Exhibit
10.7


 


___________,
2021


 


Pono
Capital Corp


643
Ilalo Street


Honolulu,
Hawaii 96813


 


	 	Re:	Initial
    Public Offering


 


Ladies
and Gentlemen:





This
letter (this “Letter Agreement”) is being delivered to you in accordance with the Underwriting Agreement (the
“Underwriting Agreement”) entered into by and between Pono Capital Corp, a Delaware corporation (the “Company”), and
EF Hutton, as representative of the several underwriters (the “Underwriter”), relating to
an underwritten initial public offering (the “Public Offering”), of up to 11,500,000 of
the Company’s units (including up to 1,500,000 units that may be purchased to cover over-allotments, if any) (the “Units”),
each comprised of one share of the Company’s Class A common stock, par value $0.000001 per share (the “Class A Common
Stock”), and three-fourths of one redeemable warrant. Each whole warrant (each, a “Public Warrant”)
entitles the holder thereof to purchase one share of Class A Common Stock at a price of $11.50 per share, subject to adjustment as described
in the Prospectus (as defined below). The Units will be sold in the Public Offering pursuant to a registration statement on Form S-1
(File No. 333-257150) and prospectus (the “Prospectus”) filed by the Company with the U.S. Securities
and Exchange Commission (the “Commission”) and the Company has applied to have the Units listed on the Nasdaq
Capital Market. Certain capitalized terms used herein are defined in paragraph 12 hereof.


 


In
order to induce the Company and the Underwriter to enter into the Underwriting Agreement and to proceed with the Public Offering and
for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each of Mehana Equity LLC, a
Delaware limited liability company (the “Sponsor”), and the undersigned individuals, each of whom is a member
of the Company’s board of directors and/or management team (each of the undersigned individuals, an “Insider”
and collectively, the “Insiders”), hereby agrees with the Company as follows:


 


1.
The Sponsor and each Insider agrees that if the Company seeks stockholder approval of a proposed Business Combination, then in connection
with such proposed Business Combination, it, he or she shall (i) vote any shares of Common Stock (as defined below) owned by it, him
or her in favor of any proposed Business Combination and (ii) not redeem any shares of Common Stock owned by it, him or her in connection
with such stockholder approval. If the Company seeks to consummate a proposed Business Combination by engaging in a tender offer, the
Sponsor and each Insider agrees that it, he or she will not sell or tender any shares of Common Stock owned by it, him or her in connection
therewith.


 


2.
The Sponsor and each Insider hereby agrees that in the event that the Company fails to consummate a Business Combination within 18
months from the closing of the Public Offering, or such later period approved by the Company’s stockholders in accordance with
the Company’s certificate of incorporation (as it may be amended and/or restated from time to time, the “Charter”),
the Sponsor and each Insider shall take all reasonable steps to cause the Company to (i) cease all operations except for the purpose
of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem 100% of the shares of Class
A Common Stock sold as part of the Units in the Public Offering (the “Offering Shares”), at a per-share
price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account (as defined below), including interest earned
on the funds held in the Trust Account and not previously released to the Company to pay its taxes (less up to $70,000 of interest to
pay dissolution expenses), divided by the number of then outstanding Offering Shares, which redemption will completely extinguish all
Public Stockholders’ (as defined below) rights as stockholders (including the right to receive further liquidating distributions,
if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining
stockholders and the Company’s board of directors, liquidate and dissolve, subject in each case to the Company’s obligations
under Delaware law to provide for claims of creditors and other requirements of applicable law. The Sponsor and each Insider agrees to
not propose any amendment to the Charter to modify the substance or timing of the Company’s obligation to redeem 100% of the
Offering Shares if the Company does not complete a Business Combination within the required time period set forth in the Charter or with
respect to any other material provisions relating to stockholders’ rights or pre-initial business combination activity, unless
the Company provides its Public Stockholders with the opportunity to redeem their Offering Shares upon approval of any such amendment
at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned
on the funds held in the Trust Account and not previously released to the Company to pay its taxes, divided by the number of then outstanding
Offering Shares.


