Stated  Value").

                                 III.  DIVIDENDS
     The  holder of the shares of Series B Preferred Stock as they appear on the
stock  records  of  the  Company  ("Holder"  or  "Holders") shall be entitled to
receive,  the  Board  of Directors shall be obligated to declare and the Company
shall  be  obligated  to  pay, out of funds legally available for the payment of
dividends,  dividends  in cash or (as provided herein) shares of Common Stock at
the rate of two percent (2%) per annum (computed on the basis of a 360-day year)
(the  "Dividend  Rate")  on the Stated Value of each share of Series B Preferred
Stock  on  and  as  of  the  most recent Conversion Date (as defined below) with
respect  to  each Dividend Period (as defined below).  Dividends on the Series B
Preferred  Stock  shall  be  cumulative  from  the  Issuance  Date.
(a)     Each  dividend  (other  than  the  first  dividend,  which shall reflect
accrual  only  from  the Issuance Date) shall be payable on each Conversion Date
(as defined below), to the Holders of record of shares of the Series B Preferred
Stock,  as  they  appear  on  the  stock  records of the Company at the close of
business  on  such  Conversion Date.  For the purposes hereof, "Dividend Period"
means  the  period  commencing  on  and  including the day after the immediately
preceding Conversion Date and ending on and including the immediately subsequent
Conversion  Date.

(b)     The  dividend  shall be paid in (i) cash or (ii) through the issuance of
duly and validly authorized and issued, fully paid and non-assessable, shares of
Series  B  Preferred  Stock  valued  at  the  Stated Value, or (iii) through the
issuance  of  duly  and  validly  authorized  and  issued,  fully  paid  and
non-assessable,  shares  of Common Stock valued at one hundred percent (100%) of
the  average  of the three (3) lowest closing bid prices per share of the Common
Stock  during  the thirty (30) Trading Days immediately preceding the Conversion
Date;  provided,  however,  that  (i)  there  shall  not  have  occurred  and be
continuing  any  Event  of Default (as defined herein) and (ii) the Common Stock
shall  be issued without restriction and be freely tradable upon resale pursuant
to  Rule  504  of  Regulation  D  of  the  Securities  Act  of 1933, as amended.

(c)     So  long  as any shares of the Series B Preferred Stock are outstanding,
no  dividends,  except  as  described  in the next succeeding sentence, shall be
declared  or  paid or set apart for payment on Pari Passu Securities (as defined
herein)  for  any period unless full cumulative dividends required to be paid in
cash  have been or contemporaneously are declared and paid or declared and a sum
sufficient  for  the  payment thereof set apart for such payment on the Series B
Preferred  Stock for all Dividend Periods terminating on or prior to the date of
payment  of  the dividend on such class or series of Pari Passu Securities. When
dividends  are  not paid in full or a sum sufficient for such payment is not set
apart,  as  aforesaid,  all  dividends  declared  upon  shares  of  the Series B
Preferred  Stock  and  all  dividends declared upon any other class or series of
Pari  Passu Securities shall be declared ratably in proportion to the respective
amounts  of dividends accumulated and unpaid on the Series B Preferred Stock and
accumulated  and  unpaid  on  such  Pari  Passu  Securities.

(d)     So  long  as any shares of the Series B Preferred Stock are outstanding,
no  dividends  shall  be  declared  or  paid  or  set apart for payment or other
distribution  declared  or  made upon Junior Securities (as defined herein), nor
shall  any Junior Securities be redeemed, purchased or otherwise acquired (other
than  a redemption, purchase or other acquisition of shares of Common Stock made
for  purposes of an employee incentive or benefit plan (including a stock option
plan)  of the Company or any subsidiary) for any consideration (or any moneys be
paid to or made available for a sinking fund for the redemption of any shares of
any  such stock) by the Company, directly or indirectly, unless in each case (i)
the  full  cumulative  dividends  required to be paid in cash on all outstanding
shares of the Series B Preferred Stock and any other Pari Passu Securities shall
have  been  paid  or  set  apart  for payment for all past Dividend Periods with
respect  to  the  Series  B  Preferred  Stock and all past dividend periods with
respect to such Pari Passu Securities, and (ii) sufficient funds shall have been
paid  or  set  apart  for  the  payment of the dividend for the current Dividend
Period  with  respect  to  the Series B Preferred Stock and the current dividend
period  with  respect  to  such  Pari  Passu  Securities.

