EXHIBIT 3.2.5
FIFTH ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
SMART CHOICE AUTOMOTIVE GROUP, INC.
Pursuant to the provisions of Sections 607.1006 and 607.0602 of the
Florida Business Corporation Act, the Corporation adopts the following Articles
of Amendment to its Articles of Incorporation:
FIRST:
ARTICLE V
Article V of the Articles of Incorporation of the Corporation is hereby
amended by inserting the following words at the end of such article:
SERIES D CONVERTIBLE PREFERRED STOCK
Three hundred Fifty (350) shares of the authorized and unissued shares of $0.01
par value per share Preferred Stock of the Corporation are hereby designated
"Series D Convertible Preferred Stock" (the "Series D Preferred Stock") with the
following powers, preferences and rights, and the qualifications, limitations
and restrictions hereon:
(1) RANK. The Series D Preferred Stock shall rank, with respect to dividend
rights and rights upon liquidation, dissolution or winding up of the
Corporation, senior to the Common Stock and any subsequent issues of stock,
whether common or preferred.
(2) DIVIDENDS. Each holder of shares of the Series D Preferred Stock (the
"Holder", collectively, the "Holders") shall be entitled to receive out of the
assets of the Corporation legally available therefore, cumulative cash dividends
at the rate per annum of eleven (11%) percent payable monthly in arrears for a
period of sixty (60) months, and thereafter at the rate per annum of twenty
(20%) percent payable monthly in arrears, accruing from the date of original
issuance ("Original Issuance Date"). In the event that a Holder is not paid
dividends within ten (10) days of the due dates for such payments, in accordance
with the foregoing, such Holder shall be entitled to receive dividends at a
dividend rate which is five percent (5%) per annum greater than the dividend
rate then in effect, until all accrued dividends have been paid. If the
Corporation remains in default on the monthly dividend payments to a Holder for
a period of greater than ninety (90) days, and such default is continuing for a
period of thirty (30) days after written notice of such default is sent by a
Holder to the Corporation, a Holder may, at its option, receive an amount which
is equal to (i) the number of shares of Series D Preferred Stock which have not
been converted by such Holder as of such date, TIMES, (ii) $10,000.00, plus all
unpaid and accrued dividends and interest in exchange for such shares of Series
D Preferred Stock. Unless full cumulative dividends on the Series D Preferred
Stock to which Holders are entitled have been paid or are declared and a sum
sufficient for the payment thereof has been set apart for the payment of such
dividends, no dividend shall be declared or paid or set aside for payment or
other distribution declared or made upon the Common Stock of the Corporation or
on any other stock of the Corporation ranking junior to or on parity with the
Series D Preferred Stock as to dividends or upon liquidation be redeemed,
purchased or otherwise acquired for any consideration or any monies to be paid
to or made available for a sinking fund for the redemption of any share of such
stock by the Corporation.
(3) LIQUIDATION PREFERENCE. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the Corporation, the
Holders are entitled to receive, out of the assets of the Corporation available
for distribution to stockholders, before any distribution of assets is made to
holders of Common
Stock, or any other holders of stock ranking junior to the Series D
Preferred Stock, liquidating distributions in the amount of $10,000.00
per share plus accrued and unpaid dividends. If, upon any liquidation,
dissolution, or winding up of the Corporation, the amounts payable to
the Holders are not paid in full, then the entire assets of the
Corporation shall be distributed ratably among the Holders. After
payment of the full amount of the liquidating distribution to which
they are entitled, the Holders shall not be entitled to any further
participation in any distribution of assets by the Corporation. A
consolidation or merger of the Corporation, with or into any other
corporation or corporations, or a sale of all or substantially all of
the assets of the Corporation, shall not be deemed to be a liquidation,
dissolution, or winding up within the meaning of this section.
(4) CONVERSION. The Holders shall have conversion rights as follows (the
"Conversion Rights"):
(i) RIGHT TO CONVERT. At any time or times after the Original Issuance
Date of the shares of Series D Preferred Stock, any Holder shall be
entitled to convert his shares of Series D Preferred Stock into shares
of Common Stock of the Corporation at the Conversion Rate, as herein
defined, without the payment of any additional consideration by the
Holder thereof, at the office of the Corporation or any transfer agent
for such shares.
(ii) CONVERSION RATE. The number of shares of Common Stock issuable
upon conversion of each of the shares of Series D Preferred Stock shall
be determined according to the following formula (the "Conversion
Rate"):
CONVERSION AMOUNT
-----------------
CONVERSION PRICE
For purposes of this section of Article V, the following terms shall
have the following meanings:
(a) "CONVERSION PRICE" means $6.00, subject to adjustment as provided
in Section 8 hereof.
