Exhibit 99.3
ARTICLES OF AMENDMENT
OF THE
ARTICLES OF INCORPORATION
OF
SECURITY INTELLIGENCE TECHNOLOGIES, INC.
Pursuant to the provisions of section 607.0602, Florida Statutes
Ben Jamil, chief executive officer of Security Intelligence Technologies, Inc.,
a Florida corporation, does hereby certify as follows:
1. The name of the corporation (the "Corporation") is Security
Intelligence Technologies, Inc.
2. Exhibit A to these Articles of Amendment sets forth the text of the
amendment determining the terms of a newly created series of preferred stock of
the Corporation which is designated as the Series C Preferred Stock.
3. The amendment was duly adopted by the board of directors of the
Corporation on March 18, 2005.
IN WITNESS WHEREOF, the undersigned has executed these Articles of
Amendment on March 18, 2005.
/s/ Ben Jamil
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Ben Jamil, Chief Executive Officer
Exhibit A
Statement of Designations of the Series C Preferred Stock
The designation of, the number of shares constituting, and the rights,
preferences, privileges and restrictions relating to, the Series C Convertible
Preferred Stock are as follows:
1. Designation and Number of Shares.
(a) The designation of this series of five million (5,000,000)
shares of preferred stock, par value $.0001 per share, created by the Board of
Directors of the Corporation pursuant to the authority granted to it by the
articles of incorporation of the Corporation is Series C Preferred Stock.
(b) In the event of the conversion of shares of Series C Preferred
Stock into this Corporation's common stock, par value $.0001 per share ("Common
Stock"), pursuant to Section 4 of this Statement of Designation, or in the event
that the Corporation shall otherwise acquire and cancel any shares of Series C
Preferred Stock, or in the event that a Conversion Event, as hereinafter
defined, shall not have occurred by July 1, 2010, the shares of Series C
Preferred Stock so converted or otherwise acquired and canceled or cancelled as
a result of the failure of a Conversion Event to occur shall have the status of
authorized but unissued shares of preferred stock, without designation as to
series until such stock is once more designated as part of a particular series
by the Corporation's Board of Directors. In addition, if the Corporation shall
not issue the maximum number of shares of Series C Preferred Stock, the
Corporation may, from time to time, by resolution of the Board of Directors,
reduce the number of shares of Series C Preferred Stock authorized, provided,
that no such reduction shall reduce the number of authorized shares to a number
which is less than the number of shares of Series C Preferred Stock then issued
or reserved for issuance. The number of shares by which the Series C Preferred
Stock is reduced shall have the status of authorized but unissued shares of
Preferred Stock, without designation as to series, until such stock is once more
designated as part of a particular Series C by the Corporation's Board of
Directors. The Board of Directors shall cause to be filed with the Secretary of
State of the State of Florida such certificate as shall be necessary to reflect
any reduction in the number of shares constituting the Series C Preferred Stock.
The Series C Preferred Stock shall be pari passu with the Series A Convertible
Preferred Stock and the Series B Convertible Preferred Stock of this Corporation
as to dividends and upon voluntary or involuntary liquidation, dissolution or
winding up.
2. Dividend Rights. The holders of the Series C Preferred Stock shall be
entitled to receive such dividends, whether payable in cash, property or capital
stock of the Corporation, if, when and as declared by the Board of Directors. In
the event that the Board of Directors shall declare a dividend on the Common
Stock, other than a dividend payable solely in shares of Common Stock, the
Corporation shall pay to the holders of Series C Preferred Stock on the record
date for the determination of the holders of Common Stock entitled to such
dividend, a dividend per share of Series C Preferred Stock equal to the dividend
which would have been paid if the Series C Preferred Stock had been converted
into Common Stock on and as of such record date, regardless of whether a
Conversion Event shall have occurred. Such dividend shall be paid on the same
dividend payment date the dividend is paid to the holders of the Common Stock.
Any dividends shall be paid only out of funds of this Corporation legally
available therefor.
