Exhibit 99.1
THIS PROMISSORY INSTRUMENT (THIS “INSTRUMENT”) HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”). THIS INSTRUMENT HAS BEEN ACQUIRED FOR INVESTMENT ONLY AND MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF REGISTRATION OF THE RESALE THEREOF UNDER THE SECURITIES ACT OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY IN FORM, SCOPE AND SUBSTANCE TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
PROMISSORY INSTRUMENT
| Principal Amount: Up to $1,500,000 | Dated as of July 26, 2022 |
Mercato Partners Acquisition Corporation, a Delaware corporation and blank check company (the “Maker”), promises to pay to Mercato Partners Acquisition Group, LLC, a Delaware limited liability company, or its registered assigns or successors in interest (the “Payee”), or order, the principal sum of One Million Five Hundred Thousand Dollars ($1,500,000) or such lesser amount as shall have been advanced by Payee to Maker and shall remain unpaid under this Instrument on the Maturity Date (as defined below) in lawful money of the United States of America, on the terms and conditions described below. All payments on this promissory instrument (this “Instrument”) shall be made by check or wire transfer of immediately available funds to such account as the Payee may from time to time designate by written notice in accordance with the provisions of this Instrument, subject to the rights of Payee specified in Section 7 hereof.
1. Principal. The entire unpaid principal balance of this Instrument shall be payable on the date (the “Maturity Date”) of the consummation of the Maker’s initial merger, stock exchange, asset acquisition, stock purchase, recapitalization, reorganization or similar business combination with one or more businesses or entities (a “Business Combination”). Payee understands that if a Business Combination is not consummated, this Instrument will not be repaid and all amounts owed hereunder will be contributed to Maker by payee except to the extent that the Maker has funds available to it outside of its trust account established in connection with its IPO (as defined herein). The principal balance may be prepaid at any time. Under no circumstances shall any individual, including but not limited to any officer, director, employee or shareholder of the Maker, be obligated personally for any obligations or liabilities of the Maker hereunder.
2. Drawdown Requests. Maker and Payee agree that Maker may request, from time to time, up to One Million Five Hundred Thousand Dollars ($1,500,000) in drawdowns under this Instrument to be used for costs and expenses related to Maker’s initial public offering of its securities (the “IPO”) and continued working capital expenditures. Principal of this Instrument may be drawn down from time to time prior to the Maturity Date upon written request from Maker to Payee (each, a “Drawdown Request”). Each Drawdown Request must state the amount to be drawn down, and must not be an amount less than Ten Thousand Dollars ($10,000), unless agreed upon in writing by Maker and Payee. Payee shall fund each Drawdown Request no later than three (3) business days after receipt of a Drawdown Request; provided, however, that the maximum amount of drawdowns outstanding under this Instrument at any time may not exceed One Million Five Hundred Thousand Dollars ($1,500,000). No fees, payments or other amounts shall be due to Payee in connection with, or as a result of, any Drawdown Request by Maker.
3. Interest. No interest shall accrue on the unpaid principal balance of this Instrument.
4. Application of Payments. All payments shall be applied first to payment in full of any costs incurred in the collection of any sum due under this Instrument, including (without limitation) reasonable attorney’s fees, then to the payment in full of any late charges and finally to the reduction of the unpaid principal balance of this Instrument.
5. Events of Default. The following shall constitute an event of default (“Event of Default”):
(a) Failure to Make Required Payments. Failure by Maker to pay the principal amount due pursuant to this Instrument within five (5) business days of the date specified above.
(b) Voluntary Bankruptcy, Etc. The commencement by Maker of a voluntary case under any applicable bankruptcy, insolvency, reorganization, rehabilitation or other similar law, or the consent by it to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other similar official) of Maker or for any substantial part of its property, or the making by it of any assignment for the benefit of creditors, or the failure of Maker generally to pay its debts as such debts become due, or the taking of corporate action by Maker in furtherance of any of the foregoing.
(c) Involuntary Bankruptcy, Etc. The entry of a decree or order for relief by a court having jurisdiction in the premises in respect of Maker in an involuntary case under any applicable bankruptcy, insolvency or other similar law, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of Maker or for any substantial part of its property, or ordering the winding-up or liquidation of its affairs, and the continuance of any such decree or order unstayed and in effect for a period of 60 consecutive days.
6. Remedies.
(a) Upon the occurrence of an Event of Default specified in Section 5(a) hereof, Payee may, by written notice to Maker, declare this Instrument to be due immediately and payable, whereupon the unpaid principal amount of this Instrument, and all other amounts payable thereunder, shall become immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived, anything contained herein or in the documents evidencing the same to the contrary notwithstanding.
(b) Upon the occurrence of an Event of Default specified in Sections 5(b) or 5(c), the unpaid principal balance of this Instrument, and all other sums payable with regard to this Instrument, shall automatically and immediately become due and payable, in all cases without any action on the part of Payee.
