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EXHIBIT 3.5
ARTICLES OF AMENDMENT TO AMENDED AND RESTATED
ARTICLES OF INCORPORATION OF TOWNE SERVICES, INC.
In accordance with Sections 14-2-602 and 14-2-1006 of the Georgia
Business Corporation Code (the "Code"), Towne Services, Inc. (the
"Corporation"), a corporation organized and existing under and by virtue of the
Code, DOES HEREBY CERTIFY:
1. The name of the Corporation is Towne Services, Inc.
2. The following resolution setting forth an amendment to the
Corporation's Articles of Incorporation has been duly adopted
by the Board of Directors:
RESOLVED, THAT ARTICLE 2 OF THE AMENDED AND RESTATED
ARTICLES OF INCORPORATION IS HEREBY AMENDED BY ADDING THE
FOLLOWING PROVISIONS TO THE END THEREOF: "THE CORPORATION IS
AUTHORIZED TO ISSUE 20,000 SHARES OF SERIES B CONVERTIBLE
PREFERRED STOCK, WITHOUT PAR VALUE PER SHARE (THE "SERIES B
PREFERRED STOCK"). THE SERIES B PREFERRED STOCK SHALL HAVE THE
PREFERENCES, LIMITATIONS AND RELATIVE RIGHTS SET FORTH ON
EXHIBIT A TO THIS RESOLUTION."
3. The "Exhibit A" referenced in the foregoing resolution is
included in these Articles of Amendment and is the same
"Exhibit A" as is attached hereto.
4. The foregoing resolution containing the amendment was duly
adopted on May 28, 1999, by the Corporation's Board of
Directors in accordance with the provisions of Sections
14-2-602 and 14-2-1002 of the Code.
IN WITNESS WHEREOF, the Corporation has caused this Amendment to be
signed by the undersigned duly authorized officer, this 11th day of June, 1999.
TOWNE SERVICES, INC.
By: /s/ Henry M. Baroco
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Name: Henry M. Baroco
Title: President and Chief Operating Officer
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EXHIBIT A
DESIGNATIONS OF PREFERENCES,
LIMITATIONS, AND RELATIVE RIGHTS OF
SERIES B PREFERRED STOCK OF TOWNE SERVICES, INC.
For the purposes of these Designations, the following terms shall have
the meanings specified:
"Articles of Incorporation" shall mean the Amended and Restated
Articles of Incorporation of the Corporation, as amended.
"Board of Directors" shall mean the board of directors of the
Corporation.
"Bylaws" shall mean the bylaws of the Corporation, as amended.
"Common Stock" shall mean the common stock, no par value per share, of
the Corporation.
"Conversion Price" shall have the meaning provided in Subsection (d)(1)
hereof.
"Conversion Rate" shall have the meaning provided in Subsection (d)(1)
hereof.
"Conversion Shares" shall mean the shares of Common Stock into which
each share of Series B Preferred Stock is convertible pursuant to Section (d) of
these Designations.
"Corporation" shall mean Towne Services, Inc., a Georgia corporation.
"Designations" shall mean the terms, preferences, limitations and
relative rights of the Series B Preferred Stock established hereby and set forth
hereinafter.
"Invested Amount" per share of Series B Preferred Stock shall mean the
per share issue price for any share of Series B Preferred Stock as designated in
the agreement with the Corporation pursuant to which such share is issued (as
adjusted pursuant to Section (d)(5) hereof after the Original Issue Date). The
initial Invested Amount per share of Series B Preferred Stock is $100.00.
"Liquidation" shall have the meaning provided in Section (b) hereof.
"Series B Preferred Stock" shall mean the 20,000 shares of Series B
Preferred Stock, without par value per share, hereby designated.
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"Original Issue Date" shall mean, with respect to each share of Series
B Preferred Stock, the date on which such share of Series B Preferred Stock is
first issued by the Corporation.
"Securities Act" shall mean the federal Securities Act of 1933, as
amended.