3. Voting Rights.
(a) Except as otherwise required by law, the holders of the Series C
Preferred Stock shall vote together with the Common Stock (and any other class
or series of capital stock which have voting rights) as if the Series C
Preferred Stock and such other classes or series of capital stock were a single
class, with the holders of the Common Stock having one vote per share and the
holders of the Series C Preferred Stock voting on an "as-converted" basis,
regardless of whether a Conversion Event shall have occurred. Voting on an "as
converted" basis means having such number of votes per share of Series C
Preferred Stock as equals the number of shares of Common Stock into which the
Series C Preferred Stock was convertible on the record date for determining
holders of Common Stock entitled to vote, either at a meeting or by an action in
writing in lieu of a meeting.
(b) In the case where the holders of the Series C Preferred Stock
vote as a single class as required by law, each share of Series C Preferred
Stock shall be entitled to one vote. The holders of the Series C Preferred Stock
will not be entitled to vote as a class with respect to the increase or decrease
in the number of authorized shares of preferred stock.
(c) The Corporation may create other series of preferred stock which
may be senior or junior to or on a parity with the Series C Preferred Stock as
to dividends and/or on voluntary or involuntary dissolution, liquidation or
winding up without the consent of the holders of the Series C Preferred Stock.
4. Conversion into Common Stock.
(a) Each holder of the Series C Preferred Stock will have the right,
at any time and from time to time, after the occurrence of a Conversion Event to
convert any shares of Series C Preferred Stock into shares of Common Stock.
Conversion of the Series C Preferred Stock shall be effected by surrender of the
certificate representing the shares of Series C Preferred Stock being converted
to the transfer agent for the Series C Preferred Stock, or, if none shall have
been appointed, to the Corporation, together with the form of notice of election
to convert as may be provided from time to time by the Corporation.
(b) A Conversion Event shall mean the first to occur of:
(i) the first day following the end of such fiscal quarter in
which the Corporation's consolidated revenue from the beginning of the fiscal
year through the last day of quarter shall be at least $6,000,000; or
(ii) the first day following the end of the first fiscal year
in which the Corporation's consolidated adjusted net income is at least
$250,000. Adjusted net income shall mean the Corporation's consolidated income
before income taxes, determined in accordance with generally accepted accounting
principles consistently applied, plus non-cash expenses incurred by the
Corporation in connection with the issuance of equity securities in a private
placement or public offering of the Corporation's debt or equity securities, but
only to the extent that such expenses were deducted in calculating income before
income taxes; or
(iii) the date on which a change of control shall have
occurred. A change of control" shall occur:
(A) When any "person" as defined in Section 3(a)(9) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and as
used in Section 13(d) and 14(d) thereof including a "group" as defined in
Section 13(d) of the Exchange Act, but excluding the Corporation or any
subsidiary or any affiliate of the Corporation or any employee benefit plan
sponsored or maintained by the Corporation or any subsidiary of the Corporation
(including any trustee of such plan acting as trustee), becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act) of securities of the
Corporation representing a majority of the combined voting power of the
Corporation's then outstanding securities; or
(B) When, during any period of twenty-four (24)
consecutive months, the individuals who, at the beginning of such period,
constitute the Board of Directors (the "Incumbent Directors") cease for any
reason other than death to constitute at least a majority thereof provided,
however, that a director who was not a director at the beginning of such
24-month period shall be deemed to have satisfied such 24-month requirement (and
be an Incumbent Director) if such director was elected by, or on the
recommendation of or with the approval of, at least two-thirds of the directors
who then qualified as Incumbent Directors either actually (because they were
directors at the beginning of such 24-month period) or through the operation of
this proviso; or
(C) Upon the occurrence of a transaction requiring
stockholder approval for the acquisition of the Corporation by an entity other
than the Corporation or a subsidiary or an affiliated company of the Corporation
through purchase of assets, or by merger, or otherwise, except for a merger or
other reorganization the principal purpose of which is to changes the state of
the Corporation's domicile and which does not otherwise result in a change of
control.
(c) If a Conversion Event shall not have occurred by July 1,
2010, the rights of the holders of the Series C Preferred Stock shall terminate,
and the holders of such shares shall transfer all of their shares of Series C
Preferred Stock to the Corporation for no consideration. Certificates for the
Series C Preferred Stock that are outstanding prior to a Conversion Event shall
bear a legend referred to the provisions of this Section 4(c).
