Exhibit 10.1


 


[·],
2021


 


Compass Digital Acquisition Corp.





3626 N Hall St





Suite 910





Dallas, Texas 75219


 


	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 among Compass Digital Acquisition Corp., a Cayman Islands exempted company (the “Company”), Citigroup
Global Markets Inc. and J.P. Morgan Securities LLC., as representatives (the “Representatives”) of the several
underwriters (each, an “Underwriter” and collectively, the “Underwriters”), relating
to an underwritten initial public offering (the “Public Offering”), of up to 23,000,000 of the Company’s
units (including up to 3,000,000 units that may be purchased to cover over-allotments, if any) (the “Units”),
each comprised of one of the Company’s Class A ordinary shares, par value $0.0001 per share (the “Class A
Ordinary Shares”), and one-third of one redeemable warrant. Each whole warrant (each, a “Warrant”)
entitles the holder thereof to purchase one Class A Ordinary Share 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 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 11 hereof.


 


In order to induce the Company and the Underwriters 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 Compass Digital SPAC LLC, a Delaware limited liability company (the “Sponsor”)
and the undersigned individuals, each of whom is, or will be, 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 shareholder approval of a proposed Business Combination, then in connection
with such proposed Business Combination, it, he or she shall (i) vote any Ordinary Shares (as defined below) owned by it, him or
her in favor of any proposed Business Combination and (ii) not redeem any Ordinary Shares owned by it, him or her in connection with
such shareholder 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 Ordinary Shares 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 24
months from the closing of the Public Offering, or such later period approved by the Company’s shareholders in accordance with the
Company’s amended and restated memorandum and articles of association (as it may be amended 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 (10) business days thereafter, redeem 100% of the
Class A Ordinary Shares 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 (less taxes payable and up to $100,000 of interest to pay dissolution expenses), divided
by the number of then outstanding Offering Shares, which redemption will completely extinguish all Public Shareholders’ (as defined
below) rights as shareholders (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 shareholders and the Company’s
board of directors, dissolve and



 




     


     


    

liquidate, subject in the case of clauses
(ii) and (iii) to the Company’s obligations under Cayman Islands law to provide for claims of creditors and in all cases subject
to the other requirements of applicable law. The Sponsor and each Insider agrees to not propose any amendment to the Charter (A) to modify
the substance or timing of the Company’s obligation to allow redemption in connection with its initial business combination or 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 (B) with respect to any other material provisions relating to shareholders’ rights or pre-initial Business Combination
activity, unless the Company provides its Public Shareholders 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 held by it, him or her. The Sponsor and each Insider hereby
further waives, with respect to any Ordinary Shares 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
shareholder vote to approve such Business Combination, or (b) a shareholder vote to approve an amendment to the Charter (A) to modify
the substance or timing of the Company’s obligation to allow redemption in connection with our initial business combination or 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 (B) with respect to any other material provisions relating to shareholders’ 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.	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 Representatives, (i) sell, offer to sell, contract or agree
to sell, hypothecate, pledge, hedge, sell any option or contract to purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase, lend or otherwise transfer or 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, Ordinary Shares (including, but not limited to, Founder Shares), Warrants or any securities convertible
into, or exercisable, or exchangeable for, Ordinary Shares 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, Ordinary Shares (including,
but not limited to, Founder Shares), Warrants or any securities convertible into, or exercisable, or exchangeable for, Ordinary Shares
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).



 


		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 rendered 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



 




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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 or a Target do not reduce the
amount of funds in the Trust Account to below the lesser of (i) $10.00 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 $10.00 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 Underwriters 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 3,000,000 Units within
45 days from the date of the Prospectus (and as further described in the Prospectus), the Initial Shareholders agree to forfeit, at no
cost, a number of Founder Shares, to be split pro rata between them based on the number of Founder Shares they hold upon the consummation
of the Public Offering, equal to 686,250 multiplied by a fraction, (i) the numerator of which is 3,000,000 minus the number of Units
purchased by the Underwriters upon the exercise of their over-allotment option, and (ii) the denominator of which is 3,000,000. The
forfeiture will be adjusted to the extent that the over-allotment option is not exercised in full by the Underwriters so that the Founder
Shares will represent an aggregate of 20% of the Company’s issued and outstanding Class A Ordinary Shares after the Public
Offering (not including Class A Ordinary Shares underlying the Private Placement Warrants (as defined below)). The Initial Shareholders
further agree that to the extent that the size of the Public Offering is increased or decreased, the Company will purchase or sell Units
or effect a share repurchase or share capitalization, as applicable, immediately prior to the consummation of the Public Offering in such
amount as to maintain the ownership of the Initial Shareholders and any other holder of Founder Shares prior to the Public Offering at
20% of its issued and outstanding Ordinary Shares upon the consummation of the Public Offering. In connection with such increase or decrease
in the size of the Public Offering, then (A) the references to 3,000,000 in the numerator and denominator of the formula in the first
sentence of this paragraph shall be changed to a number equal to 15% of the number of Class A Ordinary Shares included in the Units issued
in the Public Offering and (B) the reference to 686,250 in the formula set forth in the first sentence of this paragraph shall be
adjusted to such number of Founder Shares that the Initial Shareholders would have to surrender to the Company in order for the Initial
Shareholders and any other holder of Founder Shares to hold an aggregate of 20% of the Company’s issued and outstanding Class A
Ordinary Shares after the Public Offering (not including Class A Ordinary Shares underlying the Warrants or Private Placement Warrants).



