NOTE 6. COMMITMENTS AND CONTINGENCIES

Registration Rights

The holders of the Founder Shares, Private Placement Warrants and Public Warrants that may be issued upon conversion of the working capital loans (the “Working Capital Loans”) (and any Class A ordinary shares issuable upon the exercise of the Private Placement Warrants and warrants issued upon conversion of the Working Capital Loans) are entitled to registration rights pursuant to the Registration Rights Agreement. The holders of these securities are entitled to make up to three demands, excluding short form demands, that the Company register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to consummation of a Business Combination. The Company bears the expenses incurred in connection with the filing of any such registration statements.

Vendor Agreements

Since inception, the Company has engaged a legal firm (the “Legal Advisor”) to provide services related to the Company’s Initial Public Offering, the search for a prospective initial Business Combination, and the structuring of a transaction. Fees incurred by the Legal Advisor have been recorded as accrued contingent legal costs on the balance sheets. The payment of these fees is contingent upon the consummation of a Business Combination. As of June 30, 2024 and December 31, 2023, the Company had accrued contingent legal costs of $13,051,603 and $6,449,593, respectively.

On September 19, 2023, the Company entered into an agreement with a financial advisory firm (the “First Financial Advisor”) for financial advisory services such as structuring a transaction, assistance in negotiations, guidance on valuation in connection with a transaction, and other customary services in connection with a Business Combination. Pursuant to this agreement, the Company will pay the First Financial Advisor a fee of $7,000,000 contingent upon the consummation of a Business Combination. Additionally, upon the consummation of a private investment in public equity (“PIPE”) transaction, the Company will pay to the First Financial Advisor a fee equal to 3.5% of (i) the gross proceeds raised or received by any PIPE issuer and/or its shareholders in the PIPE transaction, plus (ii) any amounts remaining in the Trust Account as of the closing of a Business Combination after giving effect to all redemptions of shares of the Company elected by the shareholders of the Company ((i) and (ii) together, the “Proceeds”) (the “PIPE Transaction Fee”). The PIPE Transaction Fee paid to the First Financial Advisor shall not be less than 1.75% of the Proceeds. In addition to the compensation payable outlined above, the Company shall reimburse the First Financial Advisor for all reasonable and documented legal and other advisors expenses incurred by the First Financial Advisor. Such expenses are subject to a broken deal discount, which is applied to each expense and is to be collected contingently upon the consummation of the Company’s initial Business Combination. As of June 30, 2024, the total broken deal discount was $156,921.

On June 27, 2024, the Company entered into an agreement with a financial advisory firm (the “Second Financial Advisor”) to provide capital markets advisory services. Such services include developing a short- and long-term capital market strategy, comprehensive market analysis, and development of institutional investor relationships. The Second Financial Advisor will be paid an advisory fee of up to $1,000,000 (the “Advisory Fee”), of which $500,000 is payable upon the discretion of KME. The Advisory Fee may be paid in cash or 50,000 Class A Ordinary Shares per upon the consummation of an initial Business Combination.

On June 27, 2024, the Company entered into an agreement with the Second Financial Advisor to serve as a non-exclusive underwriter or placement agent with respect to a sale of equity or equity-linked securities in connection with the Company’s initial Business Combination. The Second Financial Advisor will be paid a cash fee of 3.5% or 4% of the capital raised, dependent on the amount of capital raised by the Second Financial Advisor.

Other Agreements

Pursuant to a share award letter dated October 17, 2023, and amended on May 10, 2024, entered into by and between the Company and Harebell S.r.l. (“Harebell”), Harebell will be paid a finder’s fee of 22,334 Class A ordinary shares in connection with consummation of the Target Business Combination. The Company evaluated the agreement pursuant to ASC 718. Under ASC 718, it was determined that as the share issuance is contingent upon the closing of the Target Business Combination, there is a performance condition that is required to be met. As a Business Combination cannot be considered probable until it occurs, the Company has determined that no expense will be recorded until the Company consummates its initial Business Combination.