(d) The "Conversion Rate" shall mean the number of shares of
Common Stock issuable upon conversion of one (1) share of Series C Preferred
Stock. The Conversion Rate shall be one (1) share of Common Stock for each share
of Series C Preferred Stock, subject to adjustment in the event of any stock
split, stock distribution, stock dividend, reverse split or any other similar
recapitalization.
(e) In case of any reclassification of the capital stock of
the Corporation, consolidation or merger of the Corporation with or into another
corporation, sale, lease or transfer of all or substantially all of the property
and assets of the Corporation to another corporation, or voluntary or
involuntary dissolution, liquidation or winding up of the Corporation shall be
effected, then the Corporation shall cause to be mailed by first class mail to
the record holders of Series C Preferred Stock at least ten (10) days prior to
the effective date of such reclassification, consolidation, merger, conveyance,
lease, dissolution, liquidation or winding up, as the case may be, a notice
containing a brief description of the proposed action and stating the date on
such reclassification, consolidation, merger, conveyance, lease, dissolution,
liquidation or winding up is to take place and the date, if any is to be fixed,
as of which the holders of Common Stock or other securities shall receive cash
or other property deliverable upon such reclassification, reorganization,
consolidation, merger, conveyance, dissolution, liquidation or winding up.
(f) Any consolidation or merger of the Corporation into
another corporation in which the Corporation is not the surviving entity, will
not be treated as a liquidation pursuant to Section 6(b) of this Statement of
Designation if the merger or consolidation is approved by the holders of a
majority of the shares of Series C Preferred Stock, in which event the Series C
Preferred Stock shall be converted into cash, securities or property in
accordance with the plan or merger or consolidation, as the case may be.
Otherwise, the merger or consolidated shall be treated as a liquidation,
dissolution or winding up of the Corporation under Section 6(b) of this
Statement of Designation.
(g) No fractional shares shall be issued upon conversion of
the Series C Preferred Stock into Common Stock. The number of shares of Common
Stock to be issued upon such conversion shall be rounded to the nearest whole
share, with fractional shares of one-half or greater being rounded up, and
fractional shares of less than one-half being rounded down.
(h) The Corporation shall at all times reserve and keep
available, free from preemptive rights, out of its authorized but unissued
Common Stock the full number of shares of Common Stock then issuable upon the
conversion of all shares of Series C Preferred Stock then outstanding.
(i) The Common Stock issuable upon conversion of the Series C
Preferred Stock shall, when so issued, be duly and validly authorized and
issued, fully paid and non-assessable.
5. Redemption. The Corporation shall have no right to redeem any shares of
Series C Preferred Stock.
6. Liquidation Rights.
(a) (i) In the event of the liquidation, dissolution or winding up
of the Corporation, whether voluntary or involuntary, the holders of the Series
C Preferred Stock shall be entitled to receive out of the assets of the
Corporation an amount per share equal to one cent ($.01), plus a sum equal to
all declared but unpaid dividends on the Series C Preferred Stock before any
payment or distribution upon dissolution, liquidation or winding up shall be
made on any class or series of capital stock ranking junior to Series C
Preferred Stock as to such payment or distribution, and after all such payments
or distributions have been made on any class or series of capital stock ranking
senior to the Series C Preferred Stock as to such payment or distribution.
(ii) After payment of the preference set forth in Section
6(a)(i) of this Statement of Designation and after payment of all preferences
payable to holders of any other class or series of capital stock which is senior
to the common stock on liquidation, dissolution or winding up, the holders of
the Series C Preferred Stock shall share with the holders of the Common Stock
and the holders of any other class or series of capital stock which has such or
similar rights as if the Series C Preferred Stock and the Common Stock and such
other classes and series of capital stock, which each holder of Series C
Preferred Stock to be deemed to own such number of shares of Common Stock as
would be issuable upon conversion of the Series C Preferred Stock, regardless of
whether a Conversion Event shall have occurred, immediately prior to the
effective date of the liquidation, dissolution and winding up.
(b) The sale, conveyance, exchange or transfer (for cash, shares of
stock, securities or other consideration) of all or substantially all of the
property and assets of the Corporation shall be deemed a voluntary dissolution,
liquidation or winding up of the Corporation for purposes of this Section 6.
