Exhibit
2.1
Execution
Version
BUSINESS
COMBINATION AGREEMENT
by
and among
KERNEL
GROUP HOLDINGS, INC.,
as
Kernel,
AIRO
GROUP, INC.,
as
ParentCo,
kernel
MERGER SUB, Inc.,
as Kernel Merger Sub,
AIRO
MERGER SUB, Inc.,
as AIRO Merger Sub,
VKSS
CAPITAL, LLC,
as the Sponsor and ParentCo Representative,
Dr.
Chirinjeev Kathuria,
in the capacity as the Seller Representative,
and
AIRO
GROUP HOLDINGS, INC.,
as the Company,
Dated
as of March 3, 2023
TABLE
OF CONTENTS
| |
Page |
| |
|
| I.
FIRST MERGER |
3 |
| 1.1.
First Merger |
3 |
| 1.2.
First Effective Time |
3 |
| 1.3.
Effect of the First Merger |
3 |
| 1.4.
Certificate of Incorporation and Bylaws |
3 |
| 1.5.
Directors and Officers of the Surviving Corporation |
3 |
| 1.6.
Amended Kernel Charter |
4 |
| 1.7.
First Merger Consideration |
4 |
| 1.8.
Effect of First Merger on Kernel Securities |
4 |
| 1.9.
Surrender of Kernel Common Stock and Disbursement of Kernel Merger Consideration |
5 |
| 1.10.
Effect of Transaction on Kernel Merger Sub Stock |
7 |
| 1.11.
Taking of Necessary Action; Further Action |
7 |
| 1.12.
Appraisal and Dissenter’s Rights |
7 |
| |
|
| II.
SECOND MERGER |
8 |
| 2.1.
Second Merger |
8 |
| 2.2.
Second Effective Time |
8 |
| 2.3.
Effect of the Second Merger |
8 |
| 2.4.
Certificate of Incorporation and Bylaws |
8 |
| 2.5.
Directors and Officers of the Surviving Corporation |
8 |
| 2.6.
Amended Company Charter |
9 |
| 2.7.
Second Merger Consideration |
9 |
| 2.8.
Effect of Second Merger on Company Securities |
10 |
| 2.9.
Surrender of Company Securities and Disbursement of AIRO Merger Consideration |
10 |
| 2.10.
Effect of Transaction on AIRO Merger Sub Stock |
12 |
| 2.11.
Closing Calculations |
13 |
| 2.12.
Taking of Necessary Action; Further Action |
13 |
| 2.13.
Appraisal and Dissenter’s Rights |
13 |
| 2.14.
Earnouts |
14 |
| |
|
| III.
CLOSING |
16 |
| 3.1.
Closing |
16 |
| |
|
| IV.
representations and warranties of PARENTCO, KERNEL, Kernel merger sub and airo merger sub |
16 |
| 4.1.
Organization and Standing |
16 |
| 4.2.
Authorization; Binding Agreement |
17 |
| 4.3.
Governmental Approvals |
17 |
| 4.4.
Non-Contravention |
17 |
| 4.5.
Capitalization |
18 |
| 4.6.
SEC Filings and Kernel Financials |
20 |
| 4.7.
Absence of Certain Changes |
21 |
| 4.8.
Compliance with Laws |
21 |
| 4.9.
Actions; Orders; Permits |
21 |
| 4.10.
Taxes and Returns |
22 |
| 4.11.
Employees and Employee Benefit Plans |
22 |
| 4.12.
Properties |
22 |
| 4.13.
Material Contracts |
22 |
| 4.14.
Transactions with Affiliates |
23 |
| 4.15.
Merger Sub Activities |
23 |
| 4.16.
Investment Company Act |
23 |
| 4.17.
Finders and Brokers |
23 |
| 4.18.
Ownership of Merger Consideration |
23 |
| 4.19.
Certain Business Practices |
24 |
| 4.20.
Insurance |
24 |
| 4.21.
Independent Investigation |
24 |
| |
|
| v.
representations and warranties of THE COMPANY |
25 |
| 5.1.
Organization and Standing |
25 |
| 5.2.
Authorization; Binding Agreement |
26 |
| 5.3.
Capitalization |
26 |
| 5.4.
Subsidiaries |
27 |
| 5.5.
Governmental Approvals |
28 |
| 5.6.
Non-Contravention |
28 |
| 5.7.
Financial Statements |
29 |
| 5.8.
Absence of Certain Changes |
30 |
| 5.9.
Compliance with Laws including Privacy Laws |
30 |
| 5.10.
Company Permits |
31 |
| 5.11.
Litigation |
31 |
| 5.12.
Material Contracts |
32 |
| 5.13.
Intellectual Property |
34 |
| 5.14.
Taxes and Returns |
37 |
| 5.15.
Real Property |
39 |
| 5.16.
Personal Property |
39 |
| 5.17.
Title to and Sufficiency of Assets |
39 |
| 5.18.
Employee Matters |
40 |
| 5.19.
Benefit Plans |
41 |
| 5.20.
Environmental Matters |
43 |
| 5.21.
Transactions with Related Persons |
45 |
| 5.22.
Insurance |
45 |
| 5.23.
Books and Records |
46 |
| 5.24.
Top Customers and Suppliers |
46 |
| 5.25.
Certain Business Practices |
46 |
| 5.26.
Investment Company Act |
47 |
| 5.27.
Finders and Brokers |
47 |
| 5.28.
Independent Investigation |
47 |
| 5.29.
Information Supplied |
48 |
| 5.30.
Disclosure |
48 |
| |
|
| VI.
COVENANTS |
48 |
| 6.1.
Access and Information |
48 |
| 6.2.
Conduct of Business of the Company |
49 |
| 6.3.
Conduct of Business of Kernel |
53 |
| 6.4.
Annual and Interim Financial Statements |
55 |
| 6.5.
Kernel Public Filings |
55 |
| 6.6.
No Solicitation |
56 |
| 6.7.
No Trading |
57 |
| 6.8.
Notification of Certain Matters |
57 |
| 6.9.
Efforts |
57 |
| 6.10.
Tax Matters |
59 |
| 6.11.
Further Assurances |
59 |
| 6.12.
The Registration Statement |
59 |
| 6.13.
Company Stockholder Meeting |
60 |
| 6.14.
Public Announcements |
61 |
| 6.15.
Confidential Information |
62 |
| 6.16.
Documents and Information |
63 |
| 6.17.
Post-Closing Board of Directors and Executive Officers |
63 |
| 6.18.
Indemnification of Directors and Officers; Tail Insurance |
64 |
| 6.19.
Trust Account Proceeds |
65 |
| 6.20.
Additional Financing |
65 |
| 6.21.
Post-Closing Assumption or Creation of Benefit Plans |
65 |
| 6.22.
Extension |
65 |
| 6.23.
Non-Competition Agreements |
65 |
| 6.24.
Termination and Replacement of the Company Warrants |
66 |
| 6.25.
Assumption and Conversion of Company Options |
66 |
| 6.26.
Updating Disclosure Schedules |
66 |
| 6.27.
Audited Consolidated Financials |
66 |
| |
|
| VII.
Closing conditions |
66 |
| 7.1.
Conditions of Each Party’s Obligations |
66 |
| 7.2.
Conditions to Obligations of the Company |
68 |
| 7.3.
Conditions to Obligations of Kernel |
69 |
| 7.4.
Frustration of Conditions |
71 |
| |
|
| VIII.
TERMINATION AND EXPENSES |
71 |
| 8.1.
Termination |
71 |
| 8.2.
Effect of Termination |
73 |
| 8.3.
Fees and Expenses |
73 |
| |
|
| Ix.
WAIVERS and releases |
74 |
| 9.1.
Waiver of Claims Against Trust |
74 |
| |
|
| x.
MISCELLANEOUS |
75 |
| 10.1.
Notices |
75 |
| 10.2.
Binding Effect; Assignment |
76 |
| 10.3.
Third Parties |
76 |
| 10.4.
Arbitration |
77 |
| 10.5.
Governing Law; Jurisdiction |
77 |
| 10.6.
WAIVER OF JURY TRIAL |
78 |
| 10.7.
Specific Performance |
78 |
| 10.8.
Severability |
78 |
| 10.9.
Amendment |
78 |
| 10.10.
Waiver |
79 |
| 10.11.
Entire Agreement |
79 |
| 10.12.
Interpretation |
79 |
| 10.13.
Counterparts |
80 |
| 10.14.
ParentCo Representative |
80 |
| 10.15.
Seller Representative |
82 |
| 10.16.
Legal Representation |
84 |
| 10.17.
Non-Survival of Representations, Warranties |
84 |
| |
|
| XI
DEFINITIONS |
86 |
| 11.1.
Certain Definitions |
86 |
| 11.2.
Section References |
97 |
BUSINESS
COMBINATION AGREEMENT
This
Business Combination Agreement (this “Agreement”) is made and entered into as of March 3, 2023 by and among
(i) Kernel Group Holdings, Inc., a Cayman Islands exempted company (which shall domesticate as a Delaware corporation prior to
Closing) (together with its successors, “Kernel”), (ii) AIRO Group, Inc., a Delaware corporation (“ParentCo”),
(iii) Kernel Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of ParentCo (“Kernel Merger Sub”),
(iv) AIRO Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of ParentCo (“AIRO Merger Sub”),
(v) VKSS Capital, LLC, a Delaware limited liability company, in the capacity as the representative from and after the First Effective
Time (as defined below) for the stockholders of Kernel and ParentCo (other than the Company Security Holders (as defined below) as of
immediately prior to the Second Effective Time and their successors and assignees) in accordance with the terms and conditions of this
Agreement (the “ParentCo Representative”) and also in the capacity as Kernel’s Sponsor (“Sponsor”),
(vi) Dr. Chirinjeev Kathuria, in the capacity as the representative from and after the Effective Time for the Company Stockholders (as
defined below) as of immediately prior to the Effective Time in accordance with the terms and conditions of this Agreement (the “Seller
Representative”), and (vii) AIRO Group Holdings, Inc., a Delaware corporation (the “Company”).
ParentCo, Kernel, Kernel Merger Sub, AIRO Merger Sub, ParentCo Representative, the Sponsor, the Seller Representative and the Company
are sometimes referred to herein individually as a “Party” and, collectively, as the “Parties”.
RECITALS:
A. The
Company, directly and indirectly through its subsidiaries, is a multi-faceted air mobility, autonomy and aerospace platform with differentiated
technologies and capabilities dynamically addressing high growth market trends across the entire drone ecosystem with a compelling range
of drone technologies and services, avionics and defense training;
B. Each
of ParentCo, Kernel Merger Sub and AIRO Merger Sub is a corporation newly formed for the purposes of the transaction proposed herein;
C. ParentCo
is a wholly-owned direct subsidiary of Kernel and each of Kernel Merger Sub and AIRO Merger Sub is a wholly-owned direct subsidiary of
ParentCo;
D.
Prior to the Closing Date and subject to the satisfaction or waiver of the conditions of this Agreement, Kernel shall migrate out of
the Cayman Islands and domesticate (the “Domestication”) as a Delaware corporation in accordance with Section
388 of the DGCL, and Part XII of the Cayman Islands Companies Act (2021 Revision) (the “Companies Act”);
E. Following
the Domestication, Kernel shall adopt a certificate of incorporation, in a form mutually agreeable to ParentCo and the Company (the “Kernel
Certificate of Incorporation”), and bylaws, in a form mutually agreeable to Kernel and the Company (the “Kernel
Bylaws”);
F. (i)
In connection with the Domestication, each issued and outstanding share of Old Kernel Preferred Stock, each issued and outstanding share
of Old Kernel Class A Stock, each issued and outstanding share of Old Kernel Class B Stock, each issued and outstanding Old Kernel Private
Warrant, each issued and outstanding Old Kernel Public Warrant and each issued and outstanding Old Kernel Unit shall convert automatically,
on a one-for-one basis, into one share of Kernel Preferred Stock, one share of Kernel Class A Common Stock, one share of Kernel Class
B Common Stock, one Kernel Private Warrant, one Kernel Public Warrant and one Kernel Public Unit, respectively, and (ii) immediately
following the Domestication, (a) each share of Kernel Parent Class B Common Stock shall convert automatically, on a one-for-one basis,
into one share of Kernel Class A Common Stock, (b) the Kernel Class A Common Stock will be reclassified as Kernel Common Stock and (c)
each Kernel Public Unit will be separated into Kernel Common Stock and Kernel Public Warrants (collectively, the “Conversion”);
G. On
the Closing Date, upon the terms and subject to the conditions of this Agreement and in accordance with the Delaware General Corporation
Law (“DGCL”), Kernel Merger Sub will merge with and into Kernel (the “First Merger”),
with Kernel surviving the First Merger as a wholly owned subsidiary of ParentCo;
H. On
the Closing Date, immediately following the First Merger, upon the terms and subject to the conditions of this Agreement and in accordance
with the DGCL, AIRO Merger Sub will merge with and into the Company (the “Second Merger”), with the Company
surviving the Second Merger as a wholly-owned subsidiary of ParentCo;
I. The
boards of directors of ParentCo, Kernel, Kernel Merger Sub and AIRO Merger Sub have each (i) determined that the First Merger and Second
Merger are fair, advisable and in the best interests of their respective companies and stockholders, (ii) approved this Agreement and
the transactions contemplated hereby, including the Domestication, Conversion, First Merger and Second Merger, upon the terms and subject
to the conditions set forth herein, and (iii) determined to recommend to their respective stockholders the approval and adoption of this
Agreement and the transactions contemplated hereby, including the Domestication, Conversion, First Merger and Second Merger;
J. The
board of directors of the Company has unanimously (i) determined that it is in the best interests of the Company and the Subsidiaries,
and declared it advisable, to enter into this Agreement, and (ii) approved this Agreement and the transactions (including the Second
Merger), on the terms and subject to the conditions of this Agreement;
K. As
a condition to Closing, the Significant Company Holders and Sponsor shall each enter into a Lock-Up Agreement with ParentCo and ParentCo
Representative, the terms of which are pari passu with Sponsor’s Lock-Up Agreement with Kernel (each a “Lock-Up Agreement”),
and shall become effective as of the Closing;
L. The
Parties intend the First Merger and the Second Merger be treated as part of an integrated transaction that qualifies as a contribution
pursuant to Section 351 of the Code (as defined below); and
M. Certain
capitalized terms used herein are defined in Article XI hereof.
NOW,
THEREFORE, in consideration of the premises set forth above, which are incorporated in this Agreement as if fully set forth below,
and the representations, warranties, covenants and agreements contained in this Agreement, and intending to be legally bound hereby,
the Parties agree as follows:
Article
I
FIRST MERGER
1.1 First
Merger. At the First Effective Time, and subject to and upon the terms and conditions of this Agreement, and in accordance with the
applicable provisions of the DGCL, Kernel Merger Sub and Kernel shall consummate the First Merger, pursuant to which Kernel Merger Sub
shall be merged with and into Kernel, following which the separate corporate existence of Kernel Merger Sub shall cease and Kernel shall
continue as the surviving corporation. Kernel, as the surviving corporation after the First Merger, is hereinafter sometimes referred
to as the “Kernel Surviving Corporation” (provided, that references to Kernel for periods after the Effective
Time shall include the Kernel Surviving Corporation).
1.2 First
Effective Time. The Parties shall cause the First Merger to be consummated by filing the Certificate of Merger for the merger of
Kernel Merger Sub with and into Kernel (the “Kernel Certificate of Merger”) with the Secretary of State of
the State of Delaware in accordance with the relevant provisions of the DGCL (the time of such filing, or such later time as may be specified
in the Kernel Certificate of Merger, being the “First Effective Time”).
1.3 Effect
of the First Merger. At the First Effective Time, the effect of the First Merger shall be as provided in this Agreement, the Kernel
Certificate of Merger and the applicable provisions of the DGCL. Without limiting the generality of the foregoing, and subject thereto,
at the First Effective Time, all the property, rights, privileges, agreements, powers and franchises, debts, Liabilities, duties and
obligations of Kernel Merger Sub and Kernel shall become the property, rights, privileges, agreements, powers and franchises, debts,
Liabilities, duties and obligations of the Kernel Surviving Corporation, which shall include the assumption by the Kernel Surviving Corporation
of any and all agreements, covenants, duties and obligations of Kernel Merger Sub and Kernel set forth in this Agreement to be performed
after the First Effective Time.
1.4 Certificate
of Incorporation and Bylaws. At the First Effective Time, the Certificate of Incorporation and Bylaws of Kernel, each as in effect
immediately prior to the Effective Time, shall automatically be amended and restated in their entirety to read identically to the Certificate
of Incorporation and Bylaws of Kernel Merger Sub, as in effect immediately prior to the First Effective Time, and such amended and restated
Certificate of Incorporation and Bylaws shall become the respective Certificate of Incorporation and Bylaws of the Kernel Surviving Corporation.
1.5 Directors
and Officers of the Surviving Corporation. At the First Effective Time, the board of directors and executive officers of the Kernel
Surviving Corporation shall be the board of directors and executive officers of Kernel, after giving effect to Section 6.17, each
to hold office in accordance with the Certificate of Incorporation and Bylaws of the Kernel Surviving Corporation until their respective
successors are duly elected or appointed and qualified or their earlier death, resignation or removal.
1.6 Amended
Kernel Charter. Effective upon the First Effective Time, Kernel shall amend and restate its Certificate of Incorporation in a form
mutually agreeable to the Company and Kernel (the “Kernel Amended Charter”) which shall, among other matters,
(i) provide for size and structure of the Post-Closing Kernel Board in accordance with Section 6.17, and (ii) remove and change
certain provisions in the Certificate of Incorporation related to Kernel’s status as a blank check company.
1.7 First
Merger Consideration.
(a) Each
share of Kernel Common Stock issued and outstanding immediately prior to the First Effective Time shall automatically be converted into
and exchanged for one validly issued, fully paid and nonassessable share of ParentCo Common Stock (“Kernel Merger Consideration”).
(b) Each
share of ParentCo Common Stock held by Kernel issued and outstanding immediately prior to the First Effective Time shall automatically
be cancelled and shall cease to exist as of the First Effective Time.
(c) Each
share of Kernel Merger Sub Common Stock issued and outstanding as of immediately prior to the First Effective Time shall automatically
be converted into and exchanged for one validly issued, fully paid and nonassessable share of common stock of the Kernel Surviving Company.
1.8 Effect
of First Merger on Kernel Securities. At the First Effective Time, by virtue of the First Merger and without any action on the part
of any Party or the holders of any shares of Kernel Common Stock or the holders of any shares of capital stock of ParentCo or Merger
Sub:
(a) Kernel
Common Stock. Subject to clause (b) below, all shares of Kernel Common Stock issued and outstanding immediately prior to the First
Effective Time will automatically be cancelled and cease to exist in exchange for the right to receive the Kernel Merger Consideration,
with each Kernel Stockholder being entitled to receive its Pro Rata Share of the Kernel Merger Consideration, without interest, upon
delivery of the Kernel Transmittal Documents in accordance with Section 1.9. As of the First Effective Time, each Kernel Stockholder
shall cease to have any other rights in and to Kernel or the Kernel Surviving Corporation (other than the rights set forth in Section
1.12 below).
(b) Treasury
Stock. Notwithstanding clause (a) above or any other provision of this Agreement to the contrary, at the First Effective Time, if
there are any shares of Kernel Common Stock that are owned by Kernel as treasury shares or any shares of Kernel Common Stock owned by
any direct or indirect Subsidiary of Kernel immediately prior to the First Effective Time, such shares of Kernel Common Stock shall be
cancelled and shall cease to exist without any conversion thereof or payment therefor.
(c) Dissenting
Shares. Each of the Kernel Dissenting Shares issued and outstanding immediately prior to the First Effective Time shall be cancelled
and cease to exist in accordance with Section 1.12 and shall thereafter represent only the right to receive the applicable payments
set forth in Section 1.12.
1.9 Surrender
of Kernel Common Stock and Disbursement of Kernel Merger Consideration.
(a) Prior
to the First Effective Time, ParentCo shall appoint its transfer agent, Continental Stock Transfer & Trust Company, or another agent
reasonably acceptable to Kernel and the Company (the “Exchange Agent”), for the purpose of exchanging the certificates
representing Kernel Common Stock (“Kernel Certificates”). At or prior to the First Effective Time, ParentCo
shall deposit, or cause to be deposited, with the Exchange Agent the Kernel Merger Consideration. At or prior to the First Effective
Time, ParentCo shall send, or shall cause the Exchange Agent to send, to each Kernel Stockholder, a letter of transmittal for use in
such exchange, in the form mutually agreed to by ParentCo and Kernel (a “Letter of Transmittal”) (which shall
specify that the delivery of Kernel Certificates in respect of the Kernel Merger Consideration shall be effected, and risk of loss and
title shall pass, only upon proper delivery of the Kernel Certificates to the Exchange Agent (or a Lost Certificate Affidavit)) for use
in such exchange.
(b) Each
Kernel Stockholder shall be entitled to receive its Pro Rata Share of the Kernel Merger Consideration in respect of the Kernel Common
Stock represented by the Kernel Certificate(s) (excluding any Kernel Common Stock described in Sections 1.8(b) or 1.8(c)),
as soon as reasonably practicable after the First Effective Time, but subject to the delivery to the Exchange Agent of the following
items prior thereto (collectively, the “Kernel Transmittal Documents”): (i) the Certificate(s) for its Kernel
Common Stock (or a Lost Certificate Affidavit), together with a properly completed and duly executed Letter of Transmittal and (ii) such
other documents as may be reasonably requested by the Exchange Agent or ParentCo. Until so surrendered, each Kernel Certificate shall
represent after the First Effective Time for all purposes only the right to receive such portion of the Kernel Merger Consideration attributable
to such Kernel Certificate.
(c) If
any portion of the Kernel Merger Consideration is to be delivered or issued to a Person other than the Person in whose name the surrendered
Kernel Certificate is registered immediately prior to the First Effective Time, it shall be a condition to such delivery that (i) the
transfer of such Kernel Common Stock shall have been permitted in accordance with the terms of Kernel’s Organizational Documents
and any stockholders agreement with respect to Kernel, each as in effect immediately prior to the First Effective Time, (ii) such Kernel
Certificate shall be properly endorsed or shall otherwise be in proper form for transfer and, (iii) the recipient such portion of the
Kernel Merger Consideration, or the Person in whose name such portion of the Kernel Merger Consideration is delivered or issued, shall
have already executed and delivered, if Sponsor, counterparts to a Lock-Up Agreement, and such other Kernel Transmittal Documents as
are reasonably deemed necessary by the Exchange Agent or ParentCo and (iv) the Person requesting such delivery shall pay to the Exchange
Agent any transfer or other Taxes required as a result of such delivery to a Person other than the registered holder of such Kernel Certificate
or establish to the satisfaction of the Exchange Agent that such Tax has been paid or is not payable.
(d) Notwithstanding
anything to the contrary contained herein, in the event that any Kernel Certificate shall have been lost, stolen or destroyed, in lieu
of delivery of a Kernel Certificate to the Exchange Agent, the Kernel Stockholder may instead deliver to the Exchange Agent an affidavit
of lost certificate and indemnity of loss in form and substance reasonably acceptable to ParentCo (a “Lost Certificate Affidavit”),
which at the reasonable discretion of ParentCo may include a requirement that the owner of such lost, stolen or destroyed Kernel Certificate
deliver a bond in such sum as it may reasonably direct as indemnity against any claim that may be made against ParentCo or the Kernel
Surviving Corporation with respect to the shares of Kernel Common Stock represented by the Kernel Certificates alleged to have been lost,
stolen or destroyed. Any Lost Certificate Affidavit properly delivered in accordance with this Section 1.9(d) shall be treated
as a Kernel Certificate for all purposes of this Agreement.
(e) After
the First Effective Time, there shall be no further registration of transfers of Kernel Common Stock. If, after the First Effective Time,
Kernel Certificates are presented to the Kernel Surviving Corporation, ParentCo or the Exchange Agent, they shall be cancelled and exchanged
for the applicable portion of the Kernel Merger Consideration provided for, and in accordance with the procedures set forth in this Section
1.9. No dividends or other distributions declared or made after the date of this Agreement with respect to ParentCo Common Stock
with a record date after the First Effective Time will be paid to the holders of any Kernel Certificates that have not yet been surrendered
with respect to ParentCo Common Stock to be issued upon surrender thereof until the holders of record of such Kernel Certificates shall
surrender such certificates (or provide a Lost Certificate Affidavit), if applicable, and provide the other Kernel Transmittal Documents.
Subject to applicable Law, following surrender of any such Kernel Certificates (or delivery of a Lost Certificate Affidavit), if applicable,
and delivery of the other Kernel Transmittal Documents, ParentCo shall promptly deliver to the record holders thereof, without interest,
the certificates representing ParentCo Common Stock issued in exchange therefor and the amount of any such dividends or other distributions
with a record date after the First Effective Time theretofore paid with respect to such ParentCo Common Stock.
(f) All
securities issued upon the surrender of Kernel Common Stock in accordance with the terms hereof shall be deemed to have been issued in
full satisfaction of all rights pertaining to such Kernel Common Stock. Any portion of the Kernel Merger Consideration made available
to the Exchange Agent pursuant to Section 1.9(a) that remains unclaimed by Kernel Stockholders two (2) years after the First Effective
Time shall be returned to ParentCo, upon demand, and any such Kernel Stockholder who has not exchanged its Kernel Stock for the applicable
portion of the Kernel Merger Consideration in accordance with this Section 1.9 prior to that time shall thereafter look only to
ParentCo for payment of the portion of the Kernel Merger Consideration in respect of such shares of Kernel Common Stock without any interest
thereon (but with any dividends paid with respect thereto). Notwithstanding the foregoing, none of the Kernel Surviving Corporation,
ParentCo or any Party shall be liable to any Person for any amount properly paid to a public official pursuant to any applicable abandoned
property, escheat or similar law.
(g) Notwithstanding
anything to the contrary contained herein, no fraction of a share of ParentCo Common Stock will be issued by virtue of the First Merger
or the transactions contemplated hereby, and each Person who would otherwise be entitled to a fraction of a share of ParentCo Common
Stock (after aggregating all fractional shares of ParentCo Common Stock that otherwise would be received by such holder) shall instead
have the number of shares of ParentCo Common Stock issued to such Person rounded down in the aggregate to the nearest whole share of
ParentCo Common Stock.
1.10 Effect
of Transaction on Kernel Merger Sub Stock. At the First Effective Time, by virtue of the First Merger and without any action on the
part of any Party or the holders of any Kernel Common Stock or the holders of any shares of capital stock of ParentCo or Kernel Merger
Sub, each share of Kernel Merger Sub Common Stock outstanding immediately prior to the First Effective Time shall be converted into an
equal number of shares of common stock of the Kernel Surviving Corporation, with the same rights, powers and privileges as the shares
so converted and shall constitute the only outstanding shares of capital stock of the Kernel Surviving Corporation.
1.11 Taking
of Necessary Action; Further Action. If, at any time after the First Effective Time, any further action is necessary or desirable
to carry out the purposes of this Agreement and to vest the Kernel Surviving Corporation with full right, title and possession to all
assets, property, rights, privileges, powers and franchises of Kernel and Kernel Merger Sub, the officers and directors of Kernel and
Kernel Merger Sub are fully authorized in the name of their respective corporations or otherwise to take, and will take, all such lawful
and necessary action, so long as such action is not inconsistent with this Agreement.
1.12 Appraisal
and Dissenter’s Rights. No Kernel Stockholder who has validly exercised its appraisal rights pursuant to Section 262 of the
DGCL (a “Kernel Dissenting Stockholder”) with respect to its Kernel Common Stock (such shares, “Kernel
Dissenting Shares”) shall be entitled to receive any portion of the Kernel Merger Consideration with respect to the Kernel
Dissenting Shares owned by such Kernel Dissenting Stockholder unless and until such Kernel Dissenting Stockholder shall have effectively
withdrawn or lost its appraisal rights under the DGCL. Each Kernel Dissenting Stockholder shall be entitled to receive only the payment
resulting from the procedure set forth in Section 262 of the DGCL with respect to the Kernel Dissenting Shares owned by such Kernel Dissenting
Stockholder. Kernel shall give ParentCo and ParentCo Representative (i) prompt notice of any written demands for appraisal, attempted
withdrawals of such demands, and any other instruments served pursuant to applicable Laws that are received by Kernel relating to any
Kernel Dissenting Stockholder’s rights of appraisal and (ii) the opportunity to direct all negotiations and proceedings with respect
to demand for appraisal under the DGCL. Kernel shall not, except with the prior written consent of ParentCo and ParentCo Representative,
voluntarily make any payment with respect to any demands for appraisal, offer to settle or settle any such demands or approve any withdrawal
of any such demands. Notwithstanding anything to the contrary contained in this Agreement, for all purposes of this Agreement, the Kernel
Merger Consideration shall be reduced by the Pro Rata Share of any Kernel Dissenting Stockholders attributable to any Kernel Dissenting
Shares and the Kernel Dissenting Stockholders shall have no rights to any portion of the Kernel Merger Consideration with respect to
any Kernel Dissenting Shares.
Article
II
second
merger
2.1 Second
Merger. At the Second Effective Time, and subject to and upon the terms and conditions of this Agreement, and in accordance with
the applicable provisions of the DGCL, AIRO Merger Sub and the Company shall consummate the Second Merger, pursuant to which AIRO Merger
Sub shall be merged with and into the Company, following which the separate corporate existence of AIRO Merger Sub shall cease and the
Company shall continue as the surviving corporation. The Company, as the surviving corporation after the Second Merger, is hereinafter
sometimes referred to as the “AIRO Surviving Corporation” (provided, that references to the Company for periods
after the Effective Time shall include the AIRO Surviving Corporation).
2.2 Second
Effective Time. The Parties shall cause the Second Merger to be consummated by filing the Certificate of Merger for the merger of
AIRO Merger Sub with and into the Company (the “AIRO Certificate of Merger”) with the Secretary of State of
the State of Delaware in accordance with the relevant provisions of the DGCL (the time of such filing, or such later time as may be specified
in the AIRO Certificate of Merger, being the “Second Effective Time”).
2.3 Effect
of the Second Merger. At the Second Effective Time, the effect of the Second Merger shall be as provided in this Agreement, the AIRO
Certificate of Merger and the applicable provisions of the DGCL. Without limiting the generality of the foregoing, and subject thereto,
at the Second Effective Time, all the property, rights, privileges, agreements, powers and franchises, debts, Liabilities, duties and
obligations of AIRO Merger Sub and the Company shall become the property, rights, privileges, agreements, powers and franchises, debts,
Liabilities, duties and obligations of the AIRO Surviving Corporation, which shall include the assumption by the AIRO Surviving Corporation
of any and all agreements, covenants, duties and obligations of AIRO Merger Sub and the Company set forth in this Agreement to be performed
after the Second Effective Time.
2.4 Certificate
of Incorporation and Bylaws. At the Second Effective Time, the Certificate of Incorporation and Bylaws of the Company, each as in
effect immediately prior to the Effective Time, shall automatically be amended and restated in their entirety to read identically to
the Certificate of Incorporation and Bylaws of AIRO Merger Sub, as in effect immediately prior to the Second Effective Time, and such
amended and restated Certificate of Incorporation and Bylaws shall become the respective Certificate of Incorporation and Bylaws of the
AIRO Surviving Corporation.
2.5 Directors
and Officers of the Surviving Corporation. At the Second Effective Time, the board of directors and executive officers of the AIRO
Surviving Corporation shall be the board of directors and executive officers of AIRO, after giving effect to Section 6.17, each
to hold office in accordance with the Certificate of Incorporation and Bylaws of the AIRO Surviving Corporation until their respective
successors are duly elected or appointed and qualified or their earlier death, resignation or removal.
2.6 Amended
Company Charter. Effective upon the Second Effective Time, the Company shall amend and restate its Certificate of Incorporation in
a form mutually agreeable to the Company and Kernel (the “AIRO Amended Charter”) which shall, among other matters,
provide for size and structure of the Company Board post-Closing in accordance with Section 6.17.
2.7 Second
Merger Consideration.
(a) As
consideration for the Second Merger, the Company Security Holders collectively shall be entitled to receive from ParentCo, in the aggregate,
a number of shares of ParentCo Common Stock with an aggregate value equal to (a) $770,000,000 minus (b) the amount, if any, by which
the Target Net Working Capital Amount exceeds the Net Working Capital by more than $500,000, plus (c) the amount, if any, by which the
Net Working Capital exceeds the Target Net Working Capital Amount by more than $500,000 (but not less than zero), minus (d) the amount,
if any, by which the Closing Net Debt exceeds the Target Net Debt, by more than $500,000 (but not less than zero), plus (e) the amount,
if any, by which the Target Net Debt exceeds Closing Net Debt, minus (f) the amount, if any, by which the Company Transaction Expenses
exceed the Target Company Transaction Expenses (but not less than zero)(such resulting amount, the “AIRO Merger Consideration”),
with each share of ParentCo Common Stock valued at the Per Share Price. The AIRO Merger Consideration shall be allocated among the Company
Stockholders in accordance with their respective Pro Rata Shares.
(b) Additionally,
after the Closing, subject to the terms and conditions set forth in this Agreement, the Company Stockholders and the Sponsor shall have
the contingent right to receive Earnout Shares as additional consideration if the requirements for receipt of such Earnout Share Payments
as set forth in Section 2.14 are satisfied.
(c) Additionally,
after the Closing, subject to the terms and conditions set forth in this Agreement, ParentCo shall assume the Benefit Plans of the Company
or create new Benefit Plans, including, but not limited to, equity incentive plans.
(d) Additionally,
at Closing, subject to the terms and conditions set forth in this Agreement, ParentCo shall assume the Company Options, and convert them
to options for ParentCo Common Stock with substantially similar economic terms.
(e) Additionally,
(i) for each Extension obtained by Sponsor, Sponsor will be entitled to receive from ParentCo at Closing 1.00 additional share of ParentCo
Common Stock for each dollar Sponsor deposited into the Trust Account necessary to obtain each Extension; and (ii) Sponsor will be entitled
to receive from ParentCo at Closing 1.00 additional share of ParentCo Common Stock for each dollar Sponsor deposited into the Trust Account
to be used by ParentCo as working capital. Any such deposits, whether for an Extension or for working capital purposes, would be made
by Sponsor in the form of a loan to ParentCo, and any such loans will be non-interest bearing and payable by ParentCo upon the Closing
in accordance with ParentCo’s Organizational Documents and the IPO Prospectus.
(f) Finally,
Sponsor will be entitled to receive from the ParentCo upon the Closing $1,500,000 in cash as consideration for advisory services provided
to ParentCo by the Sponsor.
2.8 Effect
of Second Merger on Company Securities. At the Second Effective Time, by virtue of the Second Merger and without any action on the
part of any Party or the holders of any Company Securities or the holders of any shares of capital stock of ParentCo or AIRO Merger Sub:
(a) Company
Stock. Subject to clause (b) below, all shares of Company Stock issued and outstanding immediately prior to the Second Effective
Time will automatically be cancelled and cease to exist in exchange for the right to receive the AIRO Merger Consideration (as it may
be adjusted after the Closing pursuant to Section 2.11), with each Company Stockholder being entitled to receive its Pro Rata
Share of the AIRO Merger Consideration, without interest, upon delivery of the AIRO Transmittal Documents in accordance with Section
2.9. As of the Second Effective Time, each Company Stockholder shall cease to have any other rights in and to the Company or the
AIRO Surviving Corporation (other than the rights set forth in Section 2.13 below).
(b) Treasury
Stock. Notwithstanding clause (a) above or any other provision of this Agreement to the contrary, at the Second Effective Time, if
there are any Company Securities that are owned by the Company as treasury shares or any Company Securities owned by any direct or indirect
Subsidiary of the Company immediately prior to the Second Effective Time, such Company Securities shall be cancelled and shall cease
to exist without any conversion thereof or payment therefor.