 






    	 	 	 



     


    

 


The
Sponsor and each Insider acknowledges that it, he or she has no right, title, interest or claim of any kind in or to any monies held
in the Trust Account or any other asset of the Company as a result of any liquidation of the Company with respect to the Founder Shares
or Private Placement Shares held by it, him or her. The Sponsor and each Insider hereby further waives, with respect to any shares
of Common Stock held by it, him or her, if any, any redemption rights it, he or she may have in connection with (A) the consummation
of a Business Combination, including, without limitation, any such rights available in the context of a stockholder vote to approve such
Business Combination, or (B) a stockholder vote to approve an amendment to the Charter to modify the substance or timing of the Company’s
obligation to redeem 100% of the Offering Shares if the Company has not consummated a Business Combination within the time period set
forth in the Charter or with respect to any other material provisions relating to stockholders’ rights or pre-initial business
combination activity or in the context of a tender offer made by the Company to purchase Offering Shares (although the Sponsor, the Insiders
and their respective affiliates shall be entitled to redemption and liquidation rights with respect to any Offering Shares it or they
hold if the Company fails to consummate a Business Combination within the time period set forth in the Charter).


 


3.
Notwithstanding the provisions set forth in paragraphs in 8(a) and 8(b), during the period commencing on the effective
date of the Underwriting Agreement and ending 180 days after such date, the Sponsor and each Insider shall not, without the prior written
consent of the Underwriter, (i) sell, offer to sell, contract or agree to sell, hypothecate, pledge, grant any option to purchase or
otherwise dispose of or agree to dispose of, directly or indirectly, or establish or increase a put equivalent position or liquidate
or decrease a call equivalent position within the meaning of Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), and the rules and regulations of the Commission promulgated thereunder, with respect to, any Units, shares
of Common Stock (including, but not limited to, Founder Shares), Warrants (as defined below) or any securities convertible into, or exercisable,
or exchangeable for, shares of Class A Common Stock owned by it, him or her, (ii) enter into any swap or other arrangement that transfers
to another, in whole or in part, any of the economic consequences of ownership of any Units, shares of Common Stock (including, but not
limited to, Founder Shares), Warrants or any securities convertible into, or exercisable, or exchangeable for, shares of Common Stock
owned by it, him or her, whether any such transaction is to be settled by delivery of such securities, in cash or otherwise, or (iii)
publicly announce any intention to effect any transaction specified in clause (i) or (ii); provided, however, all of the foregoing does
not apply to the forfeiture of any Founder Shares pursuant to their terms or any transfer of Founder Shares to any current or future
independent director of the company (as long as such current or future independent director transferee is subject to this Letter Agreement
or executes an agreement substantially identical to the terms of this Letter Agreement, as applicable to directors and officers at the
time of such transfer; and as long as, to the extent any Section 16 reporting obligation is triggered as a result of such transfer, any
related Section 16 filing includes a practical explanation as to the nature of the transfer). Each of the Insiders and the Sponsor acknowledges
and agrees that, prior to the effective date of any release or waiver, of the restrictions set forth in this paragraph 3 or paragraph
8 below, the Company shall announce the impending release or waiver by press release through a major news service at least
two business days before the effective date of the release or waiver. Any release or waiver granted shall only be effective two business
days after the publication date of such press release. The provisions of this paragraph will not apply if the release or waiver is
effected solely to permit a transfer not for consideration and the transferee has agreed in writing to be bound by the same terms described
in this Letter Agreement to the extent and for the duration that such terms remain in effect at the time of the transfer.


