Item 1.01 Entry into a Material Definitive Agreement
Merger Agreement
On February 18, 2020, LendingClub Corporation, a Delaware corporation
("LendingClub"), entered into an Agreement and Plan of Merger (the "Merger
Agreement") with privately-owned Radius Bancorp, Inc., a savings and loan
holding company and a Delaware corporation ("Radius") and SC Sub I, Inc., a
Delaware corporation and a direct, wholly owned subsidiary of LendingClub
("Merger Sub"). The Merger Agreement provides that, upon the terms and subject
to the conditions set forth therein, Merger Sub will merge with and into Radius
(the "Merger"), with Radius as the surviving corporation in the Merger.
Immediately thereafter, at LendingClub's option Radius will merge with and into
LendingClub (the "Subsequent Merger" and, together with the Merger, the
"Mergers"). As part of the transaction, LendingClub will acquire Radius'
wholly-owned subsidiary, Radius Bank, a federal savings association, which will
convert to a national bank simultaneously with the Merger. The Merger Agreement
was approved by the Boards of Directors of each of LendingClub and Radius.
Subject to the terms and conditions of the Merger Agreement, at the effective
time of the Merger (the "Effective Time"), holders of Radius voting common stock
and non-voting common stock will have the right to receive in the aggregate
3,761,141 shares of LendingClub common stock and cash consideration of
$138,750,000 with the amount of cash being subject to adjustment based on a
variety of factors as set forth in the Merger Agreement.
The Merger Agreement contains customary representations, warranties and
covenants and completion of the Merger is subject to receipt of required bank
regulatory approvals, along with the satisfaction or waiver of customary closing
conditions, including the expiration or early termination of the applicable
waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended.
Radius stockholders holding over 90% of its Class A voting common stock and 100%
of its Class B non-voting common stock have agreed to support the Merger and
vote in favor of the Merger Agreement and the transactions contemplated thereby.
In addition, such stockholders have agreed not to transfer their LendingClub
common stock received pursuant to the Merger for a 60 day period after the
Effective Time.
The Merger Agreement provides certain termination rights for both LendingClub
and Radius and further provides that a termination fee of $5 million will be
payable to Radius by LendingClub (or, in certain circumstances, payable to
LendingClub by Radius) in connection with the termination of the Merger
Agreement under certain circumstances. The Merger Agreement also provides that
either party can terminate the Merger Agreement at the one year anniversary of
the execution thereof unless LendingClub pays Radius $5 million to extend the
time at which either party can terminate the Merger Agreement to the
fifteen-month anniversary of the execution thereof.
The foregoing description of the Merger Agreement does not purport to be
complete and is qualified in its entirety by reference to the full text of the
Merger Agreement, which is attached hereto as Exhibit 2.1 and is incorporated
herein by reference. The Merger Agreement is included with this filing only to
provide investors with information regarding the terms of the Merger Agreement,
and not to provide investors with any other factual information regarding
LendingClub or Radius, their respective affiliates or their respective
businesses. In particular, the Merger Agreement and related description are not
intended to be, and should not be relied upon as, disclosures regarding any
facts and circumstances
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relating to LendingClub or Radius. The representations and warranties have been
negotiated with the principal purpose of not establishing matters of fact, but
rather as a risk allocation method establishing the circumstances under which a
party may have the right not to consummate the Merger if the representations and
warranties of the other party prove to be untrue due to a change in circumstance
or otherwise. As is customary, the assertions embodied in the representations
and warranties made by Radius in the Merger Agreement are qualified by
information contained in confidential disclosure schedules that Radius has
delivered to LendingClub in connection with the signing of the Merger Agreement.
The representations and warranties also may be subject to a contractual standard
of materiality different from those generally applicable under the securities
laws. Shareholders of LendingClub are not third-party beneficiaries under the
Merger Agreement and should not rely on the representations, warranties and
covenants or any descriptions thereof as characterizations of the actual state
of facts or condition of LendingClub or Radius. Moreover, information concerning
the subject matter of the representations and warranties may change after the
date of the Merger Agreement.