(c) Dissenting
Shares. Each of the Dissenting Shares issued and outstanding immediately prior to the Second Effective Time shall be cancelled and
cease to exist in accordance with Section 2.13 and shall thereafter represent only the right to receive the applicable payments
set forth in Section 2.13.
(d) Company
Convertible Securities. Any Company Convertible Security, if not exercised or converted prior to the Effective Time, shall be cancelled,
retired and terminated and cease to represent a right to acquire, be exchanged for or convert into shares of Company Stock.
2.9 Surrender
of Company Securities and Disbursement of AIRO Merger Consideration.
(a) Prior
to the Second Effective Time, ParentCo shall engage the Exchange Agent for the purpose of exchanging the certificates representing Company
Stock (“Company Certificates”). At or prior to the Second Effective Time, ParentCo shall deposit, or cause
to be deposited, with the Exchange Agent the AIRO Merger Consideration. At or prior to the Second Effective Time, ParentCo shall send,
or shall cause the Exchange Agent to send, to each Company Stockholder, a Letter of Transmittal (which shall specify that the delivery
of Company Certificates in respect of the AIRO Merger Consideration shall be effected, and risk of loss and title shall pass, only upon
proper delivery of the Company Certificates to the Exchange Agent (or a Lost Certificate Affidavit)) for use in such exchange.
(b) Each
Company Stockholder shall be entitled to receive its Pro Rata Share of the AIRO Merger Consideration in respect of the Company Stock
represented by the Company Certificate(s) (excluding any Company Securities described in Sections 2.8(b) or 2.8(c)), as
soon as reasonably practicable after the Second Effective Time, but subject to the delivery to the Exchange Agent of the following items
prior thereto (collectively, the “AIRO Transmittal Documents”): (i) the Company Certificate(s) for its Company
Stock (or a Lost Certificate Affidavit), together with a properly completed and duly executed Letter of Transmittal and (ii) such other
documents as may be reasonably requested by the Exchange Agent or ParentCo. Until so surrendered, each Company Certificate shall represent
after the Second Effective Time for all purposes only the right to receive such portion of the AIRO Merger Consideration (as it may be
adjusted after the Closing pursuant to Section 2.11) attributable to such Company Certificate.
(c) If
any portion of the AIRO Merger Consideration is to be delivered or issued to a Person other than the Person in whose name the surrendered
Company Certificate is registered immediately prior to the Second Effective Time, it shall be a condition to such delivery that (i) the
transfer of such Company Stock shall have been permitted in accordance with the terms of the Company’s Organizational Documents
and any stockholders agreement with respect to the Company, each as in effect immediately prior to the Second Effective Time, (ii) such
Company Certificate shall be properly endorsed or shall otherwise be in proper form for transfer and, (iii) the recipient such portion
of the AIRO Merger Consideration, or the Person in whose name such portion of the AIRO Merger Consideration is delivered or issued, shall
have already executed and delivered, if a Significant Company Holder, counterparts to a Lock-Up Agreement, and such other AIRO Transmittal
Documents as are reasonably deemed necessary by the Exchange Agent or ParentCo and (iv) the Person requesting such delivery shall pay
to the Exchange Agent any transfer or other Taxes required as a result of such delivery to a Person other than the registered holder
of such Company Certificate or establish to the satisfaction of the Exchange Agent that such Tax has been paid or is not payable.
(d) Notwithstanding
anything to the contrary contained herein, in the event that any Company Certificate shall have been lost, stolen or destroyed, in lieu
of delivery of a Company Certificate to the Exchange Agent, the Company Stockholder may instead deliver to the Exchange Agent a Lost
Certificate Affidavit, which at the reasonable discretion of ParentCo may include a requirement that the owner of such lost, stolen or
destroyed Company Certificate deliver a bond in such sum as it may reasonably direct as indemnity against any claim that may be made
against ParentCo or the AIRO Surviving Corporation with respect to the shares of Company Stock represented by the Company Certificates
alleged to have been lost, stolen or destroyed. Any Lost Certificate Affidavit properly delivered in accordance with this Section
2.9(d) shall be treated as a Company Certificate for all purposes of this Agreement.
(e) After
the Second Effective Time, there shall be no further registration of transfers of Company Stock. If, after the Second Effective Time,
Company Certificates are presented to the AIRO Surviving Corporation, ParentCo or the Exchange Agent, they shall be cancelled and exchanged
for the applicable portion of the AIRO Merger Consideration provided for, and in accordance with the procedures set forth in this Section
2.9. No dividends or other distributions declared or made after the date of this Agreement with respect to ParentCo Common Stock
with a record date after the Second Effective Time will be paid to the holders of any Company Certificates that have not yet been surrendered
with respect to ParentCo Common Stock to be issued upon surrender thereof until the holders of record of such Company Certificates shall
surrender such certificates (or provide a Lost Certificate Affidavit), if applicable, and provide the other AIRO Transmittal Documents.
Subject to applicable Law, following surrender of any such Company Certificates (or delivery of a Lost Certificate Affidavit), if applicable,
and delivery of the other Transmittal Documents, ParentCo shall promptly deliver to the record holders thereof, without interest, the
certificates representing ParentCo Common Stock issued in exchange therefor and the amount of any such dividends or other distributions
with a record date after the Second Effective Time theretofore paid with respect to such ParentCo Common Stock.
(f) All
securities issued upon the surrender of Company Securities in accordance with the terms hereof shall be deemed to have been issued in
full satisfaction of all rights pertaining to such Company Securities. Any portion of the AIRO Merger Consideration made available to
the Exchange Agent pursuant to Section 2.9(a) that remains unclaimed by Company Stockholders two (2) years after the Second Effective
Time shall be returned to ParentCo, upon demand, and any such Company Stockholder who has not exchanged its Company Stock for the applicable
portion of the AIRO Merger Consideration in accordance with this Section 2.9 prior to that time shall thereafter look only to
ParentCo for payment of the portion of the AIRO Merger Consideration in respect of such shares of Company Stock without any interest
thereon (but with any dividends paid with respect thereto). Notwithstanding the foregoing, none of the AIRO Surviving Corporation, ParentCo
or any Party shall be liable to any Person for any amount properly paid to a public official pursuant to any applicable abandoned property,
escheat or similar law.
(g) Notwithstanding
anything to the contrary contained herein, no fraction of a share of ParentCo Common Stock will be issued by virtue of the Second Merger
or the transactions contemplated hereby (including the Earnout Payments), and each Person who would otherwise be entitled to a fraction
of a share of ParentCo Common Stock (after aggregating all fractional shares of ParentCo Common Stock that otherwise would be received
by such holder) shall instead have the number of shares of ParentCo Common Stock issued to such Person rounded down in the aggregate
to the nearest whole share of ParentCo Common Stock.
2.10 Effect
of Transaction on AIRO Merger Sub Stock. At the Second Effective Time, by virtue of the Second Merger and without any action on the
part of any Party or the holders of any Company Securities or the holders of any shares of capital stock of ParentCo or AIRO Merger Sub,
each share of AIRO Merger Sub Common Stock outstanding immediately prior to the Second Effective Time shall be converted into an equal
number of shares of common stock of the AIRO Surviving Corporation, with the same rights, powers and privileges as the shares so converted
and shall constitute the only outstanding shares of capital stock of the AIRO Surviving Corporation.
2.11 Closing
Calculations. At least three (3) Business Days prior to the Closing Date, the Company shall deliver to Kernel a statement (the “Closing
Statement”) certified by the Company’s chief financial officer (the “CFO”) setting forth
(i) a consolidated balance sheet of the Target Companies as of the Reference Time; and (ii) a calculation of the Company’s Closing
Net Debt, Imminent Closing Net Debt, Net Working Capital and Company Transaction Expenses, in each case, as of the Reference Time, and
the resulting AIRO Merger Consideration and AIRO Merger Consideration Shares based on these calculations, in reasonable detail including
for each component thereof, along with the amount owed to each creditor of any of the Target Companies, and bank statements and other
evidence reasonably necessary to confirm such calculations. Promptly upon delivering the Closing Statement to Kernel, if requested by
Kernel, the Company will meet with Kernel to review and discuss the Closing Statement and the Company will consider in good faith Kernel’s
comments to the Closing Statement and make any appropriate adjustments to the Closing Statement prior to the Closing, which adjusted
Closing Statement, as mutually approved by the Company and Kernel both acting reasonably and in good faith, shall thereafter become the
Closing Statement for all purposes of this Agreement. The Closing Statement and the determinations contained therein shall be prepared
in accordance with the Accounting Principles and otherwise in accordance with this Agreement.
2.12 Taking
of Necessary Action; Further Action. If, at any time after the Second Effective Time, any further action is necessary or desirable
to carry out the purposes of this Agreement and to vest the AIRO Surviving Corporation with full right, title and possession to all assets,
property, rights, privileges, powers and franchises of the Company and AIRO Merger Sub, the officers and directors of the Company and
AIRO Merger Sub are fully authorized in the name of their respective corporations or otherwise to take, and will take, all such lawful
and necessary action, so long as such action is not inconsistent with this Agreement.
2.13 Appraisal
and Dissenter’s Rights. No Company Stockholder who has validly exercised its appraisal rights pursuant to Section 262 of the
DGCL (an “AIRO Dissenting Stockholder”) with respect to its Company Stock (such shares, “AIRO Dissenting
Shares”) shall be entitled to receive any portion of the AIRO Merger Consideration with respect to the AIRO Dissenting
Shares owned by such AIRO Dissenting Stockholder unless and until such AIRO Dissenting Stockholder shall have effectively withdrawn or
lost its appraisal rights under the DGCL. Each AIRO Dissenting Stockholder shall be entitled to receive only the payment resulting from
the procedure set forth in Section 262 of the DGCL with respect to the AIRO Dissenting Shares owned by such AIRO Dissenting Stockholder.
The Company shall give ParentCo and ParentCo Representative (i) prompt notice of any written demands for appraisal, attempted withdrawals
of such demands, and any other instruments served pursuant to applicable Laws that are received by the Company relating to any AIRO Dissenting
Stockholder’s rights of appraisal and (ii) the opportunity to direct all negotiations and proceedings with respect to demand for
appraisal under the DGCL. The Company shall not, except with the prior written consent of ParentCo and ParentCo Representative, voluntarily
make any payment with respect to any demands for appraisal, offer to settle or settle any such demands or approve any withdrawal of any
such demands. Notwithstanding anything to the contrary contained in this Agreement, for all purposes of this Agreement, the AIRO Merger
Consideration shall be reduced by the Pro Rata Share of any AIRO Dissenting Stockholders attributable to any AIRO Dissenting Shares and
the AIRO Dissenting Stockholders shall have no rights to any portion of the AIRO Merger Consideration with respect to any AIRO Dissenting
Shares.
2.14 Earnouts.
(a) After
the Closing, subject to the terms and conditions set forth herein, (I) the Company Stockholders shall have the contingent right to receive
shares of ParentCo Common Stock with an aggregate value of up to $330,000,000 (II) the Sponsor shall have the contingent right to receive
shares of ParentCo Common Stock with an aggregate value of up to $33,000,000 (in the case of each of (I) and (II), subject to adjustment
for share splits, share dividends, combinations, recapitalizations and the like after the Closing,
including to account for any equity securities into which such shares are exchanged or converted) (the “Earnout Shares”),
as additional consideration from ParentCo based on ParentCo’s revenue and EBITDA performance, as follows:
(i) In
the event ParentCo’s revenue for any full 12-month period (each an “Earnout Period”) commencing on or
after the Closing Date (the “Earnout Start Date”) and ending on or before the last day of the thirteenth full
calendar quarter following the Closing Date (the “Earnout End Date”, and the period between the Earnout Start
Date and the Earnout End Date, the “Earnout Eligibility Period”) is greater than or equal to $42,600,000 for
the first time during the Earnout Eligibility Period, then, subject to the terms and conditions of this Agreement, ParentCo shall issue
to each of the Company Stockholders such Company Stockholder’s Pro Rata Share of Earnout Shares with a value equal to $66,000,000
and the Sponsor shall be issued Earnout Shares with a value equal to $6,600,000.
(ii) In
the event ParentCo’s revenue for any Earnout Period is greater than or equal to $141,400,000 for the first time during the Earnout
Eligibility Period, then, subject to the terms and conditions of this Agreement, ParentCo shall issue to each of the Company Stockholders
such Company Stockholder’s Pro Rata Share of Earnout Shares with a value equal to $66,000,000 and the Sponsor shall be issued Earnout
Shares with a value equal to $6,600,000.
(iii) In
the event ParentCo’s revenue for any Earnout Period is greater than or equal to $358,900,000 for the first time during the Earnout
Eligibility Period, then, subject to the terms and conditions of this Agreement, ParentCo shall issue to each of the Company Stockholders
such Company Stockholder’s Pro Rata Share of Earnout Shares with a value equal to $66,000,000 and the Sponsor shall be issued Earnout
Shares with a value equal to $6,600,000.
(iv) In
the event ParentCo’s EBITDA for any Earnout Period is greater than or equal to $(19,300,000) for the first time during the Earnout
Eligibility Period, then, subject to the terms and conditions of this Agreement, ParentCo shall issue to each of the Company Stockholders
such Company Stockholder’s Pro Rata Share of Earnout Shares with a value equal to $44,000,000 and the Sponsor shall be issued Earnout
Shares with a value equal to $4,400,000.
(v) In
the event ParentCo’s EBITDA for any Earnout Period is greater than or equal to $4,000,000 for the first time during the Earnout
Eligibility Period, then, subject to the terms and conditions of this Agreement, ParentCo shall issue to each of the Company Stockholders
such Company Stockholder’s Pro Rata Share of Earnout Shares with a value equal to $44,000,000 and the Sponsor shall be issued Earnout
Shares with a value equal to $4,400,000.
(vi) In
the event ParentCo’s EBITDA for any Earnout Period is greater than or equal to $98,600,000 for the first time during the Earnout
Eligibility Period, then, subject to the terms and conditions of this Agreement, ParentCo shall issue to each of the Company Stockholders
such Company Stockholder’s Pro Rata Share of Earnout Shares with a value equal to $44,000,000 and the Sponsor shall be issued Earnout
Shares with a value equal to $4,400,000.
(b) The
CFO will monitor ParentCo’s revenue and EBITDA regularly, and as soon as practicable (and in any event within ten (10) Business
Days) after the end of each month following the Effective Date through the earlier of (x) ten (10) Business Days following the end of
the Earnout Eligibility Period and (y) the date, if any, as of which all of the Earnout Shares have been finally determined pursuant
to this Section 2.14 to have been earned, the CFO will prepare and deliver to each Representative Party a written statement (each,
an “Earnout Statement”) that sets forth (i) the Company’s revenue for the most recently completed Earnout
Period, (ii) the Company’s EBITDA for the previous Earnout Period and (ii) whether any Earnout Shares have been earned as a result
of the Company’s performance during the most recently completed Earnout Period. Each Representative Party will have ten (10) Business
Days after its receipt of an Earnout Statement to review it. Each Representative Party, and its Representatives on its behalf, may make
inquiries to the CFO and related ParentCo and Company personnel and advisors regarding questions concerning or disagreements with the
Earnout Statement arising in the course of their review thereof, and ParentCo and the Company shall provide reasonable cooperation in
connection therewith. If either Representative Party has any objections to an Earnout Statement, such Representative Party shall deliver
to ParentCo (to the attention of the CFO) and the other Representative Party a statement setting forth its objections thereto (in reasonable
detail). If such written statement is not delivered by a Representative Party within twenty (20) Business Days following the date of
delivery of each Earnout Statement, then such Representative Party will have waived its right to contest such Earnout Statement and the
calculation of the revenue and EBITDA calculations during the applicable portion of the Earnout Period (and whether the Earnout Shares
have been earned) as set forth therein. If such written statement is delivered by a Representative Party within such twenty (20) Business
Day period, then the Seller Representative and ParentCo Representative shall negotiate in good faith to resolve any such objections for
a period of ten (10) Business Day thereafter. If the Representative Parties do not reach a final resolution within such ten (10) Business
Day period, then upon the written request of either Representative Party, the Representative Parties will refer the dispute to arbitration
in accordance with the provision of Section 10.4.
(c) If
there is a final determination in accordance with Section 2.14(b) that the Company Stockholders have earned Earnout Shares, the
applicable Earnout Shares, will become due upon such final determination and ParentCo will deliver such shares within ten (10) Business
Days thereafter.
(d) Following
the Closing, ParentCo and its Subsidiaries, including the Target Companies, will be entitled to operate their respective businesses based
upon their respective business requirements. Each of ParentCo and its Subsidiaries, including the Target Companies, will be permitted,
following the Closing, to make changes at its sole discretion to its operations, organization, personnel, accounting practices and other
aspects of its business, including actions that may have an impact on, the share price of ParentCo Common Stock and the ability of the
Company Stockholders to earn the Earnout Shares, and no Person will have any right to claim the loss of all or any portion of any Earnout
Shares or other damages as a result of such decisions.
Article
III
CLOSING
3.1 Closing.
Subject to the satisfaction or waiver of the conditions set forth in Article VII, the consummation of the transactions contemplated
by this Agreement (the “Closing”) shall take place at such place (including remotely), date and time to be
agreed upon by ParentCo and the Company, which date shall be no later than the second (2nd) Business Day after all the Closing
conditions to this Agreement have been satisfied or waived (the date and time at which the Closing is actually held being the “Closing
Date”).
Article
IV
REPRESENTATIONS AND WARRANTIES OF PARENTCO, KERNEL, Kernel merger sub and airo merger sub
Except
as set forth in (a) Kernel’s SEC Reports filed or submitted on or prior to the date hereof (excluding any disclosures in any risk
factors section that do not constitute statements of fact or factual matters, disclosures in any forward-looking statements disclaimer
and other disclosures that are generally cautionary, predictive or forward-looking in nature, (b) as otherwise explicitly contemplated
by this Agreement and (c) the disclosure schedules delivered by Kernel to the Company on the date hereof (the “Kernel Disclosure
Schedules”), the Section numbers of which are numbered to correspond to the Section numbers of this Agreement to which
they refer, ParentCo, Kernel, Kernel Merger Sub and AIRO Merger Sub represent and warrant to the Company, as of the date hereof and as
of the Closing, as follows:
4.1 Organization
and Standing. Each of ParentCo, Kernel, Kernel Merger Sub and AIRO Merger Sub is a company duly incorporated, validly existing and
in good standing under the Laws its jurisdiction of incorporation. ParentCo, Kernel Merger Sub and AIRO Merger Sub were organized with
the express purposes of completing the transactions contemplated herein and have not conducted any other business since their organization.
Kernel has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being
conducted. Kernel is duly qualified or licensed and in good standing to do business in each jurisdiction in which the character of the
property owned, leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary,
except where the failure to be so qualified or licensed or in good standing would not reasonably be expected to have a Material Adverse
Effect on Kernel. Kernel has heretofore made available to the Company accurate and complete copies of ParentCo’s, Kernel’s,
Kernel Merger Sub’s and AIRO Merger Sub’s Organizational Documents, as currently in effect. Neither ParentCo, Kernel, Kernel
Merger Sub nor AIRO Merger Sub are in violation of any provision of their applicable Organizational Documents in any material respect.
4.2 Authorization;
Binding Agreement. ParentCo, Kernel, Kernel Merger Sub and AIRO Merger Sub have all requisite corporate power and authority to execute
and deliver this Agreement and each Ancillary Document to which they are a party, to perform their obligations hereunder and thereunder
and to consummate the transactions contemplated hereby and thereby, subject to obtaining the Required Kernel Stockholder Approval. The
execution and delivery of this Agreement and each Ancillary Document to which they are a party and the consummation of the transactions
contemplated hereby and thereby (a) have been duly and validly authorized by the board of directors of ParentCo, Kernel, Kernel Merger
Sub and AIRO Merger Sub, and (b) other than the Required Kernel Stockholder Approval, no other corporate proceedings, other than as set
forth elsewhere in the Agreement, on the part of Kernel are necessary to authorize the execution and delivery of this Agreement and each
Ancillary Document to which it is a party or to consummate the transactions contemplated hereby and thereby. This Agreement has been,
and each Ancillary Document to which ParentCo, Kernel, Kernel Merger Sub or AIRO Merger Sub is a party shall be when delivered, duly
and validly executed and delivered by Kernel and, assuming the due authorization, execution and delivery of this Agreement and such Ancillary
Documents by the other Parties hereto and thereto, constitutes, or when delivered shall constitute, the valid and binding obligation
of ParentCo, Kernel, Kernel Merger Sub and AIRO Merger Sub (as applicable), enforceable against ParentCo, Kernel, Kernel Merger Sub and
AIRO Merger Sub (as applicable) in accordance with its terms, except to the extent that enforceability thereof may be limited by applicable
bankruptcy, insolvency, reorganization and moratorium laws and other laws of general application affecting the enforcement of creditors’
rights generally or by any applicable statute of limitation or by any valid defense of set-off or counterclaim, and the fact that equitable
remedies or relief (including the remedy of specific performance) are subject to the discretion of the court from which such relief may
be sought (collectively, the “Enforceability Exceptions”).
4.3 Governmental
Approvals. Except as otherwise described in Schedule 4.3, no Consent of or with any Governmental Authority, on the part of
ParentCo, Kernel, Kernel Merger Sub and AIRO Merger Sub is required to be obtained or made in connection with the execution, delivery
or performance by Kernel of this Agreement and each Ancillary Document to which they are a party or the consummation by ParentCo, Kernel,
Kernel Merger Sub or AIRO Merger Sub of the transactions contemplated hereby and thereby, other than (a) pursuant to Antitrust Laws,
(b) such filings as contemplated by this Agreement, (c) any filings required with Nasdaq or the SEC with respect to the transactions
contemplated by this Agreement, (d) applicable requirements, if any, of the Securities Act, the Exchange Act, and/ or any state “blue
sky” securities Laws, and the rules and regulations thereunder, and (e) where the failure to obtain or make such Consents or to
make such filings or notifications, would not reasonably be expected to have a Material Adverse Effect on ParentCo, Kernel, Kernel Merger
Sub or AIRO Merger Sub.
4.4 Non-Contravention.
Except as otherwise described in Schedule 4.4, the execution and delivery by ParentCo, Kernel, Kernel Merger Sub and AIRO Merger
Sub of this Agreement and each Ancillary Document to which they are a party, the consummation by ParentCo, Kernel, Kernel Merger Sub
and AIRO Merger Sub of the transactions contemplated hereby and thereby, and compliance by ParentCo, Kernel, Kernel Merger Sub and AIRO
Merger Sub with any of the provisions hereof and thereof, will not (a) conflict with or violate any provision of ParentCo’s, Kernel’s,
Kernel Merger Sub’s and AIRO Merger Sub’s Organizational Documents, (b) subject to obtaining the Consents from Governmental
Authorities referred to in Section 4.3 hereof, and the waiting periods referred to therein having expired, and any condition precedent
to such Consent or waiver having been satisfied, conflict with or violate any Law, Order or Consent applicable to ParentCo, Kernel, Kernel
Merger Sub and AIRO Merger Sub or any of their properties or assets, or (c) (i) violate, conflict with or result in a breach of, (ii)
constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, (iii) result in the
termination, withdrawal, suspension, cancellation or modification of, (iv) accelerate the performance required by Kernel under, (v) result
in a right of termination or acceleration under, (vi) give rise to any obligation to make payments or provide compensation under, (vii)
result in the creation of any Lien upon any of the properties or assets of Kernel under, (viii) give rise to any obligation to obtain
any third party Consent or provide any notice to any Person or (ix) give any Person the right to declare a default, exercise any remedy,
claim a rebate, chargeback, penalty or change in delivery schedule, accelerate the maturity or performance, cancel, terminate or modify
any right, benefit, obligation or other term under, any of the terms, conditions or provisions of, any Kernel Material Contract, except
for any deviations from any of the foregoing clauses (a), (b) or (c) that would not reasonably be expected to have a Material Adverse
Effect on ParentCo, Kernel, Kernel Merger Sub or AIRO Merger Sub.
4.5 Capitalization.
(a) Kernel
is authorized to issue (i) 1,000,000 shares of Old Kernel Preferred Stock, (ii) 500,000,000 shares of Old Kernel Class A Stock and (iii)
50,000,000 shares of Old Kernel Class B Stock. The issued and outstanding Kernel Securities as of the date of this Agreement are set
forth on Schedule 4.5(a). All outstanding Kernel Securities are duly authorized, validly issued, fully paid and non-assessable
and are not subject to or issued in violation of any purchase option, right of first refusal, preemptive right, subscription right or
any similar right under any provision of the Companies Act, Kernel’s Organizational Documents or any Contract to which Kernel is
a party. None of the outstanding Kernel Securities have been issued in violation of any applicable securities Laws. Prior to giving effect
to the transactions contemplated by this Agreement, other than Kernel Merger Sub, AIRO Merger Sub and ParentCo, Kernel does not have
any Subsidiaries or own any equity interests in any other Person.
(b) Prior
to giving effect to the First Merger, ParentCo is authorized to issue 10,000 shares of Kernel Merger Sub Common Stock, par value $0.001,
of which all 10,000 shares are issued and outstanding, and all of which are owned by Kernel. There are no (i) outstanding options, warrants,
puts, calls, convertible securities, preemptive or similar rights, (ii) bonds, debentures, notes or other Indebtedness having general
voting rights or that are convertible or exchangeable into securities having such rights or (iii) subscriptions or other rights, agreements,
arrangements, Contracts or commitments of any character (other than this Agreement and the Ancillary Documents), (A) relating to the
issued or unissued shares of ParentCo or (B) obligating ParentCo to issue, transfer, deliver or sell or cause to be issued, transferred,
delivered, sold or repurchased any options or shares or securities convertible into or exchangeable for such shares, or (C) obligating
ParentCo to grant, extend or enter into any such option, warrant, call, subscription or other right, agreement, arrangement or commitment
for such capital shares. There are no outstanding obligations of ParentCo to repurchase, redeem or otherwise acquire any shares of ParentCo
or to provide funds to make any investment (in the form of a loan, capital contribution or otherwise) in any Person. There are no shareholders
agreements, voting trusts or other agreements or understandings to which ParentCo is a party with respect to the voting of any shares
of ParentCo.
(c) Prior
to giving effect to the First Merger, Kernel Merger Sub is authorized to issue 10,000 shares of Kernel Merger Sub Common Stock, par value
$0.001, of which all 10,000 shares are issued and outstanding, and all of which are owned by Kernel. There are no (i) outstanding options,
warrants, puts, calls, convertible securities, preemptive or similar rights, (ii) bonds, debentures, notes or other Indebtedness having
general voting rights or that are convertible or exchangeable into securities having such rights or (iii) subscriptions or other rights,
agreements, arrangements, Contracts or commitments of any character (other than this Agreement and the Ancillary Documents), (A) relating
to the issued or unissued shares of Kernel Merger Sub or (B) obligating Kernel Merger Sub to issue, transfer, deliver or sell or cause
to be issued, transferred, delivered, sold or repurchased any options or shares or securities convertible into or exchangeable for such
shares, or (C) obligating Kernel Merger Sub to grant, extend or enter into any such option, warrant, call, subscription or other right,
agreement, arrangement or commitment for such capital shares. There are no outstanding obligations of Kernel Merger Sub to repurchase,
redeem or otherwise acquire any shares of Kernel Merger Sub or to provide funds to make any investment (in the form of a loan, capital
contribution or otherwise) in any Person. There are no shareholders agreements, voting trusts or other agreements or understandings to
which Kernel Merger Sub is a party with respect to the voting of any shares of Kernel Merger Sub.
(d) Prior
to giving effect to the Second Merger, AIRO Merger Sub is authorized to issue 10,000 shares of AIRO Merger Sub Common Stock, par value
$0.001, of which all 10,000 shares are issued and outstanding, and all of which are owned by Kernel. There are no (i) outstanding options,
warrants, puts, calls, convertible securities, preemptive or similar rights, (ii) bonds, debentures, notes or other Indebtedness having
general voting rights or that are convertible or exchangeable into securities having such rights or (iii) subscriptions or other rights,
agreements, arrangements, Contracts or commitments of any character (other than this Agreement and the Ancillary Documents), (A) relating
to the issued or unissued shares of AIRO Merger Sub or (B) obligating AIRO Merger Sub to issue, transfer, deliver or sell or cause to
be issued, transferred, delivered, sold or repurchased any options or shares or securities convertible into or exchangeable for such
shares, or (C) obligating AIRO Merger Sub to grant, extend or enter into any such option, warrant, call, subscription or other right,
agreement, arrangement or commitment for such capital shares. There are no outstanding obligations of AIRO Merger Sub to repurchase,
redeem or otherwise acquire any shares of AIRO Merger Sub or to provide funds to make any investment (in the form of a loan, capital
contribution or otherwise) in any Person. There are no shareholders agreements, voting trusts or other agreements or understandings to
which AIRO Merger Sub is a party with respect to the voting of any shares of AIRO Merger Sub.
(e) Except
as set forth in Schedule 4.5(a) there are no (i) outstanding options, warrants, puts, calls, convertible securities, preemptive
or similar rights, (ii) bonds, debentures, notes or other Indebtedness having general voting rights or that are convertible or exchangeable
into securities having such rights or (iii) subscriptions or other rights, agreements, arrangements, Contracts or commitments of any
character (other than this Agreement and the Ancillary Documents), (A) relating to the issued or unissued shares of Kernel or (B) obligating
Kernel to issue, transfer, deliver or sell or cause to be issued, transferred, delivered, sold or repurchased any options or shares or
securities convertible into or exchangeable for such shares, or (C) obligating Kernel to grant, extend or enter into any such option,
warrant, call, subscription or other right, agreement, arrangement or commitment for such capital shares. Other than the Redemption or
as expressly set forth in this Agreement, there are no outstanding obligations of Kernel to repurchase, redeem or otherwise acquire any
shares of Kernel or to provide funds to make any investment (in the form of a loan, capital contribution or otherwise) in any Person.
Except as set forth in Schedule 4.5(e), there are no shareholders agreements, voting trusts or other agreements or understandings
to which Kernel is a party with respect to the voting of any shares of Kernel.
(f) All
Indebtedness of Kernel as of the date of this Agreement is disclosed on Schedule 4.5(f). No Indebtedness of Kernel contains any
restriction upon (i) the prepayment of any of such Indebtedness, (ii) the incurrence of Indebtedness by Kernel or (iii) the ability of
Kernel to grant any Lien on its properties or assets.
(g) Since
the date of formation of Kernel, and except as contemplated by this Agreement, Kernel has not declared or paid any distribution or dividend
in respect of its shares and has not repurchased, redeemed or otherwise acquired any of its shares, and Kernel’s board of directors
has not authorized any of the foregoing.
4.6 SEC
Filings and Kernel Financials.
(a) Kernel,
since the IPO, has filed all forms, reports, schedules, statements, registration statements, prospectuses and other documents required
to be filed or furnished by Kernel with the SEC under the Securities Act and/or the Exchange Act, together with any amendments, restatements
or supplements thereto, and will file all such forms, reports, schedules, statements and other documents required to be filed subsequent
to the date of this Agreement. Except to the extent available on the SEC’s web site through EDGAR, Kernel has delivered to the
Company copies in the form filed with the SEC of all of the following: (i) Kernel’s annual reports on Form 10-K for each fiscal
year of Kernel beginning with the first year Kernel was required to file such a form, (ii) Kernel’s quarterly reports on Form 10-Q
for each fiscal quarter that Kernel filed such reports to disclose its quarterly financial results in each of the fiscal years of Kernel
referred to in clause (i) above, (iii) all other forms, reports, registration statements, prospectuses and other documents (other than
preliminary materials) filed by Kernel with the SEC since the beginning of the first fiscal year referred to in clause (i) above (the
forms, reports, registration statements, prospectuses and other documents referred to in clauses (i), (ii) and (iii) above, whether or
not available through EDGAR, are, collectively, the “SEC Reports”) and (iv) all certifications and statements
required by (A) Rules 13a-14 or 15d-14 under the Exchange Act, and (B) 18 U.S.C. §1350 (Section 906 of SOX) with respect to any
report referred to in clause (i) above (collectively, the “Public Certifications”). The SEC Reports (x) were
prepared in all material respects in accordance with the requirements of the Securities Act and the Exchange Act, as the case may be,
and the rules and regulations thereunder and (y) did not, as of their respective effective dates (in the case of SEC Reports that are
registration statements filed pursuant to the requirements of the Securities Act) and at the time they were filed with the SEC (in the
case of all other SEC Reports) contain any untrue statement of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not
misleading. The Public Certifications are each true as of their respective dates of filing. As used in this Section 4.6(a), the
term “file” shall be broadly construed to include any manner permitted by SEC rules and regulations in which a document or
information is furnished, supplied or otherwise made available to the SEC. As of the date of this Agreement, (A) the Old Kernel Public
Units, the shares of Old Kernel Class A Common Stock and the Old Kernel Public Warrants are listed on Nasdaq, (B) Kernel has not received
any written deficiency notice from Nasdaq relating to the continued listing requirements of such Kernel Securities, (C) there are no
Actions pending or, to the Knowledge of Kernel, threatened against Kernel by the Financial Industry Regulatory Authority with respect
to any intention by such entity to suspend, prohibit or terminate the quoting of such Kernel Securities on Nasdaq and (D) such Kernel
Securities are in compliance with all of the applicable corporate governance rules of Nasdaq.
(b) The
financial statements and notes of Kernel contained or incorporated by reference in the SEC Reports (the “Kernel Financials”),
fairly present in all material respects the financial position and the results of operations, changes in shareholders’ equity,
and cash flows of Kernel at the respective dates of and for the periods referred to in such financial statements, all in accordance with
(i) GAAP methodologies applied on a consistent basis throughout the periods involved and (ii) Regulation S-X or Regulation S-K, as applicable
(except as may be indicated in the notes thereto and for the omission of notes and audit adjustments in the case of unaudited quarterly
financial statements to the extent permitted by Regulation S-X or Regulation S-K, as applicable).
(c) Except
as and to the extent reflected or reserved against in Kernel Financials, Kernel has not incurred any Liabilities or obligations of the
type required to be reflected on a balance sheet in accordance with GAAP that are not adequately reflected or reserved on or provided
for in Kernel Financials, other than Liabilities of the type required to be reflected on a balance sheet in accordance with GAAP that
have been incurred since Kernel’s formation in the ordinary course of business.
4.7 Absence
of Certain Changes. As of the date of this Agreement, except as set forth in Schedule 4.7, Kernel has, (a) to the Knowledge
of Kernel, since its formation, conducted no business other than its formation, the public offering of its securities (and the related
private offerings), public reporting and its search for an initial Business Combination as described in the IPO Prospectus (including
the investigation of the Target Companies and the negotiation and execution of this Agreement) and related activities and (b) since its
formation, not been subject to a Material Adverse Effect on Kernel.
4.8 Compliance
with Laws. Kernel is, and has since its formation been, in compliance with all Laws applicable to it and the conduct of its business
except for such noncompliance which would not reasonably be expected to have a Material Adverse Effect on Kernel, and Kernel has not
received written notice alleging any violation of applicable Law in any material respect by Kernel.
4.9 Actions;
Orders; Permits. There is no pending or, to the Knowledge of Kernel, threatened material Action to which Kernel is subject which
would reasonably be expected to have a Material Adverse Effect on Kernel. There is no material Action that Kernel has pending against
any other Person. Kernel is not subject to any material Orders of any Governmental Authority, nor are any such Orders pending. Kernel
holds all material Permits necessary to lawfully conduct its business as presently conducted, and to own, lease and operate its assets
and properties, all of which are in full force and effect, except where the failure to hold such Consent or for such Consent to be in
full force and effect would not reasonably be expected to have a Material Adverse Effect on Kernel.