 




    	 	 	 



     


    

 


4.
In the event of the liquidation of the Trust Account upon the failure of the Company to consummate its initial Business Combination within
the time period set forth in the Charter, the Sponsor (the “Indemnitor”) agrees to indemnify and hold harmless
the Company against any and all loss, liability, claim, damage and expense whatsoever (including, but not limited to, any and all legal
or other expenses reasonably incurred in investigating, preparing or defending against any litigation, whether pending or threatened)
to which the Company may become subject as a result of any claim by (i) any third party for services or products sold to the Company
or (ii) any prospective target business with which the Company has entered into a written letter of intent, confidentiality or
other similar agreement or Business Combination agreement (a “Target”); provided, however, that such
indemnification of the Company by the Indemnitor (x) shall apply only to the extent necessary to ensure that such claims by a third party
for services rendered or products sold to the Company or a Target do not reduce the amount of funds in the Trust Account to below the
lesser of (i) $10.15 per Offering Share and (ii) the actual amount per Offering Share held in the Trust Account as of the date
of the liquidation of the Trust Account, if less than $10.15 per Offering Share is then held in the Trust Account due to reductions
in the value of the trust assets, less taxes payable, (y) shall not apply to any claims by a third party or a Target which executed a
waiver of any and all rights to the monies held in the Trust Account (whether or not such waiver is enforceable) and (z) shall not apply
to any claims under the Company’s indemnity of the Underwriter against certain liabilities, including liabilities under the Securities
Act of 1933, as amended. The Indemnitor shall have the right to defend against any such claim with counsel of its choice reasonably satisfactory
to the Company if, within 15 days following written receipt of notice of the claim to the Indemnitor, the Indemnitor notifies the Company
in writing that it shall undertake such defense.


 


 5.
To the extent that the Underwriters do not exercise their over-allotment option to purchase up to an additional 1,500,000 Units in full
within 45 days from the date of the Prospectus (and as further described in the Prospectus), the Sponsor agrees to forfeit, at no cost,
a number of Founder Shares in the aggregate equal to 375,000 multiplied by a fraction, (i) the numerator of which is 1,500,000 minus
the number of Units purchased by the Underwriter upon the exercise of their over-allotment option, and (ii) the denominator of which
is 1,500,000. The forfeiture will be adjusted to the extent that the over-allotment option is not exercised in full by the Underwriter
so that the Sponsor will be required to forfeit only that number of Founder Shares as is necessary so that the Initial Stockholders will
own an aggregate of 20.0% of the Company’s issued and outstanding shares of Capital Stock after the Public Offering (not including
the Private Placement Shares). 


 


 6.
 Immediately after the consummation of this offering (assuming no exercise
of the underwriter’s over-allotment option) we will have            shares
of common stock (or         shares of common stock if the underwriters’ over-allotment
option is exercised in full) issued and outstanding. Of these shares, the shares of our Class A common stock sold in this offering (100,000,000
shares of our Class A common stock if the underwriters’ over-allotment option is not exercised and 115,000,000 shares of our Class
A common stock if the underwriters’ over-allotment option is exercised in full) will be freely tradable without restriction or
further registration under the Securities Act, except for any Class A common stock purchased by one of our affiliates within the meaning
of Rule 144 under the Securities Act. Immediately after the consummation of this offering, there will be no shares of preferred stock
issued and outstanding. Shares of founder shares are convertible into shares of our Class A common stock initially at a one-for-one ratio
but subject to adjustment as set forth herein, including in certain circumstances in which we issue Class A common stock or equity-linked
securities related to our initial business combination. All of the outstanding founder shares (on an as-converted basis, up to 2,500,000
founder shares if the underwriters’ over-allotment option is not exercised and up to 2,875,000 founder shares if the underwriters’
over-allotment option is exercised in full) and all of the outstanding placement shares (469,175 placement shares if the underwriters’
over-allotment option is not exercised and 521,675 placement shares if the underwriters’ over-allotment option is exercised
in full) and placement units (351,588 placement units if the underwriters’ over-allotment option is not exercised
and 391,256 placement units if the underwriters’ over-allotment option is exercised in full) will be restricted securities
under Rule 144, in that they were issued in private transactions not involving a public offering.


 


 7.
The Sponsor and each Insider hereby agrees and acknowledges that: (i) the Underwriter and the Company would be irreparably injured
in the event of a breach by such Sponsor or an Insider of its, his or her obligations under paragraphs 1, 2, 3, 4, 5, 6, 8(a), 8(b)
and 10, as applicable, of this Letter Agreement (ii) monetary damages may not be an adequate remedy for such breach and (iii)
the non-breaching party shall be entitled to injunctive relief, in addition to any other remedy that such party may have in law or in
equity, in the event of such breach.