(b) "CONVERSION AMOUNT" means the amount equal to (A) the number of
shares of Series D Preferred Stock that the Holder is converting TIMES
(B) $10,000.
(iii) MECHANICS OF CONVERSION. The Board of Directors may
determine in its sole discretion whether fractional shares of Common
Stock will be issued upon any conversion of the Series D Preferred
Stock. If the Board of Directors determines not to issue fractional
shares of Common Stock at the conversion, the Corporation will pay, in
lieu of any fractional shares to which the Holder would otherwise be
entitled, cash equal to such fraction multiplied by the fair market
value of a share of common stock on the conversion date. The fair
market value of a share of Common Stock shall be determined by taking
the average last closing sale price per share of Common Stock for the
twenty (20) consecutive trading days immediately preceding the
conversion date. Before any Holder shall be entitled to convert the
Series D Preferred Stock into full shares of Common Stock, he shall
surrender the certificate or certificates of Series D Preferred Stock
for shares of Common Stock to be issued in that conversion. The
Corporation shall, as soon as practicable thereafter, issue and deliver
at such office to such Holder, or to his nominee or nominees, a
certificate or certificates for the number of shares of Common Stock
and/or fractional shares of Common Stock, if any, to which he shall be
entitled as aforesaid, together with cash in lieu of any fraction of a
share, if any, to which the Holder may be entitled. Such conversion
shall be deemed to have been made immediately prior to the close of
business on the date of such surrender of the shares of the Series D
Preferred Stock to be converted and the person or persons entitled to
receive the shares of Common Stock issuable upon conversion shall be
treated for all purposes as the record holder or holders of such shares
of
Common Stock on such date. Any unpaid and accrued dividends shall be
paid to a Holder by the Corporation in cash or its equivalent or other
mutually agreeable form.
(iv) NO IMPAIRMENT. The Corporation will not, by amendment of
its Articles of Incorporation or Bylaws or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale
of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or
performed hereunder by the Corporation but will at all times in good
faith assist in the carrying out of all the provisions of this section
and in the taking of all such action as may be necessary or appropriate
in order to protect the conversion rights of the Holders against
impairment.
(v) COMMON STOCK RESERVED. The Corporation shall reserve and
keep available out of its authorized but unissued Common Stock such
number of shares of Common Stock as shall from time to time be
sufficient to effect conversion of all issued and outstanding shares of
the Series D Preferred Stock.
(5) UNAUTHORIZED DISTRIBUTIONS. Notwithstanding any other provision of these
Articles, the Corporation will not make any payment due with respect to the
Series D Preferred Stock if (a) after giving effect to that payment, the
Corporation would not be able to pay its debts as they become due in the usual
course of business; or (b) after giving effect to that payment, the
Corporation's total assets would be less than the sum of its total liabilities
plus (unless the Corporation's articles of incorporation permit otherwise) the
amount that would be needed, if the Corporation were to be dissolved at the time
of the payment, to satisfy the preferential rights upon dissolution of any
shareholders whose preferential rights are superior to the Holders of Series D
Preferred Stock; or (c) the Corporation is otherwise prohibited (under then
existing laws) from making any payment due with respect to the Series D
Preferred Stock. Nothing contained herein shall amend, alter, change or repeal
any of the powers, designations, preferences and rights of the Series A
Preferred Shares, Series B Preferred Shares, or Series C Preferred Shares.
(6) MANDATORY CONVERSION BY CORPORATION/REDEMPTION BY CORPORATION.
(a) At any time or times more than thirty-six (36) months after
the Original Issuance Date of Series D Preferred Stock, the
Corporation may at its option and in the sole discretion of
the Corporation's Board of Directors, convert any or all of
the then outstanding shares of Series D Preferred Stock into
shares of Common Stock of the Corporation as provided above;
provided however, that in no event may the Corporation convert
the Series D Preferred Stock unless and until (a) the
Corporation gives the Holder written notice of (which cannot
be given prior to that date which is two (2) years and eleven
(11) months after the Original Issuance Date and which shall
set forth the date the conversion is to be effective) its
intent to call or convert, (b) the average last closing sale
price per share of the Common Stock for the twenty (20)
consecutive trading days immediately preceding the date of
such notice equals or exceeds two (2.0) times the Conversion
Price then in effect, (c) such notice is given within ten (10)
days after the last day of the twenty (20) consecutive trading
day period, and (d) the conversion occurs within fifteen (15)
days after the last day of the twenty (20) consecutive trading
day period. Upon any such call or conversion such Holder shall
surrender the certificate or certificates for the shares of
Series D Preferred Stock so called or converted. If the
Corporation elects to convert, the Corporation shall issue
such Holder shares of Common Stock for the shares of Series D
Preferred Stock so converted.