The Designations granted to and imposed upon the Series B Preferred
Stock are as follows:
(a) Dividend Rights. The following dividend rights shall apply to
the Series B Preferred Stock:
(1) The holders of then outstanding Series B Preferred
Stock shall be entitled to receive cumulative cash dividends when, as
and if declared by the Board of Directors out of any funds legally
available therefor at the rate of $2.00 per share of Series B Preferred
Stock per quarter. Dividends will be payable quarterly on March 31,
June 30, September 30 and December 31 in each year.
(2) Dividends shall accrue on each share of Series B
Preferred Stock from the Original Issue Date, and shall accrue from day
to day, whether or not earned or declared and whether or not there
shall be funds legally available for the payment of such dividends.
Such dividends shall be cumulative so that, if such dividends in
respect of any previous or current quarterly dividend period, at the
quarterly rate specified above, shall not have been paid or declared
and a sum sufficient for the payment thereof set apart, the deficiency
shall first be fully paid before any dividend or other distribution
shall be paid on or declared and set apart for the Common Stock or any
other stock ranking junior to the Series B Preferred Stock. Any
accumulation of dividends on the Series B Preferred Stock shall not
bear interest.
(3) Unless full dividends on the Series B Preferred Stock
for all past dividend periods and the then current dividend period
shall have been paid or declared and a sum sufficient for the payment
above set apart no cash dividend shall be paid or declared on Common
Stock or any or any other stock ranking junior to the Series B
Preferred Stock as to liquidation preference.
(4) Each dividend shall be paid to the holders of record
of the Series B Preferred Stock as they shall appear on the stock
register of the Company on such record date, not exceeding 45 days nor
less than 10 days preceding a dividend payment date, as shall be fixed
by the Board of Directors or a duly authorized committee thereof.
(b) Liquidation Rights. In the event of the liquidation,
dissolution or winding up for any reason, including, without limitation,
bankruptcy, of the Corporation or any of the Corporation's subsidiaries, the
assets of which constitute all or substantially all the assets of the business
of the Corporation and its subsidiaries taken as a whole or such
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events specified in the next sentence (each such event referred to as a
"Liquidation"), the holders of the outstanding shares of Series B Preferred
Stock shall, at their election, be entitled to receive in exchange for and in
redemption of each share of their Series B Preferred Stock, and on a parity with
the holders of any capital stock ranking senior to or pari passu to the Series B
Preferred Stock by reason of their ownership thereof, from any funds or assets
legally available for distribution to shareholders that portion of such funds,
proceeds or assets in an amount equal to a fraction,
(1) the numerator of which is the number of Conversion
Shares to which the holder of such share of Series B Preferred Stock
would be entitled by virtue of converting such share; and
(2) the denominator of which is the aggregate of the
number of Conversion Shares, shares of Common Stock outstanding, and
all other shares of outstanding capital stock of any series the holders
of which are entitled to participate in the proceeds of a Liquidation;
provided, however, that, notwithstanding the foregoing, the amount payable to
such holder of a share of Series B Preferred Stock in the event of a Liquidation
of the Corporation, as provided above, shall not be less than, and shall be
increased if necessary (with sums payable to holders of shares of any other
capital stock to be reduced ratably per share as necessary) to equal, the
Invested Amount plus declared but unpaid dividends payable with respect to such
Series B Preferred Stock.
All the preferential amounts to be paid to the holders of Series B
Preferred Stock under this Section (b) shall be paid or set apart for payment
before the payment or setting apart for payment of any amount for, or the
distribution of any assets of the Corporation to, the holders of shares of
Common Stock or any class or series of stock of the Corporation ranking junior
to Series B Preferred Stock in connection with a Liquidation as to which this
Section (b) applies. If the assets or surplus funds to be distributed to the
holders of Series B Preferred Stock are insufficient to permit the payment to
such holders of the full amounts payable to such holders, the assets and surplus
funds legally available for distribution shall be distributed ratably among the
holders of Series B Preferred Stock in proportion to the full amount each such
holder is otherwise entitled to receive.
