NOTE 7. WARRANT LIABILITY

The Company accounts for the 29,025,000 warrants issued in connection with the Initial Public Offering (16,087,500 Private Placement Warrants and 12,937,500 Public Warrants) as liabilities under ASC 815-40, Derivatives and Hedging, because the warrants are not considered indexed to the Company’s own stock. The warrants are measured at fair value at each reporting date, with changes in fair value recognized in the statement of operations. The Company will continue to remeasure the warrants until the earlier of their exercise or expiration, at which time the related warrant liability will be reclassified to additional paid-in capital.

Public Warrants may only be exercised for a whole number of shares; no fractional shares will be issued. The Public Warrants will become exercisable 30 days after the consummation of a Business Combination and will expire five years thereafter or earlier upon redemption or liquidation.

The Company will not be obligated to deliver Class A ordinary shares upon exercise of a Public Warrant unless a registration statement under the Securities Act covering the issuance of the underlying shares is then effective and a current prospectus is available, and unless the issuance is registered or qualified under the securities laws of the state of the exercising holder (or an exemption is available).

Within 15 business days after the closing of a Business Combination, the Company has agreed to use its best efforts to file a registration statement covering Class A ordinary shares issuable upon exercise of the warrants and to maintain its effectiveness, with a current prospectus, until the warrants expire or are redeemed. If a registration statement covering such shares is not effective by the 60th business day after the closing, holders may exercise on a cashless basis under Section 3(a)(9) of the Securities Act or another available exemption until effectiveness is restored.

Redemption of warrants when the price per Class A ordinary share equals or exceeds $18.00. Once the Public Warrants become exercisable, the Company may redeem the Public Warrants in whole and not in part, at $0.01 per warrant, upon not less than 30 days’ prior written notice, if and only if the last reported sale price of the Class A ordinary shares equals or exceeds $18.00 per share (as adjusted for stock splits, dividends, reorganizations, recapitalizations, and the like) for any 20 trading days within a 30-trading-day period ending three business days before the Company sends the notice of redemption.

The Company may not exercise this redemption right unless an effective registration statement covering the underlying Class A ordinary shares is in place throughout the 30-day redemption period, except that the Company may exercise its redemption right even if it is unable to register or qualify the underlying securities under applicable state securities laws.

Redemption of warrants when the price per Class A ordinary share equals or exceeds $10.00. Once the Public Warrants become exercisable, the Company may redeem the Public Warrants in whole and not in part, at $0.10 per warrant, upon a minimum of 30 days’ prior written notice, if and only if (i) the closing price of the Class A ordinary shares equals or exceeds $10.00 per share (as adjusted for anti-dilution adjustments described in the warrant agreement) for any 20 trading days within a 30-trading-day period ending three trading days before the Company sends the notice of redemption, and (ii) the closing price of the Class A ordinary shares for any such 20-trading-day period is less than $18.00 per share, in which case the Private Placement Warrants must concurrently be called for redemption on the same terms. Holders may exercise their warrants on a cashless basis prior to redemption and receive a number of Class A ordinary shares determined by reference to the table set forth in the warrant agreement based on the redemption date and the “fair market value” of the Class A ordinary shares.

The Company may not exercise this redemption right if the issuance of Class A ordinary shares upon exercise of the warrants is not exempt from, or has not been registered or qualified under, applicable state blue sky laws.

The exercise price and number of Class A ordinary shares issuable upon exercise of the Public Warrants may be adjusted in certain circumstances, including in the event of a share dividend, extraordinary dividend, recapitalization, reorganization, merger, or consolidation. In no event will the Company be required to net cash settle the Public Warrants. If the Company calls the Public Warrants for redemption, management may require all holders to exercise their Public Warrants on a “cashless basis,” as described in the warrant agreement.

If the Company is unable to complete a Business Combination within the Combination Period and the Trust Account is liquidated, holders of Public Warrants will not receive any distribution from Trust Account funds or other Company assets with respect to their Public Warrants, and the Public Warrants may expire worthless.

If (i) the Company issues additional Class A ordinary shares or equity-linked securities for capital raising purposes in connection with the closing of its initial Business Combination at an issue price or effective issue price of less than $9.20 per share (the “Newly Issued Price”), (ii) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of the Business Combination on the closing date (net of redemptions), and (iii) the volume-weighted average trading price of the Company’s Class A ordinary shares during the 20 trading day period starting on the trading day prior to the closing of the Business Combination (the “Market Value”) is below $9.20 per share, then:

The Newly Issued Price will be determined in good faith by the Company’s board of directors and, for issuances to the Sponsor or its affiliates, will be calculated without giving effect to any Founder Shares held by them prior to such issuance.

The Private Placement Warrants are identical to the Public Warrants, except that the Private Placement Warrants and the Class A ordinary shares issuable upon their exercise are not transferable, assignable, or salable until 30 days after the completion of a Business Combination, subject to certain limited exceptions. So long as the Private Placement Warrants are held by the initial purchasers or their permitted transferees, they are exercisable on a cashless basis and are non-redeemable. If transferred to any other holder, the Private Placement Warrants become redeemable by the Company and exercisable on the same basis as the Public Warrants.