EXHIBIT 10.7


 


INVESTMENT MANAGEMENT TRUST AGREEMENT


 


This Investment Management
Trust Agreement (this “Agreement”) is made effective as of _                _,
2021 by and between Avalon Acquisition Inc., a Delaware corporation (the “Company”), and Continental Stock Transfer
& Trust Company, a New York limited purpose trust company (the “Trustee”).


 


WHEREAS, the
Company’s registration statement on Form S-1, No. 333-253654 (the “Registration Statement”) and prospectus
(the “Prospectus”) for the initial public offering of the Company’s units (the “Units”), each
of which consists of one share of the Company’s Class A common stock, par value $0.0001 per share (the “Common
Stock”), and three-fourths of one redeemable warrant, each full warrant entitling the holder thereof to purchase one share
of Common Stock (such initial public offering hereinafter referred to as the “Offering”), has been declared
effective as of the date hereof by the U.S. Securities and Exchange Commission; and


 


WHEREAS, the Company
has entered into an Underwriting Agreement (the “Underwriting Agreement”) with Maxim Group LLC as representative (the
“Representative”) of the several underwriters (the “Underwriters”) named therein; and


 


WHEREAS,
if a Business Combination (as defined herein) is not consummated within the initial 15 month period following the closing of the Offering,
upon the request of the Company’s sponsor (the “Sponsor”), the Company may extend
such period by two extensions with each extension being three months for up to a maximum of six months in the aggregate, subject to the
Sponsor or its affiliates or permitted designees depositing $1,500,000 (or $1,725,000 if the Underwriters’ over-allotment option
is exercised in full) into the Trust Account (as defined below) no later than the 15 month and the 18 month anniversary of the Offering
for each three month extension (each, an “Extension”), in exchange for which
the Sponsor will receive a non-interest bearing, unsecured promissory note for each Extension payable upon consummation of a Business
Combination; and


 


WHEREAS, as described in the Prospectus,
$152,250,000 of the gross proceeds of the Offering and sale of the Private Placement Warrants (as defined in the Underwriting Agreement)
(or $175,087,500 if the Underwriters’ over-allotment option is exercised in full), and the proceeds from any loans in connection
with an Extension, if any,  will be delivered to the Trustee to be deposited and held in a segregated trust account located at all
times in the United States (the “Trust Account”) for the benefit of the Company and the holders of the Common Stock included
in the Units issued in the Offering as hereinafter provided (the amount to be delivered to the Trustee (and any interest subsequently
earned thereon) is referred to herein as the “Property,” the stockholders for whose benefit the Trustee shall hold the Property
will be referred to as the “Public Stockholders,” and the Public Stockholders and the Company will be referred to together
as the “Beneficiaries”); and


 


WHEREAS, pursuant to the Underwriting Agreement, a portion of the Property
equal to $5,250,000, or $6,037,500 if the Underwriters’ over- allotment option is exercised in full, is attributable to deferred
underwriting discounts and commissions that may be payable by the Company to the Underwriters upon the consummation of the Business Combination
(as defined below) (the “Deferred Discount”); and


 


WHEREAS, the Company
and the Trustee desire to enter into this Agreement to set forth the terms and conditions pursuant to which the Trustee shall hold
the Property.


 






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NOW THEREFORE, IT IS AGREED:


 


1.             Agreements
and Covenants of Trustee. The Trustee hereby agrees and covenants to:


 








(a)           Hold
the Property in trust for the Beneficiaries in accordance with the terms of this Agreement in the Trust Account established by
the Trustee at [____________] and at a brokerage institution selected by the Trustee that is reasonably satisfactory to the Company;


 


(b)           Manage,
supervise and administer the Trust Account subject to the terms and conditions set forth herein;


 


(c)           In
a timely manner, upon the written instruction of the Company, invest and reinvest the Property in United States government securities
within the meaning of Section 2(a)(16) of the Investment Company Act of 1940, as amended, having a maturity of 185 days or less,
or in money market funds meeting the conditions of paragraphs (d)(1), (d)(2), (d)(3) and (d)(4) of Rule 2a-7 promulgated under
the Investment Company Act of 1940, as amended (or any successor rule), which invest only in direct U.S. government treasury obligations,
as determined by the Company; the Trustee may not invest in any other securities or assets, it being understood that the Trust
Account will earn no interest while account funds are uninvested awaiting the Company’s instructions hereunder;