                                 IV.  CONVERSION
     (a)     The  outstanding  shares  of  Series  B  Preferred  Stock  shall be
convertible  into shares of Common Stock as is determined by dividing the Stated
Value by the Conversion Price as defined below, and subject to the Limitation on
Conversion  in Section 4.18 of the Purchase Agreement (as defined below), at the
option  of  the Holder in whole or in part, at any time during the five (5) year
period  commencing  on  the Issuance Date (the "Holder Conversion Period").  Any
conversion  under  this  Section  IV(a)  shall  be for a minimum Stated Value of
$10,000.00  of Series B Preferred Stock.  The Holder shall effect conversions by
sending the form of conversion notice attached hereto as Appendix I (the "Notice
                                                         ----------
of  Conversion")  in  the  manner  set  forth  in Section IV(j).  Each Notice of
Conversion  shall  specify  the  Stated  Value of Series B Preferred Stock to be
converted.  The date on which such conversion is to be effected (the "Conversion
Date")  shall  be  on the date the Notice of Conversion is delivered pursuant to
Section  IV(j)  hereof  and  Exhibit  2.2(b) to the Merger Agreement.  Except as
provided  herein,  each  Notice of Conversion, once given, shall be irrevocable.
If  the  Holder is converting less than all of the Stated Value represented by a
certificate  for  the  Series B Preferred Stock(s) tendered by the Holder in the
Notice of Conversion, the Company shall deliver to the Escrow Agent a new Series
B  Preferred  Stock  certificate for such Stated Value as has not been converted
within  five (5) Business Days of the Company's receipt of the original Series B
Preferred  Stock  and  Notice of Conversion.  In the event that the Escrow Agent
holds  the  Series B Preferred Stock on behalf of the Holder, the Company agrees
that  in  lieu  of  surrendering the Series B Preferred Stock upon every partial
conversion,  the  Escrow  Agent  shall  give  the Company and the Holder written
notice of the amount of the Series B Preferred Stock left unconverted.  Upon the
entire  conversion  of  the  Series  B  Preferred Stock or the redemption of the
Series  B  Preferred Stock, the Escrow Agent shall return the Series B Preferred
Stock  to  the  Company  for  cancellation.
(b)     Immediately  subsequent  to  the  Holder Conversion Period (the "Company
Conversion  Date")  for  each  share  of  Series  B Preferred Stock that has not
previously  been  converted,  such  share  of  Series B Preferred Stock shall be
automatically  convertible  into shares of Common Stock at the Conversion Price;
provided, however, that no shares of Series B Preferred Stock shall be converted
 -------  -------
(i)  unless  the  Company  shall have duly reserved for issuance to the Holder a
sufficient  number  of  shares  of Common Stock to issue upon such conversion or
(ii) if an Event of Default shall have occurred hereunder and is continuing.  In
connection with such conversion, the Company shall deliver to the Holder of such
shares  of Series B Preferred Stock a written notice in the form attached hereto
as Appendix II (the "Company Conversion Notice").  The Company Conversion Notice
   -----------
shall  specify  the  number  of  shares of Series B Preferred Stock that will be
subject  to  automatic  conversion  on the Company Conversion Date.  The Company
shall  deliver  or  cause to be delivered the Company Conversion Notice at least
two  (2)  Business  Days  before the Company Conversion Date.  The Holder of the
Series  B  Preferred  Stock  shall  surrender the certificates representing such
shares  at the office of the Company or the Escrow Agent not later than five (5)
Business Days after the Company Conversion Date.  Each of a Notice of Conversion
and  a  Company Conversion Notice is sometimes referred to herein as a Notice of
Conversion,  and  each  of  a  Conversion  Date and a Company Conversion Date is
sometimes  referred  to  herein  as  a  Conversion  Date.
(c)     Not  later  than  two  (2)  Business Days after the Conversion Date, the
Escrow  Agent  will  deliver  to  the  Holder  (i) a certificate or certificates
representing  the  number  of  shares  of  Common  Stock being acquired upon the
conversion  of Series B Preferred Stock and (ii) once received from the Company,
Series  B  Preferred  Stock in principal amount equal to the principal amount of
Series  B  Preferred  Stock  not  converted; provided, however, that the Company
                                             --------  -------
shall  not  be  obligated  to issue certificates evidencing the shares of Common
Stock  issuable upon conversion of any Series B Preferred Stock until the Series
B  Preferred  Stock  are  either delivered for conversion to the Escrow Agent or
Company  or any transfer agent for the Series B Preferred Stock or Common Stock,
or  the Holder notifies the Company that such Series B Preferred Stock have been
lost, stolen or destroyed and provides an agreement reasonably acceptable to the
Company  to  indemnify  the  Company  from any loss incurred by it in connection
therewith.  In  the  case of a conversion pursuant to a Notice of Conversion, if
such  certificate  or  certificates are not delivered by the date required under
this  Section IV(c), the Holder shall be entitled by providing written notice to
the  Company  at  any  time  on  or  before  its  receipt of such certificate or
certificates  thereafter, to rescind such conversion, in which event the Company
shall  immediately  return the Series B Preferred Stock tendered for conversion.
(d)     (i)     The  Conversion Price for each share of Series B Preferred Stock
in  effect on any Conversion Date shall be the LESSER of (a) $.40 or one hundred
                                               ------
twenty-five percent (125%) of the average of the closing bid prices per share of
the  Common  Stock  during  the  five (5) Trading Days immediately preceding the
Closing (as defined in the Purchase Agreement) (the "Fixed Conversion Price") or
(b)  one  hundred  percent (100%) of the average of the three (3) lowest closing
bid  prices  per  share  of the Common Stock during the thirty (30) Trading Days
immediately  preceding  the  Conversion  Date (the "Floating Conversion Price").
For purposes of determining the closing bid price on any day, reference shall be
to  the closing bid price for a share of Common Stock on such date on the OTCBB,
as  reported on Bloomberg, L.P. (or similar organization or agency succeeding to
its  functions  of  reporting  prices).
     (ii)     If the Company, at any time while any Series B Preferred Stock are
outstanding,  (a) shall pay a stock dividend or otherwise make a distribution or
distributions  on  shares  of  its  Junior  Securities  payable in shares of its
capital stock (whether payable in shares of its Common Stock or of capital stock
of  any  class),  (b) subdivide outstanding shares of Common Stock into a larger
number  of shares, (c) combine outstanding shares of Common Stock into a smaller
number of shares, or (d) issue by reclassification of shares of Common Stock any
shares of capital stock of the Company, the Fixed Conversion Price designated in
Section  IV(d)(i) shall be multiplied by a fraction of which the numerator shall
be  the  number of shares of Common Stock of the Company outstanding before such
event and of which the denominator shall be the number of shares of Common Stock
outstanding  after  such  event.  Any  adjustment  made pursuant to this Section
IV(d)(ii)  shall  become  effective  immediately  after  the record date for the
determination  of stockholders entitled to receive such dividend or distribution
and shall become effective immediately after the effective date in the case of a
subdivision,  combination  or  reclassification.
     (iii)     If  the  Company,  at any time while any Series B Preferred Stock
are  outstanding,  shall  issue  or  sell  shares  of  Common Stock, or options,
warrants  or  other  rights to subscribe for or purchase shares of Common Stock,
(excluding shares of Common Stock issuable upon exercise of options, warrants or
conversion  rights  granted  prior  to the date hereof) and at a price per share
less than the Per Share Market Value of Common Stock at the issue date mentioned
below,  the  Fixed  Conversion  Price  designated  in  Section IV(d)(i) shall be
multiplied by a fraction, of which the denominator shall be the number of shares
of  Common  Stock (excluding treasury shares, if any) outstanding on the date of
issuance  of  such  rights  or  warrants plus the number of additional shares of
Common  Stock  offered  for subscription or purchase, and of which the numerator
shall  be  the  number  of shares of Common Stock (excluding treasury shares, if
any)  outstanding  on  the date of issuance of such shares, options, warrants or
rights plus the number of shares which the aggregate offering price of the total
number of shares so offered would purchase at such Per Share Market Value.  Such
adjustment  shall be made whenever such rights or warrants are issued, and shall