4.10 Taxes
and Returns.
(a) Kernel
has timely filed, or caused to be timely filed, all material Tax Returns required to be filed by it, which such Tax Returns are accurate
and complete in all material respects, and has paid, collected or withheld, or caused to be paid, collected or withheld, all material
Taxes required to be paid, collected or withheld, other than such Taxes for which adequate reserves in Kernel Financials have been established
in accordance with GAAP. Schedule 4.10(a) sets forth each jurisdiction where Kernel files or is required to file a Tax Return.
There are no audits, examinations, investigations or other proceedings pending against Kernel in respect of any Tax, and Kernel has not
been notified in writing of any proposed Tax claims or assessments against Kernel (other than, in each case, claims or assessments for
which adequate reserves in Kernel Financials have been established in accordance with GAAP or are immaterial in amount). There are no
Liens with respect to any Taxes upon any of Kernel’s assets, other than Permitted Liens. Kernel has no outstanding waivers or extensions
of any applicable statute of limitations to assess any material amount of Taxes. There are no outstanding requests by Kernel for any
extension of time within which to file any Tax Return or within which to pay any Taxes shown to be due on any Tax Return.
(b) Since
the date of its formation, Kernel has not (i) changed any Tax accounting methods, policies or procedures except as required by a change
in Law, (ii) made, revoked, or amended any material Tax election, (iii) filed any amended Tax Returns or claim for refund or (iv) entered
into any closing agreement affecting or otherwise settled or compromised any material Tax Liability or refund.
4.11 Employees
and Employee Benefit Plans. Kernel does not (a) have any paid employees or (b) maintain, sponsor, contribute to or otherwise have
any Liability under, any Benefit Plans.
4.12 Properties.
Kernel does not own, license or otherwise have any right, title or interest in any material Intellectual Property. Kernel does not own
or lease any material real property or material Personal Property.
4.13 Material
Contracts.
(a) Except
as set forth on Schedule 4.13(a), other than this Agreement and the Ancillary Documents, there are no Contracts to which Kernel
is a party or by which any of its properties or assets may be bound, subject or affected, which (i) creates or imposes a Liability greater
than $100,000, (ii) may not be cancelled by Kernel on less than sixty (60) days’ prior notice without payment of a material penalty
or termination fee or (iii) prohibits, prevents, restricts or impairs in any material respect any business practice of Kernel as its
business is currently conducted, any acquisition of material property by Kernel, or restricts in any material respect the ability of
Kernel to engage in business as currently conducted by it or compete with any other Person (each, a “Kernel Material Contract”).
All Kernel Material Contracts have been made available to the Company.
(b) With
respect to each Kernel Material Contract: (i) Kernel Material Contract was entered into at arms’ length and in the ordinary course
of business; (ii) Kernel Material Contract is legal, valid, binding and enforceable in all material respects against Kernel and, to the
Knowledge of Kernel, the other parties thereto, and is in full force and effect (except, in each case, as such enforcement may be limited
by the Enforceability Exceptions); (iii) Kernel is not in breach or default in any material respect, and no event has occurred that with
the passage of time or giving of notice or both would constitute such a breach or default in any material respect by Kernel, or permit
termination or acceleration by the other party, under such Kernel Material Contract; and (iv) to the Knowledge of Kernel, no other party
to any Kernel Material Contract is in breach or default in any material respect, and no event has occurred that with the passage of time
or giving of notice or both would constitute such a breach or default by such other party, or permit termination or acceleration by Kernel
under any Kernel Material Contract.
4.14 Transactions
with Affiliates. Schedule 4.14 sets forth a true, correct and complete list of the Contracts and arrangements that are in
existence as of the date of this Agreement under which there are any existing or future Liabilities or obligations between Kernel and
any (a) present or former director, officer or employee or Affiliate of Kernel, or any immediate family member of any of the foregoing,
or (b) record or beneficial owner of more than five percent (5%) of Kernel’s outstanding capital stock as of the date hereof.
4.15 Merger
Sub Activities. Since its formation, Merger Sub has not engaged in any business activities other than as contemplated by this Agreement,
does not own directly or indirectly any ownership, equity, profits or voting interest in any Person and has no assets or Liabilities
except those incurred in connection with this Agreement and the Ancillary Documents to which it is a party and the Transactions, and,
other than this Agreement and the Ancillary Documents to which it is a party, Merger Sub is not party to or bound by any Contract.
4.16 Investment
Company Act. Kernel is not an “investment company” or a Person directly or indirectly “controlled” by or
acting on behalf of an “investment company”, or required to register as an “investment company”, in each case
within the meaning of the Investment Company Act of 1940, as amended.
4.17 Finders
and Brokers. Except as set forth on Schedule 4.17, no broker, finder or investment banker is entitled to any brokerage, finder’s
or other fee or commission from Kernel, the Target Companies or any of their respective Affiliates in connection with the transactions
contemplated hereby based upon arrangements made by or on behalf of Kernel.
4.18 Ownership
of Merger Consideration. All shares of Kernel Common Stock to be issued and delivered to the Company Stockholders as Merger Consideration
in accordance with Article I shall be, upon issuance and delivery of such Kernel Common Stock, fully paid and non-assessable,
free and clear of all Liens, other than restrictions arising from applicable securities Laws, any applicable Lock-Up Agreement, and any
Liens incurred by any Company Stockholder, and the issuance and sale of such Kernel Common Stock pursuant to this Agreement will not
be subject to or give rise to any preemptive rights or rights of first refusal.
4.19 Certain
Business Practices.
(a) Neither
Kernel, nor any of its Representatives acting on its behalf, has (i) used any funds for unlawful contributions, gifts, entertainment
or other unlawful expenses relating to political activity, (ii) made any unlawful payment to foreign or domestic government officials
or employees, to foreign or domestic political parties or campaigns or violated any provision of the U.S. Foreign Corrupt Practices Act
of 1977 or any other local or foreign anti-corruption or bribery Law, (iii) made any other unlawful payment or (iv) since the formation
of Kernel, directly or indirectly, given or agreed to give any unlawful gift or similar benefit in any material amount to any customer,
supplier, governmental employee or other Person who is or may be in a position to help or hinder Kernel or assist it in connection with
any actual or proposed transaction.
(b) The
operations of Kernel are and have been conducted at all times in material compliance with money laundering statutes in all applicable
jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered
or enforced by any Governmental Authority, and no Action involving Kernel with respect to any of the foregoing is pending or, to the
Knowledge of Kernel, threatened.
(c) None
of Kernel or any of its directors or officers, or, to the Knowledge of Kernel, any other Representative acting on behalf of Kernel is
currently identified on the specially designated nationals or other blocked person list or otherwise currently subject to any U.S. sanctions
administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”), and Kernel has
not, in the last five (5) fiscal years, directly or indirectly, used any funds, or loaned, contributed or otherwise made available such
funds to any Subsidiary, joint venture partner or other Person, in connection with any sales or operations in any other country sanctioned
by OFAC or for the purpose of financing the activities of any Person currently subject to, or otherwise in violation of, any U.S. sanctions
administered by OFAC.
4.20 Insurance.
Schedule 4.20 lists all insurance policies held by Kernel relating to Kernel or its business, properties, assets, directors, officers
and employees, copies of which have been provided to the Company. All premiums due and payable under all such insurance policies have
been timely paid and Kernel is otherwise in material compliance with the terms of such insurance policies. All such insurance policies
are in full force and effect, and to the Knowledge of Kernel, there is no threatened termination of, or material premium increase with
respect to, any of such insurance policies. There have been no insurance claims made by Kernel. Kernel has each reported to its insurers
all claims and pending circumstances that would reasonably be expected to result in a claim, except where such failure to report such
a claim would not be reasonably likely to have a Material Adverse Effect on Kernel.
4.21 Independent
Investigation. Kernel has conducted its own independent investigation, review and analysis of the business, results of operations,
prospects, condition (financial or otherwise) or assets of the Target Companies, and acknowledges that it has been provided adequate
access to the personnel, properties, assets, premises, books and records, and other documents and data of the Target Companies for such
purpose. Kernel acknowledges and agrees that: (a) in making its decision to enter into this Agreement and to consummate the transactions
contemplated hereby, it has relied solely upon its own investigation and the express representations and warranties of the Company set
forth in this Agreement (including the related portions of the Company Disclosure Schedules) and in any certificate delivered to Kernel
pursuant to this Agreement, and the information provided by or on behalf of the Company for the Registration Statement; and (b) none
of the Company nor its respective Representatives have made any representation or warranty as to the Target Companies, or this Agreement,
except as expressly set forth in this Agreement (including the related portions of the Company Disclosure Schedules) or in any certificate
delivered to Kernel pursuant hereto, or with respect to the information provided by or on behalf of the Company for the Registration
Statement.
Article
V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except
as set forth in the disclosure schedules delivered by the Company to Kernel on the date hereof and as updated in accordance with Section
6.26 (the “Company Disclosure Schedules”), the Section numbers of which are numbered to correspond to the
Section numbers of this Agreement to which they refer, the Company hereby represents and warrants to Kernel, as of the date hereof and
as of the Closing, as follows:
5.1 Organization
and Standing. The Company is a corporation duly incorporated, validly existing and in good standing under the DGCL and has all requisite
corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted. Each Subsidiary
of the Company is a corporation or other entity duly formed, validly existing and in good standing under the Laws of its jurisdiction
of organization and has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business
as now being conducted and as proposed to be conducted except as would not have a Material Adverse Effect on the business and operations
of the Target Companies taken as a whole. Each Target Company is duly qualified or licensed and in good standing in the jurisdiction
in which it is incorporated or registered and in each other jurisdiction where it does business or operates to the extent that the character
of the property owned, or leased or operated by it or the nature of the business conducted by it makes such qualification or licensing
necessary. Schedule 5.1 lists all jurisdictions in which any Target Company is qualified to conduct business and all names other
than its legal name under which any Target Company does business. The Company has provided to ParentCo accurate and complete copies of
its Organizational Documents and the Organizational Documents of each of its Subsidiaries, each as amended to date and as currently in
effect. A correct and complete list of the directors and officers of each Target Company is set forth on Schedule 5.1. Except
as set forth in Schedule 5.1, no Person has any right to designate any director or officer of any Target Company. No Target Company
is in violation of any provision of its Organizational Documents.
5.2 Authorization;
Binding Agreement. The Company has all requisite corporate power and authority to execute and deliver this Agreement and each Ancillary
Document to which it is or is required to be a party, to perform the Company’s obligations hereunder and thereunder and to consummate
the transactions contemplated hereby and thereby, subject to obtaining the Required Company Stockholder Approval. The execution and delivery
of this Agreement and each Ancillary Document to which the Company is or is required to be a party and the consummation of the transactions
contemplated hereby and thereby, (a) have been duly and validly authorized by the Company’s board of directors in accordance with
the Company’s Organizational Documents, the DGCL, any other applicable Law or any Contract to which the Company or any of its stockholders
is a party or by which it or its securities are bound and (b) other than the Required Company Stockholder Approval, no other corporate
proceedings on the part of the Company are necessary to authorize the execution and delivery of this Agreement and each Ancillary Document
to which it is a party or to consummate the transactions contemplated hereby and thereby. This Agreement has been, and each Ancillary
Document to which the Company is or is required to be a party shall be when delivered, duly and validly executed and delivered by the
Company and assuming the due authorization, execution and delivery of this Agreement and any such Ancillary Document by the other parties
hereto and thereto, constitutes, or when delivered shall constitute, the legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, subject to the Enforceability Exceptions. The Company’s board of directors, by
resolutions duly adopted at a meeting duly called and held (i) determined that this Agreement and the Merger and the other transactions
contemplated hereby are advisable, fair to, and in the best interests of, the Company, its Subsidiaries and its stockholders, (ii) approved
this Agreement and the Merger and the other transactions contemplated by this Agreement in accordance with the DGCL, (iii) directed that
this Agreement be submitted to the Company’s stockholders for adoption and (iv) resolved to recommend that the Company stockholders
adopt this Agreement.
5.3 Capitalization.
(a) The
Company is authorized to issue 35,000,000 shares of Company Common Stock, 27,858,276 of which shares are issued and outstanding. Additionally,
(i) pursuant to the Warrant to Purchase Equity, dated March 10, 2022 (the “Stephenson Warrant”) between the
Company and Stephenson Management Inc. (“Stephenson”), Stephenson has the right to subscribe for 56,123 shares
of Company Common Stock, (ii) pursuant to the Warrant to Purchase Equity, dated March 10, 2022 (the “Scarsdale Warrant”,
and collectively with the Stephenson Warrant, the “Company Warrants”) between the Company and Scarsdale Capital
Inc. (“Scarsdale”), Scarsdale has the right to subscribe for 56,123 shares of Company Common Stock, (iii) there
are 605,236 shares of Company Common Stock reserved for issuance under the AIRO Group Holdings, Inc. Option Plan, all of which are issued
and outstanding (the “Company Options”); (iv) 431,818 shares of Company Common Stock issued and outstanding
pursuant to restricted stock awards (the “RSUs”) and (v) shares of Company Common Stock payable as IPO Interest
Charges, as defined in those certain Unsecured Promissory Notes listed on Schedule 5.3(a) (the “Bridge Financing Notes”).
Besides the foregoing, there are no other series or class of Company Stock (including preferred stock), or other warrants, options or
rights entitling any other Person to Company Stock. Prior to giving effect to the transactions contemplated by this Agreement, all of
the issued and outstanding Company Stock and other equity interests of the Company are set forth on Schedule 5.3(a), along with
the record owners thereof, all of which shares and other equity interests are owned free and clear of any Liens other than those imposed
under the Company Charter. All of the outstanding shares and other equity interests of the Company have been duly authorized, are fully
paid and non-assessable and not in violation of any purchase option, right of first refusal or first offer, preemptive right, subscription
right or any similar right under any provision of the DGCL, any other applicable Law, the Company’s Organizational Documents or
any Contract to which the Company is a party or by which it or its securities are bound. The Company holds no shares or other equity
interests of the Company in its treasury. None of the outstanding shares or other equity interests of the Company were issued in violation
of any applicable securities Laws.
(b) Other
than as set forth on Schedule 5.3(b), there are no Company Convertible Securities, or preemptive rights or rights of first refusal
or first offer, nor are there any Contracts, commitments, arrangements or restrictions to which the Company or, to the Knowledge of the
Company, any of its stockholders is a party or bound relating to any equity securities of the Company, whether or not outstanding. There
are no outstanding or authorized equity appreciation, phantom equity or similar rights with respect to the Company. Except as set forth
on Schedule 5.3(b), there are no voting trusts, proxies, shareholder agreements or any other agreements or understandings with
respect to the voting of the Company’s equity interests. Except as set forth in the Company’s Organizational Documents, there
are no outstanding contractual obligations of the Company to repurchase, redeem or otherwise acquire any equity interests or securities
of the Company, nor has the Company granted any registration rights to any Person with respect to the Company’s equity securities.
All of the Company’s securities have been granted, offered, sold and issued in compliance with all applicable securities Laws.
As a result of the consummation of the transactions contemplated by this Agreement, no equity interests of the Company are issuable and
no rights in connection with any interests, warrants, rights, options or other securities of the Company accelerate or otherwise become
triggered (whether as to vesting, exercisability, convertibility or otherwise).
(c) Except
as disclosed in the Company Financials, since its formation, the Company has not declared or paid any distribution or dividend in respect
of its equity interests and has not repurchased, redeemed or otherwise acquired any equity interests of the Company, and the board of
directors of the Company has not authorized any of the foregoing.
5.4 Subsidiaries.
Schedule 5.4 sets forth the name of each Subsidiary of the Company, and with respect to each Subsidiary of the Company (a) its
jurisdiction of organization, (b) its authorized shares or other equity interests (if applicable), (c) the number of issued and outstanding
shares or other equity interests and the record holders and beneficial owners thereof, (d) its Tax election to be treated as a corporate
or a disregarded entity under the Code and any state or applicable non-U.S. Tax laws, if any, and (e) any limitation on the ability of
the Company to exercise voting control of its Subsidiary, if any. All of the outstanding equity securities of each Subsidiary of the
Company are duly authorized and validly issued, fully paid and non-assessable (if applicable), and were offered, sold and delivered in
compliance with all applicable securities Laws, and are owned by the Company free and clear of all Liens. There are no Contracts to which
the Company or any of its Affiliates is a party or bound with respect to the voting (including voting trusts or proxies) of the equity
interests of any Subsidiary of the Company other than the Organizational Documents of any such Subsidiary, and consummating the transactions
contemplated by this Agreement will not result in a change in control or otherwise give rights to any equity holder in any Company Subsidiary.
There are no outstanding or authorized options, warrants, rights, agreements, subscriptions, convertible securities or commitments to
which any Subsidiary of the Company is a party or which are binding upon any Subsidiary of the Company providing for the issuance or
redemption of any equity interests of any Subsidiary of the Company. The Company owns all of the outstanding equity securities of its
Subsidiaries directly free and clear of all Liens. There are no outstanding equity appreciation, phantom equity, profit participation
or similar rights granted by any Subsidiary of the Company. No Subsidiary of the Company has any limitation, whether by Contract, Order
or applicable Law, on its ability to make any distributions or dividends to its equity holders or repay any debt owed to another Target
Company. Except for the equity interests of the Company’s Subsidiaries listed on Schedule 5.4, no Target Company owns or
has the right to acquire, directly or indirectly, any equity interests of, or otherwise Control, any Person. Except as set forth on Schedule
5.4, neither the Company nor its Subsidiaries is a participant in any joint venture, partnership or similar arrangement. There are
no outstanding contractual obligations of the Company or its Subsidiaries to provide funds to, or make any investment (in the form of
a loan, capital contribution or otherwise) in, any other Person.
5.5 Governmental
Approvals. Except as otherwise described in Schedule 5.5, no Consent of or with any Governmental Authority on the part of
any Target Company is required to be obtained or made, nor are any novation agreements required to be entered into with any Governmental
Authority relating to any material government contract or otherwise, in connection with the execution, delivery or performance by the
Company of this Agreement or any Ancillary Documents or the consummation by the Company of the transactions contemplated hereby or thereby
other than (a) such filings as are expressly contemplated by this Agreement or (b) pursuant to Antitrust Laws.
5.6 Non-Contravention.
Except as otherwise described in Schedule 5.6, the execution and delivery by the Company (or any other Target Company, as applicable)
of this Agreement and each Ancillary Document to which any Target Company is or is required to be a party or otherwise bound, and the
consummation by any Target Company of the transactions contemplated hereby and thereby and compliance by any Target Company with any
of the provisions hereof and thereof, will not (a) conflict with or violate any provision of any Target Company’s Organizational
Documents, (b) subject to obtaining the Consents from Governmental Authorities referred to in Section 4.3 hereof, the waiting
periods referred to therein having expired, and any condition precedent to such Consent or waiver having been satisfied, conflict with
or violate any Law, Order or Consent applicable to any Target Company or any of its properties or assets, or (c) (i) violate, conflict
with or result in a breach of, (ii) constitute a default (or an event which, with notice or lapse of time or both, would constitute a
default) under, (iii) result in the termination, withdrawal, suspension, cancellation or modification of, (iv) accelerate the performance
required by any Target Company under, (v) result in a right of termination or acceleration under, (vi) give rise to any obligation to
make payments or provide compensation under, (vii) result in the creation of any Lien upon any of the properties or assets of any Target
Company under, (viii) give rise to any obligation to obtain any third party Consent or provide any notice to any Person or (ix) give
any Person the right to declare a default, exercise any remedy, claim a rebate, chargeback, penalty or change in delivery schedule, accelerate
the maturity or performance, cancel, terminate or modify any right, benefit, obligation or other term under, any of the terms, conditions
or provisions of any Company Material Contract.
5.7 Financial
Statements.
(a) As
used herein, the term “Company Financials” means the (i) audited consolidated financial statements of the Target
Companies (including, in each case, any related notes thereto), consisting of the consolidated balance sheets of the Target Companies
as of December 31, 2021 and December 31, 2020, and the related consolidated audited income statements, changes in stockholder equity
and statements of cash flows for the fiscal years then ended, each audited by a PCAOB qualified auditor in accordance with GAAP and PCAOB
standards (the “Audited Company Financials”), (ii) the Company prepared unaudited financial statements, consisting
of the consolidated balance sheet of the Target Companies as of December 31, 2022 (the “Interim Balance Sheet Date”)
and the related consolidated income statement, changes in stockholder equity and statement of cash flows for the twelve (12) months then
ended. True and correct copies of the Company Financials have been provided to ParentCo. The Company Financials (i) accurately reflect
the books and records of the Target Companies as of the times and for the periods referred to therein, (ii) were prepared in accordance
with GAAP, consistently applied throughout and among the periods involved (except that the unaudited statements exclude the footnote
disclosures and other presentation items required for GAAP and exclude year-end adjustments which will not be material in amount), (iii)
comply with all applicable accounting requirements under the Securities Act and the rules and regulations of the SEC thereunder, and
(iv) fairly present in all material respects the consolidated financial position of the Target Companies as of the respective dates thereof
and the consolidated results of the operations and cash flows of the Target Companies for the periods indicated in accordance with GAAP.
No Target Company has ever been subject to the reporting requirements of Sections 13(a) and 15(d) of the Exchange Act.
(b) Each
Target Company maintains accurate books and records reflecting its assets and Liabilities and maintains proper and adequate internal
accounting controls that provide reasonable assurance that the following is done in accordance with GAAP: (i) such Target Company does
not maintain any off-the-book accounts and that such Target Company’s assets are used only in accordance with such Target Company’s
management directives, (ii) transactions are executed with management’s authorization, (iii) transactions are recorded as necessary
to permit preparation of the financial statements of such Target Company and to maintain accountability for such Target Company’s
assets, (iv) access to such Target Company’s assets is permitted only in accordance with management’s authorization, (v)
the reporting of such Target Company’s assets is compared with existing assets at regular intervals and verified for actual amounts,
and (vi) accounts, notes and other receivables and inventory are recorded accurately, and proper and adequate procedures are implemented
to effect the collection of accounts, notes and other receivables on a current and timely basis. All of the financial books and records
of the Target Companies are complete and accurate in all material respects and have been maintained in the ordinary course consistent
with past practice and in accordance with applicable Laws. No Target Company has been subject to or involved in any material fraud that
involves management or other employees who have a significant role in the internal controls over financial reporting of any Target Company.
No Target Company or any of its Representatives has ever received any written complaint, allegation, assertion or claim regarding the
accounting or auditing practices, procedures, methodologies or methods of any Target Company or its internal accounting controls, including
any material written complaint, allegation, assertion or claim that any Target Company has engaged in questionable accounting or auditing
practices.
(c) The
Target Companies do not have any Indebtedness other than the Indebtedness set forth on Schedule 5.7(c), which schedule sets forth
the amounts (including principal and any accrued but unpaid interest or other obligations) and maturity date with respect to such Indebtedness.
Except as disclosed on Schedule 5.7(c), no Indebtedness of any Target Company contains any restriction upon (i) the prepayment
of any of such Indebtedness, (ii) the incurrence of Indebtedness by any Target Company, or (iii) the ability of the Target Companies
to grant any Lien on their respective properties or assets.
(d) Except
as set forth on Schedule 5.7(d), no Target Company is subject to any Liabilities or obligations (whether or not required to be
reflected on a balance sheet prepared in accordance with GAAP), including any off-balance sheet obligations, except for those that are
either (i) adequately reflected or reserved on or provided for in the consolidated balance sheet of the Company and its Subsidiaries
as of the Interim Balance Sheet Date contained in the Company Financials in accordance with GAAP or (ii) not material and that were incurred
after the Interim Balance Sheet Date in the ordinary course of business consistent with past practice (other than Liabilities for breach
of any Contract or violation of any Law).
(e) All
financial projections with respect to the Target Companies that were delivered by or on behalf of the Company to ParentCo or its Representatives
were prepared in good faith using assumptions that the Company believes to be reasonable.
(f) All
accounts, notes and other receivables, whether or not accrued, and whether or not billed, of the Target Companies (the “Accounts
Receivable”) arose from sales actually made or services actually performed in the ordinary course of business and represent
valid obligations to a Target Company arising from its business. None of the Accounts Receivable are subject to any right of recourse,
defense, deduction, return of goods, counterclaim, offset, or set off on the part of the obligor in excess of any amounts reserved therefore
on the Company Financials. All of the Accounts Receivable are, to the Knowledge of the Company, fully collectible according to their
terms in amounts not less than the aggregate amounts thereof carried on the books of the Target Companies (net of reserves) within ninety
(90) days.
5.8 Absence
of Certain Changes. Except as set forth on Schedule 5.8, since September 30, 2022, each Target Company has (a) conducted its
business only in the ordinary course of business consistent with past practice, (b) not been subject to a Material Adverse Effect and
(c) has not taken any action or committed or agreed to take any action that would be prohibited by Section 6.2 (without giving
effect to Schedule 6.2(b)) if such action were taken on or after the date hereof without the consent of Kernel.
5.9 Compliance
with Laws including Privacy Laws. Except as set forth on Schedule 5.9, no Target Company is or has been in material conflict
or material non-compliance with, or in material default or violation of, nor has any Target Company received, since January 1, 2017,
any written or, to the Knowledge of the Company, oral notice of any material conflict or non-compliance with, or material default or
violation of, any applicable Laws by which it or any of its properties, assets, officers or directors, employees or consultants, business
or operations are or were bound or affected including, without limitation, all applicable laws regarding the handling of Personal Data.
Except as set forth on Schedule 5.9:
(a) No
Target Company has experienced any loss, damage or unauthorized access, use, disclosure or modification, or breach of security of Personal
Data maintained by or on behalf of any Target Company (including, to the Knowledge of the Company, by any agent, subcontractor or vendor
of a Target Company);
(b) To
the Knowledge of the Company, all activities conducted by a Target Company with respect to any Personal Data are permitted under the
Contracts relating to Personal Data.
5.10 Company
Permits. Except as described on Schedule 5.10, each Target Company (and its employees who are legally required to be licensed
by a Governmental Authority in order to perform his or her duties with respect to his or her employment with any Target Company), holds
all Permits necessary to lawfully conduct in all material respects its business as presently conducted and as currently contemplated
to be conducted, and to own, lease and operate its assets and properties (collectively, the “Company Permits”).
The Company has made available, or shall make available at least fifteen (15) days prior to Closing, to ParentCo true, correct and complete
copies of all Company Permits, all of which Company Permits are listed on Schedule 5.10. All of the Company Permits are in full
force and effect, and no suspension or cancellation of any of the Company Permits is pending or, to the Company’s Knowledge, threatened.
No Target Company is in violation in any material respect of the terms of any Company Permit, and no Target Company has received any
written or, to the Knowledge of the Company, oral notice of any Actions relating to the revocation or modification of any Company Permit.
5.11 Litigation.
Except as described on Schedule 5.11, there is no (a) Action of any nature currently pending or, to the Company’s Knowledge,
threatened, nor is there any reasonable basis for any Action to be made (and no such Action has been brought or, to the Company’s
Knowledge, threatened in the past five (5) years); or (b) Order now pending or outstanding or that was rendered by a Governmental Authority
in the past five (5) years, in either case of (a) or (b) by or against any Target Company, its current or former directors, officers
or equity holders (provided, that any litigation involving the directors, officers or equity holders of a Target Company must be related
to the Target Company’s business, equity securities or assets), its business, equity securities or assets. Except as described
on Schedule 5.11, the items listed on Schedule 5.11, if finally determined adversely to the Target Companies, will not
have, either individually or in the aggregate, a Material Adverse Effect upon any Target Company. In the past five (5) years, none of
the current or former officers, senior management or directors of any Target Company have been charged with, indicted for, arrested for,
or convicted of any felony or any crime involving fraud or been assessed any administrative fines following an investigation by a Governmental
Authority.
5.12 Material
Contracts.
(a) Schedule
5.12(a) sets forth a true, correct and complete list of, and the Company has made available, or shall make available at least fifteen
(15) days prior to Closing, to ParentCo (including written summaries of oral Contracts), true, correct and complete copies of, each Contract
to which any Target Company is a party or by which any Target Company, or any of its properties or assets are bound or affected (each
Contract required to be set forth on Schedule 5.12(a), a “Company Material Contract”) that:
(i) contains
covenants that limit the ability of any Target Company (A) to compete in any line of business or with any Person or in any geographic
area or to sell, or provide any service or product or solicit any Person, including any non-competition covenants, employee and customer
non-solicit covenants, exclusivity restrictions, rights of first refusal or most-favored pricing clauses or (B) to purchase or acquire
an interest in any other Person;
(ii) involves
any joint venture, strategic partnership, profit-sharing, partnership, limited liability company or other similar agreement or arrangement
relating to the formation, creation, operation, management or control of any partnership or joint venture;
(iii) involves
any agreement relating to the supply of product to, the purchase of product for, or the performance of services by or to any Target Company,
in each instance, which are material to the business and operations of the Company and Target Companies, taken as a whole;
(iv) involves
any exchange traded, over the counter or other swap, cap, floor, collar, futures contract, forward contract, option or other derivative
financial instrument or Contract, based on any commodity, security, instrument, asset, rate or index of any kind or nature whatsoever,
whether tangible or intangible, including currencies, interest rates, foreign currency and indices;
(v) evidences
Indebtedness (whether incurred, assumed, guaranteed or secured by any asset) of any Target Company having an outstanding principal amount
in excess of $100,000;
(vi) involves
the acquisition or disposition, directly or indirectly (by merger or otherwise), of assets with an aggregate value in excess of $100,000
(other than in the ordinary course of business consistent with past practice) or shares or other equity interests of any Target Company
or another Person;
(vii) relates
to any merger, consolidation or other business combination with any other Person or the acquisition or disposition of any other entity
or its business or material assets or the sale of any Target Company, its business or material assets;
(viii) by
its terms, individually or with all related Contracts, calls for aggregate payments or receipts by the Target Companies under such Contract
or Contracts of at least $100,000 per year or $250,000 in the aggregate;
(ix) is
with any Top Customer or Top Supplier;
(x) obligates
the Target Companies to provide continuing indemnification or a guarantee of obligations of a third party after the date hereof in excess
of $100,000.
(xi) is
between any Target Company and any directors, officers or employees of a Target Company (other than at-will employment arrangements with
employees entered into in the ordinary course of business consistent with past practice), including all non-competition, severance and
indemnification agreements, or any Related Person;
(xii) obligates
the Target Companies to make any capital commitment or expenditure in excess of $100,000 (including pursuant to any joint venture);
(xiii) relates
to a material settlement entered into within three (3) years prior to the date of this Agreement or under which any Target Company has
outstanding obligations (other than customary confidentiality obligations);
(xiv) provides
another Person (other than another Target Company or any manager, director or officer of any Target Company) with a power of attorney;
(xv) relates
to the development, ownership, licensing or use of any Intellectual Property by, to or from any Target Company, other than Off-the-Shelf
Software;
(xvi) that
will be required to be filed with the Registration Statement under applicable SEC requirements or would otherwise be required to be filed
by the Company as an exhibit for a Form S-1 pursuant to Items 601(b)(1), (2), (4), (9) or (10) of Regulation S-K under the Securities
Act as if the Company was the registrant; or
(xvii) is
otherwise material to any Target Company and not described in clauses 5.12(a)(i) through 5.12(a)(xvii) above.
(b) Except
as disclosed in Schedule 5.12(b), with respect to each Company Material Contract: (i) such Company Material Contract is valid
and binding and enforceable in all respects against the Target Company party thereto and, to the Knowledge of the Company, each other
party thereto, and is in full force and effect (except, in each case, as such enforcement may be limited by the Enforceability Exceptions);
(ii) the consummation of the transactions contemplated by this Agreement will not affect the validity or enforceability of any Company
Material Contract; (iii) no Target Company is in breach or default in any material respect, and no event has occurred that with the passage
of time or giving of notice or both would constitute a material breach or default by any Target Company, or permit termination or acceleration
by the other party thereto, under such Company Material Contract; (iv) to the Knowledge of the Company, no other party to such Company
Material Contract is in breach or default in any material respect, and no event has occurred that with the passage of time or giving
of notice or both would constitute such a material breach or default by such other party, or permit termination or acceleration by any
Target Company, under such Company Material Contract; (v) no Target Company has received written or, to the Knowledge of the Company,
oral notice of an intention by any party to any such Company Material Contract that provides for a continuing obligation by any party
thereto to terminate such Company Material Contract or amend the terms thereof, other than modifications in the ordinary course of business
that do not adversely affect any Target Company in any material respect; and (vi) no Target Company has waived any rights under any such
Company Material Contract.
5.13 Intellectual
Property.
(a) Schedule
5.13(a)(i) sets forth: (i) all U.S. and foreign registered Patents, Trademarks, Copyrights and Internet Assets and applications owned
or licensed by a Target Company or otherwise used or held for use by a Target Company in which a Target Company is the owner, applicant
or assignee (“Company Registered IP”), specifying as to each item, as applicable: (A) the nature of the item,
including the title, (B) the owner of the item, (C) the jurisdictions in which the item is issued or registered or in which an application
for issuance or registration has been filed and (D) the issuance, registration or application numbers and dates; and (ii) all material
unregistered Intellectual Property owned or purported to be owned by a Target Company. Schedule 5.13(a)(ii) sets forth all Intellectual
Property licenses, sublicenses and other agreements or permissions (“Company IP Licenses”) (other than “shrink
wrap,” “click wrap,” and “off the shelf” software agreements and other agreements for Software commercially
available on reasonable terms to the public generally with license, maintenance, support and other fees of less than $20,000 per year
(collectively, “Off-the-Shelf Software”), which are not required to be listed, although such licenses are “Company
IP Licenses” as that term is used herein), under which a Target Company is a licensee or otherwise is authorized to use or practice
any Intellectual Property, and describes (A) the applicable Intellectual Property licensed, sublicensed or used and (B) any royalties,
license fees or other compensation due from a Target Company, if any. Each Target Company owns, free and clear of all Liens (other than
Permitted Liens), has valid and enforceable rights in, and has the unrestricted right to use, sell, license, transfer or assign, all
Intellectual Property currently used, licensed or held for use by such Target Company, and previously used or licensed by such Target
Company, except for the Intellectual Property that is the subject of the Company IP Licenses. No item of Company Registered IP that consists
of a pending Patent application fails to identify all pertinent inventors, and for each Patent and Patent application in the Company
Registered IP, the Target Companies have obtained valid assignments of inventions from each inventor. Except as set forth on Schedule
5.13(a)(iii), all Company Registered IP is owned exclusively by the applicable Target Company without obligation to pay royalties,
licensing fees or other fees, or otherwise account to any third party with respect to such Company Registered IP, and such Target Company
has recorded assignments of all Company Registered IP.
(b) Each
Target Company has a valid and enforceable license to use all Intellectual Property that is the subject of the Company IP Licenses applicable
to such Target Company. The Company IP Licenses include all of the licenses, sublicenses and other agreements or permissions necessary
to operate the Target Companies as presently conducted. Each Target Company has performed all obligations imposed on it in the Company
IP Licenses, has made all payments required to date, and such Target Company is not, nor, to the Knowledge of the Company, is any other
party thereto, in breach or default thereunder, nor has any event occurred that with notice or lapse of time or both would constitute
a default thereunder. The continued use by the Target Companies of the Intellectual Property that is the subject of the Company IP Licenses
in the same manner that it is currently being used is not restricted by any applicable license of any Target Company. All registrations
for Copyrights, Patents, Trademarks and Internet Assets that are owned by or exclusively licensed to any Target Company are valid, in
force and in good standing with all required fees and maintenance fees having been paid with no Actions pending, and all applications
to register any Copyrights, Patents and Trademarks are pending and in good standing, all without challenge of any kind. No Target Company
is party to any Contract that requires a Target Company to assign to any Person all of its rights in any Intellectual Property developed
by a Target Company under such Contract.