 


(d)           Collect
and receive, when due, all interest or other income arising from the Property, which shall become part of the “Property,”
as such term is used herein;


 


(e)           Promptly
notify the Company and the Representatives of all communications received by the Trustee with respect to any Property requiring
action by the Company;


 


(f)            Supply
any necessary information or documents as may be requested by the Company (or its authorized agents) in connection with the Company’s
preparation of the tax returns relating to assets held in the Trust Account;


 


(g)           Participate
in any plan or proceeding for protecting or enforcing any right or interest arising from the Property if, as and when instructed
by the Company to do so;


 


(h)           Render
to the Company monthly written statements of the activities of, and amounts in, the Trust Account reflecting all receipts and disbursements
of the Trust Account;


 


(i)           Commence
liquidation of the Trust Account only after and promptly after (x) receipt of, and only in accordance with, the terms of a letter from
the Company (“Termination Letter”) in a form substantially similar to that attached hereto as either Exhibit A or Exhibit
B, as applicable, signed on behalf of the Company by its Chief Executive Officer, President, Chief Financial Officer, Secretary or
Chairman of the board of directors of the Company (the “Board”) or other authorized officer of the Company and in the case
of Exhibit A, acknowledged and agreed to by the Representative, and complete the liquidation of the Trust Account and distribute the Property
in the Trust Account, including interest not previously released to the Company to pay its franchise and income taxes (less up to $100,000
of interest that may be released to the Company to pay dissolution expenses), only as directed in the Termination Letter and the other
documents referred to therein, or (y) upon the date which is the latest of: (1) 15 months after the closing of the Offering, (2) such
later date upon one or more extensions effectuated pursuant to the terms hereof and the Charter and (3) such later date as may be approved
by the Company’s stockholders in accordance with the Charter, if a Termination Letter has not been received by the Trustee prior
to such date, in which case the Trust Account shall be liquidated in accordance with the procedures set forth in the Termination Letter
attached as Exhibit B and the Property in the Trust Account, including interest not previously released to the Company to pay its
franchise and income taxes (less up to $100,000 of interest that may be released to the Company to pay dissolution expenses) shall be
distributed to the Public Stockholders of record as of such date.


 






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(j)           Upon
written request from the Company, which may be given from time to time in a form substantially similar to that attached
hereto as Exhibit C (a “Tax Payment Withdrawal Instruction”), withdraw from the Trust Account and
distribute to the Company the amount of interest earned on the Property requested by the Company to cover any income or
franchise tax obligation owed by the Company as a result of assets of the Company or interest or other income earned on the
Property, which amount shall be delivered directly to the Company by electronic funds transfer or other method of prompt
payment, and the Company shall forward such payment to the relevant taxing authority; provided, however, that
to the extent there is not sufficient cash in the Trust Account to pay such tax obligation, the Trustee shall liquidate such
assets held in the Trust Account as shall be designated by the Company in writing to make such distribution so long as there is no reduction in the principal amount per share initially deposited in the Trust Account; provided,
further, that if the tax to be paid is a franchise tax, the written request by the Company to make such distribution
shall be accompanied by a copy of the franchise tax bill from the State of Delaware for the Company and a written statement
from the principal financial officer of the Company setting forth the actual amount payable. The written request of the
Company referenced above shall constitute presumptive evidence that the Company is entitled to said funds, and the Trustee
shall have no responsibility to look beyond said request (it being acknowledged and agreed that any such amount in excess of interest income earned on the Property shall not be payable from the
Trust Account);


 


(k)           Upon
written request from the Company, which may be given from time to time in a form substantially similar to that attached
hereto as Exhibit D (a “Stockholder Redemption Withdrawal Instruction”), the Trustee shall distribute on
behalf of the Company the amount requested by the Company to be used to redeem shares of Common Stock from Public
Stockholders properly submitted in connection with a stockholder vote to approve an amendment to the Company’s amended
and restated certificate of incorporation to (a) modify the substance or timing of the Company’s obligation to redeem
100% of its public shares of Common Stock in connection with an initial Business Combination or to redeem 100% of such shares
if the Company has not consummated an initial Business Combination within such time as is described in the Company’s
amended and restated certificate of incorporation or (b) with respect to any other provisions relating to stockholders’ rights or pre-initial Business Combination activity. The written request of the Company referenced above shall constitute
presumptive evidence that the Company is entitled to distribute said funds, and the Trustee shall have no responsibility to
look beyond said request; and


 


(l)           Not
make any withdrawals or distributions from the Trust Account other than pursuant to Section 1(i), (j) or (k) above.


