Item 1.01 Entry Into a Material
Definitive Agreement.
Merger Agreement
On November 4, 2021, Quantum
FinTech Acquisition Corporation (the “Company”), a Delaware corporation, entered into an Agreement and Plan of Merger (the
“Merger Agreement”) by and among the Company, TradeStation Group, Inc., a Florida corporation (“TradeStation”),
and TSG Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of TradeStation (“Merger Sub”). The Merger
Agreement was unanimously approved by the Company’s board of directors. If the Merger Agreement is approved by the Company’s
stockholders, and the transactions contemplated by the Merger Agreement are consummated, Merger Sub will merge with and into the Company
(the “Merger”), with the Company continuing as the surviving corporation and a wholly owned subsidiary of TradeStation (the
“Business Combination”).
Prior to the closing of
the Business Combination (the “Closing”), TradeStation will undergo a pre-closing reorganization which will result in
there being 163,898,232 shares of common stock of TradeStation (“TradeStation Common Stock”) issued and outstanding, all
held by Monex Group, Inc. (“Monex”), the sole shareholder of TradeStation. At the Closing, Monex will retain
129,750,000 shares of TradeStation Common Stock and deliver 34,148,232 shares of TradeStation Common Stock to an escrow agent (the
“Monex Earn Out Shares”). The Monex Earn Out Shares will be released to Monex upon certain milestones (based on the
achievement of certain price targets of TradeStation Common Stock following the Closing). In the event such milestones are not met
within five years of the Closing, the Monex Earn Out Shares will be automatically released to TradeStation for cancellation. In
addition, at the Closing, certain Sponsors (as defined below) will deliver to the escrow agent an aggregate of 798,894 shares
of TradeStation Common Stock that such Sponsors would otherwise receive as consideration in the Merger (the “Sponsor Earn Out
Shares,” and together with the Monex Earn Out Shares, the “Earn Out Shares”). The Sponsor Earn Out Shares will be
subject to the same milestones as the Monex Earn Out Shares. In the event such milestones are not met within five years of the
Closing, the Sponsor Earn Out Shares will be automatically released to TradeStation for cancellation.
In connection with the Closing,
(i) each share of the Company’s common stock (“Company Common Stock”) that (x) is held by Quantum Ventures LLC and Chardan
Quantum LLC and the Company’s directors and officers (collectively, the “Sponsors”) after taking into effect the forfeitures
described below or (y) was acquired pursuant to the Subscription Agreements (as further described below), will be converted into one share
of TradeStation Common Stock, (ii) each share of Company Common Stock (other than the shares referred to in clause (i)) that is outstanding
and has not been redeemed will be converted into a number of shares of TradeStation Common Stock equal to (A) the sum of (1) the number
of public shares outstanding for which holders have not elected redemption as of immediately prior to the Closing and (2) 750,000 divided
by (B) the number of public shares outstanding for which holders have not elected redemption immediately prior to the Closing.
Each outstanding warrant to
purchase Company Common Stock (“Company Warrant”) will become a warrant to purchase TradeStation Common Stock, with each such
warrant exercisable for the number of shares of TradeStation Common Stock the holder of the Company Warrant would have received in the
Merger if it exercised the Company Warrant immediately prior to the Merger.
Conditions to Closing
The Closing is subject to
certain customary conditions, including, among other things, (i) approval by the Company’s stockholders of the Merger Agreement,
(ii) the effectiveness of a registration statement on Form S-4 by TradeStation relating to the Business Combination and containing
a proxy statement of the Company and (iii) the approval for listing on The New York Stock Exchange of the shares of TradeStation Common Stock
to be issued in the Merger. In addition, the Closing is subject to the condition that the Company has at least $5,000,001 of net tangible
assets (as determined in accordance with Rule 3a51-1(g)(1) under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)).
Representations, Warranties and Covenants
The parties to the Merger
Agreement have made representations, warranties and covenants that are customary for transactions of this nature.
