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Eureka Acquisition Corp (NASDAQ:EURK), a blank check company incorporated in the Cayman Islands, entered into a material definitive agreement on Monday to issue an unsecured promissory note of up to $300,000 to its sponsor, Hercules Capital Management Corp, according to a statement filed with the Securities and Exchange Commission.
The sponsor note, which bears no interest, will provide Eureka Acquisition Corp with general working capital and may be drawn down in increments until the company completes its initial business combination. The principal is payable in full upon the earlier of either the consummation of a business combination or the expiration of the company’s term.
The agreement outlines several events of default, including failure to pay within five business days of maturity, bankruptcy proceedings, breach of obligations, cross defaults, enforcement actions, or any unlawfulness or invalidity related to the obligations. In the event of default, the note may be accelerated.
The sponsor, Hercules Capital Management Corp, has the right, but not the obligation, to convert the outstanding principal of the sponsor note into private units of Eureka Acquisition Corp. Each unit consists of one Class A ordinary share and one right to receive one-fifth of a Class A ordinary share upon the completion of a business combination. The number of units to be issued upon conversion will be calculated by dividing the outstanding principal by $10.00. Any conversion must be communicated in writing at least two business days before the closing of the business combination.
The issuance of the sponsor note was made pursuant to an exemption from registration under Section 4(a)(2) of the Securities Act of 1933. The units and underlying securities issuable upon conversion are subject to transfer restrictions until the completion of the company’s initial business combination and are entitled to registration rights.
This information is based on a press release statement filed with the SEC.
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