 


(m)         Upon
receipt of an extension letter (“Extension Letter”) substantially similar to Exhibit E hereto at least five
business days prior to the applicable deadline, signed on behalf of the Company by an executive officer, and receipt of the dollar amount
specified in the Extension Letter on or prior to the applicable deadline, follow the instructions set forth in the Extension Letter.


 






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2.           Agreements
and Covenants of the Company. The Company hereby agrees and covenants to:


 


(a)           Give
all instructions to the Trustee hereunder in writing, signed by the Company’s Chairman of the Board, President, Chief Executive
Officer, Chief Financial Officer or Secretary. In addition, except with respect to its duties under Sections 1(i), 1(j)
and 1(k) hereof, the Trustee shall be entitled to rely on, and shall be protected in relying on, any verbal or telephonic
advice or instruction which it, in good faith and with reasonable care, believes to be given by any one of the persons authorized
above to give written instructions, provided that the Company shall promptly confirm such instructions in writing;


 


(b)           Subject
to Section 4 hereof, hold the Trustee harmless and indemnify the Trustee from and against any and all expenses, including
reasonable counsel fees and disbursements, or losses suffered by the Trustee in connection with any action taken by it hereunder
and in connection with any action, suit or other proceeding brought against the Trustee involving any claim, or in connection with
any claim or demand, which in any way arises out of or relates to this Agreement, the services of the Trustee hereunder, or the
Property or any interest earned on the Property, except for expenses and losses resulting from the Trustee’s gross negligence,
fraud or willful misconduct. Promptly after the receipt by the Trustee of notice of demand or claim or the commencement of any
action, suit or proceeding, pursuant to which the Trustee intends to seek indemnification under this Section 2(b), it shall
notify the Company in writing of such claim (hereinafter referred to as the “Indemnified Claim”). The Trustee shall
have the right to conduct and manage the defense against such Indemnified Claim; provided that the Trustee shall obtain
the consent of the Company with respect to the selection of counsel, which consent shall not be unreasonably withheld. The Trustee
may not agree to settle any Indemnified Claim without the prior written consent of the Company, which such consent shall not be
unreasonably withheld. The Company may participate in such action with its own counsel;


 


(c)           Pay
the Trustee the fees set forth on Schedule A hereto, including an initial acceptance fee, annual administration fee, and
transaction processing fee which fees shall be subject to modification by the parties from time to time. It is expressly understood
that the Property shall not be used to pay such fees unless and until it is distributed to the Company pursuant to Sections
1(i) through 1(j) hereof. The Company shall pay the Trustee the initial acceptance fee and the first annual administration
fee at the consummation of the Offering. The Trustee shall refund to the Company the annual administration fee (on a pro rata basis)
with respect to any period after the liquidation of the Trust Account. The Company shall not be responsible for any other fees
or charges of the Trustee except as set forth in this Section 2(c), Schedule A and as may be provided in Section 2(b)
hereof;


 


(d)           In
connection with any vote of the Company’s stockholders regarding a merger, capital stock exchange, asset acquisition, stock
purchase, reorganization or similar business combination involving the Company and one or more businesses (the “Business
Combination”), provide to the Trustee an affidavit or certificate of the inspector of elections for the stockholder meeting
verifying the vote of such stockholders regarding such Business Combination;


 


(e)           Provide
the Representatives with a copy of any Termination Letter(s) and/or any other correspondence that is sent to the Trustee with respect
to any proposed withdrawal from the Trust Account promptly after it issues the same;


 






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(f)           Instruct
the Trustee to make only those distributions that are permitted under this Agreement, and refrain from instructing the Trustee
to make any distributions that are not permitted under this Agreement; and


 


(g)           Within
four (4) business days after the Underwriters exercise the over-allotment option (or any unexercised portion thereof) or such
over-allotment expires, provide the Trustee with a notice in writing of the total amount of the Deferred Discount, which shall
in no event be less than $5,250,000.