(c) Voting Rights. The Series B Preferred Stock shall be
non-voting.
(d) Conversion. The holders of Series B Preferred Stock shall have
conversion rights as follows (the "Conversion Rights"):
(1) Conversion Rate.
(A) For purposes of this Section (d), the shares
of Series B Preferred Stock shall be convertible, at the times
and under the conditions described in this Section (d)
hereafter, at the rate (the "Conversion Rate") of one share of
Series B Preferred Stock to the number of shares of Common
Stock that equals the quotient obtained by dividing the
Invested
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Amount by the Conversion Price (defined hereinafter). Thus,
the number of shares of Common Stock to which a holder of
Series B Preferred Stock shall be entitled upon any conversion
provided for in this Section (d) shall be the product obtained
by multiplying the Conversion Rate by the number of shares of
Series B Preferred Stock being converted. Such conversion
shall be deemed to have been made immediately prior to the
close of business on the date of the surrender of the shares
of Series B Preferred Stock to be converted in accordance with
the procedures described in Subsection (d)(4) below. The
"Conversion Price" shall equal the average of the closing
price per share of the Common Stock for the 10 days ending one
business day prior to the Original Issue Date, except as
otherwise adjusted as provided hereafter in this Section (d).
(B) No fractional shares of Common Stock shall
be issued upon conversion of Series B Preferred Stock, and any
shares of Series B Preferred Stock surrendered for conversion
that would otherwise result in a fractional share of Common
Stock shall be redeemed in cash at the then effective
Conversion Price per share, payable as promptly as possible
when funds are legally available therefor.
(2) Optional Conversion. Subject to Subsection (d)(3)
below, each share of Series B Preferred Stock shall be convertible, at
the option of the holder thereof, at any time after the first
anniversary of the date of issuance of such share, in whole or in part,
at the office of the Corporation or any transfer agent for the Series B
Preferred Stock, into Common Stock at the then effective Conversion
Rate; provided, however, that the Corporation shall not be obligated to
issue certificates evidencing the shares of Common Stock issuable upon
such conversion unless certificates evidencing such shares of Series B
Preferred Stock so converted are surrendered to the Corporation in
accordance with the procedures described in Subsection (d)(3) below.
(3) Mechanics of Conversion. Before any holder of Series
B Preferred Stock shall be entitled to receive certificates
representing the shares of Common Stock into which shares of Series B
Preferred Stock are converted in accordance with Subsection (d)(2)
above, such holder shall surrender the certificate or certificates for
such shares of Series B Preferred Stock, duly endorsed, at the office
of the Corporation or of any transfer agent for the Series B Preferred
Stock, and shall give written notice to the Corporation at such office
of the name or names in which such holder wishes the certificate or
certificates for shares of Common Stock to be issued, if different from
the name shown on the books and records of the Corporation (the
"Conversion Notice"). The Conversion Notice shall also contain such
representations as may reasonably be required by the Corporation to the
effect that the shares to be received upon conversion are not being
acquired and will not be transferred in any way that might violate the
then applicable securities laws. The Corporation shall, as soon as
practicable thereafter and in no event later than thirty (30) days
after the
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delivery of said certificates, issue and deliver at such office to such
holder of Series B Preferred Stock, or to the nominee or nominees of
such holder as provided in the Conversion Notice, a certificate or
certificates for the number of shares of Common Stock to which such
holder shall be entitled as aforesaid. The conversion shall be
effective at the time Towne receives and accepts the Conversion Notice.
The person or persons entitled to receive the shares of Common Stock
issuable upon a conversion pursuant to Subsection (d)(2) above shall be
treated for all purposes as the record holder or holders of such shares
of Common Stock as of the effective date of conversion pursuant to this
Section (d). All certificates issued upon the exercise or occurrence of
the conversion shall contain a legend governing restrictions upon such
shares imposed by law or agreement of the holder or his or its
predecessors.
