Upland Software, Inc. Form 8-K Summary
Business Context and Reporting Period
This Current Report on Form 8-K was filed on July 14, 2022, by Upland Software, Inc. (UPLD). The filing primarily discloses the entry into a Material Definitive Agreement for a private placement of preferred stock and significant changes to executive leadership.
Key Financial Metrics and Transaction Details
The Company entered into a Securities Purchase Agreement to issue and sell 115,000 shares of new Series A Preferred Stock to Ulysses Aggregator, LP (an affiliate of HGGC, LLC).
- Investment Amount: $115,000,000 aggregate purchase price.
- Price Per Share: $1,000 (Initial Liquidation Preference).
- Use of Proceeds: General corporate purposes and transaction-related fees/expenses.
- Dividend Rate: 4.5% per annum for the first seven years, increasing to 7% per annum thereafter (subject to increases in certain circumstances).
- Conversion Price: $17.50 per share of Common Stock.
- Liquidity Impact: The filing does not provide current cash balance or debt figures, but notes that cash dividend payments are subject to restrictions under the Company's existing credit agreement.
Material Changes and Governance
Executive Leadership Changes:
- Resignation: Rodney C. Favaron resigned as President, effective August 31, 2022.
- Appointment: John T. (Jack) McDonald, Chair and CEO, will assume the role of President effective August 31, 2022.
- Advisory Role: Mr. Favaron will serve as a strategic advisor through September 30, 2022.
Board Composition:
- The Majority Holders of the Series A Preferred Stock have the right to elect one director (David Chung) to the Board of Directors, provided the Purchaser maintains at least 5% ownership on a fully diluted basis.
- Mr. Chung will serve as a Class II director with a term expiring at the 2025 annual meeting.
Terms, Risks, and Contingencies
Preferred Stock Rights:
- Seniority: Ranks senior to Common Stock regarding liquidation and dividends; junior to existing and future indebtedness.
- Redemption: Company may redeem shares after seven years at 105% of the Liquidation Preference plus accrued dividends. Holders have a mandatory redemption right upon a "Fundamental Change" (change of control).
- Voting: Holders vote with Common Stock on an as-converted basis. Majority Holders have consent rights on specific corporate actions (e.g., amendments to charter, issuance of senior/parity stock, incurrence of debt, delisting).
- Issuance Limitation: Conversion is capped at 19.9% of outstanding Common Stock until stockholder approval is obtained.
Risks and Conditions:
- Closing is subject to customary conditions, including the expiration of Hart-Scott-Rodino waiting periods and the filing of a Certificate of Designation.
- The issuance is exempt from registration under Section 4(a)(2) and Rule 506 of Regulation D.
Investor Verification Checklist
- Verify the final closing date and confirmation of the $115 million funding receipt.
- Review the full text of the Certificate of Designation (Exhibit B to the Purchase Agreement) for specific definitions of "Fundamental Change" and dividend accrual mechanics.
- Monitor the Company's existing credit agreement to understand specific restrictions on cash dividend payments.
- Confirm the status of the NASDAQ listing application for the shares issuable upon conversion.
- Assess the impact of the 19.9% issuance limitation on future capital raising or M&A activities requiring stock issuance.