(c) Schedule
5.13(c) sets forth all licenses, sublicenses and other agreements or permissions under which a Target Company is the licensor (each,
an “Outbound IP License”), and for each such Outbound IP License, describes (i) the applicable Intellectual
Property licensed, (ii) the licensee under such Outbound IP License, and (iii) any royalties, license fees or other compensation due
to a Target Company, if any. Each Target Company has performed all obligations imposed on it in the Outbound IP Licenses, and such Target
Company is not, nor, to the Knowledge of the Company, is any other party thereto, in breach or default thereunder, nor has any event
occurred that with notice or lapse of time or both would constitute a default thereunder.
(d) No
Action is pending or, to the Company’s Knowledge, threatened against a Target Company that challenges the validity, enforceability,
ownership, or right to use, sell, license or sublicense, or that otherwise relates to, any Intellectual Property currently owned, licensed,
used or held for use by the Target Companies, nor, to the Knowledge of the Company, is there any reasonable basis for any such Action.
No Target Company has received any written or, to the Knowledge of the Company, oral notice or claim asserting or suggesting that any
infringement, misappropriation, violation, dilution or unauthorized use of the Intellectual Property of any other Person is or may be
occurring or has or may have occurred, as a consequence of the business activities of any Target Company, nor to the Knowledge of the
Company is there a reasonable basis therefor. There are no Orders to which any Target Company is a party or its otherwise bound that
(i) restrict the rights of a Target Company to use, transfer, license or enforce any Intellectual Property owned by a Target Company,
(ii) restrict the conduct of the business of a Target Company in order to accommodate a third Person’s Intellectual Property, or
(iii) other than the Outbound IP Licenses, grant any third Person any right with respect to any Intellectual Property owned by a Target
Company. No Target Company is currently infringing, or has, in the past, infringed, misappropriated or violated any Intellectual Property
of any other Person in any material respect in connection with the ownership, use or license of any Intellectual Property owned or purported
to be owned by a Target Company or, to the Knowledge of the Company, otherwise in connection with the conduct of the respective businesses
of the Target Companies. To the Company’s Knowledge, no third party is currently, or in the past five (5) years has been, infringing
upon, misappropriating or otherwise violating any Intellectual Property owned, licensed by, licensed to, or otherwise used or held for
use by any Target Company (“Company IP”) in any material respect.
(e) Except
as set forth in Schedule 5.13(e), all officers, directors, employees and independent contractors of a Target Company (and each
of their respective Affiliates) have assigned to the Target Companies all Intellectual Property arising from the services performed for
a Target Company by such Persons and all such assignments of Company Registered IP have been recorded. Except as set forth in Schedule
5.13(e), no current or former officers, employees or independent contractors of a Target Company have claimed any ownership interest
in any Intellectual Property owned by a Target Company. To the Knowledge of the Company, there has been no violation of a Target Company’s
policies or practices related to protection of Company IP or any confidentiality or nondisclosure Contract relating to the Intellectual
Property owned by a Target Company. The Company has made available, or shall make available at least fifteen (15) days prior to Closing,
to ParentCo true and complete copies of all written Contracts referenced in subsections under which employees and independent contractors
assigned their Intellectual Property to a Target Company. To the Company’s Knowledge, none of the employees of any Target Company
is obligated under any Contract, or subject to any Order, that would materially interfere with the use of such employee’s best
efforts to promote the interests of the Target Companies, or that would materially conflict with the business of any Target Company as
presently conducted or contemplated to be conducted. Each Target Company has taken reasonable security measures in order to protect the
secrecy, confidentiality and value of the material Company IP.
(f) To
the Knowledge of the Company, no Person has obtained unauthorized access to third party information and data (including personally identifiable
information) in the possession of a Target Company, nor has there been any other material compromise of the security, confidentiality
or integrity of such information or data, and no written or, to the Knowledge of the Company, oral complaint relating to an improper
use or disclosure of, or a breach in the security of, any such information or data has been received by a Target Company. Each Target
Company has complied in all material respects with all applicable Laws and Contract requirements relating to privacy, personal data protection,
and the collection, processing and use of personal information and its own privacy policies and guidelines. The operation of the business
of the Target Companies has not and does not violate any right to privacy or publicity of any third person, or constitute unfair competition
or trade practices under applicable Law.
(g) Except
as set forth in Schedule 5.13(g), the consummation of any of the transactions contemplated by this Agreement will not result in
the material breach, material modification, cancellation, termination, suspension of, or acceleration of any payments with respect to,
or release of source code because of (i) any Contract providing for the license or other use of Intellectual Property owned by a Target
Company, or (ii) any Company IP License. Following the Closing, the Company shall be permitted to exercise, directly or indirectly through
its Subsidiaries, all of the Target Companies’ rights under such Contracts or Company IP Licenses to the same extent that the Target
Companies would have been able to exercise had the transactions contemplated by this Agreement not occurred, without the payment of any
additional amounts or consideration other than ongoing fees, royalties or payments which the Target Companies would otherwise be required
to pay in the absence of such transactions.
(h) Schedule
5.13(h) contains a correct, current, and complete list of all social media accounts used in the Target Companies’ business.
The Target Companies have complied with all terms of use, terms of service, and other Contracts and all associated policies and guidelines
relating to its use of any social media platforms, sites, or services (collectively, “Platform Agreements”).
There are no Actions, whether settled, pending, or threatened, alleging any (A) breach or other violation of any Platform Agreement by
the Company; or (B) defamation, violation of publicity rights of any Person, or any other violation by the Company in connection with
its use of social media.
(i) All
Target Company IT Systems are in good working condition and are sufficient for the operation of the Target Companies’ business
as currently conducted and as proposed to be conducted. In the past five (5) years, there has been no malfunction, failure, continued
substandard performance, denial-of-service, or other cyber incident, including any cyberattack, or other impairment of the Target Company
IT Systems that has resulted or is reasonably likely to result in disruption or damage to the business of any of the Target Companies.
The Target Companies have taken all commercially reasonable steps to safeguard the confidentiality, availability, security, and integrity
of the Target Company IT Systems, including implementing and maintaining appropriate backup, disaster recovery, and Software and hardware
support arrangements.
5.14 Taxes
and Returns.
(a) Each
Target Company has or will have timely filed, or caused to be timely filed, all federal, state, local and foreign Tax Returns required
to be filed by it (taking into account all available extensions), which Tax Returns are true, accurate, correct and complete in all material
respects, and has paid, collected or withheld, or caused to be paid, collected or withheld, all Taxes required to be paid, collected
or withheld, other than such Taxes for which adequate reserves in the Company Financials have been established. Each Target Company has
complied with all applicable Laws relating to Tax.
(b) There
is no Action currently pending or, to the Knowledge of the Company, threatened against a Target Company by a Governmental Authority in
a jurisdiction where the Target Company does not file Tax Returns that it is or may be subject to taxation by that jurisdiction.
(c) No
Target Company is being audited by any Tax authority or has been notified in writing or, to the Knowledge of the Company, orally by any
Tax authority that any such audit is contemplated or pending. There are no claims, assessments, audits, examinations, investigations
or other Actions pending against a Target Company in respect of any Tax, and no Target Company has been notified in writing of any proposed
Tax claims or assessments against it (other than, in each case, claims or assessments for which adequate reserves in the Company Financials
have been established).
(d) There
are no Liens with respect to any Taxes upon any Target Company’s assets, other than Permitted Liens.
(e) Each
Target Company has collected or withheld all Taxes currently required to be collected or withheld by it, and all such Taxes have been
paid to the appropriate Governmental Authorities or set aside in appropriate accounts for future payment when due.
(f) No
Target Company has any outstanding waivers or extensions of any applicable statute of limitations to assess any amount of Taxes. There
are no outstanding requests by a Target Company for any extension of time within which to file any Tax Return or within which to pay
any Taxes shown to be due on any Tax Return.
(g) No
Target Company has made any change in accounting method (except as required by a change in Law) or received a ruling from, or signed
an agreement with, any taxing authority that would reasonably be expected to have a material impact on its Taxes following the Closing.
(h) No
Target Company has participated in, or sold, distributed or otherwise promoted, any “reportable transaction,” as defined
in U.S. Treasury Regulation section 1.6011-4.
(i) No
Target Company has any Liability or potential Liability for the Taxes of another Person (other than another Target Company) that are
not adequately reflected in the Company Financials (i) under any applicable Tax Law, (ii) as a transferee or successor, or (iii) by contract,
indemnity or otherwise (excluding commercial agreements entered into in the ordinary course of business the primary purpose of which
is not the sharing of Taxes). No Target Company is a party to or bound by any Tax indemnity agreement, Tax sharing agreement or Tax allocation
agreement or similar agreement, arrangement or practice (excluding commercial agreements entered into in the ordinary course of business
the primary purpose of which is not the sharing of Taxes) with respect to Taxes (including advance pricing agreement, closing agreement
or other agreement relating to Taxes with any Governmental Authority) that will be binding on any Target Company with respect to any
period following the Closing Date.
(j) No
Target Company has requested, or is the subject of or bound by any private letter ruling, technical advice memorandum, closing agreement
or similar ruling, memorandum or agreement with any Governmental Authority with respect to any Taxes, nor is any such request outstanding.
(k) No
Target Company: (i) has constituted either a “distributing corporation” or a “controlled corporation” (within
the meaning of Section 355(a)(1)(A) of the Code) in a distribution of securities (to any Person or entity that is not a member of the
consolidated group of which the Company is the common parent corporation) qualifying for, or intended to qualify for, Tax-free treatment
under Section 355 of the Code (A) within the two-year period ending on the date hereof or (B) in a distribution which could otherwise
constitute part of a “plan” or “series of related transactions” (within the meaning of Section 355(e) of the
Code) in conjunction with the transactions contemplated by this Agreement; or (ii) is or has ever been (A) a U.S. real property holding
corporation within the meaning of Section 897(c)(2) of the Code, or (B) a member of any consolidated, combined, unitary or affiliated
group of corporations for any Tax purposes other than a group of which the Company is or was the common parent corporation.
(l) No
Target Company is aware of any fact or circumstance that would reasonably be expected to prevent the Merger from qualifying as a “reorganization”
within the meaning of Section 368(a) of the Code.
5.15 Real
Property. Schedule 5.15 contains a complete and accurate list of all premises currently leased or subleased or otherwise used
or occupied by a Target Company for the operation of the business of a Target Company, and of all current leases, lease guarantees, agreements
and documents related thereto, including all amendments, terminations and modifications thereof or waivers thereto (collectively, the
“Company Real Property Leases”). The Company has provided to ParentCo a true and complete copy of each of the
Company Real Property Leases. The Company Real Property Leases are valid, binding and enforceable in accordance with their terms and
are in full force and effect. To the Knowledge of the Company, no event has occurred which (whether with or without notice, lapse of
time or both or the happening or occurrence of any other event) would constitute a default on the part of a Target Company or any other
party under any of the Company Real Property Leases, and no Target Company has received notice of any such condition. No Target Company
owns or has ever owned any real property or any interest in real property (other than the leasehold interests in the Company Real Property
Leases).
5.16 Personal
Property. Each item of Personal Property which is currently owned, used or leased by a Target Company with a book value or fair market
value of greater than One Hundred Thousand Dollars ($100,000) is set forth on Schedule 5.16, along with, to the extent applicable,
a list of lease agreements, lease guarantees, security agreements and other agreements related thereto, including all amendments, terminations
and modifications thereof or waivers thereto (“Company Personal Property Leases”). Except as set forth in Schedule
5.16, all such items of Personal Property are in good operating condition and repair (reasonable wear and tear excepted consistent
with the age of such items), and are suitable for their intended use in the business of the Target Companies. The operation of each Target
Company’s business as it is now conducted or presently proposed to be conducted is not dependent upon the right to use the Personal
Property of Persons other than a Target Company, except for such Personal Property that is owned, leased or licensed by or otherwise
contracted to a Target Company. The Company has provided to ParentCo a true and complete copy of each of the Company Personal Property
Leases, and in the case of any oral Company Personal Property Lease, a written summary of the material terms of such Company Personal
Property Lease. The Company Personal Property Leases are valid, binding and enforceable in accordance with their terms and are in full
force and effect. To the Knowledge of the Company, no event has occurred which (whether with or without notice, lapse of time or both
or the happening or occurrence of any other event) would constitute a default on the part of a Target Company or any other party under
any of the Company Personal Property Leases, and no Target Company has received notice of any such condition.
5.17 Title
to and Sufficiency of Assets. Each Target Company has good and marketable title to, or a valid leasehold interest in or right to
use, all of its assets, free and clear of all Liens other than (a) Permitted Liens, (b) the rights of lessors under leasehold interests,
(c) Liens specifically identified on the balance sheet as of the Interim Balance Sheet Date included in the Company Financials and (d)
Liens set forth on Schedule 5.17. The assets (including Intellectual Property rights and contractual rights) of the Target Companies
constitute all of the assets, rights and properties that are used in the operation of the businesses of the Target Companies as it is
now conducted.
5.18 Employee
Matters.
(a) Except
as set forth in Schedule 5.18(a), no Target Company is a party to any collective bargaining agreement or other Contract covering
any group of employees, labor organization or other representative of any of the employees of any Target Company, and the Company has
no Knowledge of any activities or proceedings of any labor union or other party to organize or represent such employees. There has not
occurred or, to the Knowledge of the Company, been threatened any strike, slow-down, picketing, work-stoppage, or other similar labor
activity with respect to any such employees, consultant, independent contractor, officer or manager of any of the Target Companies. Schedule
5.18(a) sets forth all unresolved labor controversies (including unresolved grievances and age or other discrimination claims), if
any, that are pending or, to the Knowledge of the Company, threatened between any Target Company and Persons employed by or providing
services as independent contractors to a Target Company. No current officer or employee of a Target Company has provided any Target Company
written or, to the Knowledge of the Company, oral notice of his or her plan to terminate his or her employment with any Target Company
or go on leave of absence.
(b) Except
as set forth in Schedule 5.18(b), each Target Company (i) is and has been in compliance in all material respects with all applicable
Laws respecting employment and employment practices, terms and conditions of employment, health and safety and wages and hours, and other
Laws relating to discrimination, sexual harassment, disability, labor relations, classification and payment of employees and independent
contractors, hours of work, payment of wages and overtime wages, pay equity, immigration, workers compensation, working conditions, employee
scheduling, occupational safety and health, family and medical leave, and employee terminations, and has not received written or, to
the Knowledge of the Company, oral notice that there is any pending Action involving unfair labor practices against a Target Company,
(ii) is not liable for any material past due arrears of wages or any material penalty for failure to comply with any of the foregoing,
and (iii) is not liable for any material payment to any Governmental Authority with respect to unemployment compensation benefits, social
security or other benefits or obligations for employees, independent contractors or consultants (other than routine payments to be made
in the ordinary course of business and consistent with past practice). There are no Actions pending or, to the Knowledge of the Company,
threatened against a Target Company brought by or on behalf of any applicant for employment, any current or former employee, any Person
alleging to be a current or former employee, or any Governmental Authority, relating to any such Law or regulation, or alleging breach
of any express or implied contract of employment, wrongful termination of employment, or alleging any other discriminatory, wrongful
or tortious conduct in connection with the employment relationship.
(c) Schedule
5.18(c) hereto sets forth a complete and accurate list as of the date hereof of all employees of the Target Companies showing for
each as of such date (i) the employee’s name, job title or description, employer, location, salary level (including any bonus,
commission, deferred compensation or other remuneration payable (other than any such arrangements under which payments are at the discretion
of the Target Companies)), (ii) any bonus, commission or other remuneration other than salary paid during the fiscal year ended December
31, 2021, and (iii) any wages, salary, bonus, commission or other compensation due and owing to each employee during or for the fiscal
year ending December 31, 2022. Except as set forth on Schedule 5.18(c), (A) no employee is a party to a written employment Contract
with a Target Company and each is employed “at will”, and (B) the Target Companies have paid in full to all their employees
all wages, salaries, commission, bonuses and other compensation due to their employees, including overtime compensation, and no Target
Company has any obligation or Liability (whether or not contingent) with respect to severance payments to any such employees under the
terms of any written or, to the Company’s Knowledge, oral agreement, or commitment or any applicable Law, custom, trade or practice.
Except as set forth in Schedule 5.18(c), each Target Company employee has entered into the Company’s standard form of employee
non-disclosure, inventions and restrictive covenants agreement with a Target Company (whether pursuant to a separate agreement or incorporated
as part of such employee’s overall employment agreement), a copy of which has been made available, or shall make available at least
fifteen (15) days prior to Closing, to ParentCo by the Company.
(d) Schedule
5.18(d) contains a list of all independent contractors (including consultants) currently engaged by any Target Company, along with
the position, the entity engaging such Person, date of retention and rate of remuneration, most recent increase (or decrease) in remuneration
and amount thereof, for each such Person. Except as set forth on Schedule 5.18(d), all of such independent contractors are a party
to a written Contract with a Target Company. Except as set forth on Schedule 5.18(d), each such independent contractor has entered
into customary covenants regarding confidentiality, non-competition and assignment of inventions and copyrights in such Person’s
agreement with a Target Company, a copy of which has been provided to ParentCo by the Company. For the purposes of applicable Law, including
the Code, all independent contractors who are currently, or within the last six (6) years have been, engaged by a Target Company are
bona fide independent contractors and not employees of a Target Company. Each independent contractor is terminable on fewer than thirty
(30) days’ notice, without any obligation of any Target Company to pay severance or a termination fee.
5.19 Benefit
Plans.
(a) Set
forth on Schedule 5.19 is a true and complete list of each Company Benefit Plan of a Target Company. With respect to each Company
Benefit Plan, there are no funded benefit obligations for which contributions have not been made or properly accrued and there are no
unfunded benefit obligations that have not been accounted for by reserves, or otherwise properly footnoted in accordance with GAAP on
the Company Financials. No Target Company is or has in the past been a member of a “controlled group” for purposes of Section
414(b), (c), (m) or (o) of the Code, nor does any Target Company have any Liability with respect to any collectively-bargained for plans,
whether or not subject to the provisions of ERISA. No statement, either written or oral, has been made by any Target Company to any Person
with regard to any Company Benefit Plan that was not in accordance with the Company Benefit Plan in any material respect.
(b) Each
Company Benefit Plan is and has been operated at all times in compliance with all applicable Laws in all material respects, including
ERISA and the Code. Each Company Benefit Plan which is intended to be “qualified” within the meaning of Section 401(a) of
the Code (i) has been determined by the IRS to be so qualified (or is based on a prototype plan which has received a favorable opinion
letter) during the period from its adoption to the date of this Agreement and (ii) its related trust has been determined to be exempt
from taxation under Section 501(a) of the Code or the Target Companies have requested an initial favorable IRS determination of qualification
and/or exemption within the period permitted by applicable Law. No fact exists which could adversely affect the qualified status of such
Company Benefit Plans or the exempt status of such trusts.
(c) With
respect to each Company Benefit Plan which covers any current or former officer, director, consultant or employee (or beneficiary thereof)
of a Target Company, the Company has provided to ParentCo accurate and complete copies, if applicable, of: (i) all Company Benefit Plan
texts and agreements and related trust agreements or annuity Contracts (including any amendments, modifications or supplements thereto);
(ii) all summary plan descriptions and material modifications thereto; (iii) the three (3) most recent Forms 5500, if applicable, and
annual report, including all schedules thereto; (iv) the most recent annual and periodic accounting of plan assets; (v) the three (3)
most recent nondiscrimination testing reports; (vi) the most recent determination letter received from the IRS, if any; (vii) the most
recent actuarial valuation; and (viii) all material communications with any Governmental Authority.
(d) With
respect to each Company Benefit Plan: (i) such Company Benefit Plan has been administered and enforced in all material respects in accordance
with its terms, the Code and ERISA; (ii) no breach of fiduciary duty has occurred; (iii) no Action is pending, or to the Company’s
Knowledge, threatened (other than routine claims for benefits arising in the ordinary course of administration); (iv) no prohibited transaction,
as defined in Section 406 of ERISA or Section 4975 of the Code, has occurred, excluding transactions effected pursuant to a statutory
or administration exemption; and (v) all contributions and premiums due through the Closing Date have been made in all material respects
as required under ERISA or have been fully accrued in all material respects on the Company Financials.
(e) No
Company Benefit Plan is a “defined benefit plan” (as defined in Section 414(j) of the Code), a “multiemployer plan”
(as defined in Section 3(37) of ERISA) or a “multiple employer plan” (as described in Section 413(c) of the Code) or is otherwise
subject to Title IV of ERISA or Section 412 of the Code, and no Target Company has incurred any Liability or otherwise could have any
Liability, contingent or otherwise, under Title IV of ERISA and no condition presently exists that is expected to cause such Liability
to be incurred. No Company Benefit Plan will become a multiple employer plan with respect to any Target Company immediately after the
Closing Date. No Target Company currently maintains or has ever maintained, or is required currently or has ever been required to contribute
to or otherwise participate in, a multiple employer welfare arrangement or voluntary employees’ beneficiary association as defined
in Section 501(c)(9) of the Code.
(f) There
is no arrangement under any Company Benefit Plan with respect to any employee that would result in the payment of any amount that by
operation of Sections 280G or 162(m) of the Code would not be deductible by the Target Companies and no arrangement exists pursuant to
which a Target Company will be required to “gross up” or otherwise compensate any person because of the imposition of any
excise tax on a payment to such person.
(g) With
respect to each Company Benefit Plan which is a “welfare plan” (as described in Section 3(1) of ERISA): (i) no such plan
provides medical or death benefits with respect to current or former employees of a Target Company beyond their termination of employment
(other than coverage mandated by Law, which is paid solely by such employees); and (ii) there are no reserves, assets, surplus or prepaid
premiums under any such plan. Each Target Company has complied with the provisions of Section 601 et seq. of ERISA and Section 4980B
of the Code.
(h) Except
as set forth in Schedule 5.19(g), the consummation of the transactions contemplated by this Agreement and the Ancillary Documents
will not: (i) entitle any individual to severance pay, unemployment compensation or other benefits or compensation; (ii) accelerate the
time of payment or vesting, or increase the amount of any compensation due, or in respect of, any individual; or (iii) result in or satisfy
a condition to the payment of compensation that would, in combination with any other payment, result in an “excess parachute payment”
within the meaning of Section 280G of the Code. No Target Company has incurred any Liability for any Tax imposed under Chapter 43 of
the Code or civil liability under Section 502(i) or (l) of ERISA.
(i) Except
to the extent required by Section 4980B of the Code or similar state Law, no Target Company provides health or welfare benefits to any
former or retired employee or is obligated to provide such benefits to any active employee following such employee’s retirement
or other termination of employment or service.
(j) All
Company Benefit Plans can be terminated at any time as of or after the Closing Date without resulting in any Liability to the Surviving
Corporation or ParentCo or their respective Affiliates for any additional contributions, penalties, premiums, fees, fines, excise taxes
or any other charges or liabilities.
(k) Each
Company Benefit Plan that is subject to Section 409A of the Code (each, a “Section 409A Plan”) as of the Closing
Date is indicated as such on Schedule 5.19(j). No options or other equity-based awards have been issued or granted by the Company
that are, or are subject to, a Section 409A Plan. Each Section 409A Plan has been administered in compliance, and is in documentary compliance,
with the applicable provisions of Section 409A of the Code, the regulations thereunder and other official guidance issued thereunder.
No Target Company has any obligation to any employee or other service provider with respect to any Section 409A Plan that may be subject
to any Tax under Section 409A of the Code. No payment to be made under any Section 409A Plan is, or to the Knowledge of the Company will
be, subject to the penalties of Section 409A(a)(1) of the Code. There is no Contract or plan to which any Target Company is a party or
by which it is bound to compensate any employee, consultant or director for penalty taxes paid pursuant to Section 409A of the Code.
5.20 Environmental
Matters. Except as set forth in Schedule 5.20:
(a) Each
Target Company is and has been in compliance in all material respects with all applicable Environmental Laws, including obtaining, maintaining
in good standing, and complying in all material respects with all Permits required for its business and operations by Environmental Laws
(“Environmental Permits”), no Action is pending or, to the Company’s Knowledge, threatened to revoke,
modify, or terminate any such Environmental Permit, and, to the Company’s Knowledge, no facts, circumstances, or conditions currently
exist that could adversely affect such continued compliance with Environmental Laws and Environmental Permits or require capital expenditures
to achieve or maintain such continued compliance with Environmental Laws and Environmental Permits.
(b) No
Target Company is the subject of any outstanding Order or Contract with any Governmental Authority or other Person in respect of any
(i) Environmental Laws, (ii) Remedial Action, or (iii) Release or threatened Release of a Hazardous Material. No Target Company has assumed,
contractually or by operation of Law, any Liabilities or obligations under any Environmental Laws.
(c) No
Action has been made or is pending, or to the Company’s Knowledge, threatened against any Target Company or any assets of a Target
Company alleging either or both that a Target Company may be in material violation of any Environmental Law or Environmental Permit or
may have any material Liability under any Environmental Law.
(d) No
Target Company has manufactured, treated, stored, disposed of, arranged for or permitted the disposal of, generated, handled or Released
any Hazardous Material, or owned or operated any property or facility, in a manner that has given or would reasonably be expected to
give rise to any material Liability or obligation under applicable Environmental Laws. No fact, circumstance, or condition exists in
respect of any Target Company or any property currently or formerly owned, operated, or leased by any Target Company or any property
to which a Target Company arranged for the disposal or treatment of Hazardous Materials that could reasonably be expected to result in
a Target Company incurring any material Environmental Liabilities.
(e) There
is no investigation of the business, operations, or currently owned, operated, or leased property of a Target Company or, to the Company’s
Knowledge, previously owned, operated, or leased property of a Target Company pending or, to the Company’s Knowledge, threatened
that could lead to the imposition of any Liens under any Environmental Law or Environmental Liabilities.
(f) To
the Knowledge of the Company, there is not located at any of the properties of a Target Company any (i) underground storage tanks, (ii)
asbestos-containing material, or (iii) equipment containing polychlorinated biphenyls.
(g) The
Company has provided to ParentCo all environmentally related site assessments, audits, studies, reports, analysis and results of investigations
that have been performed in respect of the currently or previously owned, leased, or operated properties of any Target Company.
5.21 Transactions
with Related Persons. Except as set forth on Schedule 5.21, no Target Company nor any of its Affiliates, nor any officer,
director, or beneficial owner of 5% or more of the equity of a Target Company, manager, employee, trustee or beneficiary of a Target
Company or any of its Affiliates, nor any immediate family member of any of the foregoing (whether directly or indirectly through an
Affiliate of such Person) (each of the foregoing, a “Related Person”) is presently, or in the past three (3)
years, has been, a party to any transaction with a Target Company, including any Contract or other arrangement (a) providing for the
furnishing of services by (other than as officers, directors or employees of the Target Company), (b) providing for the rental of real
property or Personal Property or the license of Intellectual Property from, (c) granting or receiving any right or interest in any asset
of a Target Company to or from, or (d) otherwise requiring payments to (other than for services or expenses as directors, officers or
employees of the Target Company in the ordinary course of business consistent with past practice) any Related Person or any Person in
which any Related Person has an interest as an owner, officer, manager, director, trustee or partner or in which any Related Person has
any direct or indirect interest (other than the ownership of securities representing no more than two percent (2%) of the outstanding
voting power or economic interest of a publicly traded company). Except as set forth on Schedule 5.21, no Target Company has outstanding
any Contract or other arrangement or commitment with any Related Person, and no Related Person owns any real property or Personal Property,
or right, tangible or intangible (including Intellectual Property) which is used in the business of any Target Company. The assets of
the Target Companies do not include any receivable or other obligation from a Related Person, and the liabilities of the Target Companies
do not include any payable or other obligation or commitment to any Related Person.
5.22 Insurance.
(a) Schedule
5.22(a) lists all insurance policies held by a Target Company relating to a Target Company or its business, properties, assets, directors,
officers and employees, copies of which have been provided to ParentCo. All premiums due and payable under all such insurance policies
have been timely paid and the Target Companies are otherwise in material compliance with the terms of such insurance policies. Each such
insurance policy (i) is legal, valid, binding, enforceable and in full force and effect and (ii) will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms following the Closing. To the Knowledge of the Company, there is no threatened
termination of, or material premium increase with respect to, any Target Companies’ insurance policies. No Target Company has any
self-insurance or co-insurance programs. In the past five (5) years, no Target Company has received any notice from, or on behalf of,
any insurance carrier relating to or involving any adverse change or any change other than in the ordinary course of business, in the
conditions of insurance, any refusal to issue an insurance policy or non-renewal of a policy.
(b) Schedule
5.22(b) identifies each individual insurance claim in excess of $50,000 made by a Target Company in the past five (5) years. Each
Target Company has reported to its insurers all claims and pending circumstances that would reasonably be expected to result in a claim,
except where such failure to report such a claim would not be reasonably likely to be material to the Target Companies. To the Knowledge
of the Company, no event has occurred, and no condition or circumstance exists, that would reasonably be expected to (with or without
notice or lapse of time) give rise to or serve as a basis for the denial of any such insurance claim. No Target Company has made any
claim against an insurance policy as to which the insurer is denying coverage.
5.23 Books
and Records. All of the financial books and records of the Target Companies are complete and accurate in all material respects and
have been maintained in the ordinary course consistent with past practice and in accordance with applicable Laws.
5.24 Top
Customers and Suppliers. Schedule 5.24 lists, by dollar volume received or paid, as applicable, for each of (a) the twelve
(12) months ended on December 31, 2021 and (b) the period from January 1, 2020 through the Interim Balance Sheet Date, the ten (10) largest
customers of the Target Companies (the “Top Customers”) and the ten largest suppliers of goods or services
to the Target Companies (the “Top Suppliers”), along with the amounts of such dollar volumes. The relationships
of each Target Company with such suppliers and customers are good commercial working relationships and (i) no Top Supplier or Top Customer
within the last twelve (12) months has materially modified (in a negative way), cancelled or otherwise terminated, or, to the Company’s
Knowledge, intends to materially modify (in a negative way), cancel or otherwise terminate, any material relationships of such Person
with a Target Company, (ii) no Top Supplier or Top Customer has during the last twelve (12) months decreased materially or, to the Company’s
Knowledge, threatened to stop, decrease or limit materially, or intends to modify materially its material relationships with a Target
Company or intends to stop, decrease or limit materially its products or services to any Target Company or its usage or purchase of the
products or services of any Target Company, (iii) to the Company’s Knowledge, no Top Supplier or Top Customer intends to refuse
to pay any amount due to any Target Company or seek to exercise any remedy against any Target Company, (iv) no Target Company has within
the past two (2) years been engaged in any material dispute with any Top Supplier or Top Customer, and (v) to the Company’s Knowledge,
the consummation of the transactions contemplated in this Agreement and the Ancillary Documents will not adversely affect the relationship
of any Target Company with any Top Supplier or Top Customer.
5.25 Certain
Business Practices.
(a) No
Target Company, nor any of their respective Representatives acting on their behalf has (i) used any funds for unlawful contributions,
gifts, entertainment or other unlawful expenses relating to political activity, (ii) made any unlawful payment to foreign or domestic
government officials or employees, to foreign or domestic political parties or campaigns or violated any provision of the U.S. Foreign
Corrupt Practices Act of 1977 or any other local or foreign anti-corruption or bribery Law or (iii) made any other unlawful payment.
No Target Company, nor any of their respective Representatives acting on their behalf has directly or indirectly, given or agreed to
give any unlawful gift or similar benefit in any material amount to any customer, supplier, governmental employee or other Person who
is or may be in a position to help or hinder any Target Company or assist any Target Company in connection with any actual or proposed
transaction.
(b) The
operations of each Target Company are and have been conducted at all times in compliance with money laundering statutes in all applicable
jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered
or enforced by any Governmental Authority, and no Action involving a Target Company with respect to any of the foregoing is pending or,
to the Knowledge of the Company, threatened.
(c) No
Target Company or any of their respective directors or officers, or, to the Knowledge of the Company, any other Representative acting
on behalf of a Target Company is currently identified on the specially designated nationals or other blocked person, organization or
entity list currently subject to any U.S. sanctions administered by OFAC, identified by the Consolidated Screening List of the U.S. International
Trade Administration (“ITA”) or identified on the Denied Persons List, the Entity List, Unverified List, or
the Military End User List of the U.S. Department of Commerce Bureau of Industry and Security (“BIS”) and no
Target Company has in the last five (5) fiscal years, directly or indirectly, used any funds, or loaned, contributed or otherwise made
available such funds to any Subsidiary, joint venture partner, agent, or other Person, in connection with any sales or operations in
Cuba, Iran, Syria, Sudan, Myanmar or any other country sanctioned by OFAC, BIS, ITA, the U.S. Department of Treasury or U.S. Department
of Justice or for the purpose of financing the activities of any Person currently subject to, or otherwise in violation of any U.S. sanctions,
Law or regulation.
(d) To
the Knowledge of each Target Company and of their respective directors or officers, or, to the Knowledge of the Company, any other Representative
acting on behalf of a Target Company, their Affiliates, and their respective Representative and distributors in their capacity as such,
have complied in all material respects at all times and are in compliance in all respects with all applicable export trade control Laws,
including but not limited to (i) each of the Target Companies and Affiliates (A) who or which has not directly or indirectly, exported,
re-exported, sold, disclosed or otherwise transferred to (including transfers to foreign nationals located in the United States) any
goods, equipment, materials, software, technology, technical data or services in violation of such trade control Laws; and (B) has not
unlawfully engaged in any other transactions or disclosures, with any person with whom U.S. persons are prohibited from dealing under
U.S trade Laws; (ii) there is no charge, proceeding or, to the Knowledge of the Company, investigation by any Governmental Authority
with respect to a violation of any applicable trade compliance Laws that is now pending or, to the Knowledge of the Company, has been
asserted or threatened with respect to the Company or its Affiliates; and (iii) the Company or Affiliates have not made, nor need to
make a voluntary self-disclosure with respect to a possible violation of any trade compliance Laws to any Governmental Authority.
5.26 Investment
Company Act. No Target Company is an “investment company” or a Person directly or indirectly “controlled”
by or acting on behalf of an “investment company”, or required to register as an “investment company”, in each
case within the meaning of the Investment Company Act of 1940, as amended.
5.27 Finders
and Brokers. Except as set forth in Schedule 5.27, no Target Company has incurred or will incur any Liability for any brokerage,
finder’s or other fee or commission in connection with the transactions contemplated hereby.
5.28 Independent
Investigation. The Company has conducted its own independent investigation, review and analysis of the business, results of operations,
prospects, condition (financial or otherwise) or assets of Kernel, and acknowledges that it has been provided adequate access to the
personnel, properties, assets, premises, books and records, and other documents and data of Kernel for such purpose. The Company acknowledges
and agrees that: (a) in making its decision to enter into this Agreement and to consummate the transactions contemplated hereby, it has
relied solely upon its own investigation and the express representations and warranties of Kernel set forth in Agreement (including the
related portions of Kernel Disclosure Schedules) and in any certificate delivered to the Company pursuant hereto; and (b) neither Kernel
nor any of its Representatives have made any representation or warranty as to Kernel or this Agreement, except as expressly set forth
in this Agreement (including the related portions of Kernel Disclosure Schedules) or in any certificate delivered to the Company pursuant
hereto.