become  effective  immediately  after  the  record date for the determination of
stockholders  entitled  to  receive  such rights or warrants.  However, upon the
expiration  of  any  right  or  warrant to purchase Common Stock the issuance of
which  resulted  in  an adjustment in the Conversion Price designated in Section
IV(d)(i) pursuant to this Section IV(d)(iii), if any such right or warrant shall
expire  and shall not have been exercised, the Fixed Conversion Price designated
in  Section  IV(d)(i)  shall  immediately upon such expiration be recomputed and
effective  immediately  upon  such expiration be increased to the price which it
would  have  been  (but reflecting any other adjustments in the Conversion Price
made  pursuant  to  the provisions of this Article IV after the issuance of such
rights  or  warrants)  had  the adjustment of the Conversion Price made upon the
issuance  of  such  rights  or  warrants  been made on the basis of offering for
subscription  or  purchase  only  that number of shares of Common Stock actually
purchased  upon  the  exercise  of  such  rights or warrants actually exercised.
     (iv)     If  the  Company,  at  any time while Series B Preferred Stock are
outstanding, shall distribute to all holders of Common Stock (and not to Holders
of  Series  B Preferred Stock) evidences of its indebtedness or assets or rights
or  warrants to subscribe for or purchase any security (excluding those referred
to  in  Section IV(d)(iii) above) then in each such case the Conversion Price at
which  each  Series  B  Preferred Stock shall thereafter be convertible shall be
determined by multiplying the Fixed Conversion Price in effect immediately prior
to  the  record date fixed for determination of stockholders entitled to receive
such  distribution by a fraction of which the denominator shall be the Per Share
Market  Value  of Common Stock determined as of the record date mentioned above,
and  of  which  the numerator shall be such Per Share Market Value of the Common
Stock on such record date less the then fair market value at such record date of
the portion of such assets or evidence of indebtedness so distributed applicable
to one outstanding share of Common Stock as determined by the Board of Directors
in  good  faith; provided, however that in the event of a distribution exceeding
                 --------  -------
ten percent (10%) of the net assets of the Company, such fair market value shall
be  determined  by  a nationally recognized or major regional investment banking
firm  or firm of independent certified public accountants of recognized standing
(which  may  be the firm that regularly examines the financial statements of the
Company) (an "Appraiser") selected in good faith by the Holders of a majority of
the  principal  amount  of  the  Series  B Preferred Stock then outstanding; and
provided,  further, 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  either  case the adjustments shall be described in a
statement  provided  to  the  Holder and all other Holders of Series B Preferred
Stock  of  the  portion of assets or evidences of indebtedness so distributed or
such  subscription  rights  applicable  to  one  share  of  Common  Stock.  Such
adjustment shall be made whenever any such distribution is made and shall become
effective  immediately  after  the  record  date  mentioned  above.
     (v)     All calculations under this Article IV shall be made to the nearest
1/1000th  of a cent or the nearest 1/1000th of a share, as the case may be.  Any
calculation  over  .005  shall  be  rounded up to the next cent or share and any
calculation  less than .005 shall be rounded down to the previous cent or share.
     (vi)     In  the  event the Fixed Conversion Price is not adjusted pursuant
to  Section  IV(d)(ii),  (iii),  (iv),  or  (v),  within  two  (2) Business Days
following  the  occurrence  of an event described therein, the Holder shall have
the  right  to  require  the  Company  to  redeem  all of  the Holder's Series B
Preferred  Stock at 150% of the Stated Value of such Holder's Series B Preferred
Stock and simultaneously pay such amount and all accrued and unpaid dividends to
the  Holder  pursuant  to  the  written  instructions  provided  by  the Holder.
     (vii)     Whenever  the  Fixed  Conversion  Price  is  adjusted pursuant to
Section IV(d)(ii),(iii), (iv) or (v), or redeemed pursuant to Section IV(d)(vi),
the  Company  shall within two (2) days after the determination of the new Fixed
Conversion Price mail and fax to the Holder and to each other Holder of Series B
Preferred  Stock,  a  notice setting forth the Fixed Conversion Price after such
adjustment  and  setting  forth  a  brief  statement of the facts requiring such
adjustment.
     (viii)     In  case  of  any  reclassification  of  the  Common  Stock, any
consolidation  or merger of the Company with or into another person, the sale or
transfer  of  all  or  substantially  all  of  the  assets of the Company or any
compulsory  share  exchange pursuant to which the Common Stock is converted into
other securities, cash or property, then each holder of Series B Preferred Stock
then  outstanding  shall  have  the  right  thereafter  to convert such Series B
Preferred  Stock only into the shares of stock and other securities and property
receivable  upon  or deemed to be held by holders of Common Stock following such
reclassification,  consolidation,  merger,  sale,  transfer  or  share  exchange
(except  in the event the property is cash, then the Holder shall have the right
to  convert  the Series B Preferred Stock and receive cash in the same manner as
other stockholders), and the Holder shall be entitled upon such event to receive
such  amount  of  securities  or property as the shares of the Common Stock into
which  such Series B Preferred Stock could have been converted immediately prior
to  such  reclassification,  consolidation,  merger,  sale,  transfer  or  share
exchange would have been entitled.  The terms of any such consolidation, merger,
sale,  transfer  or share exchange shall include such terms so as to continue to
give  to the holder the right to receive the securities or property set forth in
this  Section  IV(d)(viii)  upon  any  conversion  following such consolidation,
merger,  sale, transfer or share exchange.  This provision shall similarly apply
to  successive  reclassifications,  consolidations, mergers, sales, transfers or
share  exchanges.
     (ix)     If:
(A)     the  Company shall declare a dividend (or any other distribution) on its
Common  Stock;  or
(B)     the  Company  shall declare a special nonrecurring cash dividend on or a
redemption  of  its  Common  Stock;  or
(C)     the  Company  shall  authorize the granting to all holders of the Common
Stock  rights  or  warrants  to  subscribe for or purchase any shares of capital
stock  of  any  class  or  of  any  rights;  or
(D)     the  approval  of  any  stockholders of the Company shall be required in
connection  with  any reclassification of the Common Stock of the Company (other
than  a  subdivision  or combination of the outstanding shares of Common Stock),
any  consolidation  or  merger  to  which  the  Company  is a party, any sale or
transfer  of  all  or  substantially  all  of  the assets of the Company, or any
compulsory  share  exchange  whereby  the  Common  Stock is converted into other
securities,  cash  or  property;  or
(E)     the  Company  shall  authorize the voluntary or involuntary dissolution,
liquidation  or  winding-up  of  the  affairs  of  the  Company;
then the Company shall cause to be filed at each office or agency maintained for
the  purpose  of  conversion  of Series B Preferred Stock, and shall cause to be
mailed  and  faxed  to  the  Holders  of  Series B Preferred Stock at their last
addresses  as  it  shall  appear  upon the Series B Preferred Stock Register, at
least thirty (30) calendar days prior to the applicable record or effective date
hereinafter  specified, a notice stating (x) the date on which a record is to be
taken  for  the  purpose  of  such dividend, distribution, redemption, rights or
warrants, or if a record is not to be taken, the date as of which the holders of
Common  Stock  of  record  to  be  entitled  to  such  dividend,  distributions,
redemption,  rights  or  warrants are to be determined, or (y) the date on which
such  reclassification,  consolidation,  merger, sale, transfer, share exchange,
dissolution,  liquidation or winding-up is expected to become effective, and the
date  as of which it is expected that holders of Common Stock of record shall be
entitled  to  exchange  their  shares  of  Common  Stock for securities or other
property  deliverable  upon  such reclassification, consolidation, merger, sale,
transfer,  share  exchange,  dissolution,  liquidation  or winding-up; provided,
                                                                       --------
however,  that  the  failure to mail such notice or any defect therein or in the
    ---
mailing  thereof  shall not affect the validity of the corporate action required
to  be  specified  in  such  notice.