 


(h)         If
applicable, issue a press release at least three days prior to the applicable deadline announcing that the Company received notice from
the Sponsor that the Sponsor intends to deposit funds into the Trust Account for extending the applicable deadline and the Board has approved
such Extension; and


 


(i)  Promptly following
the applicable deadline, disclose whether or not the deadline for the Company to consummate a Business Combination has been extended.


 


3.           Limitations
of Liability. The Trustee shall have no responsibility or liability to:


 


(a)           Imply
obligations, perform duties, inquire or otherwise be subject to the provisions of any agreement or document other than this Agreement
and that which is expressly set forth herein;


 


(b)           Take
any action with respect to the Property, other than as directed in Section 1 hereof, and the Trustee shall have no liability
to any party except for liability arising out of the Trustee’s gross negligence, fraud or willful misconduct;


 


(c)           Institute
any proceeding for the collection of any principal and income arising from, or institute, appear in or defend any proceeding of
any kind with respect to, any of the Property unless and until it shall have received instructions from the Company given as provided
herein to do so and the Company shall have advanced or guaranteed to it funds sufficient to pay any expenses incident thereto;


 


(d)           Refund
any depreciation in principal of any Property;


 


(e)           Assume
that the authority of any person designated by the Company to give instructions hereunder shall not be continuing unless provided
otherwise in such designation, or unless the Company shall have delivered a written revocation of such authority to the Trustee;


 


(f)           The
other parties hereto or to anyone else for any action taken or omitted by it, or any action suffered by it to be taken or omitted,
in good faith and in the Trustee’s best judgment, except for the Trustee’s gross negligence, fraud or willful misconduct.
The Trustee may rely conclusively and shall be protected in acting upon any order, notice, demand, certificate, opinion or advice
of counsel (including counsel chosen by the Trustee, which counsel may be the Company’s counsel), statement, instrument,
report or other paper or document (not only as to its due execution and the validity and effectiveness of its provisions, but also
as to the truth and acceptability of any information therein contained) which the Trustee believes, in good faith and with reasonable
care, to be genuine and to be signed or presented by the proper person or persons. The Trustee shall not be bound by any notice
or demand, or any waiver, modification, termination or rescission of this Agreement or any of the terms hereof, unless evidenced
by a written instrument delivered to the Trustee, signed by the proper party or parties and, if the duties or rights of the Trustee
are affected, unless it shall give its prior written consent thereto;








 






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(g)           Verify
the accuracy of the information contained in the Registration Statement;


 


(h)           Provide
any assurance that any Business Combination entered into by the Company or any other action taken by the Company is as contemplated
by the Registration Statement;


 


(i)            File
information returns with respect to the Trust Account with any local, state or federal taxing authority or provide periodic written
statements to the Company documenting the taxes payable by the Company, if any, relating to any interest income earned on the Property;


 


(j)            Prepare,
execute and file tax reports, income or other tax returns and pay any taxes with respect to any income generated by, and activities
relating to, the Trust Account, regardless of whether such tax is payable by the Trust Account or the Company, including, but not
limited to, franchise and income tax obligations, except pursuant to Section 1(j) hereof; or


 


(k)           Verify
calculations, qualify or otherwise approve the Company’s written requests for distributions pursuant to Sections 1(i),
1(j) and 1(k) hereof.


 


4.           Trust
Account Waiver. The Trustee has no right of set-off or any right, title, interest or claim of any kind (“Claim”)
to, or to any monies in, the Trust Account, and hereby irrevocably waives any Claim to, or to any monies in, the Trust Account
that it may have now or in the future. In the event the Trustee has any Claim against the Company under this Agreement, including,
without limitation, under Section 2(b) or Section 2(c) hereof, the Trustee shall pursue such Claim solely against
the Company and its assets outside the Trust Account and not against the Property or any monies in the Trust Account.


 


5.           Termination.
This Agreement shall terminate as follows:


 


(a)           If
the Trustee gives written notice to the Company that it desires to resign under this Agreement, the Company shall use its reasonable
efforts to locate a successor trustee, pending which the Trustee shall continue to act in accordance with this Agreement. At such
time that the Company notifies the Trustee that a successor trustee has been appointed and has agreed to become subject to the
terms of this Agreement, the Trustee shall transfer the management of the Trust Account to the successor trustee, including but
not limited to the transfer of copies of the reports and statements relating to the Trust Account, whereupon this Agreement shall
terminate; provided, however, that in the event that the Company does not locate a successor trustee within ninety
(90) days of receipt of the resignation notice from the Trustee, the Trustee may submit an application to have the Property deposited
with any court in the State of New York or with the United States District Court for the Southern District of New York and upon
such deposit, the Trustee shall be immune from any liability whatsoever; or


 


(b)           At
such time that the Trustee has completed the liquidation of the Trust Account and its obligations in accordance with the provisions
of Section 1(i) hereof (which section may not be amended under any circumstances) and distributed the Property in accordance
with the provisions of the Termination Letter, this Agreement shall terminate except with respect to Section 2(b).