5.29 Information
Supplied. None of the information supplied or to be supplied by the Company expressly for inclusion or incorporation by reference:
(a) in any current report on Form 8-K, and any exhibits thereto or any other report, form, registration or other filing made with any
Governmental Authority or stock exchange with respect to the transactions contemplated by this Agreement or any Ancillary Documents;
(b) in the Registration Statement; or (c) in the mailings or other distributions to Kernel’s stockholders and/or prospective investors
with respect to the consummation of the transactions contemplated by this Agreement or in any amendment to any of documents identified
in (a) through (c), will, when filed, made available, mailed or distributed, as the case may be, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they are made, not misleading. None of the information supplied or to be supplied by the Company expressly
for inclusion or incorporation by reference in any of the Signing Press Release, the Signing Filing, the Closing Press Release and the
Closing Filing will, when filed or distributed, as applicable, contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they
are made, not misleading. Notwithstanding the foregoing, the Company makes no representation, warranty or covenant with respect to any
information supplied by or on behalf of Kernel or its Affiliates.
5.30 Disclosure.
No representations or warranties by the Company in this Agreement (as modified by the Company Disclosure Schedules) or the Ancillary
Documents, (a) contains or will contain any untrue statement of a material fact, or (b) omits or will omit to state, when read in conjunction
with all of the information contained in this Agreement, the Company Disclosure Schedules and the Ancillary Documents, any fact necessary
to make the statements or facts contained therein not materially misleading.
Article
VI
COVENANTS
6.1 Access
and Information.
(a) During
the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement in accordance with Section
8.1 or the Closing (the “Interim Period”), subject to Section 6.15, the Company shall give, and
shall cause its Representatives to give, Kernel and its Representatives, at reasonable times during normal business hours and upon reasonable
intervals and notice, reasonable access to all offices and other facilities and to all employees, properties, Contracts, agreements,
commitments, books and records, financial and operating data and other information (including Tax Returns, internal working papers, client
files, client Contracts and director service agreements), of or pertaining to the Target Companies, as Kernel or its Representatives
may reasonably request regarding the Target Companies and their respective businesses, assets, Liabilities, financial condition, prospects,
operations, management, employees and other aspects (including unaudited quarterly financial statements, including a consolidated quarterly
balance sheet and income statement, a copy of each material report, schedule and other document filed with or received by a Governmental
Authority pursuant to the requirements of applicable securities Laws, and independent public accountants’ work papers (subject
to the consent or any other conditions required by such accountants, if any)) and cause each of the Company’s Representatives to
reasonably cooperate with Kernel and its Representatives in their investigation; provided, however, that Kernel and its Representatives
shall conduct any such activities in such a manner as not to unreasonably interfere with the business or operations of the Target Companies.
No information or knowledge obtained by Kernel in any investigation conducted pursuant to the access contemplated by this Section
6.1 shall affect or be deemed to modify any representation or warranty of the Company set forth in this Agreement or otherwise impair
the rights and remedies available to Kernel hereunder.
(b) During
the Interim Period, subject to Section 6.15, Kernel shall give, and shall cause its Representatives to give, the Company and its
Representatives, at reasonable times during normal business hours and upon reasonable intervals and notice, reasonable access to all
offices and other facilities and to all employees, properties, Contracts, agreements, commitments, books and records, financial and operating
data and other information (including Tax Returns, internal working papers, client files, client Contracts and director service agreements),
of or pertaining to Kernel or its Subsidiaries, as the Company or its Representatives may reasonably request regarding Kernel, its Subsidiaries
and their respective businesses, assets, Liabilities, financial condition, prospects, operations, management, employees and other aspects
(including unaudited quarterly financial statements, including a consolidated quarterly balance sheet and income statement, a copy of
each material report, schedule and other document filed with or received by a Governmental Authority pursuant to the requirements of
applicable securities Laws, and independent public accountants’ work papers (subject to the consent or any other conditions required
by such accountants, if any)) and cause each of Kernel’s Representatives to reasonably cooperate with the Company and its Representatives
in their investigation; provided, however, that the Company and its Representatives shall conduct any such activities in such
a manner as not to unreasonably interfere with the business or operations of Kernel or any of its Subsidiaries. No information or knowledge
obtained by the Company in any investigation conducted pursuant to the access contemplated by this Section 6.1 shall affect or
be deemed to modify any representation or warranty of Kernel set forth in this Agreement or otherwise impair the rights and remedies
available to the Company hereunder.
6.2 Conduct
of Business of the Company.
(a) Unless
Kernel shall otherwise consent in writing (such consent not to be unreasonably withheld, conditioned or delayed), during the Interim
Period, except as expressly contemplated by this Agreement or the Ancillary Documents or as set forth on Schedule 6.2, the Company
shall, and shall cause its Subsidiaries to, (i) conduct their respective businesses, in all material respects, in the ordinary course
of business consistent with past practice, (ii) comply with all Laws applicable to the Target Companies and their respective businesses,
assets and employees, and (iii) take all commercially reasonable measures necessary or appropriate to preserve intact, in all material
respects, their respective business organizations, to keep available the services of their respective managers, directors, officers,
employees and consultants, and to preserve the possession, control and condition of their respective material assets, all as consistent
with past practice.
(b) Without
limiting the generality of Section 6.2(a) and except as contemplated by the terms of this Agreement or the Ancillary Documents
as set forth on Schedule 6.2, during the Interim Period, without the prior written consent of Kernel (such consent not to be unreasonably
withheld, conditioned or delayed), the Company shall not, and shall cause its Subsidiaries to not:
(i) amend,
waive or otherwise change, in any respect, its Organizational Documents;
(ii) authorize
for issuance, issue, grant, sell, pledge, dispose of or propose to issue, grant, sell, pledge or dispose of any of its equity securities
or any options, warrants, commitments, subscriptions or rights of any kind to acquire or sell any of its equity securities, or other
securities, including any securities convertible into or exchangeable for any of its shares or other equity securities or securities
of any class and any other equity-based awards, or engage in any hedging transaction with a third Person with respect to such securities;
(iii) split,
combine, recapitalize or reclassify any of its shares or other equity interests or issue any other securities in respect thereof or pay
or set aside any dividend or other distribution (whether in cash, equity or property or any combination thereof) in respect of its equity
interests, or directly or indirectly redeem, purchase or otherwise acquire or offer to acquire any of its securities;
(iv) incur,
create, assume, prepay or otherwise become liable for any Indebtedness (directly, contingently or otherwise) in excess of $100,000 individually
or $250,000 in the aggregate, make a loan or advance to or investment in any third party (other than advancement of expenses to employees
in the ordinary course of business), or guarantee or endorse any Indebtedness, Liability or obligation of any Person in excess of $100,000
individually or $250,000 in the aggregate;
(v) increase
the wages, salaries or compensation of its employees other than in the ordinary course of business, consistent with past practice, and
in any event not in the aggregate by more than five percent (5%), or make or commit to make any bonus payment (whether in cash, property
or securities) to any employee, or materially increase other benefits of employees generally, or enter into, establish, materially amend
or terminate any Company Benefit Plan with, for or in respect of any current consultant, officer, manager director or employee, in each
case other than as required by applicable Law, pursuant to the terms of any Company Benefit Plans or in the ordinary course of business
consistent with past practice;
(vi) make
or rescind any material election relating to Taxes, settle any claim, action, suit, litigation, proceeding, arbitration, investigation,
audit or controversy relating to Taxes, file any amended Tax Return or claim for refund, or make any material change in its accounting
or Tax policies or procedures, in each case except as required by applicable Law or in compliance with GAAP;
(vii) transfer
or license to any Person or otherwise extend, materially amend or modify, permit to lapse or fail to preserve any material Company Registered
IP, Company Licensed IP or other Company IP (excluding non-exclusive licenses of Company IP to Target Company customers in the ordinary
course of business consistent with past practice), or disclose to any Person who has not entered into a confidentiality agreement any
Trade Secrets;
(viii) terminate,
or waive or assign any material right under, any Company Material Contract or enter into any Contract that would be a Company Material
Contract, in any case outside of the ordinary course of business consistent with past practice;
(ix) fail
to maintain its books, accounts and records in all material respects in the ordinary course of business consistent with past practice;
(x) establish
any Subsidiary or enter into any new line of business;
(xi) fail
to use commercially reasonable efforts to keep in force insurance policies or replacement or revised policies providing insurance coverage
with respect to its assets, operations and activities in such amount and scope of coverage substantially similar to that which is currently
in effect;
(xii) revalue
any of its material assets or make any material change in accounting methods, principles or practices, except to the extent required
to comply with GAAP and after consulting with the Company’s outside auditors;
(xiii) waive,
release, assign, settle or compromise any claim, action or proceeding (including any suit, action, claim, proceeding or investigation
relating to this Agreement or the transactions contemplated hereby), other than waivers, releases, assignments, settlements or compromises
that involve only the payment of monetary damages (and not the imposition of equitable relief on, or the admission of wrongdoing by,
a Target Company or its Affiliates) not in excess of $100,000 (individually or in the aggregate), or otherwise pay, discharge or satisfy
any Actions, Liabilities or obligations, unless such amount has been reserved in the Company Financials;
(xiv) close
or materially reduce its activities, or effect any layoff or other personnel reduction or change, at any of its facilities;
(xv) acquire,
including by merger, consolidation, acquisition of equity interests or assets, or any other form of business combination, any corporation,
partnership, limited liability company, other business organization or any division thereof, or any material amount of assets outside
the ordinary course of business consistent with past practice;
(xvi) make
capital expenditures in excess of $100,000 (individually for any project (or set of related projects) or $250,000 in the aggregate);
(xvii) adopt
a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization;
(xviii) voluntarily
incur any Liability or obligation (whether absolute, accrued, contingent or otherwise) in excess of $100,000 individually or $250,000
in the aggregate other than pursuant to the terms of a Company Material Contract or Company Benefit Plan;
(xix) sell,
lease, license, transfer, exchange or swap, mortgage or otherwise pledge or encumber (including securitizations), or otherwise dispose
of any material portion of its properties, assets or rights;
(xx) enter
into any agreement, understanding or arrangement with respect to the voting of equity securities of the Company;
(xxi) take
any action that would reasonably be expected to significantly delay or impair the obtaining of any Consents of any Governmental Authority
to be obtained in connection with this Agreement;
(xxii) accelerate
the collection of any trade receivables or delay the payment of trade payables or any other liabilities other than in the ordinary course
of business consistent with past practice;
(xxiii) enter
into, amend, waive or terminate (other than terminations in accordance with their terms) any transaction with any Related Person (other
than compensation and benefits and advancement of expenses, in each case, provided in the ordinary course of business consistent with
past practice);
(xxiv) maintain
the existing relations and goodwill of the Target Companies with customers, suppliers, distributors and creditors of the Target Companies
and use commercially reasonable efforts to maintain all insurance policies of the Target Companies or equivalent substitutes therefor;
or
(xxv) authorize
or agree to do any of the foregoing actions.
(c) Notwithstanding
the foregoing, Kernel hereby consents to the Company engaging in, executing and closing the following transactions, and waives any violations
of the restrictions set forth in Sections 6.2(a) and Section 6.2(b) above related thereto:
(i) The
acquisition of Airgility, Inc., a Delaware corporation, and any ancillary documents related thereto; and
(ii) The
raising of capital, whether in the form of equity, convertible security or other form of financing, and any ancillary documents related
thereto.
6.3 Conduct
of Business of Kernel.
(a) Unless
the Company shall otherwise consent in writing (such consent not to be unreasonably withheld, conditioned or delayed), during the Interim
Period, except as expressly contemplated by this Agreement or the Ancillary Documents or as set forth on Schedule 6.3(a), Kernel
shall, and shall cause its Subsidiaries to, (i) conduct their respective businesses, in all material respects, in the ordinary course
of business consistent with past practice, (ii) comply with all Laws applicable to Kernel and its Subsidiaries and their respective businesses,
assets and employees, and (iii) take all commercially reasonable measures necessary or appropriate to preserve intact, in all material
respects, their respective business organizations, to keep available the services of their respective managers, directors, officers,
employees and consultants, and to preserve the possession, control and condition of their respective material assets, all as consistent
with past practice. Notwithstanding anything to the contrary in this Section 6.3(a), nothing in this Agreement shall prohibit
or restrict Kernel from extending, in accordance with Kernel’s Organizational Documents and the IPO Prospectus, the deadline by
which it must complete its Business Combination (an “Extension” and, together, the “Extensions”),
and no consent of any other Party shall be required in connection therewith.
(b) Without
limiting the generality of Section 6.3(a) and except as contemplated by the terms of this Agreement or the Ancillary Documents
(including as contemplated by any PIPE/Convertible Note Investment) or as set forth on Schedule 6.3(b), during the Interim Period,
without the prior written consent of the Company (such consent not to be unreasonably withheld, conditioned or delayed), Kernel shall
not, and shall cause its Subsidiaries to not:
(i) amend,
waive or otherwise change, in any respect, its Organizational Documents other than in connection with the Domestication;
(ii) authorize
for issuance, issue, grant, sell, pledge, dispose of or propose to issue, grant, sell, pledge or dispose of any of its equity securities
or any options, warrants, commitments, subscriptions or rights of any kind to acquire or sell any of its equity securities, or other
securities, including any securities convertible into or exchangeable for any of its equity securities or other security interests of
any class and any other equity-based awards, or engage in any hedging transaction with a third Person with respect to such securities;
(iii) split,
combine, recapitalize or reclassify any of its shares or other equity interests or issue any other securities in respect thereof or pay
or set aside any dividend or other distribution (whether in cash, equity or property or any combination thereof) in respect of its shares
or other equity interests, or directly or indirectly redeem, purchase or otherwise acquire or offer to acquire any of its securities;
(iv) incur,
create, assume, prepay or otherwise become liable for any Indebtedness (directly, contingently or otherwise) in excess of $100,000 individually
or $250,000 in the aggregate, make a loan or advance to or investment in any third party, or guarantee or endorse any Indebtedness, Liability
or obligation of any Person (provided, that this Section 6.3(b)(iv) shall not prevent Kernel from borrowing funds necessary to
finance its ordinary course administrative costs and expenses and Expenses incurred in connection with the consummation of the Merger
and the other transactions contemplated by this Agreement (including any costs and expenses necessary for Extensions (such expenses,
“Extension Expenses”), up to aggregate additional Indebtedness during the Interim Period of $5,000,000);
(v) make
or rescind any material election relating to Taxes, settle any claim, action, suit, litigation, proceeding, arbitration, investigation,
audit or controversy relating to Taxes, file any amended Tax Return or claim for refund, or make any material change in its accounting
or Tax policies or procedures, in each case except as required by applicable Law or in compliance with GAAP;
(vi) amend,
waive or otherwise change the Trust Agreement in any manner adverse to Kernel;
(vii) terminate,
waive or assign any material right under any Kernel Material Contract;
(viii) fail
to maintain its books, accounts and records in all material respects in the ordinary course of business consistent with past practice;
(ix) establish
any Subsidiary or enter into any new line of business;
(x) fail
to use commercially reasonable efforts to keep in force insurance policies or replacement or revised policies providing insurance coverage
with respect to its assets, operations and activities in such amount and scope of coverage substantially similar to that which is currently
in effect;
(xi) revalue
any of its material assets or make any material change in accounting methods, principles or practices, except to the extent required
to comply with GAAP and after consulting Kernel’s outside auditors;
(xii) waive,
release, assign, settle or compromise any claim, action or proceeding (including any suit, action, claim, proceeding or investigation
relating to this Agreement or the transactions contemplated hereby), other than waivers, releases, assignments, settlements or compromises
that involve only the payment of monetary damages (and not the imposition of equitable relief on, or the admission of wrongdoing by,
Kernel or its Subsidiary) not in excess of $100,000 (individually or in the aggregate), or otherwise pay, discharge or satisfy any Actions,
Liabilities or obligations, unless such amount has been reserved in Kernel Financials;
(xiii) acquire,
including by merger, consolidation, acquisition of equity interests or assets, or any other form of business combination, any corporation,
partnership, limited liability company, other business organization or any division thereof, or any material amount of assets outside
the ordinary course of business;
(xiv) make
capital expenditures in excess of $100,000 individually for any project (or set of related projects) or $250,000 in the aggregate (excluding
for the avoidance of doubt, incurring any Expenses);
(xv) adopt
a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization
(other than with respect to the Merger);
(xvi) voluntarily
incur any Liability or obligation (whether absolute, accrued, contingent or otherwise) in excess of $100,000 individually or $250,000
in the aggregate (excluding the incurrence of any Expenses) other than pursuant to the terms of a Contract in existence as of the date
of this Agreement or entered into in the ordinary course of business or in accordance with the terms of this Section 6.3 during
the Interim Period;
(xvii) sell,
lease, license, transfer, exchange or swap, mortgage or otherwise pledge or encumber (including securitizations), or otherwise dispose
of any material portion of its properties, assets or rights;
(xviii) enter
into any agreement, understanding or arrangement with respect to the voting of Kernel Securities;
(xix) take
any action that would reasonably be expected to significantly delay or impair the obtaining of any Consents of any Governmental Authority
to be obtained in connection with this Agreement; or
(xx) authorize
or agree to do any of the foregoing actions.
6.4 Annual
and Interim Financial Statements. During the Interim Period, within thirty (30) calendar days following the end of each calendar
month, each three-month quarterly period and each fiscal year (or such earlier date as such financial statements need to be available
for inclusion in the Registration Statement), the Company shall deliver to Kernel unaudited consolidated financial statements, including
an income statement an unaudited consolidated balance sheet, changes in shareholders’ equity, and consolidated statement of cash
flows of the Target Companies for the period from the Interim Balance Sheet Date through the end of such calendar month, quarterly period
or fiscal year and the applicable comparative period in the preceding fiscal year, in each case accompanied by a certificate of the Chief
Financial Officer of the Company to the effect that all such financial statements fairly present the consolidated financial position
and results of operations of the Target Companies as of the date or for the periods indicated, in accordance with GAAP, subject to year-end
audit adjustments and excluding footnotes. From the date hereof through the Closing Date, the Company will also promptly deliver to Kernel
copies of any audited consolidated financial statements of the Target Companies that the Target Companies’ certified public accountants
may issue.
6.5 Kernel
Public Filings. During the Interim Period, Kernel will keep current and timely file all of its public filings with the SEC and otherwise
comply in all material respects with applicable securities Laws and shall use its commercially reasonable efforts prior to the Closing
to maintain the listing of the Old Kernel Public Units, the Old Kernel Preferred Stock, the Old Kernel Class A Stock, the Old Kernel
Class B Stock and the Old Kernel Public Warrants on Nasdaq; provided, that the Parties acknowledge and agree that from and after
the Closing, the Parties intend to list on Nasdaq only Kernel Common Stock and Kernel Public Warrants.
6.6 No
Solicitation.
(a) For
purposes of this Agreement, (i) an “Acquisition Proposal” means any inquiry, proposal or offer, or any indication
of interest in making an offer or proposal, from any Person or group at any time relating to an Alternative Transaction, and (ii) an
“Alternative Transaction” means (A) with respect to the Company and its Affiliates, a transaction (other than
the transactions contemplated by this Agreement) concerning the sale of (x) all or any material part of the business or assets of the
Target Companies (other than in the ordinary course of business consistent with past practice) or (y) any of the shares or other equity
interests or profits of the Target Companies, in any case, whether such transaction takes the form of a sale of shares or other equity
interests, assets, merger, consolidation, issuance of debt securities, management Contract, joint venture or partnership, or otherwise
and (B) with respect to Kernel and its Affiliates, a transaction (other than the transactions contemplated by this Agreement) concerning
a Business Combination involving Kernel.
(b) During
the Interim Period, in order to induce the other Parties to continue to commit to expend management time and financial resources in furtherance
of the transactions contemplated hereby, each Party shall not, and shall cause its Representatives to not, without the prior written
consent of the Company and Kernel, directly or indirectly, (i) solicit, assist, initiate or facilitate the making, submission or announcement
of, or intentionally encourage, any Acquisition Proposal, (ii) furnish any non-public information regarding such Party or its Affiliates
or their respective businesses, operations, assets, Liabilities, financial condition, prospects or employees to any Person or group (other
than a Party to this Agreement or their respective Representatives) in connection with or in response to an Acquisition Proposal, (iii)
engage or participate in discussions or negotiations with any Person or group with respect to, or that could reasonably be expected to
lead to, an Acquisition Proposal, (iv) approve, endorse or recommend, or publicly propose to approve, endorse or recommend, any Acquisition
Proposal, (v) negotiate or enter into any letter of intent, agreement in principle, acquisition agreement or other similar agreement
related to any Acquisition Proposal, or (vi) release any third Person from, or waive any provision of, any confidentiality agreement
to which such Party is a party.
(c) Each
Party shall notify the others as promptly as practicable (and in any event within 48 hours) in writing of the receipt by such Party or
any of its Representatives of (i) any bona fide inquiries, proposals or offers, requests for information or requests for discussions
or negotiations regarding or constituting any Acquisition Proposal or any bona fide inquiries, proposals or offers, requests for information
or requests for discussions or negotiations that could be expected to result in an Acquisition Proposal, and (ii) any request for non-public
information relating to such Party or its Affiliates in connection with any Acquisition Proposal, specifying in each case, the material
terms and conditions thereof (including a copy thereof if in writing or a written summary thereof if oral) and the identity of the party
making such inquiry, proposal, offer or request for information. Each Party shall keep the others promptly informed of the status of
any such inquiries, proposals, offers or requests for information. During the Interim Period, each Party shall, and shall cause its Representatives
to, immediately cease and cause to be terminated any solicitations, discussions or negotiations with any Person with respect to any Acquisition
Proposal and shall, and shall direct its Representatives to, cease and terminate any such solicitations, discussions or negotiations.
6.7 No
Trading. The Company acknowledges and agrees that it is aware, and that the Company’s Affiliates are aware (and each of their
respective Representatives is aware or, upon receipt of any material nonpublic information of Kernel, will be advised) of the restrictions
imposed by U.S. federal securities laws and the rules and regulations of the SEC and Nasdaq promulgated thereunder or otherwise (the
“Federal Securities Laws”) and other applicable foreign and domestic Laws on a Person possessing material nonpublic
information about a publicly traded company. The Company hereby agrees that, while it is in possession of such material nonpublic information,
it shall not purchase or sell any securities of Kernel (other than to engage in the Merger in accordance with Article I), communicate
such information to any third party, take any other action with respect to Kernel in violation of such Laws, or cause or encourage any
third party to do any of the foregoing.
6.8 Notification
of Certain Matters. During the Interim Period, each Party shall give prompt notice to the other Parties if such Party or its Affiliates:
(a) fails to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it or its Affiliates hereunder
in any material respect; (b) receives any notice or other communication in writing from any third party (including any Governmental Authority)
alleging (i) that the Consent of such third party is or may be required in connection with the transactions contemplated by this Agreement
or (ii) any non-compliance with any Law by such Party or its Affiliates; (c) receives any notice or other communication from any Governmental
Authority in connection with the transactions contemplated by this Agreement; (d) discovers any fact or circumstance that, or becomes
aware of the occurrence or non-occurrence of any event the occurrence or non-occurrence of which, would reasonably be expected to cause
or result in any of the conditions to the Closing set forth in Article VII not being satisfied or the satisfaction of those conditions
being materially delayed; or (e) becomes aware of the commencement or threat, in writing, of any Action against such Party or any of
its Affiliates, or any of their respective properties or assets, or, to the Knowledge of such Party, any officer, director, partner,
member or manager, in his, her or its capacity as such, of such Party or of its Affiliates with respect to the consummation of the transactions
contemplated by this Agreement. No such notice shall constitute an acknowledgement or admission by the Party providing the notice regarding
whether or not any of the conditions to the Closing have been satisfied or in determining whether or not any of the representations,
warranties or covenants contained in this Agreement have been breached.
6.9 Efforts.
(a) Subject
to the terms and conditions of this Agreement, each Party shall use its commercially reasonable efforts, and shall cooperate fully with
the other Parties, to take, or cause to be taken, all actions and to do, or cause to be done, all things reasonably necessary, proper
or advisable under applicable Laws and regulations to consummate the transactions contemplated by this Agreement (including the receipt
of all applicable Consents of Governmental Authorities) and to comply as promptly as practicable with all requirements of Governmental
Authorities applicable to the transactions contemplated by this Agreement.
(b) In
furtherance and not in limitation of Section 6.9(a), to the extent required under any Laws that are designed to prohibit, restrict
or regulate actions having the purpose or effect of monopolization or restraint of trade (“Antitrust Laws”),
each Party hereto agrees to make any required filing or application under Antitrust Laws, as applicable, at such Party’s sole cost
and expense, with respect to the transactions contemplated hereby as promptly as practicable, to supply as promptly as reasonably practicable
any additional information and documentary material that may be reasonably requested pursuant to Antitrust Laws and to take all other
actions reasonably necessary, proper or advisable to cause the expiration or termination of the applicable waiting periods under Antitrust
Laws as soon as practicable, including by requesting early termination of the waiting period provided for under the Antitrust Laws. Each
Party shall, in connection with its efforts to obtain all requisite approvals and authorizations for the transactions contemplated by
this Agreement under any Antitrust Law, use its commercially reasonable efforts to: (i) cooperate in all respects with each other Party
or its Affiliates in connection with any filing or submission and in connection with any investigation or other inquiry, including any
proceeding initiated by a private Person; (ii) keep the other Parties reasonably informed of any communication received by such Party
or its Representatives from, or given by such Party or its Representatives to, any Governmental Authority and of any communication received
or given in connection with any proceeding by a private Person, in each case regarding any of the transactions contemplated by this Agreement;
(iii) permit a Representative of the other Parties and their respective outside counsel to review any communication given by it to, and
consult with each other in advance of any meeting or conference with, any Governmental Authority or, in connection with any proceeding
by a private Person, with any other Person, and to the extent permitted by such Governmental Authority or other Person, give a Representative
or Representatives of the other Parties the opportunity to attend and participate in such meetings and conferences; (iv) in the event
a Party’s Representative is prohibited from participating in or attending any meetings or conferences, the other Parties shall
keep such Party promptly and reasonably apprised with respect thereto; and (v) use commercially reasonable efforts to cooperate in the
filing of any memoranda, white papers, filings, correspondence or other written communications explaining or defending the transactions
contemplated hereby, articulating any regulatory or competitive argument, and/or responding to requests or objections made by any Governmental
Authority.
(c) As
soon as reasonably practicable following the date of this Agreement, the Parties shall reasonably cooperate with each other and use (and
shall cause their respective Affiliates to use) their respective commercially reasonable efforts to prepare and file with Governmental
Authorities requests for approval of the transactions contemplated by this Agreement and shall use all commercially reasonable efforts
to have such Governmental Authorities approve the transactions contemplated by this Agreement. Each Party shall give prompt written notice
to the other Parties if such Party or any of its Representatives receives any notice from such Governmental Authorities in connection
with the transactions contemplated by this Agreement, and shall promptly furnish the other Parties with a copy of such Governmental Authority
notice. If any Governmental Authority requires that a hearing or meeting be held in connection with its approval of the transactions
contemplated hereby, whether prior to the Closing or after the Closing, each Party shall arrange for Representatives of such Party to
be present for such hearing or meeting. If any objections are asserted with respect to the transactions contemplated by this Agreement
under any applicable Law or if any Action is instituted (or threatened to be instituted) by any applicable Governmental Authority or
any private Person challenging any of the transactions contemplated by this Agreement or any Ancillary Document as violative of any applicable
Law or which would otherwise prevent, materially impede or materially delay the consummation of the transactions contemplated hereby
or thereby, the Parties shall use their commercially reasonable efforts to resolve any such objections or Actions so as to timely permit
consummation of the transactions contemplated by this Agreement and the Ancillary Documents, including in order to resolve such objections
or Actions which, in any case if not resolved, could reasonably be expected to prevent, materially impede or materially delay the consummation
of the transactions contemplated hereby or thereby. In the event any Action is instituted (or threatened to be instituted) by a Governmental
Authority or private Person challenging the transactions contemplated by this Agreement, or any Ancillary Document, the Parties shall,
and shall cause their respective Representatives to, reasonably cooperate with each other and use their respective commercially reasonable
efforts to contest and resist any such Action and to have vacated, lifted, reversed or overturned any Order, whether temporary, preliminary
or permanent, that is in effect and that prohibits, prevents or restricts consummation of the transactions contemplated by this Agreement
or the Ancillary Documents.
(d) Prior
to the Closing, each Party shall use its commercially reasonable efforts to obtain any Consents of Governmental Authorities or other
third Persons as may be necessary for the consummation by such Party or its Affiliates of the transactions contemplated by this Agreement
or required as a result of the execution or performance of, or consummation of the transactions contemplated by, this Agreement by such
Party or its Affiliates, and the other Parties shall provide reasonable cooperation in connection with such efforts.
6.10 Tax
Matters. Each of the Parties shall use its reasonable best efforts to cause the First Merger and the Second Merger to be treated
as part of an integrated transaction that qualifies as a reorganization pursuant to Section 368 of the Code and/or a contribution pursuant
to Section 351 of the Code (collectively, the “Intended Tax Treatment”). Each Party shall file all Tax Returns
consistent with, and take no position inconsistent with, such treatment (whether in audits, Tax Returns or otherwise) unless required
to do so pursuant to a “determination” within the meaning of Section 1313(a) of the Code. From and after the date of this
Agreement, none of the Parties shall, nor shall they permit any of their Affiliates to, knowingly take any action, cause any action to
be taken or omit to take any action which could cause the transactions to fail to qualify for, or fail to be reported in a manner consistent
with, the Intended Tax Treatment.
6.11 Further
Assurances. The Parties shall further cooperate with each other and use their respective commercially reasonable efforts to take
or cause to be taken all actions, and do or cause to be done all things, necessary, proper or advisable on their part under this Agreement
and applicable Laws to consummate the transactions contemplated by this Agreement as soon as reasonably practicable, including preparing
and filing as soon as practicable all documentation to effect all necessary notices, reports and other filings.
6.12 The
Registration Statement.
(a) As
promptly as practicable after the date hereof, Kernel shall prepare with the reasonable assistance of the Company, and file with the
SEC a registration statement on Form S-4 (as amended or supplemented from time to time, and including the Proxy Statement contained therein,
the “Registration Statement”) in connection with the registration under the Securities Act of Kernel Common
Stock to be issued under this Agreement as the Merger Consideration, which Registration Statement will also contain a proxy statement
(as amended, the “Proxy Statement”) for the purpose of soliciting proxies from Kernel stockholders for the
matters to be acted upon at Kernel Special Meeting and providing the Public Stockholders an opportunity in accordance with Kernel’s
Organizational Documents and the IPO Prospectus to have their shares of Old Kernel Class A Stock redeemed (the “Redemption”)
in conjunction with the stockholder vote on Kernel Stockholder Approval Matters. The Proxy Statement shall include proxy materials for
the purpose of soliciting proxies from Kernel stockholders to vote, at a special meeting of Kernel stockholders to be called and held
for such purpose (the “Kernel Special Meeting”), in favor of resolutions approving (i) the adoption and approval
of this Agreement and the transactions contemplated hereby or referred to herein, including the Merger (and, to the extent required,
the issuance of any shares in connection with any PIPE/Convertible Note Investment), by the holders of shares of Old Kernel Class A Stock
and Old Kernel Class B Stock in accordance with Kernel’s Organizational Documents, the Companies Act and the rules and regulations
of the SEC and Nasdaq, (ii) the adoption and approval of the Amended Kernel Charter, (iii) the appointment of the members of the post-Closing
Kernel Board in accordance with Section 6.17 hereof, (iv) such other matters as the Company and Kernel shall hereafter mutually
determine to be necessary or appropriate in order to effect the Merger and the other transactions contemplated by this Agreement (the
approvals described in foregoing clauses (i) through (iv), collectively, the “Kernel Stockholder Approval Matters”),
and (v) the adjournment of Kernel Special Meeting, if necessary or desirable in the reasonable determination of Kernel. If on the date
for which Kernel Special Meeting is scheduled, Kernel has not received proxies representing a sufficient number of shares to obtain the
Required Kernel Stockholder Approval, whether or not a quorum is present, Kernel may make one or more successive postponements or adjournments
of Kernel Special Meeting. In connection with the Registration Statement, Kernel will file with the SEC financial and other information
about the transactions contemplated by this Agreement in accordance with applicable Law and applicable proxy solicitation and registration
statement rules set forth in Kernel’s Organizational Documents, the Companies Act and the rules and regulations of the SEC and
Nasdaq. Kernel shall cooperate and provide the Company (and its counsel) with a reasonable opportunity to review and comment on the Registration
Statement and any amendment or supplement thereto prior to filing the same with the SEC. The Company shall provide Kernel with such information
concerning the Target Companies and their stockholders, officers, directors, employees, assets, Liabilities, condition (financial or
otherwise), business and operations that may be required or appropriate for inclusion in the Registration Statement, or in any amendments
or supplements thereto, which information provided by the Company shall be true and correct and not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which
they were made, not materially misleading.
(b) Kernel
shall take any and all reasonable and necessary actions required to satisfy the requirements of the Securities Act, the Exchange Act
and other applicable Laws in connection with the Registration Statement, Kernel Special Meeting and the Redemption. Each of Kernel and
the Company shall, and shall cause each of its Subsidiaries to, make their respective directors, officers and employees, upon reasonable
advance notice, available to the Company, Kernel and, after the Closing, Kernel Representative, and their respective Representatives
in connection with the drafting of the public filings with respect to the transactions contemplated by this Agreement, including the
Registration Statement, and responding in a timely manner to comments from the SEC. Each Party shall promptly correct any information
provided by it for use in the Registration Statement (and other related materials) if and to the extent that such information is determined
to have become false or misleading in any material respect or as otherwise required by applicable Laws. Kernel shall amend or supplement
the Registration Statement and cause the Registration Statement, as so amended or supplemented, to be filed with the SEC and to be disseminated
to Kernel stockholders, in each case as and to the extent required by applicable Laws and subject to the terms and conditions of this
Agreement and Kernel’s Organizational Documents.
(c) Kernel,
with the assistance of the other Parties, shall promptly respond to any SEC comments on the Registration Statement and shall otherwise
use its commercially reasonable efforts to cause the Registration Statement to “clear” comments from the SEC and become effective.
Kernel shall provide the Company with copies of any written comments, and shall inform the Company of any material oral comments, that
Kernel or its Representatives receive from the SEC or its staff with respect to the Registration Statement, Kernel Special Meeting and
the Redemption promptly after the receipt of such comments and shall give the Company a reasonable opportunity under the circumstances
to review and comment on any proposed written or material oral responses to such comments.
(d) As
soon as practicable following the Registration Statement “clearing” comments from the SEC and becoming effective, Kernel
shall distribute the Registration Statement to Kernel’s stockholders and the Company Stockholders, and, pursuant thereto, shall
call Kernel Special Meeting in accordance with the Companies Act for a date no later than thirty (30) days following the effectiveness
of the Registration Statement.
(e) Kernel
shall comply with all applicable Laws, any applicable rules and regulations of Nasdaq, Kernel’s Organizational Documents and this
Agreement in the preparation, filing and distribution of the Registration Statement, any solicitation of proxies thereunder, the calling
and holding of Kernel Special Meeting and the Redemption.
6.13 Company
Stockholder Meeting. As promptly as practicable after the Registration Statement has become effective, the Company will call a meeting
of its stockholders in order to obtain the Required Company Stockholder Approval (the “Company Special Meeting”),
and the Company shall use its reasonable best efforts to solicit from the Company Stockholders proxies in favor of the Required Company
Stockholder Approval prior to such Company Special Meeting, and to take all other actions necessary or advisable to secure the Required
Company Stockholder Approval.
6.14 Public
Announcements.
(a) The
Parties agree that during the Interim Period no public release, filing or announcement concerning this Agreement or the Ancillary Documents
or the transactions contemplated hereby or thereby shall be issued by any Party or any of their Affiliates without the prior written
consent of Kernel and the Company (which consent shall not be unreasonably withheld, conditioned or delayed), except as such release
or announcement may be required by applicable Law or the rules or regulations of any securities exchange, in which case the applicable
Party shall use commercially reasonable efforts to allow the other Parties reasonable time to comment on, and arrange for any required
filing with respect to, such release or announcement in advance of such issuance.