     (e)     If  at  any  time  conditions  shall  arise  by reason of action or
inaction taken by the Company which in the opinion of the Board of Directors are
not adequately covered by the other provisions hereof and which might materially
and  adversely  affect  the  rights  of  the Holders of Series B Preferred Stock
(different  than or distinguished from the effect generally on rights of holders
of any class of the Company's capital stock), the Company shall, at least thirty
(30)  calendar  days  prior to the effective date of such action, mail and fax a
written notice to each Holder of Series B Preferred Stock briefly describing the
action  contemplated  and  the  material  adverse  effects of such action on the
rights  of  such Holders and an Appraiser selected by the Holders of majority of
the  outstanding  Series  B  Preferred  Stock  shall  give its opinion as to the
adjustment,  if  any  (not  inconsistent  with the standards established in this
Article  IV),  of  the  Fixed  Conversion  Price  (including,  if necessary, any
adjustment  as  to  the  securities  into  which  Series  B  Preferred Stock may
thereafter be convertible) and any distribution which is or would be required to
preserve without diluting the rights of the Holders of Series B Preferred Stock;
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  adjustment  shall be equal to the average of the adjustments recommended by
each  such  Appraiser.  The  Board  of  Directors  shall  make  the  adjustment
recommended forthwith upon the receipt of such opinion or opinions or the taking
of  any such action contemplated, as the case may be; provided, however, that no
                                                      --------  -------
such adjustment of the Fixed Conversion Price shall be made which in the opinion
of  the Appraiser(s) giving the aforesaid opinion or opinions would result in an
increase  of  the Fixed Conversion Price to more than the Fixed Conversion Price
then  in  effect.
(f)     The  Company  covenants  that  it  will  at  all  times reserve and keep
available out of its authorized and unissued Common Stock solely for the purpose
of issuance upon conversion of Series B Preferred Stock as herein provided, free
from preemptive rights or any other actual contingent purchase rights of persons
other  than  the  Holders  of Series B Preferred Stock, such number of shares of
Common  Stock  as  shall  be  issuable  (taking into account the adjustments and
restrictions  of  Section IV(d) and Section IV(e) hereof) upon the conversion of
the aggregate principal amount of all outstanding Series B Preferred Stock.  The
Company  covenants  that  all  shares  of Common Stock that shall be so issuable
shall,  upon  issue,  be  duly and validly authorized, issued and fully paid and
nonassessable.
(g)     No fractional shares of Common Stock shall be issuable upon a conversion
hereunder  and  the  number  of  shares  to be issued shall be rounded up to the
nearest  whole share.  If a fractional share interest arises upon any conversion
hereunder, the Company shall eliminate such fractional share interest by issuing
Holder  an  additional  full  share  of  Common  Stock.
(h)     The issuance of certificates for shares of Common Stock on conversion of
Series  B  Preferred  Stock  shall  be made without charge to the Holder for any
documentary  stamp  or similar taxes that may be payable in respect of the issue
or delivery of such certificate, provided that the Company shall not be required
to  pay  any  tax that may be payable in respect of any transfer involved in the
issuance  and  delivery  of any such certificate upon conversion in a name other
than  that  of  the  Holder  and  the  Company shall not be required to issue or
deliver  such  certificates unless or until the person or persons requesting the
issuance  thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid.
(i)     Series  B  Preferred Stock converted into Common Stock shall be canceled
upon  conversion.
(j)     Each  Notice  of  Conversion  shall  be given by facsimile to the Escrow
Agent  no  later  than  4:00  pm  New York time.  Upon receipt of such Notice of
Conversion,  the  Escrow  Agent  shall  forward such Notice of Conversion to the
Company by facsimile by the end of the Business Day, on which received, assuming
received by 6:00 pm New York time and if thereafter on the next Business Day, at
the facsimile telephone number and address of the principal place of business of
the  Company.  Each  Company  Notice  of  Conversion shall be given by facsimile
addressed  to each Holder of Series B Preferred Stock at the facsimile telephone
number  and  address  of  such  Holder  appearing on the books of the Company as
provided to the Company by such Holder for the purpose of such Company Notice of
Conversion,  with  a  copy to the Escrow Agent.  Any such notice shall be deemed
given  and  effective  upon  the transmission of such facsimile at the facsimile
telephone  number  specified in this Section IV(j) (with printed confirmation of
transmission).  In  the  event  that  the  Escrow  Agent  receives the Notice of
Conversion after 4:00 p.m. New York time, the Conversion Date shall be deemed to
be  the next Business Day.  In the event that the Company receives the Notice of
Conversion  after  the  end  of  the Business Day, notice will be deemed to have
been  given  the  next  Business  Day.
                       V.  EVENTS OF DEFAULT AND REMEDIES
     (a)     "Event  of  Default",  wherever  used  herein, means any one of the
following  events:
     (i)     the Company shall fail to observe or perform any material covenant,
agreement  or warranty contained in this Series B Preferred Stock Certificate of
Designation,  and  such  failure  shall  not  have been remedied within ten (10)
Business  Days after the date on which written notice of such failure shall have
been  given;
     (ii)     the  occurrence  of  any event or breach or default by the Company