(b) At any time or times more than sixty (60) months after the
Original Issuance Date of Series D Preferred Stock, the
Corporation may at its option and in the sole discretion of
the Corporation's Board of Directors, call any or all the
outstanding shares of Series D Preferred Stock for cash at a
price of $10,000.00 per share plus any unpaid and accrued
dividends as provided above, provided that the Corporation
gives the Holder thirty (30) days prior written notice of its
intent to call.
(c) If the Corporation at any time or times elects to convert or
call less them all the shares of Series D Preferred Stock in
accordance with this Section 6, then the number of shares of a
Holder so called or converted shall be determined among the
Holders PRO RATA based on the aggregate number of shares held
by such Holder.
(7) VOTING RIGHTS. Except as expressly required by applicable law, the Holders
will not be entitled to vote. However, upon conversion of shares of Series D
Preferred Stock as provided above, the holder of the Common Stock received
pursuant to such conversion shall be entitled to one vote for each share of
Common Stock received upon such conversion.
(8) ADJUSTMENT OF CONVERSION PRICE. The Conversion Price shall be adjusted from
time to time as follows:
(a) In case the Corporation shall hereafter (i) pay a dividend or
make a distribution on its Common Stock in shares of Common
Stock, (ii) subdivide its outstanding shares of Common Stock
into a greater number of shares, (iii) combine its outstanding
shares of Common Stock into a smaller number of shares, or
(iv) issue by reclassification of its Common Stock any shares
of capital stock of the Corporation, the Conversion Price in
effect immediately prior to such action shall be adjusted so
that the Holder shall thereafter be entitled to receive the
number of shares of Common Stock or other capital stock of the
Corporation which it would have owned immediately following
such action had the Series D Preferred Stock been converted
immediately prior thereto. An adjustment made pursuant to this
subparagraph (a) shall become effective immediately after the
record date in the case of a dividend or distribution and
shall become effective immediately after the effective date in
the case of a subdivision, combination or reclassification.
If, as a result of an adjustment made pursuant to this
subparagraph (a), the Holder thereafter surrendering the
Series D Preferred Stock for conversion shall become entitled
to receive shares of two or more classes of capital stock or
shares of Common Stock and other capital stock of the
Corporation, the Board of Directors of the Corporation shall
determine, on the basis of the opinion of an independent
financial advisor, the allocation of the adjusted Conversion
Price between or among shares of such classes of capital stock
or shares of Common Stock and other capital stock.
(b) In case the Corporation shall hereafter issue rights or
warrants to holders of its outstanding shares of Common Stock
generally entitling them to subscribe for or purchase shares
of Common Stock at a price per share less than the current
market price per share (as determined pursuant to subparagraph
(d) of this paragraph) of the Common Stock on the record date
mentioned in this subparagraph (b) below, the Conversion Price
of the shares of Common Stock shall be adjusted so that the
same shall equal the price determined by multiplying the
Conversion Price in effect immediately prior to the date of
issuance of such rights or warrants by a fraction the
numerator of which shall be the number of shares of Common
Stock outstanding on the date of issuance of such rights or
warrants plus the number of shares which the aggregate
offering price of the total number of shares so offered
would purchase at such current market price, and the
denominator of which shall be the number of shares of Common
Stock 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. Such adjustment shall
become effective immediately after the record date for the
determination of stockholders entitled to receive such rights
or warrants.
(c) In case the Corporation shall hereafter distribute to holders
of its outstanding Common Stock generally evidences of its
indebtedness or assets (excluding any cash dividend paid from
retained earnings of the Corporation and dividends or
distributions payable in stock from which adjustment is made
pursuant to subparagraph (a) of this paragraph) or rights or
warrants to subscribe to securities of the Corporation
(excluding those referred to in subparagraph (b) of this
paragraph), then in each such case the Conversion Price of the
shares of Common Stock shall be adjusted so that the same
shall equal the price determined by multiplying the Conversion
Price in effect immediately prior to the date of such
distribution by a fraction the numerator of which shall be the
current market price per share (determined as provided in
subparagraph (d) of this paragraph) of the Common Stock on the
record date mentioned in this subparagraph (c) below less the
then fair market value (as determined by the Board of
Directors, whose determination shall be conclusive) of the
portion of the evidences of indebtedness or assets so
distributed to the holder of one share of Common Stock or of
such subscription rights or warrants applicable to one share
of Common Stock, and the denominator of which shall be such
current market price per share of Common Stock. Such
adjustment shall become effective immediately after the record
date for the determination of stockholders entitled to receive
such distribution.