(4) Adjustment for Subdivisions or Combinations of Common
Stock. In the event the Corporation at any time, or from time to time,
after the Original Issue Date effects a subdivision or combination of
the outstanding Common Stock into a greater or lesser number of shares
without a proportionate and corresponding subdivision or combination of
the outstanding Series B Preferred Stock, then and in each such event
the Invested Amount (and therefore, the Conversion Price and the
corresponding Conversion Rate) shall be decreased or increased
proportionately.
(5) Adjustments for Dividends. Distributions and Other
Common Stock Equivalents. In the event that the Corporation at any
time, or from time to time, after the Original Issue Date shall make or
issue, or fix a record date to determine the holders of Common Stock
entitled to receive, a dividend or other distribution payable in
additional shares of Common Stock or other securities or rights
convertible or exercisable into or otherwise entitling the holder
thereof, directly or indirectly, to receive additional shares of Common
Stock (such other securities or rights being hereinafter referred to as
"Common Stock Equivalents") without payment of any consideration by
such holder of such Common Stock Equivalents or the additional shares
of Common Stock, and without a proportionate and corresponding dividend
or other distribution to holders of Series B Preferred Stock, then and
in each such event the maximum number of shares (as set forth in the
instrument relating thereto without regard to any provisions contained
therein for subsequent adjustment of such number) of the type of Common
Stock issuable in payment of such dividend or distribution or upon
conversion or exercise of such Common Stock Equivalents shall be
deemed, for purposes of this Subsection (d)(5), to be issued and
outstanding as of the time of such issuance or, in the event such a
record date shall have been fixed, as of the close of business on such
record date. In each such event the Conversion Price shall be decreased
as of the time of such issuance or, in the event such a record date
shall have been fixed, as of the close of business on such record date,
by multiplying the Conversion Price by a fraction,
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(A) the numerator of which shall be the total
number of shares of Common Stock issued and outstanding or
deemed to be issued and outstanding (as provided below)
immediately prior to the time of such issuance or the close of
business on such record date; and
(B) the denominator of which shall be the total
number of shares of Common Stock (i) issued and outstanding or
deemed pursuant to the terms hereof to be issued and
outstanding, as provided below (not including any shares
described in clause (ii) immediately below), immediately prior
to the time of such issuance or the close of business on such
record date, plus (ii) the number of shares of Common Stock
issuable in payment of such dividend or distribution or upon
conversion or exercise of such Common Stock Equivalents;
provided, however, that (i) if such record date shall have been fixed
and such dividend is not fully paid or if such distribution is not
fully made on the date fixed therefor, the Conversion Price (and the
corresponding Conversion Rate) shall be recomputed accordingly as of
the close of business on such record date and thereafter the Conversion
Price (and the corresponding Conversion Rate) shall be adjusted
pursuant to this Subsection (d)(5) as of the time of actual payment of
such dividend or distribution; or (ii) if such Common Stock Equivalents
provide, with the passage of time or otherwise, for any decrease in the
number of shares of Common Stock issuable upon conversion or exercise
thereof (or upon the occurrence of a record date with respect thereto),
the Conversion Price (and the corresponding Conversion Rate) computed
upon the original issue thereof (or upon the occurrence of a record
date with respect thereto), and any subsequent adjustments based
thereon, shall, upon any such decrease becoming effective, be
recomputed to reflect such decrease insofar as it affects the rights of
conversion or exercise of the Common Stock Equivalents then
outstanding; or (iii) upon the expiration of any rights of conversion
or exercise under any unexercised Common Stock Equivalents, the
Conversion Price (and the corresponding Conversion Rate) computed upon
the original issue thereof (or upon the occurrence of a record date
with respect thereto), and any subsequent adjustments based thereon,
shall, upon such expiration, be recomputed as if the only additional
shares of Common Stock issued were the shares of such stock, if any,
actually issued upon the conversion or exercise of such Common Stock
Equivalents; or (iv) in the event of issuance of Common Stock
Equivalents that expire by their terms not more than ninety (90) days
after the date of issuance thereof, no adjustments of the Conversion
Price (or the corresponding Conversion Rate) shall be made until the
expiration or exercise of all such Common Stock Equivalents, whereupon
the adjustment otherwise required by this Subsection (d)(5) shall be
made in the manner provided herein. For purposes of this Subsection
(d)(5), Common Stock deemed issued and outstanding shall include shares
of Common Stock into which the then outstanding shares of Series B
Preferred Stock could be converted if fully converted on the day
immediately preceding the given date, and shares of Common Stock that
could be obtained through the exercise or conversion of all
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other rights, options, and convertible securities on the day
immediately preceding the given date.