under  the  Merger  Agreement, including, without limitation, the performance of
all  obligations and duties of Zzyzx pursuant to the Convertible Preferred Stock
Purchase  Agreement  (the  "Purchase Agreement"), dated August 20, 2002, between
Zzyzx  and  the  purchaser  listed  therein, and the exhibits, schedules and all
documents  executed  in  connection therewith, or any other Transaction Document
(as defined in the Purchase Agreement) and such failure or breach shall not have
been  remedied  within  the applicable cure period provided for therein, if any;
     (iii)     the Company or any of its subsidiaries shall commence a voluntary
case  under  the  United States Bankruptcy Code as now or hereafter in effect or
any  successor  thereto  (the  "Bankruptcy  Code");  or  an  involuntary case is
commenced against the Company under the Bankruptcy Code and the Company fails to
pursue  dismissal  of  the case within sixty (60) days after commencement of the
case;  or  the  Company commences any other proceeding under any reorganization,
arrangement,  adjustment  of debt, relief of debtors, dissolution, insolvency or
liquidation  or  similar  law  of  any  jurisdiction whether now or hereafter in
effect  relating  to  the  Company or there is commenced against the Company any
such  proceeding  and  the  Company fails to pursue dismissal of the case within
sixty  (60)  days  after  commencement  of  the case; or the Company suffers any
appointment  of  any custodian or the like for it or any substantial part of its
property and the Company fails to pursue dismissal of the custodian within sixty
(60)  days  after the appointment; or the Company makes a general assignment for
the  benefit  of  creditors;  or  any  corporate or other action is taken by the
Company  for  the  purpose  of  effecting  any  of  the  foregoing;
     (iv)     the  Company  shall  voluntarily  have its Common Stock deleted or
delisted,  as  the  case  may  be,  from  the OTCBB or other national securities
exchange or market on which such Common Stock is listed for trading or suspended
from  trading thereon, and shall not have its Common Stock relisted or have such
suspension  lifted,  as the case may be, within twenty (20) Trading Days of such
deletion  or  delisting;
     (v)     notwithstanding  anything herein to the contrary, the Company shall
fail  to  deliver to the Escrow Agent share certificates representing the shares
of  Common  Stock  to  be issued upon conversion of the Series B Preferred Stock
within  ten (10) Business Days pursuant to written notice by the Escrow Agent to
the  Company  that  additional shares are required in escrow pursuant to Section
4.14 of the Purchase Agreement and Article 2 of the Escrow Agreement (annexed as
Exhibit  2.2(a)  to  the  Merger  Agreement);
     (vi)     the  Company  shall  issue  a  press  release,  or  otherwise make
publicly  known, that it is not honoring properly executed Notice of Conversions
for  any  reason  whatsoever;
     (vii)     the  Company  shall issue or enter into an agreement to issue any
equity  or  equity  equivalent  security  with  a  floating  conversion  price
substantially  similar  to  the  Series  B  Preferred  Stock.
(b)     If any Event of Default occurs and continues, beyond any cure period, if
any,  then  so long as such Event of Default shall then be continuing any Holder
may,  by  notice  to  the  Company  demand  redemption of the Shares of Series B
Preferred  Stock  at  the  Redemption  Price  (as defined herein), whereupon the
Stated  Value  and all accrued but unpaid Dividends immediately due and payable,
and  such  Holder  may  immediately  and  without expiration of any grace period
enforce  any and all of its rights and remedies hereunder and all other remedies
available  to  it  under  applicable law.  Such declaration may be rescinded and
annulled  by  such  Holder  at  any  time  prior  to payment hereunder.  No such
rescission  or  annulment shall affect any subsequent Event of Default or impair
any  right  consequent  thereon.  This  shall include, but not be limited to the
right  to  temporary,  preliminary  and  permanent injunctive relief without the
requirement  of  posting  any  bond  or  undertaking.
(c)     Such  Holder  may  thereupon  proceed  to protect and enforce its rights
either  by  suit  in  equity,  or  by  action  at  law,  or by other appropriate
proceedings  whether  for  the  specific performance (to the extent permitted by
law)  of  any  covenant  or agreement contained in this Series B Preferred Stock
Certificate  of  Designation  or  in aid of the exercise of any power granted in
this Series B Preferred Stock Certificate of Designation, and proceed to enforce
the redemption of any of the Series B Preferred Stock held by it, and to enforce
any  other  legal  or  equitable  right  of  such  Holder.
(d)     As  a  non-exclusive  remedy,  in the Event of a Default, the Holder can
convert  the outstanding shares of Series B Preferred Stock at the lesser of the
Fixed  Conversion Price or the Floating Conversion Price upon giving a notice of
conversion  to  the  Company.  The Company shall not have the right to object to
the  conversion  or  the calculation of the applicable Conversion Price, and the
Escrow Agent shall release the shares of Common Stock from escrow upon notifying
the  Company  of  the  conversion.
(e)     To  effectuate  the  terms  and  provisions  of  this  Certificate  of
Designation  of  Series  B  Preferred  Stock,  the Holder may send notice of any
default  to the Attorney-in-Fact (as defined in the Escrow Agreement) and send a
copy  of such notice to the Company and its counsel, simultaneously, and request
the  Attorney-in-Fact,  to  comply  with  the  terms  of  this  Certificate  of
Designation  of  Series  B  Preferred  Stock  and  the  Merger Agreement and all
agreements  entered  into  and/or  assumed  pursuant  to the Merger Agreement on
behalf  of  the  Company.