(b) The
Parties shall mutually agree upon and, as promptly as practicable after the execution of this Agreement (but in any event within four
(4) Business Days thereafter), issue a press release announcing the execution of this Agreement (the “Signing Press Release”).
Promptly after the issuance of the Signing Press Release, Kernel shall file a current report on Form 8-K (the “Signing Filing”)
with the Signing Press Release and a description of this Agreement as required by Federal Securities Laws, which the Company shall review,
comment upon and approve (which approval shall not be unreasonably withheld, conditioned or delayed) prior to filing (with the Company
reviewing, commenting upon and approving such Signing Filing in any event no later than the third (3rd) Business Day after
the execution of this Agreement). The Parties shall mutually agree upon and, as promptly as practicable after the Closing (but in any
event within four (4) Business Days thereafter), issue a press release announcing the consummation of the transactions contemplated by
this Agreement (the “Closing Press Release”). Promptly after the issuance of the Closing Press Release, Kernel
shall file a current report on Form 8-K (the “Closing Filing”) with the Closing Press Release and a description
of the Closing as required by Federal Securities Laws which the Seller Representative and Kernel Representative shall review, comment
upon and approve (which approval shall not be unreasonably withheld, conditioned or delayed) prior to filing. In connection with the
preparation of the Signing Press Release, the Signing Filing, the Closing Filing, the Closing Press Release, or any other report, statement,
filing notice or application made by or on behalf of a Party to any Governmental Authority or other third party in connection with the
transactions contemplated hereby, each Party shall, upon request by any other Party, furnish the Parties with all information concerning
themselves, their respective directors, officers and equity holders, and such other matters as may be reasonably necessary or advisable
in connection with the transactions contemplated hereby, or any other report, statement, filing, notice or application made by or on
behalf of a Party to any third party and/ or any Governmental Authority in connection with the transactions contemplated hereby.
6.15 Confidential
Information.
(a) The
Company and the Seller Representative hereby agrees that during the Interim Period and, in the event that this Agreement is terminated
in accordance with Article VIII, for a period of two (2) years after such termination, they shall, and shall cause their respective
Representatives to: (i) treat and hold in strict confidence any Kernel Confidential Information, and will not use for any purpose (except
in connection with the consummation of the transactions contemplated by this Agreement or the Ancillary Documents, performing their obligations
hereunder or thereunder, enforcing their rights hereunder or thereunder, or in furtherance of their authorized duties on behalf of Kernel
or its Subsidiaries), nor directly or indirectly disclose, distribute, publish, disseminate or otherwise make available to any third
party any of Kernel Confidential Information without Kernel’s prior written consent; and (ii) in the event that the Company, the
Seller Representative or any of their respective Representatives, during the Interim Period or, in the event that this Agreement is terminated
in accordance with Article VIII, for a period of two (2) years after such termination, becomes legally compelled to disclose any
Kernel Confidential Information, (A) provide Kernel to the extent legally permitted with prompt written notice of such requirement so
that Kernel or an Affiliate thereof may seek, at Kernel’s cost, a protective Order or other remedy or waive compliance with this
Section 6.15(a), and (B) in the event that such protective Order or other remedy is not obtained, or Kernel waives compliance
with this Section 6.15(a), furnish only that portion of such Kernel Confidential Information which is legally required to be provided
as advised in writing by outside counsel and to exercise its commercially reasonable efforts to obtain assurances that confidential treatment
will be accorded such Kernel Confidential Information. In the event that this Agreement is terminated and the transactions contemplated
hereby are not consummated, the Company and the Seller Representative shall, and shall cause their respective Representatives to, promptly
deliver to Kernel or destroy (at Kernel’s election) any and all copies (in whatever form or medium) of Kernel Confidential Information
and destroy all notes, memoranda, summaries, analyses, compilations and other writings related thereto or based thereon; provided, however,
that the Company and the Seller Representative and their respective Representatives shall be entitled to keep any records required by
applicable Law or bona fide record retention policies; and provided, further, that any Kernel Confidential Information that is not returned
or destroyed shall remain subject to the confidentiality obligations set forth in this Agreement.
(b) Kernel
hereby agrees that during the Interim Period and, in the event that this Agreement is terminated in accordance with Article VIII,
for a period of two (2) years after such termination, it shall, and shall cause its Representatives to: (i) treat and hold in strict
confidence any Company Confidential Information, and will not use for any purpose (except in connection with the consummation of the
transactions contemplated by this Agreement or the Ancillary Documents, performing its obligations hereunder or thereunder or enforcing
its rights hereunder or thereunder), nor directly or indirectly disclose, distribute, publish, disseminate or otherwise make available
to any third party any of the Company Confidential Information without the Company’s prior written consent; and (ii) in the event
that Kernel or any of its Representatives, during the Interim Period or, in the event that this Agreement is terminated in accordance
with Article VIII, for a period of two (2) years after such termination, becomes legally compelled to disclose any Company Confidential
Information, (A) provide the Company to the extent legally permitted with prompt written notice of such requirement so that the Company
may seek, at the Company’s sole expense, a protective Order or other remedy or waive compliance with this Section 6.15(b)
and (B) in the event that such protective Order or other remedy is not obtained, or the Company waives compliance with this Section
6.15(b), furnish only that portion of such Company Confidential Information which is legally required to be provided as advised in
writing by outside counsel and to exercise its commercially reasonable efforts to obtain assurances that confidential treatment will
be accorded such Company Confidential Information. In the event that this Agreement is terminated and the transactions contemplated hereby
are not consummated, Kernel shall, and shall cause its Representatives to, promptly deliver to the Company or destroy (at Kernel’s
election) any and all copies (in whatever form or medium) of Company Confidential Information and destroy all notes, memoranda, summaries,
analyses, compilations and other writings related thereto or based thereon; provided, however, that Kernel and its Representatives shall
be entitled to keep any records required by applicable Law or bona fide record retention policies; and provided, further, that any Company
Confidential Information that is not returned or destroyed shall remain subject to the confidentiality obligations set forth in this
Agreement. Notwithstanding the foregoing, Kernel and its Representatives shall be permitted to disclose any and all Company Confidential
Information to the extent required by the Federal Securities Laws.
6.16 Documents
and Information. After the Closing Date, ParentCo and the Company shall, and shall cause their respective Subsidiaries to, until
the seventh (7th) anniversary of the Closing Date, retain all books, records and other documents pertaining to the business
of the Target Companies in existence on the Closing Date and make the same available for inspection and copying by ParentCo Representative
during normal business hours of the Company and its Subsidiaries, as applicable, upon reasonable request and upon reasonable notice.
No such books, records or documents shall be destroyed after the seventh (7th) anniversary of the Closing Date by ParentCo
or its Subsidiaries (including any Target Company) without first advising ParentCo Representative in writing and giving ParentCo Representative
a reasonable opportunity to obtain possession thereof.
6.17 Post-Closing
Board of Directors and Executive Officers.
(a) The
Parties shall take all necessary action, including causing the directors of ParentCo to resign, so that effective as of the Closing,
ParentCo’s board of directors (the “Post-Closing ParentCo Board”) will consist of nine (9) individuals.
Immediately after the Closing, the Parties shall take all necessary action to designate and appoint to the Post-Closing ParentCo Board
(i) the two (2) persons that are designated by ParentCo prior to the Closing (the “ParentCo Directors”), and
(ii) the seven (7) persons that are designated by the Company prior to the Closing (the “Company Directors”),
at least four (4) of whom shall be required to qualify as an independent director under Nasdaq rules. The Post-Closing ParentCo Board
directors shall be classified, with respect to the term for which they severally hold office, into three classes. The initial Class I
Directors shall serve for a term expiring at the first annual meeting of stockholders to be held following the Closing; the initial Class
II Directors shall serve for a term expiring at the second annual meeting of stockholders following the Closing; and the initial Class
III Directors shall serve for a term expiring at the third annual meeting of stockholders to be held following the Closing. At each succeeding
annual meeting of stockholders, beginning with the first annual meeting of stockholders following the Closing, Directors elected to succeed
those Directors whose terms expire shall be elected for a term of office to expire at the third succeeding annual meeting of stockholders
after their election. Three (3) of the Company Directors shall be Class I, two (2) of the Company Directors shall be Class II and two
(2) of the Company Directors shall be Class III. One (1) of ParentCo Directors shall be Class II and one (1) of ParentCo Directors shall
be Class III. The board of directors of the Surviving Corporation immediately after the Closing shall be the same as the Post-Closing
ParentCo Board. At or prior to the Closing, ParentCo will provide each ParentCo Director with a customary director indemnification agreement,
in form and substance reasonably acceptable to such ParentCo Director.
(b) The
Parties shall take all action necessary, including causing the executive officers of ParentCo to resign, so that the individuals serving
as the chief executive officer and chief financial officer, respectively, of ParentCo immediately after the Closing will be the same
individuals (in the same office) as that of the Company immediately prior to the Closing.
(c) The
Parties shall take all action necessary, including causing the directors and officers of Kernel to resign, so that the individuals serving
as directors, chief executive officer and chief financial officer, respectively, of Kernel immediately after the Closing will be the
same individuals (in the same office) as that of ParentCo immediately following the Closing.
(d) The
Parties shall take all action necessary, including causing the directors of the Company to resign, so that the individuals serving as
directors of the Company immediately after the Closing will be the same individuals (in the same office) as that of ParentCo immediately
following the Closing.
6.18 Indemnification
of Directors and Officers; Tail Insurance.
(a) The
Parties agree that all rights to exculpation, indemnification and advancement of expenses existing in favor of the current or former
directors and officers of ParentCo, Kernel, Kernel Merger Sub, AIRO Merger Sub and each Person who served as a director, officer, member,
trustee or fiduciary of another corporation, partnership, joint venture, trust, pension or other employee benefit plan or enterprise
at the request of ParentCo, Kernel, Kernel Merger Sub or AIRO Merger Sub (the “D&O Indemnified Persons”)
as provided in their respective Organizational Documents or under any indemnification, employment or other similar agreements between
any D&O Indemnified Person and ParentCo, Kernel, Kernel Merger Sub or AIRO Merger Sub, in each case as in effect on the date of this
Agreement, shall survive the Closing and continue in full force and effect in accordance with their respective terms to the extent permitted
by applicable Law. For a period of six (6) years after the Second Effective Time, ParentCo shall cause the Organizational Documents of
ParentCo and the Kernel Surviving Corporation and AIRO Surviving Corporation to contain provisions no less favorable with respect to
exculpation and indemnification of and advancement of expenses to D&O Indemnified Persons than are set forth as of the date of this
Agreement in the Organizational Documents of ParentCo, Kernel, Kernel Merger Sub and AIRO Merger Sub to the extent permitted by applicable
Law. The provisions of this Section 6.18(a) shall survive the consummation of the First Merger and Second Merger and are intended
to be for the benefit of, and shall be enforceable by, each of the D&O Indemnified Persons and their respective heirs and representatives,
each of whom shall be a third-party beneficiary of the provisions of this Section 6.18(a).
(b) For
the benefit of ParentCo’s, Kernel’s, Kernel Merger Sub’s and AIRO Merger Sub’s directors and officers, ParentCo
shall be permitted prior to the First Effective Time to obtain and fully pay from the capital of the Kernel Surviving Company upon release
of funds from the Trust Account the premium for a “tail” insurance policy that provides coverage for up to a six-year period
from and after the First Effective Time for events occurring prior to the First Effective Time (the “D&O Tail Insurance”)
that is substantially equivalent to and in any event not less favorable in the aggregate than ParentCo’s existing policy or, if
substantially equivalent insurance coverage is unavailable, the best available coverage. If obtained, ParentCo shall maintain the D&O
Tail Insurance in full force and effect, and continue to honor the obligations thereunder, and ParentCo shall timely pay or caused to
be paid all premiums with respect to the D&O Tail Insurance.
6.19 Unencumbered
Cash Proceeds. The Parties agree that after the Closing, the Unencumbered Cash shall first be used to pay (in the following order
until paid in full): (i) Company Transaction Expenses, (ii) ParentCo Expenses, (iii) deferred Kernel Expenses (including cash amounts
payable to the IPO Underwriter and any legal fees) of the IPO, (iv) any loans owed by ParentCo to the Sponsor for any ParentCo Expenses
(including deferred ParentCo Expenses), other administrative costs and expenses incurred by or on behalf of ParentCo, and then (v) any
other Liabilities of ParentCo as of the Closing. Such ParentCo Expenses and Company Transaction Expenses, as well as any ParentCo Expenses
and Company Transaction Expenses that are required to be paid by delivery of ParentCo’s securities, will be paid at the Closing.
Any remaining cash will be used for working capital and general corporate purposes of ParentCo and the Surviving Corporation.
6.20 Additional
Financing.
(a) PIPE/Convertible
Note Investment. Without limiting anything to the contrary contained herein, during the Interim Period, Kernel shall use its best
efforts to enter into and consummate subscription agreements and/or convertible note purchase agreements with investors relating to an
investment in Kernel to purchase shares of Kernel in connection with a private placement, and/or relating to a private investment in
Kernel in the form a convertible note, in either case on terms mutually agreeable to the Company and Kernel, acting reasonably (a “PIPE/Convertible
Note Investment”), and, if Kernel consummates a PIPE/Convertible Note Investment, Kernel and the Company shall, and shall
cause their respective Representatives to, cooperate with each other and their respective Representatives in connection with such PIPE/Convertible
Note Investment and use their respective commercially reasonable efforts to cause such PIPE/Convertible Note Investment to occur (including
having the Company’s senior management participate in any investor meetings and roadshows as reasonably requested by Kernel).
6.21 Post-Closing
Assumption or Creation of Benefit Plans. After the Closing, subject to the terms and conditions set forth in this Agreement, ParentCo
shall assume the Benefit Plans of the Company or create new Benefit Plans, including, but not limited to, equity incentive plans, that
are substantially similar to the Benefit Plans previously approved by the board of directors of the Company.
6.22 Extension.
Kernel shall timely obtain all Extensions necessary and permissible under Kernel’s charter (as in effect on the date hereof or
as amended prior to the Closing Date) and applicable Law so that the First Merger and Second Merger can be completed prior to Kernel’s
deadline to complete a Business Combination.
6.23 Non-Competition
Agreements. On or prior to the Closing Date, the Significant Company Holders shall have each entered into a non-competition and non-solicitation
agreement in favor of ParentCo and Company (each, a “Non-Competition Agreement”), in form and substance mutually
acceptable to Kernel and the Company, which will become effective as of the Closing.
6.24 Termination
and Replacement of the Company Warrants. The Company and Kernel shall attempt to negotiate in good faith with Stephenson and Scarsdale
in order to obtain prior to Closing executed agreements in which Stephenson and Scarsdale terminate the Company Warrants in exchange
for warrants for shares of ParentCo on terms of substantially similar economic value as the Company Warrants as of the time of Closing
(the “Replacement Warrants”).
6.25 Assumption
and Conversion of Company Options. The Company and Kernel shall attempt to negotiate in good faith with holders of the Company Options
in order to obtain prior to Closing executed agreements in which ParentCo assumes the Company Options, and converts them to options for
ParentCo Common Stock with substantially similar economic terms (the “Replacement Options”).
6.26 Updating
Disclosure Schedules. The Company shall have the right to update or otherwise amend the Company Disclosure Schedules prior to Closing
so long as such changes to the Company Disclosure Schedules do not, in the aggregate, result in a Material Adverse Effect; however, any
reference in the Company Disclosure Schedules (as of the date hereof) to any agreement or item that has not been made available to Kernel
shall be deemed excluded from the Company Disclosure Schedules until such agreement or item is provided to Kernel. Notwithstanding the
foregoing, in no event shall the Company providing Kernel the agreement or item referenced in the Company Disclosure Schedules as of
the date hereof at some time after the date hereof be considered for the purposes of determining if a Material Adverse Effect has occurred,
so long as the aforementioned agreement or item is provided to Kernel no later than fifteen (15) days prior to the Closing Date. For
the avoidance of doubt, Kernel shall not be deemed to have conducted legal due diligence on any agreement or item referenced in the Company
Disclosure Schedules but not made available to Kernel as of the date hereof.
6.27 Audited
Consolidated Financials. Within 60 calendar days of the date hereof, the Company shall provide audited consolidated financial statements
of the Target Companies (including, in each case, any notes thereto), consisting of the consolidated balance sheets of the Target Companies
as of December 31, 2022, and the related consolidated audited income statements, changes in stockholders equity and statements of cash
flows for the fiscal year then ended, audited by a PCAOB qualified auditor in accordance with GAAP and PCAOB standards (the “2022
Audited Financials”).
Article
VII
CLOSING CONDITIONS
7.1 Conditions
to Each Party’s Obligations. The obligations of each Party to consummate the First Merger and Second Merger and the other transactions
described herein shall be subject to the satisfaction or written waiver (where permissible) by the Company and Kernel of the following
conditions:
(a) Required
Kernel Stockholder Approval. Kernel Stockholder Approval Matters that are submitted to the vote of the stockholders of Kernel at
Kernel Special Meeting in accordance with the Proxy Statement shall have been approved by the requisite vote of the stockholders of Kernel
at Kernel Special Meeting in accordance with Kernel’s Organizational Documents, applicable Law and the Proxy Statement (the “Required
Kernel Stockholder Approval”).
(b) Required
Company Stockholder Approval. The Company Special Meeting shall have been held in accordance with the DGCL and the Company’s
Organizational Documents, and at such meeting, the requisite vote of the Company Stockholders (including any separate class or series
vote that is required, whether pursuant to the Company’s Organizational Documents, any stockholder agreement or otherwise) shall
have authorized, approved and consented to, the execution, delivery and performance of this Agreement and each of the Ancillary Documents
to which the Company is or is required to be a party or bound, and the consummation of the transactions contemplated hereby and thereby,
including the Merger (the “Required Company Stockholder Approval”).
(c) Antitrust
Laws. Any waiting period (and any extension thereof) applicable to the consummation of this Agreement under any Antitrust Laws shall
have expired or been terminated.
(d) Requisite
Regulatory Approvals. All Consents required to be obtained from or made with any Governmental Authority in order to consummate the
transactions contemplated by this Agreement shall have been obtained or made.
(e) Requisite
Consents. The Consents required to be obtained from or made with any third Person (other than a Governmental Authority) in order
to consummate the transactions contemplated by this Agreement that are set forth in Schedule 7.1(e) shall have each been obtained
or made.
(f) No
Adverse Law or Order. No Governmental Authority shall have enacted, issued, promulgated, enforced or entered any Law (whether temporary,
preliminary or permanent) or Order that is then in effect and which has the effect of making the transactions or agreements contemplated
by this Agreement illegal or which otherwise prevents or prohibits consummation of the transactions contemplated by this Agreement.
(g) Net
Tangible Assets Test. Upon the Closing, after giving effect to the Redemption, Kernel shall have net tangible assets of at least
$5,000,001.
(h) Appointment
to the Board. The members of the Post-Closing ParentCo Board, Kernel Board and Company Board shall have been elected or appointed
as of the Closing consistent with the requirements of Section 6.17.
(i) Registration
Statement. The Registration Statement shall have been declared effective by the SEC and shall remain effective as of the Closing,
and no stop order or similar order shall be in effect with respect to the Registration Statement.
(j) Nasdaq
Listing. ParentCo Common Stock to be issued in connection with this Agreement shall have been approved for listing on Nasdaq, subject
to official notice of issuance.
7.2 Conditions
to Obligations of the Company. In addition to the conditions specified in Section 7.1, the obligations of the Company to consummate
the Merger and the other transactions contemplated by this Agreement are subject to the satisfaction or written waiver (by the Company)
of the following conditions:
(a) Representations
and Warranties. All of the representations and warranties of Kernel, ParentCo, Kernel Merger Sub and AIRO Merger Sub set forth in
this Agreement and in any certificate delivered by or on behalf of Kernel, ParentCo, Kernel Merger Sub and AIRO Merger Sub pursuant hereto
shall be true and correct on and as of the date of this Agreement and on and as of the Closing Date as if made on the Closing Date, except
for (i) those representations and warranties that address matters only as of a particular date (which representations and warranties
shall have been accurate as of such date), and (ii) any failures to be true and correct that (without giving effect to any qualifications
or limitations as to materiality or Material Adverse Effect), individually or in the aggregate, have not had and would not reasonably
be expected to have a Material Adverse Effect on, or with respect to, Kernel.
(b) Agreements
and Covenants. Kernel, ParentCo, Kernel Merger Sub and AIRO Merger Sub shall have performed in all material respects all of their
obligations and complied in all material respects with all of their agreements and covenants under this Agreement to be performed or
complied with by it on or prior to the Closing Date.
(c) No
Kernel Material Adverse Effect. No Material Adverse Effect shall have occurred with respect to Kernel since the date of this Agreement
which is continuing and uncured.
(d) Closing
Deliveries.
(i) Officer
Certificate. Kernel shall have delivered to the Company a certificate, dated the Closing Date, signed by an executive officer
of Kernel in such capacity, certifying as to the satisfaction of the conditions specified in Sections 7.2(a), 7.2(b), and
7.2(c).
(ii) Secretary
Certificate. Kernel shall have delivered to the Company a certificate from its secretary or other executive officer certifying
as to, and attaching, (A) copies of Kernel’s Organizational Documents as in effect as of the Closing Date, (B) the resolutions
of Kernel’s board of directors authorizing and approving the execution, delivery and performance of this Agreement and each of
the Ancillary Documents to which it is a party or by which it is bound, and the consummation of the transactions contemplated hereby
and thereby, (C) evidence that the Required Kernel Stockholder Approval has been obtained and (D) the incumbency of officers authorized
to execute this Agreement or any Ancillary Document to which Kernel is or is required to be a party or otherwise bound.
(iii) Good
Standing. Kernel shall have delivered to the Company a good standing certificate (or similar documents applicable for such jurisdictions)
for Kernel certified as of a date no earlier than thirty (30) days prior to the Closing Date from the proper Governmental Authority of
Kernel’s jurisdiction of organization and from each other jurisdiction in which Kernel is qualified to do business as a foreign
entity as of the Closing, in each case to the extent that good standing certificates or similar documents are generally available in
such jurisdictions.
(iv) Company
Stockholder Registration Rights Agreement. The Company Stockholders shall have received a copy of the Company Stockholder
Registration Rights Agreement in a form mutually agreed to by the Company and Kernel, duly executed by ParentCo.
(v) Replacement
Warrants and Replacement Options. ParentCo shall have delivered to the Company the Replacement Warrants and Replacement Options
duly executed by ParentCo.
(d) Minimum
Unencumbered Cash Condition. Upon the Closing, Kernel shall have Unencumbered Cash in an amount no less than Fifty Million U.S. Dollars
($50,000,000).
7.3 Conditions
to Obligations of Kernel. In addition to the conditions specified in Section 7.1, the obligations of Kernel, ParentCo, Kernel
Merger Sub and AIRO Merger Sub to consummate the Merger and the other transactions contemplated by this Agreement are subject to the
satisfaction or written waiver (by Kernel) of the following conditions:
(a) Representations
and Warranties. All of the representations and warranties of the Company set forth in this Agreement and in any certificate delivered
by or on behalf of the Company pursuant hereto shall be true and correct on and as of the date of this Agreement and on and as of the
Closing Date as if made on the Closing Date, except for (i) those representations and warranties that address matters only as of a particular
date (which representations and warranties shall have been accurate as of such date), and (ii) any failures to be true and correct that
(without giving effect to any qualifications or limitations as to materiality or Material Adverse Effect), individually or in the aggregate,
have not had and would not reasonably be expected to have a Material Adverse Effect on, or with respect to, the Target Companies, taken
as a whole.
(b) Agreements
and Covenants. The Company shall have performed in all material respects all of its obligations and complied in all material respects
with all of its agreements and covenants under this Agreement to be performed or complied with by it on or prior to the Closing Date.
(c) No
Material Adverse Effect. No Material Adverse Effect shall have occurred with respect to the Target Companies taken as a whole since
the date of this Agreement which is continuing and uncured.
(d) Certain
Ancillary Documents. Each Lock-Up Agreement and Non-Competition Agreement shall be in full force and effect in accordance with the
terms thereof as of the Closing.
(e) Imminent
Closing Net Debt. Imminent Closing Net Debt shall be no more than $50,000,000.
(f) Completion
of Legal Due Diligence. Kernel shall have completed its legal due diligence of the Target Companies to its reasonable satisfaction
and shall be satisfied with the results thereof in its reasonable discretion.
(g) Closing
Deliveries.
(i) Officer
Certificate. Kernel shall have received a certificate from the Company, dated as the Closing Date, signed by an executive officer
of the Company in such capacity, certifying as to the satisfaction of the conditions specified in Sections 7.3(a), 7.3(b),
and 7.3(c).
(ii) Secretary
Certificate. The Company shall have delivered to Kernel a certificate executed by the Company’s secretary certifying as
to the validity and effectiveness of, and attaching, (A) copies of the Company’s Organizational Documents as in effect as of the
Closing Date (immediately prior to the Second Effective Time), (B) the requisite resolutions of the Company’s board of directors
authorizing and approving the execution, delivery and performance of this Agreement and each Ancillary Document to which the Company
is or is required to be a party or bound, and the consummation of the Merger and the other transactions contemplated hereby and thereby,
and the adoption of the Surviving Corporation Organizational Documents, and recommending the approval and adoption of the same by the
Company Stockholders at a duly called meeting of stockholders, (C) evidence that the Required Company Stockholder Approval has been obtained
and (D) the incumbency of officers of the Company authorized to execute this Agreement or any Ancillary Document to which the Company
is or is required to be a party or otherwise bound.
(iii) Good
Standing. The Company shall have delivered to Kernel good standing certificates (or similar documents applicable for such jurisdictions)
for each Target Company certified as of a date no earlier than thirty (30) days prior to the Closing Date from the proper Governmental
Authority of the Target Company’s jurisdiction of organization and from each other jurisdiction in which the Target Company is
qualified to do business as a foreign corporation or other entity as of the Closing, in each case to the extent that good standing certificates
or similar documents are generally available in such jurisdictions.
(iv) Certified
Charter. The Company shall have delivered to Kernel a copy of the Company Charter, as in effect as of immediately prior to the
Second Effective Time, certified by the Secretary of State of the State of Delaware as of a date no more than ten (10) Business Days
prior to the Closing Date.
(v) Employment
Agreements. Kernel
shall have received employment agreements, in each case effective as of the Closing, in form and substance reasonably acceptable to
the Company and Kernel, between each of the persons set forth Schedule 1.1(d)(v) hereto and the applicable Target Company or
Kernel, as noted in Schedule 1.1(d)(v), each such employment agreement duly executed by the parties thereto.
(vi) Non-Competition
Agreements. Kernel shall have received non-competition and non-solicitation agreement in favor of ParentCo and Company, in
a form mutually agreed-to by Kernel and the Company, fully executed by the Significant Company Holders, which will become effective as
of the Closing.
(vii) Transmittal
Documents. The Exchange Agent shall have received from each Company Stockholder the Transmittal Documents, each in form reasonably
acceptable for transfer on the books of the Company.
(viii) Resignations.
Subject to the requirements of Section 6.18, Kernel shall have received written resignations, effective as of the Closing,
of each of the directors and officers of the Company as requested by Kernel prior to the Closing.
(ix) Lock-Up
Agreements. Kernel shall have received a Lock-Up Agreement for each Significant Company Holder, duly executed by such Significant
Company Holder.
(x) Termination
of Certain Contracts. Kernel shall have received evidence reasonably acceptable to Kernel that the Contracts involving the Target
Companies and/or Company Security Holders or other Related Persons set forth on Schedule 5.21 shall have been terminated with
no further obligation or Liability of the Target Companies thereunder.
(xi) Replacement
Warrants and Replacement Options. The Company shall have delivered to Kernel the Replacement Warrants and Replacement Options
duly executed by the Company and the holders of the Company Warrants and Company Options.
7.4 Frustration
of Conditions. Notwithstanding anything contained herein to the contrary, no Party may rely on the failure of any condition set forth
in this Article VII to be satisfied if such failure was caused by the failure of such Party or its Affiliates (or with respect
to the Company, any Target Company or Company Stockholder) failure to comply with or perform any of its covenants or obligations set
forth in this Agreement.
Article
VIII
TERMINATION AND EXPENSES
8.1 Termination.
This Agreement may be terminated and the transactions contemplated hereby may be abandoned at any time prior to the Closing as follows:
(a) by
mutual written consent of Kernel and the Company;
(b) by
written notice by Kernel or the Company if any of the conditions to the Closing set forth in Article VII have not been satisfied
or waived by August 2, 2023 (the “Outside Date”); provided, however, the right to terminate this Agreement
under this Section 8.1(b) shall not be available to a Party if the breach or violation by such Party or its Affiliates of any
representation, warranty, covenant or obligation under this Agreement was the cause of, or resulted in, the failure of the Closing to
occur on or before the Outside Date;
(c) by
written notice by either Kernel or the Company if a Governmental Authority of competent jurisdiction shall have issued an Order or taken
any other action permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by this Agreement, and such
Order or other action has become final and non-appealable; provided, however, that the right to terminate this Agreement pursuant
to this Section 8.1(c) shall not be available to a Party if the failure by such Party or its Affiliates to comply with any provision
of this Agreement has been a substantial cause of, or substantially resulted in, such action by such Governmental Authority;
(d) by
written notice by the Company to Kernel, if (i) there has been a breach by Kernel of any of its representations, warranties, covenants
or agreements contained in this Agreement, or if any representation or warranty of Kernel shall have become untrue or inaccurate, in
any case, which would result in a failure of a condition set forth in Section 7.2(a) or Section 7.2(b) to be satisfied
(treating the Closing Date for such purposes as the date of this Agreement or, if later, the date of such breach), and (ii) the breach
or inaccuracy is incapable of being cured or is not cured within the earlier of (A) twenty (20) days after written notice of such breach
or inaccuracy is provided to Kernel or (B) the Outside Date; provided, that the Company shall not have the right to terminate this Agreement
pursuant to this Section 8.1(d) if at such time the Company is in material uncured breach of this Agreement;
(e) by
written notice by Kernel to the Company, if (i) there has been a breach by the Company of any of its representations, warranties, covenants
or agreements contained in this Agreement, or if any representation or warranty of such Parties shall have become untrue or inaccurate,
in any case, which would result in a failure of a condition set forth in Section 7.3(a) or Section 7.3(b) to be satisfied
(treating the Closing Date for such purposes as the date of this Agreement or, if later, the date of such breach), and (ii) the breach
or inaccuracy is incapable of being cured or is not cured within the earlier of (A) twenty (20) days after written notice of such breach
or inaccuracy is provided to the Company or (B) the Outside Date; provided, that Kernel shall not have the right to terminate this Agreement
pursuant to this Section 8.1(e) if at such time Kernel is in material uncured breach of this Agreement;
(f) by
written notice by Kernel to the Company, if there shall have been a Material Adverse Effect on the Target Companies taken as a whole
following the date of this Agreement which is uncured and continuing;
(g) by
written notice by either Kernel or the Company to the other, if Kernel Special Meeting is held (including any adjournment or postponement
thereof) and has concluded, Kernel’s stockholders have duly voted, and the Required Kernel Stockholder Approval was not obtained;
(h) by
written notice by either Kernel or the Company to the other, if the Company Special Meeting is held (including any adjournment or postponement
thereof) and has concluded, the Company Stockholders have duly voted, and the Required Company Stockholder Approval was not obtained;
or
(i) by
written notice by Kernel to the Company, if the Company shall have failed to provide the 2022 Audited Financials in accordance with Section
6.27.
8.2 Effect
of Termination. This Agreement may only be terminated in the circumstances described in Section 8.1 and pursuant to a written
notice delivered by the applicable Party to the other applicable Parties, which sets forth the basis for such termination, including
the provision of Section 8.1 under which such termination is made. In the event of the valid termination of this Agreement pursuant
to Section 8.1, this Agreement shall forthwith become void, and there shall be no Liability on the part of any Party or any of
their respective Representatives, and all rights and obligations of each Party shall cease, except: (i) Sections 6.14, 6.15,
8.3, 9.1, Article X and this Section 8.2 shall survive the termination of this Agreement, and (ii) nothing
herein shall relieve any Party from Liability for any willful breach of any representation, warranty, covenant or obligation under this
Agreement or any Fraud Claim against such Party, in either case, prior to termination of this Agreement (in each case of clauses (i)
and (ii) above, subject to Section 9.1). Without limiting the foregoing, and except as provided in Sections 8.3 and this
Section 8.2 (but subject to Section 9.1) and subject to the right to seek injunctions, specific performance or other equitable
relief in accordance with Section 10.7, the Parties’ sole right prior to the Closing with respect to any breach of any representation,
warranty, covenant or other agreement contained in this Agreement by another Party or with respect to the transactions contemplated by
this Agreement shall be the right, if applicable, to terminate this Agreement pursuant to Section 8.1.
(a) In
the event this Agreement is validly terminated pursuant to Section 8.1, within seven (7) days of the termination, Kernel shall
change the name of ParentCo to a name that does not contain the word “Airo”, and shall promptly provide the Company evidence
of a successful name change for ParentCo.
8.3 Fees
and Expenses. Subject to Sections 6.19, 9.1, 10.14 and 10.15 all Company Transaction Expenses and Kernel
Expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the Party incurring such
expenses; provided, however, that if the Closing occurs, all remaining Company Transaction Expenses and Kernel Expenses shall be paid
from the capital of Kernel upon release of funds from the Trust Account.
