Billtrust Seeks Relief Pursuant to Section 205

Press Release | May 15, 2023

LAWRENCEVILLE, NJ – May 15, 2023 — 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

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 [email protected].

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