As used herein, "Additional Shares of Common Stock" shall
mean, with respect to such adjustments to be made to the Conversion
Price and the Conversion Rate, either shares of Common Stock issued
subsequent to the Original Issue Date, or, with respect to the issuance
of Common Stock Equivalents, the maximum number of shares (as set forth
in the instrument relating thereto without regard to any provisions
contained therein for subsequent adjustment of such number) of Common
Stock issuable in exchange for, upon conversion of, or upon exercise of
such Common Stock Equivalents.
(C) The foregoing notwithstanding, no adjustment
of the Conversion Price and the Conversion Rate shall be made
pursuant to this Subsection (d) as a result of the issuance
of:
(i) any shares of Common Stock upon the
conversion of shares of Series B Preferred Stock;
(ii) securities of the Corporation
offered to the public pursuant to an effective
registration statement under the Securities Act;
(iii) the Corporation's securities
pursuant to the acquisition by the Corporation of any
product, technology, know-how or another corporation
by merger, purchase of all or substantially all of
the securities or assets, or any other
reorganization;
(iv) any shares of Common Stock pursuant
to which the Conversion Price and the Conversion Rate
are adjusted under this Section (d);
(v) any shares of Common Stock issued
at any time following the Original Issue Date
pursuant to options, warrants or rights granted
either before or after the Original Issue Date to
purchase shares of such series of Common Stock, less
the number of any such options, warrants or rights
that are repurchased by the Corporation, are canceled
or expire, in each case in favor of employees,
directors, officers or consultants of the Corporation
or any subsidiary thereof pursuant to a stock option
plan or agreement approved by the Board of Directors;
or
(vi) any shares of Common Stock issued
pursuant to the exchange, conversion or exercise of
Common Stock Equivalents that have previously been
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incorporated into computations hereunder on the date
when such Common Stock Equivalents were issued.
(6) Redemption. The Series B Preferred Stock is
redeemable at any time on or after June 30, 2002 at the option of the
Corporation for cash at any time or from time to time, in whole or in
part, on at least 10 business days but not more than 90 calendar days'
notice. Additionally, the Series B Preferred Stock is redeemable at any
time on or after June 30, 2000 at the option of the Corporation for
cash pursuant to the above terms if the average price per share of the
Common Stock for any 30 consecutive days equals or exceeds 150% of the
initial Conversion Price. Upon delivery of notice by the Corporation of
its intent to redeem to the holders of the Series B Preferred Stock,
such holders shall have ten (10) business days to notify the
Corporation of their election to convert their shares of Series B
Preferred Stock pursuant to a Conversion Notice delivered pursuant to
Section (d) above. With respect to any such redemption at the option of
the Corporation where no such Conversion Notice is received by the
Corporation within the allotted time, shares of Series B Preferred
Stock will be redeemable at the stated value per share, or $100 per
share, together in each case with accrued but unpaid dividends to the
date of redemption.
(7) De Minimis Adjustments. No adjustment to the
Conversion Price (and, thereby, the Conversion Rate) shall be made if
such adjustment would result in a change in the Conversion Price of
less than $.01.