Exchange Agreement
In connection with the execution of the Merger Agreement and in order to
facilitate the regulatory approvals of the Merger, on February 18, 2020,
LendingClub entered into an exchange agreement (the "Exchange Agreement") with
its largest stockholder, Shanda Asset Management Holdings Limited and its
affiliates (collectively, "Shanda"), pursuant to which Shanda will exchange all
of the 19,562,881 shares beneficially owned by it of LendingClub common stock,
par value $0.01 per share for (i) 195,628 newly issued shares of LendingClub
Mandatorily Convertible Non-Voting Preferred Stock, Series A ("Series A
Preferred Stock"), par value $0.01 per share, having the designations, relative
. . .
Item 3.02 Unregistered Sales of Equity Securities
The information set forth in the second and seventh paragraphs of Item 1.01 of
hereby incorporated by reference. No underwriting discounts or commissions are
being paid in connection with the Merger or the issuance of Series A Preferred
Stock.
Shares offered pursuant to the Merger and shares of Series A Preferred Stock
will be offered pursuant to exemptions from registration under the Securities
Act of 1933. LendingClub has not engaged in general solicitation or advertising
relating to the offering of Series A Preferred Stock or common stock in
connection with the Merger and is not offering any securities to the public in
connection with the Merger Agreement or the Exchange Agreement.
Item 3.03. Material Modification to Rights of Security Holders.
Protection Agreement
Unless otherwise defined herein, the capitalized terms used in this Item 3.03
shall have the meanings ascribed to them in the Protection Agreement.
Effective February 18, 2020, the board of directors of LendingClub (the "Board")
authorized and declared a dividend of one right for each outstanding share of
LendingClub common stock (each such right, a "Common Right") and one right for
each outstanding share of Series A Preferred Stock (each such right, a "Series A
Preferred Right" and, together with the Common Rights, the "Rights") in each
case to stockholders of record at the Close of Business on March 19, 2020 (the
"Record Date"), and authorized the issuance of one Common Right or one Series A
Preferred Right (as such number may be adjusted pursuant to the Protection
Agreement) for each share of LendingClub common stock or Series A Preferred
Stock, respectively, issued between the Record Date and the earlier of the
Distribution Date (as defined below) and the Expiration Date (as defined below)
and, in some cases, through the Expiration Date.
Each Common Right entitles the registered holder, subject to the terms of the
Protection Agreement, to purchase from LendingClub one one-thousandth of a share
(a "Unit") of the LendingClub Preferred Stock, Series B ("Series B Preferred
Stock"), at a purchase price of $48.00 per Unit, subject to adjustment. Each
Series A Preferred Right entitles the registered holder, subject to the terms of
the Protection Agreement, to purchase from LendingClub one share of LendingClub
Series A Preferred Stock, at a purchase price of $4,800.00 per share, subject to
adjustment. The purchase price is payable in cash or by certified or bank check
or money order payable to the order of LendingClub.
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Distribution Date. Initially, the Rights will attach to all certificates
representing shares of outstanding LendingClub common stock and Series A
Preferred Stock, and no separate Rights Certificates will be distributed.
Subject to the provisions of the Protection Agreement, the Common Rights may
separate from the LendingClub common stock (though the Series A Preferred Rights
shall not separate from the Series A Preferred Stock) and the "Distribution
Date" will occur upon the earlier of (i) ten business days following a public
announcement (the date of such announcement being the "Stock Acquisition Date")
(or, if the tenth business day after the Stock Acquisition Date occurs before
the Record Date, the Close of Business on the Record Date) that a Person, acting
directly or indirectly or through or in concert with one or more Persons, has
acquired control over securities representing either (x) either (1) from and
after the first public announcement by LendingClub of the closing of the
Exchange, 10% or more, or (2) until such announcement, 7.5% or more (or more
than 15% in some cases specified in the Protection Agreement) of any class of
the then-outstanding Voting Securities of LendingClub or (y) 25% or more of the
total equity of LendingClub (such Person an "Acquiring Person"), and (ii) ten
business days (or such later date as may be determined by the Board) following
the commencement of a tender offer or exchange offer that would result in a
Person becoming an Acquiring Person. Any determinations under the definition of
Acquiring Person shall be made by the Board and in a manner consistent with the
provisions of Regulation Y and the published interpretations of the Board of
Governors of the Federal Reserve System and the published rulings and opinions
of the staff of the Board of Governors of the Federal Reserve System thereunder.