(c) The consolidation or merger of the Corporation into another
corporation in which the Corporation is not the surviving corporation shall be
governed by Section 4(h) of this Certificate of Designation.
(d) In the event the assets of the Corporation available for
distribution to the holders of shares of Series C Preferred Stock upon
dissolution, liquidation or winding up of the Corporation, whether voluntary or
involuntary, shall be insufficient to pay in full all amounts to which such
holders are entitled pursuant to Section 6(a)(i) of this Statement of
Designation, no such distribution shall be made on account of any shares of any
other class or series of capital stock of the Corporation ranking on a parity
with the shares of Series C Preferred Stock upon such dissolution, liquidation
or winding up unless proportionate distributive amounts shall be paid on account
of the shares of Series C Preferred Stock, ratably, in proportion to the full
distributable amounts for which holders of all such parity shares are
respectively entitled upon such dissolution, liquidation or winding up.
7. Notice. Unless otherwise provided in this Statement of Designation,
each notice or other communication pursuant to this Statement of Designation
shall be in writing signed by the party giving such notice, and delivered
personally or sent by overnight courier, mail or messenger against receipt
thereof or sent by registered or certified, return receipt requested, or first
class mail to the Corporation at its executive offices, presently 145 Huguenot
Street, New Rochelle, New York 10801, Attention: Chief Executive Officer, or to
such other address or person as the Corporation may advise the holders of the
Series C Preferred Stock by like notice, or to any holder at his address set
forth on the Corporation's records. Notices shall be deemed to have been
received on the date of personal delivery or, if sent by mail, shall be deemed
to be delivered on the fifth (5th) business day after the date of mailing,
except that notice of change in the person or address shall be effective on
actual receipt. Notwithstanding the foregoing, any notice for a meeting of
stockholders or communication which otherwise solicits a vote or consent shall
be given in the manner provided in the Corporation's bylaws.
8. Rank of Series. For purposes of this Certificate of Designation, any
stock of any series or class of the Corporation shall be deemed to rank:
(a) prior to the shares of Series C Preferred Stock, as to dividends
or upon liquidation, dissolution or winding up, as the case may be, if the
holders of such class or classes shall be entitled to the receipt of dividends
or of amounts distributable upon dissolution, liquidation or winding up of the
Corporation, as the case may be, in preference or priority to the holders of
shares of Series C Preferred Stock;
(b) on a parity with shares of Series C Preferred Stock, as to
dividends or upon liquidation, dissolution or winding up, as the case may be,
whether or not the dividend rates, dividend payment dates or redemption or
liquidation prices per share or sinking fund provisions, if any, be different
from those of Series C Preferred Stock, if the holders of such stock shall be
entitled to the receipt of dividends or of amounts distributable upon
dissolution, liquidation or winding up of the Corporation, as the case may be,
in proportion to their respective dividend rates or liquidation prices, without
preference or priority, one over the other, as between the holders of such stock
and the holders of shares of Series C Preferred Stock; and
(c) junior to shares of Series C Preferred Stock as to dividends or
upon liquidation, dissolution or winding up, as the case may be, if such class
shall be Common Stock or if the holders of shares of Series C Preferred Stock
shall be entitled to receipt of dividends or of amounts distributable upon
dissolution, liquidation or winding up of the Corporation, as the case may be,
in preference or priority to the holders of shares of such class or classes.
9. No Preemptive Rights. No holder of the Series C Preferred Stock shall,
as such holder, be entitled as of right to purchase or subscribe for any shares
of stock of the Corporation of any class or any series now or hereafter
authorized or any securities convertible into or exchangeable for any shares, or
any warrants, options, rights or other instruments evidencing rights to
subscribe for or purchase any such shares, whether such shares, securities,
warrants, options, rights or other instruments be unissued or issued and
thereafter acquired by the Corporation.
10. Transfer Agent and Registrar. The Corporation may appoint a transfer
agent and registrar for the issuance, transfer and conversion of the Series C
Preferred Stock and for the payment of dividends to the holders of the Series C
Preferred Stock.