                                 VI.  REDEMPTION
     (a)     The  shares  of Series B Preferred Stock are redeemable at the sole
option of the Company prior to receipt of a Notice of Conversion (as provided in
Article  IV  hereof)  to the extent funds are legally available therefor, at any
time  and  from  time to time in whole or in part at a redemption price equal to
one hundred fifteen percent (115%) of the Stated Value of each share of Series B
Preferred  Stock  being  redeemed plus accrued and unpaid dividends ("Redemption
Price").  The Company is not obligated to provide for redemption of the Series B
Preferred  Stock  through  a  sinking  fund.
(b)     The  Company shall not optionally redeem the Series B Preferred Stock or
any  other Pari Passu Securities in whole or in part without redeeming, on a pro
rata  basis,  all  outstanding  Pari  Passu  Securities  in  accordance with the
relative  amounts  due  the  holders  of  Pari  Passu  Securities on redemption.
(c)     Shares of Series B Preferred Stock which have been redeemed or converted
shall  be  deemed  retired  pursuant to the NGCL and shall thereafter resume the
status  of authorized and unissued shares of Preferred Stock, undesignated as to
series,  and  may  be  redesignated  and  reissued  as part of any new series of
Preferred  Stock  other  than  Series  B  Preferred  Stock.
(d)     Notwithstanding  the foregoing provisions of this Article VI, unless the
full  cumulative dividends on all outstanding shares of Series B Preferred Stock
shall  have  been  paid  or contemporaneously are declared and paid for all past
dividend  periods, none of the Series B Preferred Stock shall be redeemed unless
all  outstanding shares of Series B Preferred Stock are simultaneously redeemed.
(e)     No  redemption  shall  be  made and no sum set aside for such redemption
unless  at  the time thereof (i) all accrued and unpaid dividends payable on any
Senior  Securities (as defined herein) have been paid in full, (ii) all required
mandatory  redemptions on Senior Securities have been made in full and (iii) all
optional  redemptions  of  Senior  Securities, if any, previously declared, have
been  made  in  full.  No redemption shall be made and no sum set aside for such
redemption  at  any  time  that  the  terms  or  provisions  of any indenture or
agreement  of  the  Company,  including  any agreement relating to indebtedness,
specifically  prohibits  such  redemption or setting aside or provides that such
redemption  or  setting  aside  would  constitute a breach or default thereunder
(after  notice or lapse of time or both), except with the written consent of the
lender  or  other  parties  to  said  agreement  as  the  case  may  be.
(f)     If  any redemption shall at any time be prohibited by the NGCL, the same
shall be deferred until such time as the redemption can occur in full compliance
with  such  statute.
(g)     In the event the Company shall redeem shares of Series B Preferred Stock
notice  of  such redemption shall be given by first class mail, postage prepaid,
or  by confirmed facsimile transmission, not less than thirty (30) business days
prior  to  the date fixed by the Board for redemption to each holder of Series B
Preferred Stock at the address that appears on the Company's stock record books;
provided, however, that no failure to provide such notice nor any defect therein
--------  -------
shall  affect  the validity of the redemption proceeding except as to the holder
to  whom  the  Company  has  failed  to  send  such  notice  or whose notice was
defective.  Each  notice shall state (i) the redemption date, (ii) the number of
shares  of  Series B Preferred Stock to be redeemed; (iii) the Redemption Price;
(iv)  the  place  or  places where certificates for shares of Series B Preferred
Stock  are  to be surrendered for payment and (v) that dividends on the redeemed
shares  shall  cease  to  accrue  on such redemption date.  When notice has been
provided  as  aforesaid  then from and after the redemption date (unless default
shall  be  made  by  the  Company  in  providing  money  for  the payment of the
Redemption  Price  of  the shares called for redemption) dividends on the shares
called  for  redemption shall cease to accrue and said shares shall no longer be
deemed  to  be  outstanding  and  all  rights of the holders thereof shall cease
(other  than  the right to receive the Redemption Price).  Upon surrender of the
certificates  for  Series  B  Preferred  Stock  accompanied by appropriate stock
powers, the shares shall be redeemed by the Company at the Redemption Price.  In
case  fewer  than all shares represented by any such certificate are redeemed, a
new  certificate  representing  the  shares  of  Series B Preferred Stock not so
redeemed  shall  be  issued  to  the  holder  without  cost.