 


 8.  (a)
The Sponsor and each Insider agrees that it, he or she shall not Transfer (as defined below) any Founder Shares (or any shares of
Class A Common Stock issuable upon conversion thereof) until the earlier of (A) one year after the completion of the Company’s
Business Combination and (B) subsequent to the Business Combination, (x) if the closing price of the Class A Common Stock equals or
exceeds $12.00 per unit (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20
trading days within any 30-trading day period commencing at least 150 days after the Business Combination or (y) the date on
which the Company completes a liquidation, merger, capital stock exchange, reorganization or other similar transaction that results
in all of the Company’s stockholders having the right to exchange their shares of Class A Common Stock for cash,
securities or other property (the “Founder Shares Lock-up Period”).


 




    	 	 	 



     


    

 


(b)
The Sponsor and each Insider agrees that it, he or she shall not Transfer any Private Placement Units, the Private Placement Shares,
the Private Placement Warrants (or any share of Class A Common Stock issued or issuable upon the exercise of the Private Placement
Warrants), until 30 days after the completion of a Business Combination (the “Private Placement Units Lock-up Period”,
together with the Founder Shares Lock-up Period, the “Lock-up Periods”).


 


(c)
Notwithstanding the provisions set forth in paragraphs 8(a) and (b), Transfers of the Founder Shares, Private Placement Units,
Private Placement Shares, Private Placement Warrants and shares of Class A Common Stock issued or issuable upon the exercise or conversion
of the Private Placement Warrants or the Founder Shares that are held by the Sponsor, any Insider or any of their permitted transferees
(that have complied with this paragraph 8(c)), are permitted (a) to the Company’s officers or directors, any affiliates
or family members of any of the Company’s officers or directors, any members or partners of the Sponsor or their affiliates, any affiliates of the Sponsor, or any employees of such affiliates; (b) in the case of an individual,
by gift to a member of such individual’s immediate family or to a trust, the beneficiary of which is a member of such individual’s
immediate family, an affiliate of such individual or to a charitable organization; (c) in the case of an individual, by virtue of laws
of descent and distribution upon death of such individual; (d) in the case of an individual, pursuant to a qualified domestic relations
order; (e) by private sales or transfers made in connection with any forward purchase agreement or similar arrangement or in connection
with the consummation of an initial Business Combination at prices no greater than the price at which the securities were originally
purchased; (f) by virtue of the laws of the State of Delaware or the Sponsor’s organizational documents upon liquidation or dissolution
of the Sponsor; (g) to the Company for no value for cancellation in connection with the consummation of an initial Business Combination;
(h) in the event of the Company’s liquidation prior to the consummation of an initial Business Combination; or (i) in the event
of the Company’s completion of a liquidation, merger, capital stock exchange or other similar transaction which results in all
of the Company’s stockholders having the right to exchange their shares of Class A Common Stock for cash, securities or other property
subsequent to the Company’s completion of an initial Business Combination; provided, however, that in the case of
clauses (a) through (f), these permitted transferees must enter into a written agreement with the Company agreeing to be bound by the
transfer restrictions herein and the other restrictions contained in this Agreement (including provisions relating to voting, the Trust
Account and liquidating distributions).


 


 9.
 The Sponsor and each Insider represents and warrants that it, he or
she has never been suspended or expelled from membership in any securities or commodities exchange or association or had a securities
or commodities license or registration denied, suspended or revoked. Each Insider’s biographical information furnished to the Company
(including any such information included in the Prospectus) is true and accurate in all  respects and does not omit any material
information with respect to such Insider’s background. The Sponsor and each Insider represents and warrants that the questionnaire
it, he or she furnished to the Company is true and accurate in all  respects. The Sponsor and each Insider represents and warrants
that: it, he or she is not subject to or a respondent in any legal action for, any injunction, cease-and-desist order or order or stipulation
to desist or refrain from any act or practice relating to the offering of securities in any jurisdiction; it, he or she has never been
convicted of, or pleaded guilty to, any crime (i) involving fraud, (ii) relating to any financial transaction or handling of funds of
another person, or (iii) pertaining to any dealings in any securities and it, he or she is not currently a defendant in any such criminal
proceeding.


