Item
1.01 Entry Into A Material Definitive Agreement.
As
previously reported on a Current Report on Form 8-K filed on October 11, 2018 by MTech Acquisition Corp., a Delaware corporation
(“
MTech
”), with the U.S. Securities and Exchange Commission (the “
SEC
”), on October 10,
2018, MTech entered into an Agreement and Plan of Merger (as amended by the First Amendment to Agreement and Plan of Merger on
April 17, 2019, the “
Merger Agreement
”) by and among MTech, MTech Acquisition Holdings Inc., a Delaware corporation
and a wholly-owned subsidiary of MTech (“
Pubco
”), MTech Purchaser Merger Sub Inc., a Delaware corporation and
a wholly-owned subsidiary of Pubco, MTech Company Merger Sub LLC, a Colorado limited liability company and a wholly-owned subsidiary
of Pubco, MTech Sponsor LLC, a Florida limited liability company, in the capacity as the Purchaser Representative thereunder,
MJ Freeway LLC, a Colorado limited liability (“
MJF
”), and Jessica Billingsley (as successor to Harold Handelsman),
in the capacity as the Seller Representative thereunder. Pursuant to the Merger Agreement, subject to the terms and conditions
set forth therein, at the closing of the transactions contemplated by the Merger Agreement (the “
Closing
”),
MTech and MJF will merge with and into the subsidiaries of Pubco and become wholly owned subsidiaries of Pubco (the “
Business
Combination
”). On May 16, 2019, Pubco filed with the SEC a registration statement on Form S-4 (as amended, the “
Registration
Statement
”) for the Pubco securities to be issued to MTech and MJF security holders at the Closing, which Registration
Statement contains a preliminary proxy statement of MTech in connection with a special meeting of the stockholders of MTech (“
Special
Meeting
”) to consider and vote on the Business Combination and related matters.
On
June 5, 2019, MTech entered into subscription agreements (each, a “
Subscription Agreement
”) with certain investors,
pursuant to which the investors (“
Investors
”) have agreed to purchase immediately prior to the Closing in the
aggregate 685,599 shares of Class A common stock of MTech (“
Class A Common Stock
”) at a purchase price of $10.21
per share (for an aggregate of $7.0 million) on a private placement basis (the “
Private Placement
”).
The shares issued by MTech in the Private Placement (“
Private Placement Shares
”) will be converted into shares
of common stock of Pubco on a one-for-one basis. MTech may issue up to an additional 799,907 shares of Class A Common Stock in
the Private Placement on substantially the same terms and conditions prior to the Special Meeting. The closing of the Private
Placement is conditioned on the Closing of the Business Combination immediately thereafter.
During
the period from the execution of the Subscription Agreements and through 5:00 p.m. Eastern Time on the third business day prior
to the Special Meeting, the Investors will have the right to purchase shares of Class A Common Stock in privately negotiated transactions
with third parties (any shares so purchased, “
Backstop Shares
”), which if held and not redeemed in accordance
with the requirements of the Subscription Agreement, will reduce the number of Private Placement Shares required to be purchased
by such Investors. The Investors have agreed to (i) not transfer prior to the Closing any Backstop Shares that it owns or otherwise
acquires, (ii) vote at the Special Meeting all of the Backstop Shares that it owns or acquires, or otherwise has proxy rights
with respect to, in favor of the Business Combination, and each of the other proposals of MTech set forth in the proxy statement
in connection with the Business Combination, and (iii) waive and not exercise any rights that it may have to redeem or convert
any Backstop Shares that it owns or acquires in the redemption conducted by the Company in connection with the Business Combination.
In
each Subscription Agreement, Pubco has agreed to file with the SEC within 30 days after the Closing a registration statement registering
the resale of the Pubco shares issued in the Business Combination for the Private Placement Shares and Backstop Shares, use its
commercially reasonable efforts to have such registration statement declared effective as soon as practicable and maintain the
effectiveness of such registration statement until the earlier of (i) two years from the issuance of the Private Placement Shares
to the Investor thereunder, or (ii) on the first date on which the Investor can sell all of its Private Placement Shares under
Rule 144 of the Securities Act, as amended (the “
Securities Act
”), without limitation as to the manner of sale
or the amount of such securities that may be sold.
In each Subscription
Agreement, Pubco also granted to each Investor an option for a period of 60 days starting after the Closing to purchase, subject
to certain conditions, additional shares of Pubco Class A common stock (“
Option Shares
”) at a price of $10.21
per share, up to a number of Option Shares equal to the number of Private Placement Shares and Backstop Shares purchased and held
and not redeemed by such Investor under the Subscription Agreement. The Investor will have the registration rights described above
with respect to any such purchased Option Shares.
Each
Subscription Agreement will terminate with no further force and effect upon the earlier to occur of (i) such date and time as
the Merger Agreement is terminated in accordance with its terms, (ii) upon the mutual written agreement of each of the parties
to the Subscription Agreement to terminate such agreement or (iii) the transactions contemplated by the Subscription Agreement
are not consummated prior to July 31, 2019.
In
connection with the execution of the Subscription Agreements, MTech’s sponsor, MTech Sponsor LLC, a Florida limited liability
company (the “
Sponsor
”), and MTech entered into an Agreement to Transfer Sponsor Shares (each, a “
Sponsor
Stock Transfer Agreement
”) with each Investor, pursuant to which the Sponsor agreed to transfer to each Investor at
the closing of the Private Placement one (1) share of Class B common stock of MTech for each nine (9) Private Placement Shares
or Backstop Shares purchased and held and not redeemed by such Investor under the Subscription Agreement, which shares of Class
B common stock of MTech will become Class A shares of Pubco upon the Closing (such shares, the “
Transferred Sponsor Shares
”).
Each Investor agreed to accept its portion of the Transferred Sponsor Shares subject to (i) the escrow and related restrictions
applying to such Transferred Sponsor Shares under that certain Stock Escrow Agreement, dated as of January 29, 2018 (the “
Stock
Escrow Agreement
”), by and among the Company, the Sponsor, and Continental Stock Transfer & Trust Company, a New
York corporation, as escrow agent (“
Escrow Agent
”), as a “Founder” party thereto, with each Investor
agreeing to also sign a joinder agreement in form and substance reasonably acceptable to MTech, Pubco, the Sponsor and the Escrow
Agent to become subject to the Amendment to Stock Escrow Agreement in substantially the form attached to the Merger Agreement,
which Amendment to Stock Escrow Agreement will be signed by MTech, Pubco, the Sponsor and the Escrow Agent in connection with
the Closing, and (ii) the restrictions applying to “insiders” after the Closing under the Letter Agreement, dated
as of January 29, 2018, by and among MTech, EarlyBirdCapital, Inc., as representative of the underwriters thereunder, the Sponsor
and Steven Van Dyke.
Copies
of the Form of Subscription Agreement and the Form of Sponsor Stock Transfer Agreement are filed with this Current Report on Form
8-K as, respectively, Exhibits 10.1 and 10.2 hereto, and are incorporated herein by reference, and the foregoing descriptions
of the Form of Subscription Agreement and the Form of Sponsor Stock Transfer Agreement agreements are qualified in their entirety
by reference thereto.