 









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6.           Miscellaneous.


 


(a)           The
Company and the Trustee each acknowledge that the Trustee will follow the security procedures set forth below with respect to funds
transferred from the Trust Account. The Company and the Trustee will each restrict access to confidential information relating
to such security procedures to authorized persons. Each party must notify the other party immediately if it has reason to believe
unauthorized persons may have obtained access to such confidential information, or of any change in its authorized personnel. In
executing funds transfers, the Trustee shall rely upon all information supplied to it by the Company, including, account names,
account numbers, and all other identifying information relating to a Beneficiary, Beneficiary’s bank or intermediary bank.
Except for any liability arising out of the Trustee’s gross negligence, fraud or willful misconduct, the Trustee shall not
be liable for any loss, liability or expense resulting from any error in the information or transmission of the funds.


 


(b)           This
Agreement shall be governed by and construed and enforced in accordance with the laws of the State of New York, without giving
effect to conflicts of law principles that would result in the application of the substantive laws of another jurisdiction. This
Agreement may be executed in several original or facsimile counterparts, each one of which shall constitute an original, and together
shall constitute but one instrument.


 


(c)            This
Agreement contains the entire agreement and understanding of the parties hereto with respect to the subject matter hereof. This
Agreement or any provision hereof may only be changed, amended or modified (other than to correct a typographical error) by a writing
signed by each of the parties hereto.


 


(d)           This
Agreement or any provision hereof may only be changed, amended or modified pursuant to Section 6(c) hereof with the Consent
of the Stockholders, it being the specific intention of the parties hereto that each of the Company’s stockholders is, and
shall be, a third party beneficiary of this Section 6(d) with the same right and power to enforce this Section 6(d)
as the other parties hereto. For purposes of this Section 6(d), the “Consent of the Stockholders” means receipt
by the Trustee of a certificate from the inspector of elections of the stockholder meeting certifying that either (i) the Company’s
stockholders of record as of a record date established in accordance with Section 213(a) of the Delaware General Corporation Law,
as amended (“DGCL”) (or any successor rule), who hold fifty percent (50%) or more of all then outstanding shares of
the Common Stock and Class B common stock, par value $0.0001 per share, of the Company voting together as a single class, have
voted in favor of such change, amendment or modification, or (ii) the Company’s stockholders of record as of the record date
who hold fifty percent (50%) or more of all then outstanding shares of the Common Stock and Class B common stock, par value $0.0001
per share, of the Company voting together as a single class, have delivered to such entity a signed writing approving such change,
amendment or modification. Except for any liability arising out of the Trustee’s gross negligence, fraud or willful misconduct,
the Trustee may rely conclusively on the certification from the inspector or elections referenced above and shall be relieved of
all liability to any party for executing the proposed amendment in reliance thereon.


 


(e)           The
parties hereto consent to the jurisdiction and venue of any state or federal court located in the City of New York, State of New
York, for purposes of resolving any disputes hereunder. AS TO ANY CLAIM, CROSS-CLAIM OR COUNTERCLAIM IN ANY WAY RELATING TO THIS
AGREEMENT, EACH PARTY WAIVES THE RIGHT TO TRIAL BY JURY.


 









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(f)           Any
notice, consent or request to be given in connection with any of the terms or provisions of this Agreement shall be in writing
and shall be sent by express mail or similar private courier service, by certified mail (return receipt requested), by hand delivery
or by facsimile or email transmission:


 


if to the Trustee,
to:


 


Continental Stock Transfer
& Trust Company


1 State Street, 30th
floor


New York, New York 10004


Attn: Steven Nelson and
Francis E. Wolf, Jr.


Fax No.: (212) 509-5150


Email: [ ]


 


if to the Company,
to:


 


Avalon Acquisition Inc.


