Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
On September 7, 2022, ESM Acquisition Corporation, a Cayman Islands exempted
company (the "Company"), entered into Promissory Note (the "Note") with ESM
Sponsor, LP, a Cayman Islands exempted limited partnership ("Sponsor"). The
purposes of the Note are (i) to provide funding to the Company to pay its
expenses and (ii) to facilitate the transactions contemplated by the Company's
registration statement on Form S-1, and the prospectus included therein,
including any merger, capital stock exchange, asset acquisition, stock purchase,
reorganization or other similar business combination by the Company with one or
more businesses (a "Business Combination").
Pursuant to the Note, Sponsor has agreed to advance to the Company from time to
time, upon request by the Company, a maximum of $1,000,000 in the aggregate. The
Company intends to promptly make an initial drawdown of $500,000 under the Note.
The Note is payable on the earlier of (i) date on which the Company consummates
its initial Business Combination or (ii) March 12, 2023. No interest accrues on
the unpaid principal balance of the Note. Sponsor cannot seek repayment from the
Company's trust account for amounts owed under the Note. Up to $1,500,000 of any
loans from the Sponsor are convertible into warrants to purchase shares of
common stock (the "Conversion Warrants"), at the option of the Sponsor. The
number of Conversion Warrants granted will be equal to the portion of the
principal amount of the Promissory Note being converted, divided by $1.50 (as
adjusted for any stock dividend, stock split, stock combination,
reclassification or similar transaction related to the Company's common stock
occurring after the date of the Note), rounded up to the nearest whole number of
shares. The Conversion Warrants shall be identical to those warrants that were
issued in a private placement that closed concurrently with the Company's
initial public offering. The holders of Conversion Warrants or shares of common
stock underlying the Conversion Warrants are entitled to certain demand and
piggyback registration rights pursuant to the terms of the Note.
A copy of the Note is filed as Exhibit 10.1.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
The following exhibits are being filed herewith:
Exhibit
No. Description
10.1 Promissory Note executed by the Registrant in favor of ESM Sponsor, LP
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
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