                                   VII.  RANK
     The  Series  B Preferred Stock shall, as to dividends, redemptions, and the
distribution  of  assets  upon  liquidation,  dissolution  or  winding up of the
Company,  rank  (i) prior to the Company's Common Stock; (ii) prior to any class
or  series of capital stock of the Company hereafter created that, by its terms,
ranks junior to the Series B Preferred Stock ("Junior Securities"); (iii) junior
to  any  class or series of capital stock of the Company hereafter created (with
the  consent  of the holders of a majority of the outstanding Series B Preferred
Stock)  which by its terms ranks senior to the Series B Preferred Stock ("Senior
Securities");  and  (iv)  pari passu with any other series of preferred stock of
the  Company hereafter created (with the consent of the holders of a majority of
the  outstanding  Series B Preferred Stock) which by its terms ranks on a parity
("Pari  Passu  Securities")  with  the  Series  B  Preferred  Stock.

                          VIII.  LIQUIDATION PREFERENCE
     If  the  Company  shall  commence  a  voluntary case under the U.S. Federal
bankruptcy  laws  or any other applicable bankruptcy, insolvency or similar law,
or  consent to the entry of an order for relief in an involuntary case under any
law  or  to  the  appointment  of  a  receiver, liquidator, assignee, custodian,
trustee,  sequestrator  (or  other  similar  official)  of the Company or of any
substantial  part  of its property, or make an assignment for the benefit of its
creditors,  or admit in writing its inability to pay its debts generally as they
become  due,  or if a decree or order for relief in respect of the Company shall
be entered by a court having jurisdiction in the premises in an involuntary case
under  the  U.S.  Federal  bankruptcy  laws  or any other applicable bankruptcy,
insolvency  or  similar  law  resulting  in  the  appointment  of  a  receiver,
liquidator,  assignee,  custodian,  trustee,  sequestrator  (or  other  similar
official) of the Company or of any substantial part of its property, or ordering
the winding up or liquidation of its affairs, and any such decree or order shall
be  unstayed  and  in effect for a period of sixty (60) consecutive days and, on
account  of any such event, the Company shall liquidate, dissolve or wind up, or
if  the  Company  shall otherwise liquidate, dissolve or wind up, including, but
not  limited  to,  the  sale  or  transfer  of  all  or substantially all of the
Company's  assets  in  one transaction or in a series of related transactions (a
"Liquidation Event"), no distribution shall be made to the holders of any shares
of  capital  stock  of  the Company (other than Senior Securities and Pari Passu
Securities) upon liquidation, dissolution or winding up unless prior thereto the
Holders  of  shares  of  Series  B  Preferred  Stock  shall  have  received  the
Liquidation  Preference  (as defined below) with respect to each share. If, upon
the  occurrence  of  a  Liquidation  Event,  the  assets and funds available for
distribution  among  the  Holders of the Series B Preferred Stock and Holders of
Pari  Passu  Securities  shall  be  insufficient  to  permit the payment to such
holders  of the preferential amounts payable thereon, then the entire assets and
funds  of  the  Company  legally  available  for  distribution  to  the Series B
Preferred Stock and the Pari Passu Securities shall be distributed ratably among
such  shares  in proportion to the ratio that the Liquidation Preference payable
on  each such share bears to the aggregate Liquidation Preference payable on all
such  shares.  The  purchase or redemption by the Company of stock of any class,
in  any manner permitted by law, shall not, for the purposes hereof, be regarded
as  a  liquidation,  dissolution  or  winding  up  of  the  Company. Neither the
consolidation  or  merger  of  the Company with or into any other entity nor the
sale  or  transfer  by  the Company of less than substantially all of its assets
shall,  for  the  purposes hereof, be deemed to be a liquidation, dissolution or
winding up of the Company.  The "Liquidation Preference" with respect to a share
of  Series  B Preferred Stock means an amount equal to the Stated Value thereof,
plus  the  accrued  but  unpaid  dividends  thereon  through  the  date of final
distribution.  The  Liquidation  Preference  with  respect  to  any  Pari  Passu
Securities  shall  be  as  set  forth in the Certificate of Designation filed in
respect  thereof.