2 Embarcadero Center,
8th Floor


San Francisco, CA 94111


Attn: S. Craig
Cognetti


Email: [ ]


 


in each case, with
copies to:


 


Venable LLP


1270 Avenue of the Americas


New York, New York 10020


Attn: William N. Haddad,
Esq.


Email: [ ]


 


and


 


Maxim Group LLC


300 Park Avenue Ave., 16th
Floor


New York, NY 10022


Attn: Clifford A. Teller, Executive
Managing Director, Investment Banking


Email: cteller@maximgrp.com


 









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and


 


Ellenoff Grossman &
Schole LLP


1345 Avenue of the Americas


New York, NY 10105


Attn: Barry Grossman,
Esq.


Fax No: 212-370-7889


Email: bigrossman@egsllp.com


 


(g)          Each
of the Company and the Trustee hereby represents that it has the full right and power and has been duly authorized to enter into
this Agreement and to perform its respective obligations as contemplated hereunder. The Trustee acknowledges and agrees that it
shall not make any claims or proceed against the Trust Account, including by way of set-off, and shall not be entitled to any funds
in the Trust Account under any circumstance.


 


(h)          Each
of the Company and the Trustee hereby acknowledges and agrees that the Representatives, on behalf of the Underwriters,
is a third party beneficiary of this Agreement.


 


(i)           Except
as specified herein, no party to this Agreement may assign its rights or delegate its obligations hereunder to any other person
or entity.


 


[Signature Page Follows]








 






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IN WITNESS WHEREOF,
the parties have duly executed this Investment Management Trust Agreement as of the date first written above.


 


	 	Continental Stock Transfer & Trust Company,  as Trustee
	 	 	 
	 	By:	
	 	 	Name: Francis E. Wolf, Jr.
	 	 	Title: Vice President
	 	 	 
	 	Avalon Acquisition Inc.
	 	 
	 	By:	
	 	 	Name: S. Craig Cognetti
	 	 	Title: Chief Executive Officer








 






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SCHEDULE A


 


	Fee Item	 	Time and method of payment	 	Amount	 
	Initial set-up fee	 	Initial closing of Offering by wire transfer.	 	$	2,000.00	 
	Trustee administration fee	 	Payable annually. First year fee payable at initial closing of Offering by wire transfer; thereafter, payable by wire transfer or check.	 	$	10,000.00	 
	Transaction processing fee for disbursements to Company under Sections 1(i), 1(j) and 1(k)	 	Billed to the Company following disbursement made to Company under Section 1	 	$	250.00	 
	
        Paying Agent services as required pursuant to Section 1(i)

         
	 	Billed to Company upon delivery of service pursuant to Section 1(i)	 	 	Prevailing rates	 


           









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EXHIBIT A


 


[Letterhead of
Company]


 


[Insert date]


 


 


 


Continental Stock Transfer & Trust Company


1 State Street


New York, New York 10004


Attn: [                                    ]


 


	 	Re:	Trust Account - Termination Letter


 


Gentlemen:


 


Pursuant to Section
1(i) of the Investment Management Trust Agreement between Avalon Acquisition Inc. (the “Company”) and Continental Stock
Transfer & Trust Company (the “Trustee”), dated as of           , 2021 (the “Trust Agreement”), this is to advise
you that the Company has entered into an agreement with (the “Target Business”) to consummate a business combination
with Target Business (the “Business Combination”) on or about [insert date]. The Company shall notify you at least
forty-eight (48) hours in advance of the actual date of the consummation of the Business Combination (the “Consummation Date”).
Capitalized terms used but not defined herein shall have the meanings set forth in the Trust Agreement.


 


In accordance with
the terms of the Trust Agreement, we hereby authorize you to commence to liquidate all of the assets of the Trust Account on [insert
date], and to transfer the proceeds into the trust checking account at [_______________________] to the effect that, on the Consummation
Date, all of the funds held in the Trust Account will be immediately available for transfer to the account or accounts that the
Company shall direct on the Consummation Date. It is acknowledged and agreed that while the funds are on deposit in the trust checking
account at J.P. Morgan Chase Bank, N.A. awaiting distribution, the Company will not earn any interest or dividends.