Termination
The Merger Agreement may be
terminated by either TradeStation or the Company under certain circumstances, including, among others, (i) by written consent of
both the Company and TradeStation, (ii) by either TradeStation or the Company if the Closing has not occurred on or before the 270th
day following the date of the Merger Agreement, (iii) by either TradeStation or the Company if the other party has materially breached
their respective representations or covenants under the Merger Agreement and has not timely cured such breach, (iv) by TradeStation
if the Company has held a stockholder meeting to approve the Business Combination and approval of the Business Combination has not been
obtained by the requisite number of stockholders of the Company and (v) by the Company if (x) the consent from Monex (in its capacity
as TradeStation’s sole shareholder) approving the adoption of TradeStation’s amended and restated articles of incorporation
and the bylaws (the “A&R Charter and Bylaws”), and (y) the consent of TradeStation (in its capacity as Merger Sub’s
sole stockholder) approving the Business Combination and related transactions, have not been obtained within three business days from
the date of the Merger Agreement.
The foregoing description
of the Merger Agreement does not purport to be complete and is qualified in its entirety by the terms and conditions of the Merger Agreement,
a copy of which is attached hereto as Exhibit 2.1 and is incorporated herein by reference. The Merger Agreement contains representations,
warranties and covenants that the parties to the Merger Agreement made to each other as of the date of the Merger Agreement or other specific
dates. The assertions embodied in those representations, warranties and covenants were made for purposes of the contract among the parties
and are subject to important qualifications and limitations agreed to by the parties in connection with negotiating the Merger Agreement.
The Merger Agreement has been attached to provide investors with information regarding its terms and is not intended to provide any other
factual information about the Company, TradeStation or any other party to the Merger Agreement. In particular, the representations, warranties,
covenants and agreements contained in the Merger Agreement, which were made only for purposes of the Merger Agreement and as of specific
dates, were solely for the benefit of the parties to the Merger Agreement (other than as expressly provided for in the Merger Agreement),
may be subject to limitations agreed upon by the contracting parties (including being qualified by confidential disclosures made for the
purposes of allocating contractual risk between the parties to the Merger Agreement instead of establishing these matters as facts) and
may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors and reports
and documents filed with the SEC. Investors should not rely on the representations, warranties, covenants or agreements, or any descriptions
thereof, as characterizations of the actual state of facts or condition of any party to the Merger Agreement. In addition, the representations,
warranties, covenants and agreements and other terms of the Merger Agreement may be subject to subsequent waiver or modification. Moreover,
information concerning the subject matter of the representations and warranties and other terms may change after the date of the Merger
Agreement, which subsequent information may or may not be fully reflected in the Company’s public disclosures.
Subscription Agreements
Additionally, the Company
and TradeStation entered into subscription agreements (collectively, the “Subscription Agreements”), each dated as of November
4, 2021, with certain investors (collectively, the “PIPE Investors”) pursuant to which, among other things, the Company agreed
to issue and sell, in private placements to close immediately prior to the Closing, an aggregate of 12,500,000 shares of the Company’s
common stock for $10.00 per share (the “Company PIPE Shares”), including 5,000,000 shares to Monex. The PIPE Investment will
be consummated substantially concurrently with the Closing, subject to the terms and conditions contemplated by the Subscription Agreements.
The Company PIPE Shares will be converted in the Merger into an equal number of shares of TradeStation Common Stock.
Subject to limitations described
below, in the event that the Adjustment Period VWAP (as defined below) is less than $10.00 per share of TradeStation Common Stock (as
adjusted for any stock split, reverse stock split or similar adjustment following the Closing), each PIPE Investor, other than Monex,
shall be entitled to receive from TradeStation a number of additional shares of TradeStation Common Stock equal to the product of (x)
the number of Company PIPE Shares, excluding any Incentive Shares (as defined below) issued to such PIPE Investor at the Closing that
such PIPE Investor holds through the Measurement Date (as defined below), multiplied by (y) a fraction, (A) the numerator of which is
$10.00 (as adjusted for any stock split, reverse stock split or similar adjustment following the Closing) minus the Adjustment Period
VWAP, and (B) the denominator of which is the Adjustment Period VWAP (such additional shares, the “Additional Shares”).