Article
IX
WAIVERS AND RELEASES
9.1 Waiver
of Claims Against Trust. Reference is made to the IPO Prospectus. The Company, Merger Sub and the Seller Representative each hereby
represents and warrants that it has read the IPO Prospectus and understands that Kernel has established the Trust Account containing
the proceeds of the IPO and the overallotment shares acquired by Kernel’s underwriters and from certain private placements occurring
simultaneously with the IPO (including interest accrued from time to time thereon) for the benefit of Kernel’s public stockholders
(including overallotment shares acquired by Kernel’s underwriters) (the “Public Stockholders”) and that,
except as otherwise described in the IPO Prospectus, Kernel may disburse monies from the Trust Account only: (a) to the Public Stockholders
in the event they elect to redeem their shares of Old Kernel Class A Stock in connection with the consummation of its initial business
combination (as such term is used in the IPO Prospectus) (“Business Combination”) or in connection with an
amendment to Kernel’s Organizational Documents to extend Kernel’s deadline to consummate a Business Combination, (b) to the
Public Stockholders if Kernel fails to consummate a Business Combination within 18 months after the closing of the IPO, subject to extension
by amendment to Kernel’s Organizational Documents, (c) with respect to any interest earned on the amounts held in the Trust Account,
amounts necessary to pay for any taxes and up to $100,000 in dissolution expenses, and (d) to Kernel after or concurrently with the consummation
of a Business Combination. For and in consideration of Kernel entering into this Agreement and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, each of the Company, Merger Sub and the Seller Representative hereby agrees
on behalf of itself and its Affiliates that, notwithstanding anything to the contrary in this Agreement, none of the Company, Merger
Sub or the Seller Representative nor any of their respective Affiliates do now or shall at any time hereafter have any right, title,
interest or claim of any kind in or to any monies in the Trust Account or distributions therefrom, or make any claim against the Trust
Account (including any distributions therefrom), regardless of whether such claim arises as a result of, in connection with or relating
in any way to, this Agreement or any proposed or actual business relationship between Kernel or any of its Representatives, on the one
hand, and the Company, Merger Sub, the Seller Representative or any of their respective Representatives, on the other hand, or any other
matter, and regardless of whether such claim arises based on contract, tort, equity or any other theory of legal liability (collectively,
the “Released Claims”). Each of the Company, Merger Sub and the Seller Representative on behalf of itself and
its Affiliates hereby irrevocably waives any Released Claims that any such Party or any of its Affiliates may have against the Trust
Account (including any distributions therefrom) now or in the future and will not seek recourse against the Trust Account (including
any distributions therefrom) for any reason whatsoever (including for an alleged breach of this Agreement or any other agreement with
Kernel or its Affiliates). The Company, Merger Sub and the Seller Representative each agrees and acknowledges that such irrevocable waiver
is material to this Agreement and specifically relied upon by Kernel and its Affiliates to induce Kernel to enter in this Agreement,
and each of the Company, Merger Sub and the Seller Representative further intends and understands such waiver to be valid, binding and
enforceable against such Party and each of its Affiliates under applicable Law. To the extent that the Company, Merger Sub or the Seller
Representative or any of their respective Affiliates commences any Action based upon, in connection with, relating to or arising out
of any matter relating to Kernel or its Representatives, which proceeding seeks, in whole or in part, monetary relief against Kernel
or its Representatives, each of the Company, Merger Sub and the Seller Representative hereby acknowledges and agrees that its and its
Affiliates’ sole remedy shall be against funds held outside of the Trust Account and that such claim shall not permit such Party
or any of its Affiliates (or any Person claiming on behalf or in lieu of any of them) to have any claim against the Trust Account (including
any distributions therefrom) or any amounts contained therein. In the event that the Company, Merger Sub or the Seller Representative
or any of their respective Affiliates commences Action based upon, in connection with, relating to or arising out of any matter relating
to Kernel or its Representatives which proceeding seeks, in whole or in part, relief against the Trust Account (including any distributions
therefrom) or the Public Stockholders, whether in the form of money damages or injunctive relief, Kernel and its Representatives, as
applicable, shall be entitled to recover from the Company, Merger Sub, the Seller Representative and their respective Affiliates, as
applicable, the associated legal fees and costs in connection with any such Action, in the event Kernel or its Representatives, as applicable,
prevails in such Action. This Section 9.1 shall survive termination of this Agreement for any reason and continue indefinitely.
Article
X
MISCELLANEOUS
10.1 Notices.
All notices, consents, waivers and other communications hereunder shall be in writing and shall be deemed to have been duly given when
delivered (i) in person, (ii) by email, (iii) one Business Day after being sent, if sent by reputable, nationally recognized overnight
courier service or (iv) three (3) Business Days after being mailed, if sent by registered or certified mail, pre-paid and return receipt
requested, in each case to the applicable Party at the following addresses (or at such other address for a Party as shall be specified
by like notice):
If
to Kernel, ParentCo, Kernel Merger Sub or AIRO Merger Sub at or prior to the Closing, to:
Kernel
Group Holdings, Inc.
515 Madison Avenue, Suite 865
New
York, New York 10022
Attn: Suren Ajjarapu
Telephone No.: (646) 908-2658
Email: sa@kernelcap.com
|
|
with
a copy (which will not constitute notice) to:
Nelson
Mullins Riley & Scarborough LLP
101
Constitution Avenue, NW Suite 900
Attn: Andrew M. Tucker
Facsimile No.: (202) 689-2860
Telephone No.: (202) 689-2987
Email: Andy.Tucker@nelsonmullins.com |
If
to ParentCo Representative, to:
VKSS
Capital, LLC
515
Madison Avenue, Suite 865
New
York, New York 10022Attn: Suren Ajjarapu
Telephone
No.: (646) 908-2658
Email:
sa@kernelcap.com |
|
with
a copy (which will not constitute notice) to:
Nelson
Mullins Riley & Scarborough LLP
101
Constitution Avenue, NW Suite 900
Attn: Andrew M. Tucker
Facsimile No.: (202) 689-2860
Telephone No.: (202) 689-2987
Email: Andy.Tucker@nelsonmullins.com
|
If
to the Company or the Surviving Corporation, to:
AIRO
Group Holdings, Inc.
5001 Indian School Road NE, Suite 100
Attn: Joseph Burns
joe.burns@theairogroup.com |
|
with
a copy (which will not constitute notice) to:
Dykema
Gossett PLLC
111 E Kilbourn Ave
Suite
1050
Milwaukee,
WI 53202
Attn: Kate Bechen, Esq.
Facsimile No.: (866) 945-9792
Telephone No.: (414) 488-7333
Email: KBechen@dykema.com
|
If
to the Seller Representative, to:
Dr.
Chirinjeev Kathuria
19W060
Avenue Latour
Oak
Brook, IL 60523
Email: drkathuria@theairogroup.com |
|
with
a copy (which will not constitute notice) to:
Dykema
Gossett PLLC
111 E Kilbourn Ave
Suite
1050
Milwaukee,
WI 53202
Attn: Kate Bechen, Esq.
Facsimile No.: (866) 945-9792
Telephone No.: (414) 488-7333
Email: KBechen@dykema.com
|
If
to ParentCo after the Closing, to:
AIRO
Group Holdings, Inc.
5001 Indian School Road NE, Suite 100
Attn: Joseph Burns
joe.burns@theairogroup.com
and
ParentCo
Representative |
|
with
a copy (which will not constitute notice) to:
Dykema
Gossett PLLC
111 E Kilbourn Ave
Suite
1050
Milwaukee,
WI 53202
Attn: Kate Bechen, Esq.
Facsimile No.: (866) 945-9792
Telephone No.: (414) 488-7333
Email: KBechen@dykema.com
|
10.2 Binding
Effect; Assignment. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the Parties
and their respective successors and permitted assigns. This Agreement shall not be assigned by operation of Law or otherwise without
the prior written consent of Kernel and the Company (and after the Closing, Kernel Representative and the Seller Representative), and
any assignment without such consent shall be null and void; provided that no such assignment shall relieve the assigning Party
of its obligations hereunder.
10.3 Third
Parties. Except for the rights of the D&O Indemnified Persons set forth in Section 6.18(a), which the Parties acknowledge
and agree are express third party beneficiaries of this Agreement, nothing contained in this Agreement or in any instrument or document
executed by any party in connection with the transactions contemplated hereby shall create any rights in, or be deemed to have been executed
for the benefit of, any Person that is not a Party hereto or thereto or a successor or permitted assign of such a Party.
10.4 Arbitration.
Any and all disputes, controversies and claims (other than applications for a temporary restraining order, preliminary injunction, permanent
injunction or other equitable relief or application for enforcement of a resolution under this Section 10.4) arising out of, related
to, or in connection with this Agreement or the transactions contemplated hereby (a “Dispute”) shall be governed
by this Section 10.4. A Party must, in the first instance, provide written notice of any Disputes to the other Parties subject
to such Dispute, which notice must provide a reasonably detailed description of the matters subject to the Dispute. The Parties involved
in such Dispute shall seek to resolve the Dispute on an amicable basis within ten (10) Business Days of the notice of such Dispute being
received by such other Parties subject to such Dispute (the “Resolution Period”); provided, that if
any Dispute would reasonably be expected to have become moot or otherwise irrelevant if not decided within sixty (60) days after the
occurrence of such Dispute, then there shall be no Resolution Period with respect to such Dispute. Any Dispute that is not resolved during
the Resolution Period may immediately be referred to and finally resolved by arbitration pursuant to the then-existing Expedited Procedures
(as defined in the AAA Procedures) of the Commercial Arbitration Rules (the “AAA Procedures”) of the AAA. Any
Party involved in such Dispute may submit the Dispute to the AAA to commence the proceedings after the Resolution Period. To the extent
that the AAA Procedures and this Agreement are in conflict, the terms of this Agreement shall control. The arbitration shall be conducted
by one arbitrator nominated by the AAA promptly (but in any event within five (5) Business Days) after the submission of the Dispute
to the AAA and reasonably acceptable to each party subject to the Dispute, which arbitrator shall be a commercial lawyer with substantial
experience arbitrating disputes under acquisition or merger agreements. The arbitrator shall accept his or her appointment and begin
the arbitration process promptly (but in any event within five (5) Business Days) after his or her nomination and acceptance by the Parties
subject to the Dispute. The proceedings shall be streamlined and efficient. The arbitrator shall decide the Dispute in accordance with
the substantive law of the state of Delaware. Time is of the essence. Each Party subject to the Dispute shall submit a proposal for resolution
of the Dispute to the arbitrator within twenty (20) days after confirmation of the appointment of the arbitrator. The arbitrator shall
have the power to order any party to do, or to refrain from doing, anything consistent with this Agreement, the Ancillary Documents and
applicable Law, including to perform its contractual obligation(s); provided, that the arbitrator shall be limited to ordering
pursuant to the foregoing power (and, for the avoidance of doubt, shall order) the relevant Party (or Parties, as applicable) to comply
with only one or the other of the proposals. The arbitrator’s award shall be in writing and shall include a reasonable explanation
of the arbitrator’s reason(s) for selecting one or the other proposal. The seat of arbitration shall be in New York County, State
of New York. The language of the arbitration shall be English.
10.5 Governing
Law; Jurisdiction. This Agreement shall be governed by, construed and enforced in accordance with the Laws of the State of Delaware
without regard to the conflict of laws principles thereof. Subject to Section 10.4, all Actions arising out of or relating to
this Agreement shall be heard and determined exclusively in any state or federal court located in Delaware (or in any appellate court
thereof) (the “Specified Courts”). Subject to Section 10.4, each Party (a) submits to the exclusive
jurisdiction of any Specified Court for the purpose of any Action arising out of or relating to this Agreement brought by any Party and
(b) irrevocably waives, and agrees not to assert by way of motion, defense or otherwise, in any such Action, any claim that it is not
subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution,
that the Action is brought in an inconvenient forum, that the venue of the Action is improper, or that this Agreement or the transactions
contemplated hereby may not be enforced in or by any Specified Court. Each Party agrees that a final judgment in any Action shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law. Each Party irrevocably
consents to the service of the summons and complaint and any other process in any other Action relating to the transactions contemplated
by this Agreement, on behalf of itself, or its property, by personal delivery of copies of such process to such Party at the applicable
address set forth in Section 10.1. Nothing in this Section 10.5 shall affect the right of any Party to serve legal process
in any other manner permitted by Law.
10.6 WAIVER
OF JURY TRIAL. EACH PARTY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH
RESPECT TO ANY ACTION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY. EACH PARTY (A) CERTIFIES THAT NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY
WOULD NOT, IN THE EVENT OF ANY ACTION, SEEK TO ENFORCE THAT FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HAVE
BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 10.6.
10.7 Specific
Performance. Each Party acknowledges that the rights of each Party to consummate the transactions contemplated hereby are unique,
recognizes and affirms that in the event of a breach of this Agreement by any Party, money damages may be inadequate and the non-breaching
Parties may have not adequate remedy at law, and agree that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed by an applicable Party in accordance with their specific terms or were otherwise breached. Accordingly,
each Party shall be entitled to seek an injunction or restraining order to prevent breaches of this Agreement and to seek to enforce
specifically the terms and provisions hereof, without the requirement to post any bond or other security or to prove that money damages
would be inadequate, this being in addition to any other right or remedy to which such Party may be entitled under this Agreement, at
law or in equity.
10.8 Severability.
In case any provision in this Agreement shall be held invalid, illegal or unenforceable in a jurisdiction, such provision shall be modified
or deleted, as to the jurisdiction involved, only to the extent necessary to render the same valid, legal and enforceable, and the validity,
legality and enforceability of the remaining provisions hereof shall not in any way be affected or impaired thereby nor shall the validity,
legality or enforceability of such provision be affected thereby in any other jurisdiction. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the Parties will substitute for any invalid, illegal or unenforceable
provision a suitable and equitable provision that carries out, so far as may be valid, legal and enforceable, the intent and purpose
of such invalid, illegal or unenforceable provision.
10.9 Amendment.
This Agreement may be amended, supplemented or modified only by execution of a written instrument signed by Kernel, the Company, Kernel
Representative and the Seller Representative.
10.10 Waiver.
Kernel on behalf of itself and its Affiliates, the Company on behalf of itself and its Affiliates, and the Seller Representative on behalf
of itself and the Company Stockholders, may in its sole discretion (i) extend the time for the performance of any obligation or other
act of any other non-Affiliated Party , (ii) waive any inaccuracy in the representations and warranties by such other non-Affiliated
Party contained herein or in any document delivered pursuant to this Agreement and (iii) waive compliance by such other non-Affiliated
Party with any covenant or condition contained herein. Any such extension or waiver shall be valid only if set forth in an instrument
in writing signed by the Party or Parties to be bound thereby (including by Kernel Representative or the Seller Representative in lieu
of such Party to the extent provided in this Agreement). Notwithstanding the foregoing, no failure or delay by a Party in exercising
any right hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further
exercise of any other right hereunder. Notwithstanding the foregoing, any waiver of any provision of this Agreement after the Closing
shall also require the prior written consent of Kernel Representative.
10.11 Entire
Agreement. This Agreement and the documents or instruments referred to herein, including any exhibits and schedules attached hereto,
which exhibits and schedules are incorporated herein by reference, together with the Ancillary Documents, embody the entire agreement
and understanding of the Parties in respect of the subject matter contained herein. There are no restrictions, promises, representations,
warranties, covenants or undertakings, other than those expressly set forth or referred to herein or the documents or instruments referred
to herein, which collectively supersede all prior agreements and the understandings among the Parties with respect to the subject matter
contained herein.
10.12 Interpretation.
The table of contents and the Article and Section headings contained in this Agreement are solely for the purpose of reference, are not
part of the agreement of the Parties and shall not in any way affect the meaning or interpretation of this Agreement. In this Agreement,
unless the context otherwise requires: (a) any pronoun used shall include the corresponding masculine, feminine or neuter forms, and
words in the singular, including any defined terms, include the plural and vice versa; (b) reference to any Person includes such Person’s
successors and assigns but, if applicable, only if such successors and assigns are permitted by this Agreement, and reference to a Person
in a particular capacity excludes such Person in any other capacity; (c) any accounting term used and not otherwise defined in this Agreement
or any Ancillary Document has the meaning assigned to such term in accordance with GAAP; (d) “including” (and with correlative
meaning “include”) means including without limiting the generality of any description preceding or succeeding such term and
shall be deemed in each case to be followed by the words “without limitation”; (e) the words “herein,” “hereto,”
and “hereby” and other words of similar import shall be deemed in each case to refer to this Agreement as a whole and not
to any particular Section or other subdivision of this Agreement; (f) the word “if” and other words of similar import when
used herein shall be deemed in each case to be followed by the phrase “and only if”; (g) the term “or” means
“and/or”; (h) any reference to the term “ordinary course” or “ordinary course of business” shall
be deemed in each case to be followed by the words “consistent with past practice”; (i) any agreement, instrument, insurance
policy, Law or Order defined or referred to herein or in any agreement or instrument that is referred to herein means such agreement,
instrument, insurance policy, Law or Order as from time to time amended, modified or supplemented, including (in the case of agreements
or instruments) by waiver or consent and (in the case of statutes, regulations, rules or orders) by succession of comparable successor
statutes, regulations, rules or orders and references to all attachments thereto and instruments incorporated therein; (j) except as
otherwise indicated, all references in this Agreement to the words “Section,” “Article”, “Schedule”
and “Exhibit” are intended to refer to Sections, Articles, Schedules and Exhibits to this Agreement; and (k) the term “Dollars”
or “$” means United States dollars. Any reference in this Agreement to a Person’s directors shall include any member
of such Person’s governing body and any reference in this Agreement to a Person’s officers shall include any Person filling
a substantially similar position for such Person. Any reference in this Agreement or any Ancillary Document to a Person’s shareholders
or stockholders shall include any applicable owners of the equity interests of such Person, in whatever form, including with respect
to Kernel its stockholders under the Companies Act, as then applicable, or its Organizational Documents. The Parties have participated
jointly in the negotiation and drafting of this Agreement. Consequently, in the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the Parties, and no presumption or burden of proof shall arise favoring
or disfavoring any Party by virtue of the authorship of any provision of this Agreement. To the extent that any Contract, document, certificate
or instrument is represented and warranted to by the Company to be given, delivered, provided or made available by the Company, in order
for such Contract, document, certificate or instrument to have been deemed to have been given, delivered, provided and made available
to Kernel or its Representatives, such Contract, document, certificate or instrument shall have been posted to the electronic data site
maintained on behalf of the Company for the benefit of Kernel and its Representatives and Kernel and its Representatives have been given
access to the electronic folders containing such.
10.13 Counterparts.
This Agreement and each Ancillary Document may be executed and delivered (including by facsimile or other electronic transmission) in
one or more counterparts, and by the different Parties in separate counterparts, each of which when executed shall be deemed to be an
original but all of which taken together shall constitute one and the same agreement.
10.14 ParentCo
Representative.
(a) ParentCo
and Kernel, on behalf of themselves and their Subsidiaries, successors and assigns, by execution and delivery of this Agreement, hereby
irrevocably appoints Sponsor, in the capacity as ParentCo Representative, as each such Person’s agent, attorney-in-fact and representative,
with full power of substitution to act in the name, place and stead of such Person, to act on behalf of such Person from and after the
Closing in connection with: (i) controlling and making any determinations with respect to the post-Closing AIRO Merger Consideration
adjustments under Section 2.11; (ii) terminating, amending or waiving on behalf of such Person any provision of this Agreement
or any Ancillary Documents to which ParentCo Representative is a party or otherwise has rights in such capacity (together with this Agreement,
the “ParentCo Representative Documents”); (iii) signing on behalf of such Person any releases or other documents
with respect to any dispute or remedy arising under any ParentCo Representative Documents; (iv) employing and obtaining the advice of
legal counsel, accountants and other professional advisors as ParentCo Representative, in its reasonable discretion, deems necessary
or advisable in the performance of its duties as ParentCo Representative and to rely on their advice and counsel; (v) incurring and paying
reasonable out-of-pocket costs and expenses, including fees of brokers, attorneys and accountants incurred pursuant to the transactions
contemplated hereby, and any other out-of-pocket fees and expenses allocable or in any way relating to such transaction Documents, including
giving and receiving all notices and communications hereunder or thereunder on behalf of such Person; provided, that the Parties
acknowledge that ParentCo Representative is specifically authorized and directed to act on behalf of, and for the benefit of, the holders
of ParentCo Securities (other than the Company Security Holders immediately prior to the Second Effective Time and their respective successors
and assigns). All decisions and actions by ParentCo Representative, including any agreement between ParentCo Representative and the Company,
Seller Representative, any Company Stockholders, shall be binding upon ParentCo, Kernel and their Subsidiaries, successors and assigns,
and neither they nor any other Party shall have the right to object, dissent, protest or otherwise contest the same. The provisions of
this Section 10.14(a) are irrevocable and coupled with an interest. ParentCo Representative hereby accepts its appointment and
authorization as ParentCo Representative under this Agreement.
(b) ParentCo
Representative shall not be liable for any act done or omitted under any ParentCo Representative Document as ParentCo Representative
while acting in good faith and without willful misconduct or gross negligence, and any act done or omitted pursuant to the advice of
counsel shall be conclusive evidence of such good faith. ParentCo and Kernel shall indemnify, defend and hold harmless ParentCo Representative
from and against any and all Losses incurred without gross negligence, bad faith or willful misconduct on the part of ParentCo Representative
(in its capacity as such) and arising out of or in connection with the acceptance or administration of ParentCo Representative’s
duties under any ParentCo Representative Document, including the reasonable fees and expenses of any legal counsel retained by ParentCo
Representative. In no event shall ParentCo Representative in such capacity be liable under or in connection with any ParentCo Representative
Document for any indirect, punitive, special or consequential damages. ParentCo Representative shall be fully protected in relying upon
any written notice, demand, certificate or document that it in good faith believes to be genuine, including facsimiles or copies thereof,
and no Person shall have any Liability for relying on ParentCo Representative in the foregoing manner. In connection with the performance
of its rights and obligations hereunder, ParentCo Representative shall have the right at any time and from time to time to select and
engage, at the cost and expense of ParentCo and Kernel, attorneys, accountants, investment bankers, advisors, consultants and clerical
personnel and obtain such other professional and expert assistance, maintain such records and incur other out-of-pocket expenses, as
ParentCo Representative may deem necessary or appropriate from time to time. All of the indemnities, immunities, releases and powers
granted to ParentCo Representative under this Section 10.14 shall survive the Closing and continue indefinitely.
(c) The
Person serving as ParentCo Representative may resign upon ten (10) days’ prior written notice to ParentCo, Kernel and the Seller
Representative, provided, that ParentCo Representative appoints in writing a replacement ParentCo Representative. Each successor ParentCo
Representative shall have all of the power, authority, rights and privileges conferred by this Agreement upon the original ParentCo Representative,
and the term “ParentCo Representative” as used herein shall be deemed to include any such successor ParentCo Representatives.
10.15 Seller
Representative.
(a) Each
Company Stockholder, by delivery of a Letter of Transmittal, on behalf of itself and its successors and assigns, hereby irrevocably constitutes
and appoints Dr. Chirinjeev Kathuria, in his capacity as the Seller Representative, as the true and lawful agent and attorney-in-fact
of such Persons with full powers of substitution to act in the name, place and stead of thereof with respect to the performance on behalf
of such Person under the terms and provisions of this Agreement and the Ancillary Documents to which the Seller Representative is a party
or otherwise has rights in such capacity (together with this Agreement, the “Seller Representative Documents”),
as the same may be from time to time amended, and to do or refrain from doing all such further acts and things, and to execute all such
documents on behalf of such Person, if any, as the Seller Representative will deem necessary or appropriate in connection with any of
the transactions contemplated under the Seller Representative Documents, including: (i) controlling and making any determinations with
respect to the post-Closing Merger Consideration adjustments under Section 2.11; (ii) terminating, amending or waiving on behalf
of such Person any provision of any Seller Representative Document (provided, that any such action, if material to the rights and obligations
of the Company Stockholders in the reasonable judgment of the Seller Representative, will be taken in the same manner with respect to
all Company Stockholders unless otherwise agreed by each Company Stockholder who is subject to any disparate treatment of a potentially
material and adverse nature); (iii) signing on behalf of such Person any releases or other documents with respect to any dispute or remedy
arising under any Seller Representative Document; (iv) employing and obtaining the advice of legal counsel, accountants and other professional
advisors as the Seller Representative, in its reasonable discretion, deems necessary or advisable in the performance of its duties as
the Seller Representative and to rely on their advice and counsel; (v) incurring and paying reasonable costs and expenses, including
fees of brokers, attorneys and accountants incurred pursuant to the transactions contemplated hereby, and any other reasonable fees and
expenses allocable or in any way relating to such transaction, whether incurred prior or subsequent to Closing; (viii) receiving all
or any portion of the consideration provided to the Company Stockholders under this Agreement and to distribute the same to the Company
Stockholders in accordance with their Pro Rata Share; and (ix) otherwise enforcing the rights and obligations of any such Persons under
any Seller Representative Document, including giving and receiving all notices and communications hereunder or thereunder on behalf of
such Person. All decisions and actions by the Seller Representative, including any agreement between the Seller Representative and ParentCo
Representative, ParentCo or Kernel shall be binding upon each Company Stockholder and their respective successors and assigns, and neither
they nor any other Party shall have the right to object, dissent, protest or otherwise contest the same. The provisions of this Section
10.15(a) are irrevocable and coupled with an interest. The Seller Representative hereby accepts its appointment and authorization
as the Seller Representative under this Agreement.
(b) Any
other Person, including ParentCo Representative, Kernel and the Company may conclusively and absolutely rely, without inquiry, upon any
actions of the Seller Representative as the acts of the Company Stockholders under any Seller Representative Documents. ParentCo Representative,
Kernel and the Company shall be entitled to rely conclusively on the instructions and decisions of the Seller Representative as to (i)
any payment instructions provided by the Seller Representative or (ii) any other actions required or permitted to be taken by the Seller
Representative hereunder, and no Company shall have any cause of action against ParentCo Representative, Kernel or the Company for any
action taken by any of them in reliance upon the instructions or decisions of the Seller Representative. ParentCo Representative, Kernel
and the Company shall not have any Liability to any Company Stockholder for any allocation or distribution among the Company Stockholders
by the Seller Representative of payments made to or at the direction of the Seller Representative. All notices or other communications
required to be made or delivered to a Company Stockholder under any Seller Representative Document shall be made to the Seller Representative
for the benefit of such Company Stockholder, and any notices so made shall discharge in full all notice requirements of the other parties
hereto or thereto to such Company Stockholder with respect thereto. All notices or other communications required to be made or delivered
by a Company Stockholder shall be made by the Seller Representative (except for a notice under Section 10.15(d) of the replacement
of the Seller Representative).
(c) The
Seller Representative will act for the Company Stockholders on all of the matters set forth in this Agreement in the manner the Seller
Representative believes to be in the best interest of the Company Stockholders, but the Seller Representative will not be responsible
to the Company Stockholders for any Losses that any Company Stockholder or any Indemnifying Party may suffer by reason of the performance
by the Seller Representative of the Seller Representative’s duties under this Agreement, other than Losses arising from the bad
faith, gross negligence or willful misconduct by the Seller Representative in the performance of its duties under this Agreement. From
and after the Closing, the Company Stockholders shall jointly and severally indemnify, defend and hold the Seller Representative harmless
from and against any and all Losses reasonably incurred without gross negligence, bad faith or willful misconduct on the part of the
Seller Representative (in its capacity as such) and arising out of or in connection with the acceptance or administration of the Seller
Representative’s duties under any Seller Representative Document, including the reasonable fees and expenses of any legal counsel
retained by the Seller Representative. In no event shall the Seller Representative in such capacity be liable hereunder or in connection
herewith for any indirect, punitive, special or consequential damages. The Seller Representative shall not be liable for any act done
or omitted under any Seller Representative Document as the Seller Representative while acting in good faith and without willful misconduct
or gross negligence, and any act done or omitted pursuant to the advice of counsel shall be conclusive evidence of such good faith. The
Seller Representative shall be fully protected in relying upon any written notice, demand, certificate or document that it in good faith
believes to be genuine, including facsimiles or copies thereof, and no Person shall have any Liability for relying on the Seller Representative
in the foregoing manner. In connection with the performance of its rights and obligations hereunder, the Seller Representative shall
have the right at any time and from time to time to select and engage, at the reasonable cost and expense of the Company Stockholders,
attorneys, accountants, investment bankers, advisors, consultants and clerical personnel and obtain such other professional and expert
assistance, maintain such records and incur other reasonable out-of-pocket expenses, as the Seller Representative may reasonably deem
necessary or appropriate from time to time. All of the indemnities, immunities, releases and powers granted to the Seller Representative
under this Section 10.15 shall survive the Closing and continue indefinitely.
(d) If
the Seller Representative shall die, become disabled, dissolve, resign or otherwise be unable or unwilling to fulfill its responsibilities
as representative and agent of Company Stockholders, then the Company Stockholders shall, within ten (10) days after such death, disability,
dissolution, resignation or other event, appoint a successor Seller Representative (by vote or written consent of the Company Stockholders
holding in the aggregate a Pro Rata Share in excess of fifty percent (50%)), and promptly thereafter (but in any event within two (2)
Business Days after such appointment) notify ParentCo Representative and Kernel in writing of the identity of such successor. Any such
successor so appointed shall become the “Seller Representative” for purposes of this Agreement.
10.16 Legal
Representation. The Parties agree that, notwithstanding the fact that Nelson Mullins Riley & Scarborough LLP may have, prior
to Closing, jointly represented Kernel, ParentCo, Kernel Merger Sub, AIRO Merger Sub, ParentCo Representative and/or the Sponsor in connection
with this Agreement, the Ancillary Documents and the transactions contemplated hereby and thereby, and has also represented Kernel and/or
its Affiliates in connection with matters other than the transaction that is the subject of this Agreement, Nelson Mullins Riley &
Scarborough LLP will be permitted in the future, after Closing, to represent the Sponsor, ParentCo Representative or their respective
Affiliates in connection with matters in which such Persons are adverse to ParentCo or any of its Affiliates, including any disputes
arising out of, or related to, this Agreement. The Company and the Seller Representative, who are or have the right to be represented
by independent counsel in connection with the transactions contemplated by this Agreement, hereby agree, in advance, to waive (and to
cause their Affiliates to waive) any actual or potential conflict of interest that may hereafter arise in connection with Nelson Mullins
Riley & Scarborough LLP’s future representation of one or more of the Sponsor, ParentCo Representative or their respective
Affiliates in which the interests of such Person are adverse to the interests of ParentCo, the Company and/or the Seller Representative
or any of their respective Affiliates, including any matters that arise out of this Agreement or that are substantially related to this
Agreement or to any prior representation by Nelson Mullins Riley & Scarborough LLP of Kernel, ParentCo, Kernel Merger Sub, AIRO Merger
Sub, any Sponsor, ParentCo Representative or any of their respective Affiliates. The Parties acknowledge and agree that, for the purposes
of the attorney-client privilege, the Sponsor and ParentCo Representative shall be deemed the clients of Nelson Mullins Riley & Scarborough
LLP with respect to the negotiation, execution and performance of this Agreement and the Ancillary Documents. All such communications
shall remain privileged after the Closing and the privilege and the expectation of client confidence relating thereto shall belong solely
to the Sponsor and ParentCo Representative, shall be controlled by the Sponsor and ParentCo Representative and shall not pass to or be
claimed by ParentCo or the Surviving Corporation; provided, further, that nothing contained herein shall be deemed to be a waiver
by ParentCo or any of its Affiliates (including, as applicable, after the First Effective Time or the Second Effective Time, the Surviving
Corporation and its Affiliates) of any applicable privileges or protections that can or may be asserted to prevent disclosure of any
such communications to any third party.
10.17 Non-Survival
of Representations, Warranties. The representations and warranties of the Company and ParentCo, Kernel, Kernel Merger Sub and AIRO
Merger Sub contained in this Agreement or in any certificate or instrument delivered by or on behalf of the Company or ParentCo, Kernel,
Kernel Merger Sub and AIRO Merger Sub pursuant to this Agreement shall not survive the Closing, and from and after the Closing, the Company
and ParentCo, Kernel, Kernel Merger Sub and AIRO Merger Sub and their respective Representatives shall not have any further obligations,
nor shall any claim be asserted or action be brought against the Company or ParentCo, Kernel, Kernel Merger Sub or AIRO Merger Sub or
their respective Representatives with respect thereto. The covenants and agreements made by the Company and ParentCo, Kernel, Kernel
Merger Sub and AIRO Merger Sub in this Agreement or in any certificate or instrument delivered pursuant to this Agreement, including
any rights arising out of any breach of such covenants or agreements, shall not survive the Closing, except for those covenants and agreements
contained herein and therein that by their terms apply or are to be performed in whole or in part after the Closing (which such covenants
shall survive the Closing and continue until fully performed in accordance with their terms).
Article
XI
DEFINITIONS
11.1 Certain
Definitions. For purpose of this Agreement, the following capitalized terms have the following meanings:
“AAA”
means the American Arbitration Association or any successor entity conducting arbitrations.
“Accounting
Principles” means in accordance with GAAP as in effect at the date of the financial statement to which it refers or if
there is no such financial statement, then as of the Closing Date, using and applying the same accounting principles, practices, procedures,
policies and methods (with consistent classifications, judgments, elections, inclusions, exclusions and valuation and estimation methodologies)
used and applied by the Target Companies in the preparation of the latest audited Company Financials.
“Action”
means any notice of noncompliance or violation, or any claim, demand, charge, action, suit, litigation, audit, settlement, complaint,
stipulation, assessment or arbitration, or any request (including any request for information), inquiry, hearing, proceeding or investigation,
by or before any Governmental Authority.
“Affiliate”
means, with respect to any Person, any other Person directly or indirectly Controlling, Controlled by, or under common Control with such
Person. For the avoidance of doubt, Sponsor shall be deemed to be an Affiliate or Kernel prior to the Closing.
“AIRO
Merger Sub Common Stock” means the shares of common stock, par value $0.001 per share, of AIRO Merger Sub.
“Ancillary
Documents” means each agreement, instrument or document attached hereto as an Exhibit, and the other agreements, certificates
and instruments to be executed or delivered by any of the Parties hereto in connection with or pursuant to this Agreement.
“Benefit
Plans” of any Person means any and all deferred compensation, executive compensation, incentive compensation, equity purchase
or other equity-based compensation plan, employment or consulting, severance or termination pay, holiday, vacation or other bonus plan
or practice, hospitalization or other medical, life or other insurance, supplemental unemployment benefits, profit sharing, pension,
or retirement plan, program, agreement, commitment or arrangement, and each other employee benefit plan, program, agreement or arrangement,
including each “employee benefit plan” as such term is defined under Section 3(3) of ERISA, maintained or contributed to
or required to be contributed to by a Person for the benefit of any employee or terminated employee of such Person, or with respect to
which such Person has any Liability, whether direct or indirect, actual or contingent, whether formal or informal, and whether legally
binding or not.
“Business
Day” means any day other than a Saturday, Sunday or a legal holiday on which commercial banking institutions in New York,
New York are authorized to close for business, excluding as a result of “stay at home”, “shelter-in-place”, “non-essential
employee” or any other similar orders or restrictions or the closure of any physical branch locations at the direction of any governmental
authority so long as the electronic funds transfer systems, including for wire transfers, of commercial banking institutions in New York,
New York are generally open for use by customers on such day.
“Closing
Company Cash” means, as of the Reference Time, the aggregate cash and cash equivalents of the Target Companies on hand
or in bank accounts, including deposits in transit, minus the aggregate amount of outstanding and unpaid checks issued by or on behalf
of the Target Companies as of such time.
“Closing
Net Debt” means, as of the Reference Time, (a) the aggregate amount of all Indebtedness of the Target Companies, less (b)
the Closing Company Cash, in each case of clauses (a) and (b), on a consolidated basis and as determined in accordance with the Accounting
Principles.
“Code”
means the Internal Revenue Code of 1986, as amended, and any successor statute thereto, as amended. Reference to a specific section of
the Code shall include such section and any valid treasury regulation promulgated thereunder.
“Company
Benefit Plans” means all contracts, plans, agreements, programs, arrangements, employee benefit plans, compensation arrangements
and other benefit arrangements, whether written or unwritten and whether or not providing cash- or equity-based incentives (e.g., restricted
stock, stock option, stock appreciation right, phantom stock, etc.), health, medical, dental, disability, accident or life insurance
benefits, change in control or retention payments, vacation, severance, salary continuation, or other termination pay, bonus, commissions
or other variable compensation, vacation, paid-time-off, sick leave, fringe benefit, retirement, deferred compensation, retirement, pension
or savings benefits, that are sponsored, maintained or contributed to by a Target Company for the benefit of any current or former employees,
offices, directors, or consultants of a Target Company or under which a Target Company has any liability and all employment or other
agreements (other than at will offer letters that do not provide for any severance or termination benefits) providing compensation, vacation,
severance or other benefits to any officer, employee, consultant or former employee of a Target Company to which a Target Company is
a party.
“Company
Charter” means the Certificate of Incorporation of the Company, as amended and effective under the DGCL, prior to the Second
Effective Time.
“Company
Common Stock” means the common stock, par value $0.000001 per share, of the Company.
“Company
Confidential Information” means all confidential or proprietary documents and information concerning the Target Companies
or any of their respective Representatives, furnished in connection with this Agreement or the transactions contemplated hereby; provided,
however, that Company Confidential Information shall not include any information which, (i) at the time of disclosure by ParentCo,
Kernel, Kernel Merger Sub or AIRO Merger Sub or their Representatives, is generally available publicly and was not disclosed in breach
of this Agreement or (ii) at the time of the disclosure by the Company or its Representatives to ParentCo, Kernel, Kernel Merger Sub
or AIRO Merger Sub or their Representatives was previously known by such receiving party without violation of Law or any confidentiality
obligation by the Person receiving such Company Confidential Information.