 


On the
Consummation Date (i) counsel for the Company shall deliver to you written notification that the Business Combination has
been consummated, or will be consummated concurrently with your transfer of funds to the accounts as directed by the Company
(the “Notification”) and (ii) the Company shall deliver to you (a) [an affidavit] [a certificate] of the Chief
Executive Officer of the Company, which verifies that the Business Combination has been approved by a vote of the
Company’s stockholders, if a vote is held and (b) joint written instructions signed by the Company and Maxim Group LLC
with respect to the transfer of the funds held in the Trust Account, including payment of the Deferred Discount to Maxim
Group LLC from the Trust Account (the “Instruction Letter”). You are hereby directed and authorized to transfer
the funds held in the Trust Account immediately upon your receipt of the Notification and the Instruction Letter, in
accordance with the terms of the Instruction Letter. In the event that certain deposits held in the Trust Account may not be
liquidated by the Consummation Date without penalty, you will notify the Company in writing of the same and the Company shall
direct you as to whether such funds should remain in the Trust Account and be distributed after the Consummation Date to the
Company. Upon the distribution of all the funds, net of any payments necessary for reasonable unreimbursed expenses related
to liquidating the Trust Account, your obligations under the Trust Agreement shall be terminated.


 









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In the event that the
Business Combination is not consummated on the Consummation Date described in the notice thereof and we have not notified you on
or before the original Consummation Date of a new Consummation Date, then upon receipt by the Trustee of written instructions from
the Company, the funds held in the Trust Account shall be reinvested as provided in Section 1(c) of the Trust Agreement on the
business day immediately following the Consummation Date as set forth in such written instruction as soon thereafter as possible.


 


	 	Very truly yours,
	 	 
	 	Avalon Acquisition Inc.
	 	 
	 	By:	 
	 	 	Name: 
	 	 	Title:


 


Agreed and acknowledged by:


 


	Maxim Group LLC	 
	 	 
	By:	 	 
	 	Name: 	 
	 	Title:	 


  






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EXHIBIT B


 


[Letterhead of Company]


 


[Insert date]


 


Continental Stock Transfer & Trust Company


1 State Street


New York, New York 10004


Attn: [                                 ]


 


	 	Re:	Trust Account  - Termination Letter


 


Gentlemen:


 


Pursuant to Section
1(i) of the Investment Management Trust Agreement between Avalon Acquisition Inc. (the “Company”) and Continental Stock
Transfer & Trust Company (the “Trustee”), dated as of                  , 2021 (the “Trust Agreement”), this is to advise
you that the Company has been unable to effect a business combination with a Target Business within the time frame specified in
the Company’s Amended and Restated Certificate of Incorporation, as described in the Company’s Prospectus relating
to the Offering. Capitalized terms used but not defined herein shall have the meanings set forth in the Trust Agreement.


 


In accordance with
the terms of the Trust Agreement, we hereby authorize you to liquidate all of the assets in the Trust Account on                        , 20         and to transfer
the total proceeds into the trust checking account at [_____________]. to await distribution to the Public Stockholders. The Company
has selected [       ]1 as the record date for the purpose of determining the Public
Stockholders entitled to receive their share of the liquidation proceeds. You agree to be the Paying Agent of record and, in your
separate capacity as Paying Agent, agree to distribute said funds directly to the Public Stockholders in accordance with the terms
of the Trust Agreement and the Amended and Restated Certificate of Incorporation of the Company. Upon the distribution of all the
funds, net of any payments necessary for reasonable unreimbursed expenses related to liquidating the Trust Account, your obligations
under the Trust Agreement shall be terminated, except to the extent otherwise provided in Section 1(i) of the Trust Agreement.


 


	 	 	 	Very truly yours,
	 	 	 	 
	 	 	 	Avalon Acquisition Inc.
	 	 	 	 	 
	 	 	 	By:	 
	 	 	 	 	Name: 
	 	 	 	 	Title:
	 	 	 	 	 
	cc:	Maxim Group LLC	 	 	 
	 	 	 	 	 


 


1 21 months from the closing of the Offering.


 









    14


     


    

 


EXHIBIT C


 


[Letterhead of Company]


 


[Insert date]


 


Continental Stock Transfer & Trust Company


1 State Street, 30th floor


New York, New York 10004


Attn: [                                 ]


 


	 	Re:	Trust Account - Tax Payment Withdrawal
    Instruction


 


Gentlemen:


 


Pursuant to Section
1(j) of the Investment Management Trust Agreement between Avalon Acquisition Inc. (the “Company”) and Continental Stock
Transfer & Trust Company (the “Trustee”), dated as of              _,
2021 (the “Trust Agreement”), the Company hereby requests that you deliver to the Company $ of the interest income
earned on the Property as of the date hereof. Capitalized terms used but not defined herein shall have the meanings set forth in
the Trust Agreement.