If (i) at any time from
the Closing through the Measurement Date, a PIPE Investor transfers the TradeStation Common Stock into which the Company PIPE Shares
are converted, other than ordinary course of business pledges as part of prime brokerage or other similar financing arrangements
permitted under the Subscription Agreements; or (ii) at any time from the Closing through the Measurement Date, the PIPE Investor or
any person or entity acting on its behalf, at its direction or pursuant to any understanding with the PIPE Investor, directly or
indirectly engages in any transaction in breach of the prohibition in the Subscription Agreement on “short sales”, the PIPE Investor will automatically forfeit the Additional Shares.
For purposes of the Subscription
Agreements: (i) the “Adjustment Period VWAP” means the higher of (x) the lower of (A) the average of the VWAP of a share of
TradeStation Common Stock, determined for each of the successive 60 Trading Days of the Adjustment Period (as defined below) and (B) the
average of the VWAP of a share of TradeStation Common Stock determined for each of the successive 10 Trading Days ending on and including
the last day of the Adjustment Period and (y) $6.50 (as adjusted for any stock split, reverse stock split or similar adjustment following
the Closing); (ii) the “Adjustment Period” means the 60 Trading Day period beginning on and including the Resale Shelf Effectiveness
Date (as defined below); (iii) the “Measurement Date” means the last day of the Adjustment Period; (iv) “Trading Day”
means any day on which (A) there is no VWAP Market Disruption Event (as defined below); and (B) trading in the Common Stock generally
occurs on the applicable stock exchange on which the Company Shares are then listed (the “Stock Exchange”), or, if the TradeStation
Common Stock is not then listed on the Stock Exchange, on the principal other market on which the TradeStation Common Stock is then traded.
If the TradeStation Common Stock is not so listed or traded, then “Trading Day” means a business day; (v) “VWAP Market
Disruption Event” means, with respect to any date, (A) the failure by the Stock Exchange, or, if the TradeStation Common Stock is
not then listed on the Stock Exchange, the principal other market on which the TradeStation Common Stock is then traded, to open for trading
during its regular trading session on such date; or (B) the occurrence or existence, for more than a one half hour period in the aggregate,
of any suspension or limitation imposed on trading (by reason of movements in price exceeding limits permitted by the relevant exchange
or otherwise) in the TradeStation Common Stock or in any options contracts or futures contracts relating to the TradeStation Common Stock,
and such suspension or limitation occurs or exists at any time before 1:00 p.m., New York City time, on such date; (vi) “VWAP”
means, for any Trading Day, the per share volume weighted average price of the TradeStation Common Stock as displayed under the heading
“Bloomberg VWAP” on the applicable Bloomberg page (or, if such page is not available, its equivalent successor page) in respect
of the period from the scheduled open of trading until the scheduled close of trading of the primary trading session on such Trading Day
(or, if such volume weighted average price is unavailable, the market value of one share of TradeStation Common Stock on such Trading
Day, determined, using a volume weighted average price method, by a nationally recognized independent investment banking firm selected
by the Company); and (vii) “Resale Shelf Effectiveness Date” means the date on which the resale registration statement registering
the resale of the Company PIPE Shares is declared effective by the SEC. The VWAP will be determined without
regard to after-hours trading or any other trading outside of the regular trading session.
Monex will participate in
the PIPE Investment and has agreed to purchase 5,000,000 Company PIPE Shares pursuant to a Subscription Agreement on substantially the
same terms and conditions as the other PIPE Investors; provided that it will not be entitled to receive any Additional Shares.
The Company will issue
to any PIPE Investor, other than Monex, whose aggregate subscription amount for Company PIPE Shares is equal to or greater than $5
million, an additional number of Company PIPE Shares equal to 10.0% of such aggregate subscribed-for Committed Shares for no
additional consideration (the “Incentive Shares”). No PIPE Investor will be entitled to receive any Additional Shares in
respect of the Incentive Shares.
