Kernel : Termination of Material Agreement - Form 8-K

Item 1.02 Termination of a Material Definitive Agreement.

As previously disclosed, on March 3, 2023, Kernel Group Holdings, Inc., a Cayman Islands exempted company (the "Company") entered into a Business Combination Agreement (the "Business Combination Agreement") with AIRO Group, Inc., a Delaware corporation ("ParentCo"), Kernel Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of ParentCo, AIRO Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of ParentCo, VKSS Capital, LLC, a Delaware limited liability company, in the capacity as the representative for the shareholders of the Company and ParentCo, and also in the capacity as the Company's sponsor, Dr. Chirinjeev Kathuria, in the capacity as the representative for the AIRO Group Holdings, Inc's stockholders, and AIRO Group Holdings, Inc., a Delaware corporation ("AIRO").

In connection with the Business Combination Agreement, the Company, AIRO, and Meteora Special Opportunity Fund I, LP ("MSOF"), Meteora Capital Partners, LP ("MCP") and Meteora Select Trading Opportunities Master, LP ("MSTO") (with MCP, MSOF, and MSTO collectively as "Seller") entered into that certain Forward Purchase Agreement, dated as of February 28, 2023 (the "FPA" or the "Confirmation").

Pursuant to the FPA. Meteora agreed to purchase from the Company up to a maximum of 7,700,000 Class A ordinary shares of the Company from holders (other than the Company or its affiliates) who elected to redeem such shares in connection with the business combination between the Company and AIRO (the "Business Combination"). Purchases by Seller were to be made through brokers in the open market after the redemption deadline in connection with the Business Combination at a price no higher than the redemption price to be paid by the Company in connection with the Business Combination.

On November 27, 2023, the Company, Seller, and AIRO entered into a mutual termination agreement (the "Mutual Termination Agreement") to terminate the FPA. As a result of the termination of the FPA, the FPA is of no further force and effect. In consideration of the termination of the FPA, ParentCo agreed to issue fifty-thousand (50,000) shares of common stock to an entity designated by Seller at the time of closing of the Business Combination, which shares will have certain demand and piggback registration rights.

The foregoing description of the FPA and the Mutual Termination Agreement does not purport to be complete and is qualified in its entirety by the terms and conditions of the FPA and Mutual Termination Agreement, which are filed as Exhibits 10.1 and 10.2 hereto, respectively, and incorporated by reference herein.