(8) No Impairment. The Corporation shall at all times in
good faith assist in the carrying out of all the provisions of this
Section (d) and in the taking of all such action as may be necessary in
order to protect the Conversion Rights of the holders of the Series B
Preferred Stock against material impairment.
(9) Certificate as to Adjustments. Upon the occurrence of
each adjustment or readjustment of the Conversion Price pursuant to
this Section (d), the Corporation at its expense shall promptly compute
such adjustment or readjustment in accordance with the terms hereof and
cause independent public accountants selected by the Corporation to
verify such computation and prepare and furnish to each holder of
Series B Preferred Stock a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment
or readjustment is based. The Corporation shall, upon the written
request at any time of any holder of Series B Preferred Stock, furnish
or cause to be furnished to such holder a like certificate setting
forth (i) such adjustments and readjustments, (ii) the Conversion Price
and the Conversion Rate at that time in effect, and (iii) the number of
shares of Common Stock and the amount, if any, of other property that
at that time would be received upon the conversion of Series B
Preferred Stock.
(10) Notices of Record Date. In the event of any taking by
the
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Corporation of a record of the holders of any series or class of
securities other than Series B Preferred Stock for the purpose of
determining the holders thereof who are entitled to receive any
dividend or other distribution, Common Stock Equivalents or any right
to subscribe for, purchase or otherwise acquire any shares of stock of
any class or any other securities or property, or to receive any other
right, the Corporation shall mail to each holder of Series B Preferred
Stock, at least ten (10) days prior to the date specified therein, a
notice specifying the date on which any such record is to be taken for
the purpose of such dividend, distribution or rights, and the amount
and character of such dividend, distribution or rights.
(11) Reservation of Stock Issuable Upon Conversion. The
Corporation shall at all times reserve and keep available out of its
authorized but unissued shares of Common Stock solely for the purpose
of effecting the conversion of the shares of the Series B Preferred
Stock such number of its shares of Common Stock as shall from time to
time be sufficient to effect the conversion of all outstanding shares
of the Series B Preferred Stock; and if at any time the number of
authorized but unissued shares of Common Stock shall be insufficient to
effect the conversion of all then outstanding shares of the Series B
Preferred Stock, the Corporation shall take such corporate action as
may, in the opinion of its counsel, be necessary to increase its
authorized but unissued shares of Common Stock to such number of shares
as shall be sufficient for such purpose.
(e) Protective Provisions. In addition to any other rights
provided by law, so long as any shares of Series B Preferred Stock are then
outstanding, except where the vote or written consent of the holders of a
greater number of shares is required by law or by another provision of the
Articles of Incorporation, without first obtaining the affirmative vote or
written consent of the holders of a majority of the total number of shares of
Series B Preferred Stock outstanding, voting together as a single class, the
Corporation shall not:
(1) amend or repeal any provision of, or add any
provision to, the Articles of Incorporation or the Bylaws, or file any
certificate of designations, preferences, limitations and relative
rights of any series or class of preferred stock, if such action would
materially and negatively alter or change the preferences, rights,
privileges or powers of, or restrictions provided for the benefit of
holders of Series B Preferred Stock;
(2) create or authorize the creation of any additional
series or class of shares of stock unless the same ranks junior or pari
passu to the Series B Preferred Stock as to dividends and the
distribution of assets upon a Liquidation of the Corporation;
(3) increase or decrease the authorized number of shares
of the Series B Preferred Stock;
(4) take any action that would alter or change the
preferences, rights,
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privileges or powers of, or restrictions provided for the benefit of
holders of Series B Preferred Stock in one or more of the ways set
forth in Section 14-2-1004(a) of the Code; or
(5) amend the provisions of this Section (e).
(f) Notices. Any notice required by the provisions hereof to be
given to the holders of shares of Series B Preferred Stock shall be deemed given
on the third business day following (and not including) the date on which such
notice is deposited in the United States Mail, first-class, postage prepaid, and
addressed to each holder of record at his address appearing on the books of the
Corporation. Notice by any other means shall not be deemed effective until
actually received.
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