 


 10.
 Except as disclosed in the Prospectus, neither the Sponsor nor any
officer or director of the Company, nor any affiliate of the Sponsor or any officer or director of the Company, shall receive
from the Company any finder’s fee, reimbursement, consulting fee, non-cash payments, monies in respect of any repayment of a loan
or other compensation prior to, or in connection with any services rendered in order to effectuate, the consummation of the Company’s
initial Business Combination (regardless of the type of transaction that it is), other than the following, none of which will be made
from the proceeds held in the Trust Account prior to the completion of the initial Business Combination: repayment of a loan and advances
up to an aggregate of $300,000 made to the Company by the Sponsor; reimbursement for any reasonable out-of-pocket expenses related to
identifying, investigating, negotiating and completing an initial Business Combination; and repayment of loans, if any, and on such terms
as to be determined by the Company from time to time, made by the Sponsor or an affiliate of the Sponsor or any of the Company’s
officers or directors to finance transaction costs in connection with an intended initial Business Combination, provided, that, if the
Company does not consummate an initial Business Combination, a portion of the working capital held outside the Trust Account may be used
by the Company to repay such loaned amounts so long as no proceeds from the Trust Account are used for such repayment. Up to $1,500,000
of such loans may be convertible into units of the post-Business Combination entity at a price of $10.00 per unit
at the option of the lender. Such warrants would be identical to the Private Placement Units. 


 




    	 	 	 



     


    

 


 11.
 The Sponsor and each Insider has full right and power, without violating
any agreement to which it is bound (including, without limitation, any non-competition or non-solicitation agreement with any employer
or former employer), to enter into this Letter Agreement and, as applicable, to serve as an officer and/or director on the board of directors
of the Company and hereby consents to being named in the Prospectus as an officer and/or director of the Company.


 


 12.
 As used herein, (i) “Business Combination”
shall mean a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination, involving
the Company and one or more businesses; (ii) “Common Stock” shall mean the Class A Common Stock and Class B
common stock, par value $0.000001 per share, of the Company (“Class B Common Stock”); (iii) “Founder
Shares” shall mean the 2,875,000 shares of Class B Common Stock issued and outstanding immediately prior to the consummation
of the Public Offering (up to 375,000 shares of which are subject to complete or partial forfeiture by the Sponsor if the over-allotment
option is not exercised by the Underwriter); (iv) “Initial Stockholders” shall mean the Sponsor and any Insider
that holds Founder Shares; (v) “Private Placement Shares” shall mean the 469,175 shares of Common Stock
(or up to 521,675 shares of Common Stock if the over-allotment option is exercised in full) comprising the Private Placement Units (as
defined below) (vi) “Private Placement Units” shall mean the 469,175 (or up to 521,675 if
the over-allotment option is exercised in full) that the Sponsor and certain Insiders have agreed to purchase for an aggregate purchase
price of $4,691,750 (or $5,216,750 if the over-allotment option is exercised in full), each unit comprised of one Private
Placement Share and one Private Placement Warrant, or $10.00 per unit, in a private placement that shall occur simultaneously
with the consummation of the Public Offering; (vii) “Private Placement Warrants” shall mean the warrants
to purchase up to 351,881 shares of Common Stock (or up to 391,256 shares of Common Stock if the over-allotment option is exercised in
full) comprising the Private Placement Units; (viii) “Public Stockholders” shall mean the holders of securities
issued in the Public Offering; (vii) “Trust Account” shall mean the trust fund into which a portion of the
net proceeds of the Public Offering and the sale of the Private Placement Units shall be deposited; (viii) “Transfer”
shall mean the (a) sale of, offer to sell, contract or agreement to sell, hypothecate, pledge, grant of any option to purchase or otherwise
dispose of or agreement to dispose of, directly or indirectly, or establishment or increase of a put equivalent position or liquidation
with respect to or decrease of a call equivalent position within the meaning of Section 16 of the Exchange Act, and the rules and regulations
of the Commission promulgated thereunder with respect to, any security, (b) entry into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of ownership of any security, whether any such transaction is to be settled
by delivery of such securities, in cash or otherwise, or (c) public announcement of any intention to effect any transaction specified
in clause (a) or (b); and (ix) “Warrants” shall mean the Private Placement Warrants and Public Warrants.