Until the Distribution Date, the Rights will be evidenced by LendingClub common
stock and Series A Preferred Stock certificates and will be transferred with and
only with such LendingClub common stock and Series A Preferred Stock
certificates. Until the Distribution Date or, in the case of Series A Preferred
Stock, the Expiration Date, the surrender for transfer of any certificates
representing outstanding LendingClub common stock or outstanding Series A
Preferred Stock will also constitute the transfer of the Rights associated with
LendingClub common stock or Series A Preferred Stock represented by such
certificates.
An "Acquiring Person" does not include certain Persons specified in the
Protection Agreement.
The Rights are not exercisable until the Distribution Date and will expire at
the Close of Business on the eighteen-month anniversary of the Protection
Agreement or if earlier at the time of consummation of the Relevant Transaction
or under certain circumstances in connection with a transaction pursuant to a
Qualified Offer (the "Expiration Date"), unless earlier redeemed or exchanged by
LendingClub as described below. Under certain circumstances, as provided in the
Protection Agreement, the exercisability of the Rights may be suspended.
As soon as practicable after the Distribution Date, Rights Certificates will be
mailed to holders of record of LendingClub common stock and Series A Preferred
Stock as of the Close of Business on the Distribution Date (and to each initial
holder of certain shares of LendingClub common stock and Series A Preferred
Stock issued after the Distribution Date) and, thereafter, the separate Rights
Certificates alone will represent the Rights, provided, that the Company may
choose to issue Rights in book-entry form.
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Flip-In. If a Person becomes an Acquiring Person, then each holder of a Right
will thereafter have the right to buy either Series A Preferred Stock, in the
case of Series A Preferred Rights, or common stock, in the case of Common
Rights, at one-half of market price (determined as provided in the Protection
Agreement), for the exercise price of a Right. Notwithstanding any of the
foregoing, following the occurrence of the event set forth in this paragraph,
all Rights that are, or (under certain circumstances specified in the Protection
Agreement) were, beneficially owned by any Acquiring Person or any affiliate or
associate thereof (or certain transferees of any thereof) will be null and void.
Flip-Over. If, at any time following the date that any Person becomes an
Acquiring Person, (i) LendingClub is acquired in a merger or other business
combination transaction and LendingClub is not the surviving corporation,
(ii) any Person merges with LendingClub and all or part of LendingClub common
stock is converted or exchanged for securities, cash or property of LendingClub
or any other Person or (iii) one-half or more of LendingClub's assets, cash flow
or earning power is sold or transferred, each holder of a Right (except Rights
which previously have been voided as described above) shall thereafter have the
right to receive, upon exercise, common stock of the acquiring company having a
value equal to two times the exercise price of the Right.
Redemption. At any time until ten business days following the Stock Acquisition
Date (or, if the Stock Acquisition Date shall have occurred prior to the Record
Date, until ten business days following the Record Date), the Board may redeem
the Rights in whole, but not in part, at a price of $0.001 per Right (subject to
adjustment in certain events) payable, at the election of the Board, in cash,
. . .
Item 5.03. Amendments to Articles of Incorporation or Bylaws.
On February 18, 2020, LendingClub filed a Certificate of Designations of the
Series A Preferred Stock (the "Series A Certificate of Designations") and a
Certificate of Designations of the Series B Preferred Stock (the "Series B
Certificate of Designations") with the Secretary of State of Delaware. Pursuant
to the Series A Certificate of Designations, the Board authorized 200,000 shares
of Series A Preferred Stock, par value $0.01 per share. Pursuant to the Series B
Certificate of Designations, the Board authorized 600,000 shares of Series B
Preferred Stock, par value per share of $0.01.