 


The Company needs such
funds to pay for the tax obligations as set forth on the attached tax return or tax statement. In accordance with the terms of
the Trust Agreement, you are hereby directed and authorized to transfer (via wire transfer) such funds promptly upon your receipt
of this letter to the Company’s operating account at:


 


	 	 	 	[WIRE INSTRUCTION INFORMATION] 
	 	 	 	 
	 	 	 	Very truly yours,
	 	 	 	Avalon Acquisition Inc.
	 	 	 	 	 
	 	 	 	By:	 
	 	 	 	 	Name: 
	 	 	 	 	Title:
	 	 	 	 	 
	cc:	Maxim Group LLC	 	 	 


  






    15


     


    

 


EXHIBIT D


 


[Letterhead of Company]


 


[Insert date]


 


Continental Stock Transfer & Trust Company


1 State Street, 30th floor


New York, New York 10004


Attn: [                                 ]


 


	 	Re:	Trust Account - Stockholder Redemption Withdrawal
    Instruction


 


Gentlemen:


 


Pursuant to Section
1(k) of the Investment Management Trust Agreement between Avalon Acquisition Inc. (the “Company”) and Continental
Stock Transfer & Trust Company (the “Trustee”), dated as of , 2021 (the “Trust Agreement”), the Company
hereby requests that you deliver to the redeeming Public Stockholders of the Company $ of the principal and interest income earned
on the Property as of the date hereof. Capitalized terms used but not defined herein shall have the meanings set forth in the Trust
Agreement.


 


The Company needs
such funds to pay its Public Stockholders who have properly elected to have their shares of Common Stock redeemed by the
Company in connection with a stockholder vote to approve an amendment to the Company’s amended and restated certificate
of incorporation to (a) modify the substance or timing of the Company’s obligation to redeem 100% of its public shares
of Common Stock in connection with an initial Business Combination or to redeem 100% of such shares if the Company has not
consummated an initial Business Combination within such time as is described in the Company’s amended and restated
certificate of incorporation or (b) with respect to any other provisions relating to stockholders’
rights or pre-initial Business Combination activity. As such, you are hereby directed and authorized to transfer (via wire transfer) such funds
promptly upon your receipt of this letter to the redeeming Public Stockholders in accordance with your customary
procedures.


 


	 	 	 	Very truly yours,
	 	 	 	Avalon Acquisition Inc.
	 	 	 	 	 
	 	 	 	By:	 
	 	 	 	 	Name: 
	 	 	 	 	Title:
	 	 	 	 	 
	cc:	Maxim Group LLC	 	 	 


 






    16 


     


    

 


EXHIBIT E


 


[Letterhead of Company]


 


[Insert date]


 


Continental Stock Transfer
& Trust Company


1 State Street, 30th floor


New York, New York 10004


Attn: [                        ]


 


	 	Re:	Trust Account
    Extension Letter:


 


Gentlemen: 


 


Pursuant
to Section 1(m) of Investment Management Trust Agreement between Avalon Acquisition Inc. (the “Company”) and Continental
Stock Transfer & Trust Company (the “Trustee”), dated as of , 2021 (the “Trust Agreement”), this is to advise
you that the Company is extending the time available to consummate a Business Combination for an additional three (3) months, from
________ to ________ (the “Extension”).


 


This
Extension Letter shall serve as the notice required with respect to the Extension prior to the applicable deadline. Capitalized words
used herein and not otherwise defined shall have the meanings ascribed to them in the Trust Agreement.


 


In
accordance with the terms of the Trust Agreement, we hereby authorize you to deposit $   [(or $[   ] if the
underwriters’ over-allotment option was exercised in full)], which will be wired to you, into the Trust Account investments
upon receipt.


 


This
is the ____ of up to two Extension Letters.


 


	 	 	 	Very truly yours,
	 	 	 	Avalon Acquisition Inc.
	 	 	 	 	 
	 	 	 	By:	 
	 	 	 	 	Name: 
	 	 	 	 	Title:
	 	 	 	 	 
	cc:	Maxim Group LLC	 	 	 


  


 






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