(d) For the purpose of any computation under subparagraphs (a),
(b) or (c) of this paragraph, the current market price per
share of Common Stock on any date shall be deemed to be the
average of the last closing sale prices for the twenty (20)
consecutive trading days (each, a "Trading Day") before the
day in question. The market price for each such Trading Day
shall be (i)_in the case of a security listed or admitted to
trading on any securities exchange, the last reported sale
price, regular way (as determined in accordance with the
practices of such exchange), on such day, or if no sale takes
place on such day, the average of the closing bid and asked
prices on such day (and in the case of a security traded on
more than one national securities exchange, at such price or
such average, upon the exchange on which the volume of trading
during the last calendar year was the greatest), (ii)_in the
case of a security not then listed or admitted to trading on
any securities exchange, the last reported sale price on such
day, or if no sale takes place on such day, the average of the
closing bid and asked prices on such day, as reported by a
reputable quotation service designated by the Corporation,
(iii)_in the case of a security not then listed or admitted to
trading on any securities exchange and as to which no such
reported sale price or bid and asked prices are available, the
average of the reported high bid and low asked prices on such
day, as reported by a reputable quotation service, or the WALL
STREET JOURNAL, or if there are no bid and asked prices on
such day, the average of the high bid and low asked prices, as
so reported, on the most recent day (not more than 30 days
prior to the date in question) for which prices have been so
reported, and (iv)_in the case of a security determined by the
Corporation's Board of Directors as not having an active
quoted market or in the case of other property, such fair
market value as shall be determined by the Board of Directors.
(e) In any case in which the provisions of subparagraphs (a)
through (c) of this paragraph shall require that an adjustment
be made immediately following a record date, the Corporation
may elect to defer (but only until five business days
following the filing by the Corporation with the Holder of the
certificate of independent public accountants described in
subparagraph (g) below) issuing to the Holder if converted
after such record date the shares
of Common Stock issuable upon such conversion over and above
the shares of Common Stock issuable upon such conversion on
the basis of the Conversion Price prior to adjustment.
(f) Whenever the Conversion Price is adjusted as herein provided,
the Corporation shall promptly deliver to the Holder (i) a
certificate of a firm of independent public accountants
setting forth the Conversion Price after such adjustment and
setting forth a brief statement of the facts requiring such
adjustment and the manner of computing the same, which
certificate shall be conclusive evidence of the correctness of
such adjustment and (ii) a notice stating that the Conversion
Price has been adjusted and setting forth the adjusted
Conversion Price.
(g) In the event that at any time as a result of an adjustment
made pursuant to subparagraph (a) of this paragraph, the
Holder thereafter surrendering the Series D Preferred Stock
for conversion shall become entitled to receive any shares of
the Corporation other than shares of Common Stock, thereafter
the Conversion Price of such other shares so receivable upon
conversion of the Series D Preferred Stock or any portion
hereof shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the
provisions with respect to Common Stock contained in
subparagraphs (a) through (g) hereof.
(9) LIMITATIONS ON ISSUANCES OF ADDITIONAL SHARES OF SERIES A REDEEMABLE
CONVERTIBLE PREFERRED STOCK, SERIES B PREFERRED STOCK, SERIES C PREFERRED STOCK
AND OTHER CONVERTIBLE PREFERRED STOCK. The Corporation will not (i) issue or
re-issue any additional shares of Series A Redeemable Convertible Preferred
Stock, Series B Preferred Stock (except for issuing an additional eighty (80)
shares of Series B Preferred Stock), or Series C Preferred Stock, including
without limitation, any such shares which have been converted to shares of
Common Stock, or (ii) issue or re-issue shares of Series D Preferred Stock such
that the number of issued and outstanding shares of Series D Preferred Stock
would exceed Three Hundred and Fifty (350) (based on a stated value per share of
$10,000), or (iii) issue any shares of Convertible Preferred Stock which rank,
with respect to dividend rights or rights upon liquidation, dissolution and
winding up on Corporation, senior to the Series D Preferred Stock.
SECOND:
Pursuant to Section 607.0602 of the Florida Business Act, the Board of
Directors adopted this Amendment to Article V of the Articles of Incorporation
effective as of June 22, 1998 without shareholder action.
IN WITNESS WHEREOF, the undersigned authorized officer of the
Corporation has executed this instrument this 22nd day of June, 1998.
/s/ JOSEPH E. MOHR
----------------------------
Joseph E. Mohr
Executive Vice President and
Chief Financial Officer