The
issuance or sale of the shares of the Company’s common stock in connection with the Subscription Agreements has not been
registered under the Securities Act of 1933, as amended (the “Securities Act”). TradeStation will assume upon Closing
the Company’s obligation to file, within 15 calendar days of Closing (the “Filing Deadline”), a registration
statement registering the resale of such common stock and will use commercially reasonable efforts to have such registration
statement declared effective as soon as practicable after the filing thereof, but no later than the earlier of (i) forty-five
(45) calendar days (or ninety (90) calendar days if the SEC notifies the Company that it will “review” the registration
statement) following the Filing Deadline and (ii) the third (3rd)
business day after the date the Company is notified (orally or in writing, whichever is earlier) by the SEC that the registration
statement will not be “reviewed” or will not be subject to further review.
The foregoing description
of the Subscription Agreements does not purport to be complete and is qualified in its entirety by the terms and conditions of the Subscription
Agreements, the form of which is filed as Exhibit 10.1hereto and is incorporated by reference herein.
Sponsor Support Agreement
In connection with the
Company’s entrance into the Merger Agreement, it also entered into a Sponsor Support Agreement (the “Sponsor Support
Agreement”) with TradeStation, Monex and the Sponsors, pursuant to which, among other things, the Sponsors will agree to vote
any of the shares of Company Common Stock held by them in favor of the Business Combination and not to redeem any such shares at the
special meeting of stockholders to be held in connection with the Business Combination. In addition, the Sponsors agreed not to
transfer (i) their TradeStation Common Stock following the Closing, subject to certain exceptions, until the earlier of (A) (1) in
the case of Quantum Ventures LLC and Chardan Quantum LLC, 12 months from Closing and (2) in the case of the Company’s directors and officers, 6
months from Closing and (B) subsequent to the Closing, the date on which the last reported sale price of TradeStation Common Stock
exceeds $12.50 per share for 20 out of any 30 consecutive trading days and (ii) their TradeStation warrants following the Closing,
subject to certain exceptions, until the earlier of (A) 30 days from Closing and (B) February 4, 2022.
In addition, certain of the
Sponsors have agreed pursuant to the Support Agreement to forfeit 1,610,554 shares of Company Common Stock.
The foregoing
description of the Sponsor Support Agreement does not purport to be complete and is qualified in its entirety by the terms and
conditions of the Sponsor Support Agreement, a copy of which is attached hereto as Exhibit 10.2 and is incorporated herein by
reference.
TradeStation Support Agreement
In connection with the Company’s
entry into the Merger Agreement, the Company, TradeStation and Monex entered into a Company Support Agreement (the “TradeStation
Support Agreement”), pursuant to which TradeStation agreed, among other things, to deliver a written consent approving the Business
Combination and related transactions in its capacity as the sole stockholder of Merger Sub and Monex agreed, among other things, to approve
TradeStation’s adoption of the A&R Charter and Bylaws in its capacity as the sole shareholder of TradeStation. In addition,
Monex agreed not to transfer its TradeStation Common Stock following the closing, excluding the shares it will acquire in the PIPE Investment
and subject to certain exceptions, until (i) for one-third of such TradeStation Common Stock, the earlier of (A) one year from Closing
and (B) subsequent to the Closing, the date on which the last reported sale price of TradeStation Common Stock equals or exceeds $12.50
per share for 20 out of any 30 consecutive trading days, (ii) for one-third of such TradeStation Common Stock, the earlier of (A) two
years from Closing and (B) subsequent to the Closing, the date on which the last reported sale price of TradeStation Common Stock equals
or exceeds $15.00 per share for 20 out of any 30 consecutive trading days and (iii) for one-third of such TradeStation Common Stock, the
earlier of (A) three years from Closing and (B) subsequent to the Closing, the date on which the last reported sale price of TradeStation
Common Stock equals or exceeds $17.50 per share for 20 out of any 30 consecutive trading days.
The foregoing
description of the TradeStation Support Agreement does not purport to be complete and is qualified in its entirety by the terms and
conditions of the TradeStation Support Agreement, a copy of which is filed as Exhibit 10.3 hereto and is incorporated by
reference herein.