 


		6.	The Sponsor and each Insider hereby agrees and acknowledges that: (i) the Underwriters 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, 7(a), and 7(b),
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.



 


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



 




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


 


(c) Notwithstanding the provisions set forth in paragraphs
7(a) and (b), Transfers of the Founder Shares, Private Placement Warrants and the Class A Ordinary Shares underlying the Private
Placement Warrants that are held by the Sponsor, any Insider or any of their permitted transferees (that have complied with this paragraph
7(c)), are permitted (a) to the Company’s officers or directors, any affiliate or family member of any of the Company’s
officers or directors, any affiliate of the Sponsor or to any members of the Sponsor or any of their 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) in the event of the Company’s liquidation prior to the completion of an
initial Business Combination; (g) by virtue of the laws of the Cayman Islands or the Sponsor’s limited liability company agreement
upon dissolution of the Sponsor; or (h) in the event of the Company’s liquidation, merger, capital stock exchange or other
similar transaction which results in all of the Company’s shareholders having the right to exchange their Class A Ordinary
Shares 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 (e) or (g), 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).


 


		8.	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 the Insider’s background. The Sponsor
and each Insider’s questionnaire 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.



 


		9.	Except as disclosed in the Prospectus, neither the Sponsor nor any officer, nor any affiliate of the Sponsor or any officer, nor any
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 $250,000 made to the Company by the Sponsor; payment to the Sponsor for certain
office space, utilities, secretarial and administrative support services provided to the Company and other expenses and obligations of
the Sponsor as may be reasonably required by



 




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the Company for a total up to $10,000 per
month; 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 warrants at a price of $1.50 per
warrant at the option of the lender. Such warrants would be identical to the Private Placement Warrants, including as to exercise price,
exercisability and exercise period.


 


		10.	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.



 


		11.	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)
                                                             “Ordinary Shares” shall mean the Class A Ordinary Shares and Class B ordinary shares, par value
                                                             $0.0001 per share (the “Class B Ordinary Shares”); (iii) “Founder Shares”
                                                             shall mean the 5,750,000 Class B Ordinary Shares issued and outstanding (up to 750,000 of which are subject to complete or
                                                             partial forfeiture if the over-allotment option is not exercised by the Underwriters); (iv) “Initial
                                                             Shareholders” shall mean the Sponsor and any Insider that holds Founder Shares; (v) “Private Placement
                                                             Warrants” shall mean the 4,666,667 warrants (or 5,066,667 warrants if the underwriters’ over-allotment option is
                                                             exercised in full) that the Sponsor, certain funds and accounts managed by affiliates of Apollo Capital Management, L.P. and Meteora
                                                             Capital Partners, L.P. and certain funds and accounts managed by affiliates of Apollo Capital Management, L.P. has agreed to
                                                             purchase for an aggregate purchase price of $7,000,000 (or $7,600,000 if the underwriters’ over-allotment option is exercised
                                                             in full), or $1.50 per whole warrant, in a private placement that shall occur simultaneously with the consummation of the Public
                                                             Offering; (vi) “Public Shareholders” 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 Warrants shall be deposited; and (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).



 


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



 


		13.	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.



 





 




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		14.	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.



 


		15.	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.



 


		16.	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.



 


		17.	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.



 


		18.	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.



 


		19.	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.



 


		20.	This Letter Agreement shall terminate on the earlier of (i) the expiration of the Lock-up Periods or (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 September 30, 2021; provided further that paragraph 4 of this Letter Agreement shall survive such liquidation.



 


[Signature Page Follows]


 




    6 


     


    

	 	
    Sincerely,

     

    COMPASS DIGITAL SPAC LLC

     

	 	By:	
     /s/ 

	 	 	Name: 
	 	 	Title: 
	 	 	 
	 	By:	 /s/ 
	 	 	Name: 
	 	 	Title: 
	 	 	 
	 	By:	 /s/ 
	 	 	Name: 
	 	 	Title: 
	 	 	 
	 	By:	 /s/ 
	 	 	Name: 
	 	 	Title: 
	 	 	 
	 	By:	 /s/ 
	 	 	Name: 
	 	 	Title: 
	 	 	 
	 	By:	 /s/ 
	 	 	Name: 
	 	 	Title: 
	 	 	 
	 	By:	 /s/ 
	 	 	Name: 
	 	 	Title: 
	 	 	 
	 	 	 	 
	Acknowledged and Agreed:	 
	 	 
	COMPASS DIGITAL ACQUISITION CORP.	 
	 	 	 
	By:	 	
    /s/ 
	 
	 	 	Name: 	 
	 	 	Title: 	 
	 	 	 	 	 	 






 





[Signature Page to Letter Agreement]