                               IX.  VOTING RIGHTS
     The  Holders  of  the  Series  B  Preferred  Stock  have  no  voting  power
whatsoever,  except as otherwise provided by the NGCL.  To the extent that under
the  NGCL  the  vote  of  the  Holders  of  the Series B Preferred Stock, voting
separately as a class or series, as applicable, is required to authorize a given
action  of  the  Company,  the  affirmative vote or consent of the Holders of at
least  a majority of the then outstanding shares of the Series B Preferred Stock
represented  at  a  duly held meeting at which a quorum is present or by written
consent  of the Holders of at least a majority of the then outstanding shares of
Series  B  Preferred  Stock (except as otherwise may be required under the NGCL)
shall  constitute  the  approval of such action by the class. To the extent that
under the NGCL Holders of the Series B Preferred Stock are entitled to vote on a
matter with holders of Common Stock, voting together as one class, each share of
Series  B  Preferred  Stock  shall be entitled to a number of votes equal to the
number  of  shares of Common Stock into which it is then convertible (subject to
the limitations contained in Article IV) using the record date for the taking of
such  vote  of  shareholders  as  the  date  as of which the Conversion Price is
calculated.

                                X.  MISCELLANEOUS
     (a)     If any shares of Series B Preferred Stock are converted pursuant to
Article  IV,  the  shares  so  converted  shall be canceled, shall return to the
status  of authorized, but unissued preferred stock of no designated series, and
shall  not  be  issuable  by  the  Company  as  Series  B  Preferred  Stock.
(b)     Upon  receipt  by  the  Company  of  (i)  evidence  of  the loss, theft,
destruction  or mutilation of any Preferred Stock certificate(s) and (ii) (y) in
the  case of loss, theft or destruction, of indemnity (without any bond or other
security)  reasonably  satisfactory  to  the  Company,  or  (z)  in  the case of
mutilation,  upon  surrender  and  cancellation  of  the  Preferred  Stock
certificate(s),  the  Company  shall  execute  and  deliver  new Preferred Stock
certificate(s)  of  like  tenor  and  date.  However,  the  Company shall not be
obligated  to  reissue such lost or stolen Preferred Stock certificate(s) if the
Holder contemporaneously requests the Company to convert such Series B Preferred
Stock.
(c)     Upon  submission  of  a  Notice  of  Conversion  by a Holder of Series B
Preferred  Stock,  (i) the shares covered thereby shall be deemed converted into
shares  of  Common  Stock  and  (ii)  the  Holder's  rights  as a Holder of such
converted  shares  of  Series  B  Preferred  Stock  shall  cease  and terminate,
excepting only the right to receive certificates for such shares of Common Stock
and  to  any remedies provided herein or otherwise available at law or in equity
to  such  Holder because of a failure by the Company to comply with the terms of
this  Certificate of Designation. Notwithstanding the foregoing, if a Holder has
not  received  certificates  for  all  shares of Common Stock prior to the tenth
(10th)  business day after the expiration of the Delivery Period with respect to
a conversion of Series B Preferred Stock for any reason, then (unless the Holder
otherwise  elects  to  retain  its  status  as  a  holder  of Common Stock by so
notifying the Company within five (5) business days after the expiration of such
ten  (10) business day period) the Holder shall regain the rights of a Holder of
Series  B  Preferred  Stock  with respect to such unconverted shares of Series B
Preferred  Stock  and  the  Company  shall,  as soon as practicable, return such
unconverted  shares  to the Holder. In all cases, the Holder shall retain all of
its  rights and remedies for the Company's failure to convert Series B Preferred
Stock.
(d)     The  remedies  provided  in  this  Certificate  of  Designation shall be
cumulative  and  in  addition  to  all  other  remedies  available  under  this
Certificate  of Designation, at law or in equity (including a decree of specific
performance  and/or  other  injunctive relief), and nothing herein shall limit a
Holder's right to pursue actual damages for any failure by the Company to comply
with the terms of this Certificate of Designation. The Company acknowledges that
a  breach  by it of its obligations hereunder will cause irreparable harm to the
Holders  of  Series  B  Preferred  Stock and that the remedy at law for any such
breach may be inadequate. The Company therefore agrees, in the event of any such
breach  or threatened breach, that the Holders of Series B Preferred Stock shall
be  entitled,  in  addition  to  all  other available remedies, to an injunction
restraining  any  breach,  without  the  necessity  of showing economic loss and
without  any  bond  or  other  security  being  required.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

<PAGE>
IN  WITNESS  WHEREOF,  the  undersigned,  being  the  President and Secretary of
National  Beauty  Corp.,  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  B  2%  Convertible Preferred Stock of
National  Beauty Corp. duly adopted by the Board of Directors of National Beauty
Corp. on August 19, 2002, and this Certificate of Designation is executed by the
undersigned  on  behalf  of  National  Beauty Corp. this ___ day of August 2002.

     NATIONAL  BEAUTY  CORP.

     By:     ______________________________
     Edward  A.  Roth,  President

     By:     ______________________________
     Alisha  Roth,  Secretary

<PAGE>
                                   APPENDIX I

                              NOTICE OF CONVERSION
                            AT THE ELECTION OF HOLDER
(To be Executed by the Registered Holder
in order to Convert the Series B Preferred Stock)

Except  as provided by Article IV of the Series B Preferred Stock Certificate of
Designation,  the  undersigned  hereby  irrevocably  elects to convert the above
Series  B  Preferred  Stock certificate number(s) _______________ into shares of
Common Stock, $.001 par value per share (the "Common Stock"), of National Beauty
Corp. (the "Company") according to the conditions hereof, as of the date written
below.  If  shares  are  to  be  issued  in  the  name  of  a  person other than
undersigned,  the  undersigned  will pay all transfer taxes payable with respect
thereto  and is delivering herewith such certificates and opinions as reasonably
requested by the Company in accordance therewith.  No other fees will be charged
to  the  Holder,  except for such transfer taxes, if any.  A fee of $350 will be
charged  to  the  Company  for  any  conversion  by  the  Escrow  Agent.

Conversion  calculations:
     Date  to  Effect  Conversion

     Stated  Value  of  Shares  of  Series  B  Preferred  Stock  to be Converted

     Applicable  Conversion  Price  (Pursuant  to  Article  IV(d))

     Number  of  Shares  to  be  Issued  Upon  Conversion

     Signature

     Name

     Address

<PAGE>
                                   APPENDIX II

                         NOTICE OF AUTOMATIC CONVERSION

The  undersigned  in  the  name  and  on  behalf  of  National Beauty Corp. (the
"Company")  hereby  notifies  the  addressee hereof that _________ shares of the
Series  B  Preferred  Stock  held by the Holder will be converted into shares of
Common  Stock,  par  value  $.001 per share (the "Common Stock"), of the Company
according  to  the terms of the Series B Preferred Stock, as of the date written
below.   No  other  fees  will be charged to the Holder except for such transfer
taxes, if any which may be incurred by the Company if shares are to be issued in
the  name of a person other than the person to whom this notice is addressed.  A
fee  of  $350.00 will be charged to the Company for any conversion by the Escrow
Agent.

Conversion calculations:
Date to Effect Conversion

Number of shares of Series B Preferred Stock to be Converted

Applicable Conversion Price

Number of Shares of Common Stock to be Issued

Signature

Name

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00044-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00044-of-00352.parquet"}]]