 


 13.
 The Company will maintain an insurance policy or policies providing
directors’ and officers’ liability insurance, and each Director and Officer shall be covered by such policy or policies,
in accordance with its or their terms, to the maximum extent of the coverage available for any of the Company’s directors or officers.


 


 14.
 This Letter Agreement constitutes the entire agreement and understanding
of the parties hereto in respect of the subject matter hereof and supersedes all prior understandings, agreements, or representations
by or among the parties hereto, written or oral, to the extent they relate in any way to the subject matter hereof or the transactions
contemplated hereby. This Letter Agreement may not be changed, amended, modified or waived (other than to correct a typographical error)
as to any particular provision, except by a written instrument executed by all parties hereto.


 


 15.
 No party hereto may assign either this Letter Agreement or any of its
rights, interests, or obligations hereunder without the prior written consent of the other parties. Any purported assignment in violation
of this paragraph shall be void and ineffectual and shall not operate to transfer or assign any interest or title to the purported assignee.
This Letter Agreement shall be binding on the Sponsor and each Insider and their respective successors, heirs and assigns and permitted
transferees.


 


 16.
 Nothing in this Letter Agreement shall be construed to confer upon,
or give to, any person or corporation other than the parties hereto any right, remedy or claim under or by reason of this Letter Agreement
or of any covenant, condition, stipulation, promise or agreement hereof. All covenants, conditions, stipulations, promises and agreements
contained in this Letter Agreement shall be for the sole and exclusive benefit of the parties hereto and their successors, heirs, personal
representatives and assigns and permitted transferees.


 




    	 	 	 



     


    

 


 17.
 This Letter Agreement may be executed in any number of original or
facsimile counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall
together constitute but one and the same instrument.


 


 18.
 This Letter Agreement shall be deemed severable, and the invalidity
or unenforceability of any term or provision hereof shall not affect the validity or enforceability of this Letter Agreement or of any
other term or provision hereof. Furthermore, in lieu of any such invalid or unenforceable term or provision, the parties hereto intend
that there shall be added as a part of this Letter Agreement a provision as similar in terms to such invalid or unenforceable provision
as may be possible and be valid and enforceable.


 


 19.
 This Letter Agreement shall be governed by and construed and enforced
in accordance with the laws of the State of New York. The parties hereto (i) all agree that any action, proceeding, claim or dispute
arising out of, or relating in any way to, this Letter Agreement shall be brought and enforced in the courts of New York City, in the
State of New York, and irrevocably submit to such jurisdiction and venue, which jurisdiction and venue shall be exclusive and (ii) waive
any objection to such exclusive jurisdiction and venue or that such courts represent an inconvenient forum.


 


 20.
 Any notice, consent or request to be given in connection with any of
the terms or provisions of this Letter 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 facsimile transmission.


 


 21.
 This Letter Agreement shall terminate on the earlier of (i) the expiration
of the Lock-up Periods and (ii) the liquidation of the Company; provided, however, that this Letter Agreement shall earlier terminate
in the event that the Public Offering is not consummated and closed by July 31, 2021; provided further that paragraph 4 of this Letter
Agreement shall survive such liquidation.


 


 22.
The Company, the Sponsor and each Insider hereby acknowledges and agrees that the Underwriter is a third party beneficiary of this Letter
Agreement. 


   


[Signature
Page Follows]


 


 


	Acknowledged and Agreed:	 
	 	 	 
	PONO
    CAPITAL CORP	 
	 	 	 
	By:
    	 	 
	Name:
    	Dustin
    Shindo	 
	Title:
    	Chief
    Executive Officer