7. Warrants. Upon consummation of a Business Combination, the Payee may utilize up to $1,500,000 of the unpaid principal balance of this Instrument to acquire that number of warrants to purchase one share of Class A Common Stock, $0.0001 par value per share, of the Maker (the “Working Capital Warrants”) equal to the amount so utilized divided by $1.00. The Working Capital Warrants shall be identical to the warrants issued by the Maker to the Payee in a private placement concurrent with the consummation of the IPO. Upon any such acquisition of Working Capital Warrants in connection of this Instrument, (i) such principal amount so utilized to acquire Working Capital Warrants shall be fully paid and satisfied, (ii) Payee shall surrender and deliver this Instrument, duly endorsed, to Maker or such other address which Maker shall designate, (iii) Maker shall promptly deliver a new duly executed Instrument to Payee in the principal amount that remains outstanding, if any, after any such utilization and (iv) Maker shall, at the direction of Payee, deliver to Payee (or its members or their respective affiliates or their designees) the Working Capital Warrants, which shall bear such legends as are required, in the opinion of counsel to Maker or by any other agreement between Maker and Payee and applicable state and federal securities laws. For the avoidance of doubt, to the extent Payee does not utilize the unpaid principal balance of the Instrument to acquired Working Capital Warrants upon consummation of a Business Combination, Payee will receive the payment owed upon the Maturity Date in exchange for this Instrument, as provided herein. Maker and Payee will cooperate to characterize and report the arrangements contemplated by this Agreement in a manner that is tax-efficient for Payee for income tax purposes.
8. Waivers. Maker and all endorsers and guarantors of, and sureties for, this Instrument waive presentment for payment, demand, notice of dishonor, protest, and notice of protest with regard to this Instrument, all errors, defects and imperfections in any proceedings instituted by Payee under the terms of this Instrument, and all benefits that might accrue to Maker by virtue of any present or future laws exempting any property, real or personal, or any part of the proceeds arising from any sale of any such property, from attachment, levy or sale under execution, or providing for any stay of execution, exemption from civil process, or extension of time for payment; and Maker agrees that any real estate that may be levied upon pursuant to a judgment obtained by virtue hereof, on any writ of execution issued hereon, may be sold upon any such writ in whole or in part in any order desired by Payee.
9. Unconditional Liability. Maker hereby waives all notices in connection with the delivery, acceptance, performance, default, or enforcement of the payment of this Instrument and agrees that its liability shall be unconditional, without regard to the liability of any other party, and shall not be affected in any manner by any indulgence, extension of time, renewal, waiver or modification granted or consented to by Payee, and consents to any and all extensions of time, renewals, waivers, or modifications that may be granted by Payee with respect to the payment or other provisions of this Instrument, and agrees that additional makers, endorsers, guarantors, or sureties may become parties hereto without notice to Maker or affecting Maker’s liability hereunder.
10. Notices. All notices, statements or other documents which are required or contemplated by this Agreement shall be: (i) in writing and delivered personally or sent by first class registered or certified mail, overnight courier service or facsimile or electronic transmission to the address designated in writing, (ii) by facsimile to the number most recently provided to such party or such other address or fax number as may be designated in writing by such party or (iii) by electronic mail, to the electronic mail address most recently provided to such party or such other electronic mail address as may be designated in writing by such party. Any notice or other communication so transmitted shall be deemed to have been given on the day of delivery, if delivered personally, on the business day following receipt of written confirmation, if sent by facsimile or electronic transmission, one (1) business day after delivery to an overnight courier service or five (5) days after mailing if sent by mail.
11. Construction. THIS INSTRUMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF LAW PROVISIONS THEREOF.
12. Severability. Any provision contained in this Instrument which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
13. Trust Waiver. Notwithstanding anything herein to the contrary, the Payee hereby waives any and all right, title, interest or claim of any kind (“Claim”) in or to any distribution of or from the trust account (including the deferred underwriters discounts and commissions) described in greater detail in the registration statement and prospectus filed with the Securities and Exchange Commission in connection with the IPO, and hereby agrees not to seek recourse, reimbursement, payment or satisfaction for any Claim against the trust account related to this Instrument.
14. Amendment; Waiver. Any amendment hereto or waiver of any provision hereof may be made with, and only with, the written consent of the Maker and the Payee.
15. Assignment. No assignment or transfer of this Instrument or any rights or obligations hereunder may be made by any party hereto (by operation of law or otherwise) without the prior written consent of the other party hereto and any attempted assignment without the required consent shall be void.
[Signature page follows]
IN WITNESS WHEREOF, Maker, intending to be legally bound hereby, has caused this Instrument to be duly executed by the undersigned as of the day and year first above written.
MERCATO PARTNERS ACQUISITION CORPORATION, a Delaware corporation | ||
| By: | /s/ Scott Klossner | |
| Name: Scott Klossner | ||
| Title: Chief Financial Officer | ||
Accepted and agreed this 26th day of July, 2022
MERCATO PARTNERS ACQUISITION GROUP, LLC, a Delaware limited liability company | ||
| SOLE MEMBER: | ||
| Bullfrog Bay Trust | ||
| By: | /s/ Diane Warnock | |
| Name: | Diane Warnock | |
| Title: | Trustee | |