“Company
Convertible Securities” means, collectively, any options, warrants or rights to subscribe for or purchase any capital stock
of the Company or securities convertible into or exchangeable for, or that otherwise confer on the holder any right to acquire any capital
stock of the Company.
“Company
IT Systems” means all computer systems, computer software and hardware, communication systems, servers, network equipment
and related documentation, in each case, owned, licensed or leased by a Target Company.
“Company
Securities” means, collectively, the Company Stock and any Company Convertible Securities.
“Company
Security Holders” means, collectively, the holders of Company Securities.
“Company
Stock” means any shares of the Company Common Stock.
“Company
Stockholders” means, collectively, the holders of Company Stock.
“Company
Transaction Expenses” means all fees and expenses of any of the Target Companies incurred or payable as of the Closing
and not paid prior to the Closing (i) in connection with the consummation of the transactions contemplated hereby, including any amounts
payable to professionals (including investment bankers, brokers, finders, attorneys, accountants and other consultants and advisors)
retained by or on behalf of any Target Company, (ii) any change in control bonus, accrued but unpaid salary, transaction bonus, retention
bonus, termination or severance payment or payment relating to terminated options, warrants or other equity appreciation, phantom equity,
profit participation or similar rights, in any case, to be made to any current or former employee, independent contractor, director or
officer of any Target Company at or after the Closing pursuant to any agreement to which any Target Company is a party prior to the Closing
which become payable (including if subject to continued employment) as a result of the execution of this Agreement or the consummation
of the transactions contemplated hereby, (iii) any sales, use, real property transfer, stamp, stock transfer or other similar transfer
Taxes imposed on Target Company in connection with the Merger or the other transactions contemplated by this Agreement, and (iv) in connection
with the Company’s prior attempt at completing an initial public offering or SPAC transaction, including any amounts payable to
professionals (including investment bankers, brokers, finders, attorneys, accountants and other consultants and advisors) retained by
or on behalf of any Target Company in connection with the Company’s attempted initial public offering or SPAC transaction.
“Consent”
means any consent, approval, waiver, authorization or Permit of, or notice to or declaration or filing with any Governmental Authority
or any other Person.
“Contracts”
means all contracts, agreements, binding arrangements, bonds, notes, indentures, mortgages, debt instruments, purchase order, licenses
(and all other contracts, agreements or binding arrangements concerning Intellectual Property), franchises, leases and other instruments
or obligations of any kind, written or oral (including any amendments and other modifications thereto).
“Control”
of a Person means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies
of such Person, whether through the ownership of voting securities, by contract, or otherwise. “Controlled”, “Controlling”
and “under common Control with” have correlative meanings. Without limiting the foregoing a Person (the “Controlled
Person”) shall be deemed Controlled by (a) any other Person (i) owning beneficially, as meant in Rule 13d-3 under the Exchange
Act, securities entitling such Person to cast ten percent (10%) or more of the votes for election of directors or equivalent governing
authority of the Controlled Person or (ii) entitled to be allocated or receive ten percent (10%) or more of the profits, losses, or distributions
of the Controlled Person; (b) an officer, director, general partner, partner (other than a limited partner), manager, or member (other
than a member having no management authority that is not a Person described in clause (a) above) of the Controlled Person; or (c) a spouse,
parent, lineal descendant, sibling, aunt, uncle, niece, nephew, mother-in-law, father-in-law, sister-in-law, or brother-in-law of an
Affiliate of the Controlled Person or a trust for the benefit of an Affiliate of the Controlled Person or of which an Affiliate of the
Controlled Person is a trustee.
“Copyrights”
means any works of authorship, mask works and all copyrights therein, including all renewals and extensions, copyright registrations
and applications for registration and renewal, and non-registered copyrights.
“Environmental
Law” means any Law in any way relating to (a) the protection of human health and safety, (b) the protection, preservation
or restoration of the environment and natural resources (including air, water vapor, surface water, groundwater, drinking water supply,
surface land, subsurface land, plant and animal life or any other natural resource), or (c) the exposure to, or the use, storage, recycling,
treatment, generation, transportation, processing, handling, labeling, production, release or disposal of Hazardous Materials, including
the Comprehensive Environmental Response, Compensation and Liability Act, 42 USC. Section 9601 et. seq., the Resource Conservation and
Recovery Act, 42 USC. Section 6901 et. seq., the Toxic Substances Control Act, 15 USC. Section 2601 et. seq., the Federal Water Pollution
Control Act, 33 USC. Section 1151 et seq., the Clean Air Act, 42 USC. Section 7401 et seq., the Federal Insecticide, Fungicide and Rodenticide
Act, 7 USC. Section 111 et. seq., Occupational Safety and Health Act, 29 USC. Section 651 et. seq. (to the extent it relates to exposure
to Hazardous Substances), the Asbestos Hazard Emergency Response Act, 15 USC. Section 2601 et. seq., the Safe Drinking Water Act, 42
USC. Section 300f et. seq., the Oil Pollution Act of 1990 and analogous state acts.
“Environmental
Liabilities” means, in respect of any Person, all Liabilities, obligations, responsibilities, Remedial Actions, Losses,
damages, costs, and expenses (including all reasonable fees, disbursements, and expenses of counsel, experts, and consultants and costs
of investigation and feasibility studies), fines, penalties, sanctions, and interest incurred as a result of any claim or demand by any
other Person or in response to any violation of Environmental Law, whether known or unknown, accrued or contingent, whether based in
contract, tort, implied or express warranty, strict liability, criminal or civil statute, to the extent based upon, related to, or arising
under or pursuant to any Environmental Law, Environmental Permit, Order, or Contract with any Governmental Authority or other Person,
that relates to any environmental, health or safety condition, violation of Environmental Law, or a Release or threatened Release of
Hazardous Materials.
“ERISA”
means the U.S. Employee Retirement Income Security Act of 1974, as amended.
“Exchange
Act” means the U.S. Securities Exchange Act of 1934, as amended.
“Fraud
Claim” means any claim based in whole or in part upon fraud, willful misconduct or intentional misrepresentation.
“GAAP”
means generally accepted accounting principles as in effect in the United States of America.
“Governmental
Authority” means any federal, state, local, foreign or other governmental, quasi-governmental or administrative body, instrumentality,
department or agency or any court, tribunal, administrative hearing body, arbitration panel, commission, or other similar dispute-resolving
panel or body.
“Hazardous
Material” means any waste, gas, liquid or other substance or material that is defined, listed or designated as a “hazardous
substance”, “pollutant”, “contaminant”, “hazardous waste”, “regulated substance”,
“hazardous chemical”, or “toxic chemical” (or by any similar term) under any Environmental Law, or any other
material regulated, or that could result in the imposition of Liability or responsibility, under any Environmental Law, including petroleum
and its by-products, asbestos, polychlorinated biphenyls, radon, mold, and urea formaldehyde insulation.
“Imminent
Closing Net Debt” means, as of the Reference Time, (a) the aggregate amount of all Indebtedness of the Target Companies
due earlier than 180 days after the Closing, less (b) the Closing Company Cash, in each case of clauses (a) and (b), on a consolidated
basis and as determined in accordance with the Accounting Principles.
“Indebtedness”
of any Person means, without duplication, (a) all indebtedness of such Person for borrowed money (including the outstanding principal
and accrued but unpaid interest), (b) all obligations for the deferred purchase price of property or services (other than trade payables
incurred in the ordinary course of business), (c) any other indebtedness of such Person that is evidenced by a note, bond, debenture,
credit agreement or similar instrument, (d) all obligations of such Person under leases that should be classified as capital leases in
accordance with GAAP, (e) all obligations of such Person for the reimbursement of any obligor on any line or letter of credit, banker’s
acceptance, guarantee or similar credit transaction, in each case, that has been drawn or claimed against, (f) all obligations of such
Person in respect of acceptances issued or created, (g) all interest rate and currency swaps, caps, collars and similar agreements or
hedging devices under which payments are obligated to be made by such Person, whether periodically or upon the happening of a contingency,
(h) all obligations secured by an Lien on any property of such Person, (i) any premiums, prepayment fees or other penalties, fees, costs
or expenses associated with payment of any Indebtedness of such Person and (j) all obligation described in clauses (a) through (i) above
of any other Person which is directly or indirectly guaranteed by such Person or which such Person has agreed (contingently or otherwise)
to purchase or otherwise acquire or in respect of which it has otherwise assured a creditor against loss.
“Intellectual
Property” means all of the following as they exist in any jurisdiction throughout the world: Patents, Trademarks, Copyrights,
Trade Secrets, Internet Assets, Software and other intellectual property, and all licenses, sublicenses and other agreements or permissions
related to the preceding property.
“Internet
Assets” means any and all domain name registrations, web sites and web addresses and related rights, items and documentation
related thereto, and applications for registration therefor.
“IPO”
means the initial public offering of Old Kernel Public Units pursuant to the IPO Prospectus.
“IPO
Prospectus” means the final prospectus of Kernel, dated as of February 2, 2021, and filed with the SEC on February 4, 2021.
“IPO
Underwriter” means Citigroup Global Markets Inc., the lead underwriter in the IPO.
“IRS”
means the U.S. Internal Revenue Service (or any successor Governmental Authority).
“Kernel
Class A Common Stock” means the shares of Class A common stock, par value $0.0001 per share, of Kernel after Domestication.
“Kernel
Class B Common Stock” means the shares of Class B common stock, par value $0.0001 per share, of Kernel after Domestication.
“Kernel
Common Stock” means the common stock, par value $0.0001 per share, of Kernel after Domestication and Conversion.
“Kernel
Expenses” means all out-of-pocket expenses (including all fees and expenses of counsel, accountants, investment bankers,
financial advisors, financing sources, experts and consultants to a Kernel hereto or any of its Affiliates) incurred by Kernel or on
its behalf in connection with or related to the authorization, preparation, negotiation, execution or performance of this Agreement or
any Ancillary Document related hereto and all other matters related to the consummation of this Agreement, including any and all deferred
expenses (including fees or commissions payable to the underwriters and any legal fees) of the IPO upon consummation of a Business Combination,
any Extension Expenses, and any expenses relating to Hart-Scott-Rodino Act, SEC and Nasdaq filing fees relating to this Transaction.
“Kernel
Merger Sub Common Stock” means the shares of common stock, par value $0.001 per share, of Kernel Merger Sub.
“Kernel
Preferred Stock” means the shares of preferred stock, par value $0.0001 per share, of Kernel after Domestication.
“Kernel
Private Warrant” means, after Domestication and Conversion, one (1) whole private warrant entitling the holder thereof
to purchase one (1) share of Kernel Common Stock at a purchase price of $11.50 per share.
“Kernel
Public Units” means the units issued in the Domestication consisting of one (1) share of Kernel Class A Common Stock and
one-half (1/2) of one (1) Kernel Public Warrant.
“Kernel
Public Warrant” means, after Domestication and Conversion, one (1) whole public warrant, entitling the holder thereof to
purchase one (1) share of Kernel Common Stock at a purchase price of $11.50 per share.
“Kernel
Securities” means the Old Kernel Preferred Stock, Old Kernel Class A Stock, Old Kernel Class B Stock, Old Kernel Private
Warrants, Old Kernel Public Warrants and the Old Kernel Units, collectively.
“Knowledge”
means, with respect to (i) the Company, the actual knowledge of the executive officers or directors of any Target Company, after reasonable
inquiry or (ii) Kernel, the actual knowledge of Suren Ajjarapu or Howard Doss.
“Law”
means any federal, state, local, municipal, foreign or other law, statute, legislation, principle of common law, ordinance, code, edict,
decree, proclamation, treaty, convention, rule, regulation, directive, requirement, writ, injunction, settlement, Order or Consent that
is or has been issued, enacted, adopted, passed, approved, promulgated, made, implemented or otherwise put into effect by or under the
authority of any Governmental Authority.
“Liabilities”
means any and all liabilities, Indebtedness, Actions or obligations of any nature (whether absolute, accrued, contingent or otherwise,
whether known or unknown, whether direct or indirect, whether matured or unmatured, whether due or to become due and whether or not required
to be recorded or reflected on a balance sheet under GAAP or other applicable accounting standards), including Tax liabilities due or
to become due.
“Lien”
means any mortgage, pledge, security interest, attachment, right of first refusal, option, proxy, voting trust, encumbrance, lien or
charge of any kind (including any conditional sale or other title retention agreement or lease in the nature thereof), restriction (whether
on voting, sale, transfer, disposition or otherwise), any subordination arrangement in favor of another Person, or any filing or agreement
to file a financing statement as debtor under the Uniform Commercial Code or any similar Law.
“Material
Adverse Effect” means, with respect to any specified Person, any fact, event, occurrence, change or effect that has had,
or would reasonably be expected to have, individually or in the aggregate, a material adverse effect upon (a) the business, assets, Liabilities,
results of operations, prospects or condition (financial or otherwise) of such Person and its Subsidiaries, taken as a whole, or (b)
the ability of such Person or any of its Subsidiaries on a timely basis to consummate the transactions contemplated by this Agreement
or the Ancillary Documents to which it is a party or bound or to perform its obligations hereunder or thereunder; provided, however,
that for purposes of clause (a) above, any changes or effects directly or indirectly attributable to, resulting from, relating to or
arising out of the following (by themselves or when aggregated with any other, changes or effects) shall not be deemed to be, constitute,
or be taken into account when determining whether there has or may, would or could have occurred a Material Adverse Effect: (i) general
changes in the financial or securities markets or general economic or political conditions in the country or region in which such Person
or any of its Subsidiaries do business; (ii) changes, conditions or effects that generally affect the industries in which such Person
or any of its Subsidiaries principally operate; (iii) changes in GAAP or other applicable accounting principles or mandatory changes
in the regulatory accounting requirements applicable to any industry in which such Person and its Subsidiaries principally operate; (iv)
conditions caused by acts of God, terrorism, war (whether or not declared) or natural disaster; (v) any failure in and of itself by such
Person and its Subsidiaries to meet any internal or published budgets, projections, forecasts or predictions of financial performance
for any period (provided that the underlying cause of any such failure may be considered in determining whether a Material Adverse Effect
has occurred or would reasonably be expected to occur to the extent not excluded by another exception herein) and (vi), with respect
to Kernel, the consummation and effects of the Redemption (or any redemption in connection with an Extension); provided further, however,
that any event, occurrence, fact, condition, or change referred to in clauses (i) - (iv) immediately above shall be taken into account
in determining whether a Material Adverse Effect has occurred or could reasonably be expected to occur to the extent that such event,
occurrence, fact, condition, or change has a disproportionate effect on such Person or any of its Subsidiaries compared to other participants
in the industries in which such Person or any of its Subsidiaries primarily conducts its businesses. Notwithstanding the foregoing, with
respect to Kernel, the amount of the Redemption (or any redemption in connection with an Extension, if any) or the failure to obtain
the Required Kernel Stockholder Approval shall not be deemed to be a Material Adverse Effect on or with respect to Kernel.
“Nasdaq”
means the Nasdaq Capital Market.
“Net
Working Capital” means, as of the Reference Time, (i) all current assets of the Target Companies (excluding, without duplication,
Closing Company Cash), on a consolidated basis, minus (ii) all current liabilities of the Target Companies (excluding, without duplication,
Indebtedness and unpaid Company Transaction Expenses), on a consolidated basis and as determined in accordance with the Accounting Principles;
provided, that, for purposes of this definition, whether or not the following is consistent with the Accounting Principles, “current
assets” will exclude any receivable from a Company Stockholder.
“Old
Kernel Class A Stock” means the Class A ordinary stock, par value $0.0001 per share, of Kernel prior to Domestication.
“Old
Kernel Class B Stock” means the Class B ordinary stock, par value $0.0001 per share, of Kernel prior to Domestication.
“Old
Kernel Preferred Stock” means the preferred stock, par value $0.0001 per share, of Kernel prior to Domestication.
“Old
Kernel Private Warrant” means one (1) whole warrant issued as part of the private placement consummated simultaneously
with the closing of the IPO, entitling the holder thereof to purchase one (1) share of Old Kernel Class A Stock at a purchase price of
$11.50 per share.
“Old
Kernel Public Warrant” means one (1) whole warrant, of which one-half (1/2) of one (1) was included as part of each Old
Kernel Unit, entitling the holder thereof to purchase one (1) share of Old Kernel Class A Stock at a purchase price of $11.50 per share.
“Old
Kernel Unit” means the units issued in the IPO (including overallotment units acquired by Kernel’s underwriter) consisting
of one (1) share of Old Kernel Class A Stock and one-half (1/2) of one (1) Old Kernel Public
Warrant.
“Order”
means any order, decree, ruling, judgment, injunction, writ, determination, binding decision, verdict, judicial award or other action
that is or has been made, entered, rendered, or otherwise put into effect by or under the authority of any Governmental Authority.
“Organizational
Documents” means, with respect to any Person that is an entity, its certificate of incorporation or formation, bylaws,
operating agreement, memorandum and articles of association or similar organizational documents, in each case, as amended.
“ParentCo
Confidential Information” means all confidential or proprietary documents and information concerning ParentCo or Kernel
or any of its Representatives; provided, however, that ParentCo Confidential Information shall not include any information which,
(i) at the time of disclosure by the Company, the Seller Representative or any of their respective Representatives, is generally available
publicly and was not disclosed in breach of this Agreement or (ii) at the time of the disclosure by ParentCo, Kernel or their Representatives
to the Company, the Seller Representative or any of their respective Representatives, was previously known by such receiving party without
violation of Law or any confidentiality obligation by the Person receiving such ParentCo Confidential Information. For the avoidance
of doubt, from and after the Closing, ParentCo Confidential Information will include the confidential or proprietary information of the
Target Companies.
“Patents”
means any patents, patent applications and the inventions, designs and improvements described and claimed therein, patentable inventions,
and other patent rights (including any divisionals, provisionals, continuations, continuations-in-part, substitutions, or reissues thereof,
whether or not patents are issued on any such applications and whether or not any such applications are amended, modified, withdrawn,
or refiled).
“PCAOB”
means the U.S. Public Company Accounting Oversight Board (or any successor thereto).
“Per
Share Price” means Ten and No/100 Dollars ($10.00).
“Permits”
means all federal, state, local or foreign or other third-party permits, grants, easements, consents, approvals, authorizations, exemptions,
licenses, franchises, concessions, ratifications, permissions, clearances, confirmations, endorsements, waivers, certifications, designations,
ratings, registrations, qualifications or orders of any Governmental Authority or any other Person.
“Permitted
Liens” means (a) Liens for Taxes or assessments and similar governmental charges or levies, which either are (i) not delinquent
or (ii) being contested in good faith and by appropriate proceedings, and adequate reserves have been established with respect thereto,
(b) other Liens imposed by operation of Law arising in the ordinary course of business for amounts which are not due and payable and
as would not in the aggregate materially adversely affect the value of, or materially adversely interfere with the use of, the property
subject thereto, (c) Liens incurred or deposits made in the ordinary course of business in connection with social security, (d) Liens
on goods in transit incurred pursuant to documentary letters of credit, in each case arising in the ordinary course of business, or (v)
Liens arising under this Agreement or any Ancillary Document.
“Person”
means an individual, corporation, partnership (including a general partnership, limited partnership or limited liability partnership),
limited liability company, association, trust or other entity or organization, including a government, domestic or foreign, or political
subdivision thereof, or an agency or instrumentality thereof.
“Personal
Data” means any information relating to an identified or identifiable natural person (data subject); an identifiable natural
person is one who can be identified, directly or indirectly, in particular by reference to an identifier such as a name, an identification
number, location data, an online identifier or to one or more factors specific to the physical, physiological, genetic, mental, economic,
cultural or social identity of that natural person.
“Personal
Property” means any machinery, equipment, tools, vehicles, furniture, leasehold improvements, office equipment, plant,
parts and other tangible personal property.
“Privacy
Laws” means any applicable international, national, federal, provincial, state, or local law, code, rule or regulation
that regulates the processing of Personal Data in any way, including data protection laws, laws regulating marketing communications and/or
electronic communications, information security regulations and security breach notification rules.
“Pro
Rata Share” means (a) with respect to each Company Stockholder, a fraction expressed as a percentage equal to (i) the portion
of the AIRO Merger Consideration payable by ParentCo to such Company Stockholder in accordance with the terms of this Agreement, divided
by (ii) the total AIRO Merger Consideration payable by ParentCo to all Company Stockholders in accordance with the terms of this Agreement,
and (b) with respect to each Kernel Stockholder, a fraction expressed as a percentage equal to (i) the portion of the Kernel Merger Consideration
payable by ParentCo to such Kernel Stockholder in accordance with the terms of this Agreement, divided by (ii) the total Kernel Merger
Consideration payable by ParentCo to all Kernel Stockholders in accordance with the terms of this Agreement.
“Redemption
Price” means an amount equal to the price at which each share of Kernel Common Stock is redeemed or converted pursuant
to the Redemption (as equitably adjusted for stock splits, stock dividends, combinations, recapitalizations and the like after the Closing).
“Reference
Time” means the close of business of the Company on the Closing Date (but without giving effect to the transactions contemplated
by this Agreement, including any payments by ParentCo hereunder to occur at the Closing, but treating any obligations in respect of Indebtedness,
Transaction Expenses or other liabilities that are contingent upon the consummation of the Closing as currently due and owing without
contingency as of the Reference Time).
“Release”
means any release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, or leaching into the indoor
or outdoor environment, or into or out of any property.
“Remedial
Action” means all actions to (i) clean up, remove, treat, or in any other way address any Hazardous Material, (ii) prevent
the Release of any Hazardous Material so it does not endanger or threaten to endanger public health or welfare or the indoor or outdoor
environment, (iii) perform pre-remedial studies and investigations or post-remedial monitoring and care, or (iv) correct a condition
of noncompliance with Environmental Laws.
“Representatives”
means, as to any Person, such Person’s Affiliates and the respective managers, directors, officers, employees, independent contractors,
consultants, advisors (including financial advisors, counsel and accountants), agents and other legal representatives of such Person
or its Affiliates.
“SEC”
means the U.S. Securities and Exchange Commission (or any successor Governmental Authority).
“Securities
Act” means the Securities Act of 1933, as amended.
“Significant
Company Holder” means Company Stockholders that own at least one percent (1%) of Company Stock as of the Reference Time.
“Software”
means any computer software programs, including all source code, object code, and documentation related thereto and all software modules,
tools and databases.
“SOX”
means the U.S. Sarbanes-Oxley Act of 2002, as amended.
“Sponsor”
means VKSS Capital, LLC, a Delaware limited liability company.
“Subsidiary”
means, with respect to any Person, any corporation, partnership, association or other business entity of which (i) if a corporation,
a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one
or more of the other Subsidiaries of that Person or a combination thereof, or (ii) if a partnership, association or other business entity,
a majority of the partnership or other similar ownership interests thereof is at the time owned or controlled, directly or indirectly,
by any Person or one or more Subsidiaries of that Person or a combination thereof. For purposes hereof, a Person or Persons will be deemed
to have a majority ownership interest in a partnership, association or other business entity if such Person or Persons will be allocated
a majority of partnership, association or other business entity gains or losses or will be or control the managing director, managing
member, general partner or other managing Person of such partnership, association or other business entity. A Subsidiary of a Person
will also include any variable interest entity which is consolidated with such Person under applicable accounting rules.
“Target
Company” means each of the Company and its direct and indirect Subsidiaries.
“Target
Company Transaction Expenses” means $14,000,000.
“Target
Net Debt” means $75,000,000.
“Target
Net Working Capital Amount” means an amount equal to $(5,500,000).
“Tax
Return” means any return, declaration, report, claim for refund, information return or other documents (including any related
or supporting schedules, statements or information) filed or required to be filed in connection with the determination, assessment or
collection of any Taxes or the administration of any Laws or administrative requirements relating to any Taxes.
“Taxes”
means (a) all direct or indirect federal, state, local, foreign and other net income, gross income, gross receipts, sales, use, value-added,
ad valorem, transfer, franchise, profits, license, lease, service, service use, withholding, payroll, employment, social security and
related contributions due in relation to the payment of compensation to employees, excise, severance, stamp, occupation, premium, property,
windfall profits, alternative minimum, estimated, customs, duties or other taxes, fees, assessments or charges of any kind whatsoever,
together with any interest and any penalties, additions to tax or additional amounts with respect thereto, (b) any Liability for payment
of amounts described in clause (a) whether as a result of being a member of an affiliated, consolidated, combined or unitary group for
any period or otherwise through operation of law and (c) any Liability for the payment of amounts described in clauses (a) or (b) as
a result of any tax sharing, tax group, tax indemnity or tax allocation agreement with, or any other express or implied agreement to
indemnify, any other Person.
“Trade
Secrets” means any trade secrets, confidential business information, concepts, ideas, designs, research or development
information, processes, procedures, techniques, technical information, specifications, operating and maintenance manuals, engineering
drawings, methods, know-how, data, mask works, discoveries, inventions, modifications, extensions, improvements, and other proprietary
rights (whether or not patentable or subject to copyright, trademark, or trade secret protection).
“Trademarks”
means any trademarks, service marks, trade dress, trade names, brand names, internet domain names, designs, logos, or corporate names
(including, in each case, the goodwill associated therewith), whether registered or unregistered, and all registrations and applications
for registration and renewal thereof.
“Trading
Day” means any day on which shares of ParentCo Common Stock are actually traded on the principal securities exchange or
securities market on which ParentCo Common Stock are then traded.
“Trust
Account” means the trust account established by Kernel with the proceeds from the IPO pursuant to the Trust Agreement in
accordance with the IPO Prospectus.
“Trust
Agreement” means that certain Investment Management Trust Agreement, effective as of February 5, 2021 as it may be amended,
by and between Kernel and the Trustee, as well as any other agreements entered into related to or governing the Trust Account.
“Trustee”
means Continental Stock Transfer & Trust Company, in its capacity as trustee under the Trust Agreement.
“Unencumbered
Cash” means (a) cash remaining in the Trust Account after giving effect to (i) the completion and payment of the Redemption
and (ii) any prepayment regarding any forward purchase agreement; (b) the net cash proceeds of any PIPE/Convertible Note Investment;
(c) fifty percent (50%) of any net cash proceeds of any capital investment raise and/or convertible debt raise conducted by the Company
during the period beginning on the Date of this Agreement and ending on the Closing Date; and (d) any net cash proceeds of any executed
agreements regarding a capital investment raise and/or convertible debt raise conducted by Kernel or ParentCo in which such cash proceeds
are required to be paid to ParentCo during the thirty (30) day period beginning on the Closing Date. For the avoidance of doubt: (x)
the calculation of “Unencumbered Cash” shall occur prior to, and shall not consider, the payment of Kernel’s unpaid
Expenses or Liabilities or the payment of Company Transaction Expenses; (y) “Unencumbered Cash” shall not include any cash
received as a result of a forward purchase agreement other than prepayments; and (z) “Unencumbered Cash” shall not include
any cash available or received as a result of an equity line of credit.
11.2 Section
References. The following capitalized terms, as used in this Agreement, have the respective meanings given to them in the Section
as set forth below adjacent to such terms:
| Term |
|
Section |
|
Term |
|
Section |
| AAA Procedures |
|
10.4 |
|
Company Real Property Leases |
|
5.15 |
| Accounts Receivable |
|
5.7(f) |
|
Company Registered IP |
|
5.13(a) |
| Acquisition Proposal |
|
6.6(a) |
|
Company Special Meeting |
|
6.13 |
| Agreement |
|
Preamble |
|
Company Warrants |
|
5.3(a) |
| AIRO Amended Charter |
|
2.6 |
|
Conversion |
|
Recitals |
| AIRO Certificate of Merger |
|
2.1 |
|
D&O Indemnified Persons |
|
6.18(a) |
| AIRO Dissenting Shareholder |
|
2.13 |
|
D&O Tail Insurance |
|
6.18(b) |
| AIRO Dissenting Shares |
|
2.13 |
|
DGCL |
|
Recitals |
| AIRO Merger Consideration |
|
2.7(a) |
|
Dispute |
|
10.4 |
| AIRO Merger Sub |
|
Preamble |
|
Domestication |
|
Recitals |
| AIRO Surviving Corporation |
|
2.1 |
|
Earnout Eligibility Period |
|
2.14(a)(i) |
| AIRO Transaction Documents |
|
2.9(b) |
|
Earnout End Date |
|
2.14(a)(i) |
| Alternative Transaction |
|
6.6(a) |
|
Earnout Period |
|
2.14(a)(i) |
| Amended ParentCo Charter |
|
1.6 |
|
Earnout Shares |
|
2.14(a) |
| Antitrust Laws |
|
6.9(b) |
|
Earnout Start Date |
|
2.14(a)(i) |
| Audited Company Financials |
|
5.7(a) |
|
Earnout Statement |
|
2.14(b) |
| Bridge Financing Notes |
|
5.3(a) |
|
Enforceability Exceptions |
|
4.2 |
| Business Combination |
|
9.1 |
|
Environmental Permits |
|
5.20(a) |
| CFO |
|
2.11 |
|
Exchange Agent |
|
1.9(a) |
| Closing |
|
3.1 |
|
Extension |
|
6.3(a) |
| Closing Date |
|
3.1 |
|
Extension Expenses |
|
1.1(c)(iv) |
| Closing Filing |
|
6.14(b) |
|
Federal Securities Laws |
|
6.7 |
| Closing Press Release |
|
6.14(b) |
|
First Effective Time |
|
1.2 |
| Closing Statement |
|
2.11 |
|
First Merger |
|
Recitals |
| Companies Act |
|
Recitals |
|
Intended Tax Treatment |
|
6.1 |
| Company |
|
Preamble |
|
Interim Balance Sheet Date |
|
5.7(a) |
| Company Benefit Plan |
|
11.1 |
|
Interim Period |
|
6.1(a) |
| Company Certificates |
|
2.9(a) |
|
Kernel |
|
Preamble |
| Company Directors |
|
6.17(a) |
|
Kernel Amended Charter |
|
1.6 |
| Company Disclosure Schedules |
|
Article V |
|
Kernel Bylaws |
|
Recitals |
| Company Financials |
|
5.7(a) |
|
Kernel Certificate of Incorporation |
|
Recitals |
| Company IP |
|
5.13(d) |
|
Kernel Certificate of Merger |
|
1.1 |
| Company IP Licenses |
|
5.13(a) |
|
Kernel Certificates |
|
1.9(a) |
| Company Material Contract |
|
5.12(a) |
|
Kernel Disclosure Schedules |
|
Article IV |
| Company Options |
|
5.3(a) |
|
Kernel Dissenting Shareholders |
|
1.12 |
| Company Permits |
|
5.10 |
|
Kernel Dissenting Shares |
|
1.12 |
| Company Personal Property Leases |
|
5.16 |
|
Kernel Financials |
|
4.6(b) |
| Term |
|
Section |
|
Term |
|
Section |
| Kernel Material Contract |
|
4.13(a) |
|
Public Stockholders |
|
9.1 |
| Kernel Merger Consideration |
|
1.7(a) |
|
Redemption |
|
6.12(a) |
| Kernel Merger Sub |
|
Preamble |
|
Registration Statement |
|
6.12(a) |
| Kernel Special Meeting |
|
6.12(a) |
|
Related Person |
|
5.21 |
| Kernel Stockholder Approval Matters |
|
6.12(a) |
|
Released Claims |
|
9.1 |
| Kernel Surviving Corporation |
|
Recitals |
|
Replacement Options |
|
6.25 |
| Kernel Transmittal Documents |
|
1.9(b) |
|
Replacement Warrants |
|
6.24 |
| Letter of Transmittal |
|
1.9(a) |
|
Required Company Stockholder Approval |
|
7.1(b) |
| Lock-Up Agreement |
|
Recitals |
|
Required Kernel Stockholder Approval |
|
7.1(a) |
| Lost Certificate Affidavit |
|
1.9(d) |
|
Resolution Period |
|
10.4 |
| Non-Competition Agreement |
|
6.23 |
|
RSUs |
|
5.3(a) |
| OFAC |
|
4.19(c) |
|
Scarsdale |
|
5.3(a) |
| Off-the-Shelf Software |
|
5.13(a) |
|
Scarsdale Warrant |
|
5.3(a) |
| Outbound IP License |
|
5.13(c) |
|
SEC Reports |
|
4.6(a) |
| Outside Date |
|
8.1(b) |
|
Second Effective Time |
|
2.2 |
| ParentCo |
|
Preamble |
|
Second Merger |
|
Recitals |
| ParentCo Directors |
|
6.17(a) |
|
Section 409A Plan |
|
5.19(j) |
| ParentCo Disclosure Schedules |
|
Article IV |
|
Seller Representative |
|
Preamble |
| ParentCo Financials |
|
4.6(b) |
|
Seller Representative Documents |
|
10.15(a) |
| ParentCo Material Contract |
|
4.13(a) |
|
Signing Filing |
|
6.14(b) |
| ParentCo Representative |
|
Preamble |
|
Signing Press Release |
|
6.14(b) |
| ParentCo Representative Documents |
|
10.14(a) |
|
Specified Courts |
|
10.5 |
| ParentCo Stockholder Approval Matters |
|
6.12(a) |
|
Stephenson |
|
5.3(a) |
| ParentCo Special Meeting |
|
6.12(a) |
|
Stephenson Warrant |
|
5.3(a) |
| PIPE/Convertible Note Investment |
|
6.20(a) |
|
Surviving Corporation |
|
1.1 |
| Platform Agreements |
|
5.13(h) |
|
Top Customers |
|
5.24 |
| Post-Closing ParentCo Board |
|
6.17(a) |
|
Top Suppliers |
|
5.24 |
| Proxy Statement |
|
6.12(a) |
|
Transmittal Documents |
|
1.9(b) |
| Public Certifications |
|
4.6(a) |
|
|
|
|
{REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS}
IN
WITNESS WHEREOF, each Party has caused this Agreement and Plan of Merger to be signed and delivered as of the date first written above.
| Kernel: |
|
ParentCo Representative/Sponsor: |
| |
|
|
| KERNEL GROUP HOLDINGS, INC. |
|
VKSS CAPITAL, LLC |
| |
|
|
| By: |
/s/
Suren Ajjarapu |
|
By: |
/s/
Suren Ajjarapu |
| Name: |
Suren Ajjarapu |
|
Name: |
Suren
Ajjarapu |
| Title: |
Chief Executive Officer |
|
Title: |
Managing Member |
| |
|
|
| Kernel Merger Sub: |
|
Company: |
| |
|
|
| KERNEL MERGER SUB, INC. |
|
AIRO GROUP HOLDINGS, INC. |
| |
|
|
| By: |
/s/
Suren Ajjarapu |
|
By: |
/s/
Joseph Burns |
| Name: |
Suren Ajjarapu |
|
Name: |
Joseph Burns |
| Title: |
President |
|
Title: |
Chief Executive Officer |
| |
|
|
| AIRO Merger Sub: |
|
Seller Representative: |
| |
|
|
| AIRO MERGER SUB, INC. |
|
Dr. Chirinjeev Kathuria, |
| |
|
solely in the capacity as the Seller Representative
hereunder |
| By: |
/s/
Suren Ajjarapu |
|
|
| Name: |
Suren Ajjarapu |
|
By: |
/s/ Chirinjeev Kathuria |
| Title: |
President |
|
Name: |
Dr. Chirinjeev Kathuria |
| |
|
|
| ParentCo: |
|
|
| |
|
|
| AIRO GROUP, INC. |
|
|
| |
|
|
| By: |
/s/ Suren Ajjarapu |
|
|
| Name: |
Suren Ajjarapu |
|
|
| Title: |
President |
|
|
[Signature
Page to Business Combination Agreement]
