LAWRENCEVILLE, N.J., May 15, 2023
/PRNewswire/ -- On January 12, 2021,
Petitioner BTRS Holdings Inc. ("BTRS" or the "Company," previously
South Mountain Merger Corp.) held a special meeting to validate
amendments to its Certificate of Incorporation proposed by a
Certificate of Amendment and by a Second Amended and Restated
Certificate of Incorporation (collectively, the "Amendments").
The first proposed certificate of incorporation amendment (the
"Pre-Mergers Charter Proposal"), sought to amend the previous
certificate of incorporation to increase the outstanding shares to
541,000,000 shares, with shares of Class A Common Stock and the
newly-issued Class C Common Stock being issued to the stockholders
of the Company.
The second proposed certificate of incorporation amendment (the
"Post-Mergers Charter Proposal") sought to further amend the
previous certificate of incorporation to increase the number of
authorized shares to 575,000,000 and also reclassify the
then-existing Class A and Class C shares into shares of Class 1 and
Class 2 Common Stock, respectively.
On the same date, the Company also consummated the merger
contemplated by a merger agreement (the "de-SPAC Merger," or the
"Business Combination"), dated as of October
18, 2020 by and among the Company, BT Merger Sub I, Inc., BT
Merger Sub II, LLC and Factor Systems, Inc. (which conducted
business under the name "Billtrust").
At the special meeting held on January
12, 2021, the Amendments and Business Combination proposal
were approved by holders of the Class A and Class B shares voting
together as a single class. A separate Class A vote regarding the
Amendments and the Business Combination proposal was not solicited.
Following the business combination that was consummated on
January 12th, 2021, the Company was
acquired via merger in December 2022
and is now a company controlled by affiliates of EQT X Fund
("EQT").
Following a recent ruling by the Court of Chancery, it is
unclear whether Section 242(b)(2) of the Delaware General
Corporation Law (the "DGCL") would have required the Amendments to
be approved by a separate vote of the majority of the Company's
then-outstanding shares of Class A common stock.
If, in fact, the vote approving the Amendments on January 12, 2021 did not comply with the
Delaware law and thus did not
validly increase the number of shares of Class A Common Stock
authorized for issuance, then (absent validation by this Court) the
Company is limited to validly issuing only 200,000,000 shares of
Class A Common Stock (the maximum number fixed in the certificate
of incorporation prior to the Amendments). To date, the Company has
neither issued, nor reserved for issuance, shares in excess of the
certificate of incorporation's authorized number, pre-Amendments.
However, because the effectiveness of the Amendments was
cross-conditioned on the effectiveness of the other Amendments, it
is not certain whether the share increase (if ineffective) is
severable from the other Amendments. If the applicable Amendment
increasing the authorized share count is in fact not severable,
then the increase to the authorized share court could call into
question certain corporate actions that occurred thereupon and
thereafter, including without limitation, the other Amendments
(which the Company relied on to issue shares of a new Class C
Common Stock to certain of the Billtrust stockholders), the
reclassification of Class A Common Stock and Class C Common Stock,
respectively, into Class 1 and Class 2 Common Stock, and the
subsequent transactions.
To date, no one has provided the Company with notice of any
allegations or demand letters about the potential invalidity under
Delaware law (or otherwise) of the
stockholder votes necessary to approve the Amendments. However, to
resolve potential uncertainty with respect to the Company's capital
structure, on May 10, 2023, the
Company filed a petition in the Delaware Court of Chancery (the "Court of
Chancery") under Section 205 of the DGCL to seek validation of the
Amendments (the "Petition"). Section 205 of the DGCL permits the
Court of Chancery, in its discretion, to ratify and validate
potentially defective corporate acts. The Petition filed by the
Company in the Court of Chancery is captioned In Re BTRS Holdings
Inc. (C.A. No. 2023-0516-LWW (Del. Ch.)). Concurrently with the
Petition, the Company filed a motion to expedite the hearing on the
Petition.
On May 12, 2023, the Court of
Chancery granted the motion to expedite and set a hearing date for
the Petition to be heard. The hearing has been set for May 25, 2023 at 1:30 p.m.
Eastern Time, at the Leonard L. Williams Justice Center, 500
North King Street, Wilmington,
Delaware 19801. As required by the Court of Chancery, the
Company is filing the Petition with this Press Release, a copy of
which is available at www.billtrust.com/news.
This Press Release constitutes notice of the hearing. If any
former stockholder of the Company wishes to express a position on
the Petition, such stockholders of the Company may (i) appear at
the hearing or (ii) file a written submission with the Register in
Chancery, Leonard L. Williams Justice Center, 500 North King
Street, Wilmington, Delaware
19801, referring to the case caption, In Re BTRS Holdings Inc.
(C.A. No. 2023-0516-LWW (Del. Ch.)), in advance of the hearing, and
any such written submission should be emailed to the Company's
counsel, Kevin M. Coen Esq., Morris,
Nichols, Arsht & Tunnell LLP, at kcoen@morrisnichols.com.
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SOURCE Billtrust