The Series A Certificate of Designations and the Series B Certificate of
Designations are attached hereto as Exhibits 3.1 and 3.2 and are incorporated
herein by reference.
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Item 9.01 Financial Statements and Exhibits
Exhibits
Exhibit
Number Exhibit Title or Description
2.1* Agreement and Plan of Merger, dated as of February 18, 2020, by and
among LendingClub Corporation, Radius Bancorp, Inc. and SC Sub I,
Inc.
3.1 Certificate of Designations of the Series A Preferred Stock, as
filed with the Secretary of State of Delaware on February 18, 2020.
3.2 Certificate of Designations of the Series B Preferred Stock, as
filed with the Secretary of State of Delaware on February 18, 2020.
4.1 Temporary Bank Charter Protection Agreement by and between
LendingClub Corporation and American Stock Transfer & Trust Company
dated February 18, 2020.
10.1 Share Exchange Agreement, dated as of February 18, 2020, by and
among LendingClub Corporation and Shanda Asset Management Holdings
Limited.
10.2 Registration Rights Agreement, dated as of February 18, 2020, by
and among LendingClub Corporation and Shanda Asset Management
Holdings, Limited.
99.1 Press Release dated February 18, 2020.
104 Cover Page Interactive Data File (Cover page XBRL tags are embedded
within the Inline XBRL document)
* Certain schedules have been omitted and LendingClub agrees to furnish
supplementally to the Securities and Exchange Commission a copy of any omitted
exhibits and schedules upon request.
Forward-Looking Statements
This Current Report on Form 8-K may contain certain "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995. In
some cases, forward-looking statements can be identified by the use of words
such as "may," "might," "will," "would," "should," "could," "expect," "plan,"
"intend," "anticipate," "believe," "estimate," "predict," "probable,"
"potential," "possible," "target," "continue," "look forward," or "assume" and
words of similar import. Forward-looking statements are not historical facts or
guarantees of future performance or outcomes, but instead express only
management's beliefs regarding future results or events, many of which, by their
nature, are inherently uncertain and outside of management's control. It is
possible that actual results and events may differ, possibly materially, from
the anticipated results or events indicated in these forward-looking statements.
We caution you not to place undue reliance on these statements. Forward-looking
statements are made only as of the date of this report, and LendingClub
undertakes no obligation to update any forward-looking statements to reflect new
information or events or conditions after the date hereof.
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Forward-looking statements are subject to certain risks, uncertainties and
assumptions, including, but not limited to: expected synergies, cost savings and
other financial or other benefits of the proposed transaction between
LendingClub and Radius might not be realized within the expected timeframes or
might be less than projected; the requisite regulatory approvals for the
proposed transaction between LendingClub and Radius, including bank regulatory
approvals, might not be obtained, or might not be obtained in a timely manner;
credit and interest rate risks associated with LendingClub's and Radius's
respective businesses; the exchange between LendingClub and Shanda is subject to
closing conditions which might not be realized within the expected timeframes
and the anticipated regulatory or other benefits of such exchange might be less
than projected; customer borrowing, repayment, investment and deposit practices,
and general economic conditions, either nationally or in the market areas in
which LendingClub and Radius operate or anticipate doing business; and risks
related to any required approvals for the consummation of such share exchange
may be less favorable than expected, new regulatory or legal requirements or
obligations, and other risks, uncertainties and assumptions identified under the
sections entitled "Risk Factors" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" in LendingClub's Annual Report on
Form 10-K for the year ended December 31, 2018, as well as LendingClub's
subsequent filings made with the Securities and Exchange Commission, including
subsequent reports on Form 10-Q and 10-K. However, these risks and uncertainties
are not exhaustive. Other sections of such filings describe additional factors
that could impact LendingClub's business, financial performance and pending or
consummated acquisition transactions, including the proposed acquisition of
Radius.
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