Exhibit
10.1


 


[   ], 2021


Sagaliam
Acquisition Corp.


1800
Avenue of the Stars, Suite 1475


Los
Angeles, CA 90067


 


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 AgreementI”) entered into by and among Sagaliam Acquisition Corp., a Delaware corporation
(the “Company”), and EF Hutton, division of Benchmark Investments, LLC, as representative (the “Representative”)
of the several underwriters (each, an “Underwriter” and collectively, the “Underwriters”),
relating to an underwritten initial public offering (the “Public Offering”), of 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 $0.0001 per share (the “Common Stock”),
and one right (the “Right”). Each Right entitles the holder thereof to receive one-eighth (1/8) of one
share of Common Stock upon consummation of the initial business combination, subject to adjustment. The Units will be sold in the Public
Offering pursuant to a registration statement 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 Sagaliam Sponsor LLC
(the “Sponsor”) and the undersigned individuals, each of whom is a member of the Company’s board of directors
and/or management team or an advisor of the Company (each, 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 Capital Stock 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 engages in a tender offer in connection
with any proposed Business Combination, the Sponsor and each Insider agrees that it, he or she will not seek to sell its, his or her
shares of Capital Stock to the Company in connection with such tender offer.




 


	2.	The Sponsor and each Insider hereby agrees that in the event
that the Company fails to consummate a Business Combination within the timeframe set forth in the Company’s amended and restated
certificate of incorporation, 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 10 business days thereafter, subject to lawfully available funds therefor, redeem 100%
of the 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 $150,000 of interest to
pay dissolution expenses), divided by the number of then outstanding Offering Shares, which redemption will completely extinguish all
Public Stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any), subject
to applicable law, 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, dissolve and liquidate, subject in the case of clauses (ii) and (iii)
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 not to propose any amendment to the Charter to modify (i) the substance or timing of the ability of holders
of Offering Shares to seek redemption in connection with a Business Combination or amendments to the Charter prior thereto or (ii) (A)
the Company’s obligation to redeem 100% of the Offering Shares if the Company does not complete a Business Combination within such
time set forth in the Charter or (B) any other provisions relating to stockholders’ rights or pre-initial Business Combination
activity, unless the Company provides its public stockholders with the opportunity to redeem their shares of Common Stock 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.




 




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		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 shares of Common Stock held by it, him or
  her, if any, whether acquired now or hereafter, any redemption rights it, he or she may have in connection with the consummation of
  a Business Combination or amendments to the Charter prior thereto, including, without limitation, any such rights available in the
  context of a stockholder vote to approve such Business Combination or a stockholder vote to approve an amendment to the Charter to
  modify (i) (A) 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 (B) any other provisions relating to
  stockholders’ rights or pre-initial Business Combination activity or (ii) in the context of a tender offer made by the Company
  to purchase shares of Common Stock (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 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 Representative,
(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 Capital Stock, Rights or
any securities convertible into, or exercisable, or exchangeable for, shares of Capital 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 Capital Stock, Rights or any securities convertible into, or exercisable, or exchangeable for, shares of Capital 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). 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 7 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 (which
for purposes of clarification shall not extend to any other shareholders, members or managers of 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
(other than the Company’s independent public accountants) 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 shall
(x) 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 interest earned on the Trust Account which may be withdrawn to pay taxes, (y) 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) 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.




 




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	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 Underwriters upon the exercise of their
over-allotment option, and (ii) the denominator of which is 1,500,000. 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.




 


	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), 7(b), and 9, 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 shares of Common Stock issuable upon conversion thereof) until the earlier of (A) one year
after the completion of the Company’s initial Business Combination or (B) subsequent to the Business Combination, (x) if the last
sale price of the Common Stock equals or exceeds $12.00 per share (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 Company’s initial
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 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 (including the underlying Rights), until 30 days after the completion of a Business Combination
(the “Private Placement 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 and Private Placement Units (including the Private Shares and Private Rights), are permitted
(a) to the Company’s officers or directors, any affiliate or family member of any of the Company’s officers or directors
or any affiliate of the Sponsor or to any member(s) of the Sponsor; (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 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 State of Delaware 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, reorganization or other similar transaction
which results in all of the Company’s stockholders having the right to exchange their shares of common stock for cash, securities
or other property subsequent to the completion of the Company’s 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.




 


	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. Each Insider’s questionnaire furnished to the Company is true and accurate in all
respects. 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.




 




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	9.	Except as disclosed in the Prospectus, neither the Sponsor
nor any officer, director, advisor or affiliate of the Sponsor, nor any officer, director or advisor of the Company, shall receive from
the Company any finder’s fee, reimbursement, consulting fee, 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).




 


	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 or an advisor of the Company and hereby consents to being named in the Prospectus as an officer and/or director of the Company
or an advisor 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) “Capital Stock” shall mean, collectively, the Common Stock and
the Founder Shares; (iii) “Founder Shares” shall mean (a) the 2,875,000 shares of the Company’s Class
B common stock, par value $0.0001 per share, initially issued to the Sponsor (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 Underwriters) for an aggregate purchase price
of $25,000, or $0.009 per share, prior to the consummation of the Public Offering; (iv) “Initial Stockholders”
shall mean the Sponsor and any Insider that holds Founder Shares; (v) “Private Placement Units” shall mean
370,000 units (or 400,000 units if the over-allotment option is exercised in full) that the Sponsor has agreed to purchase
for an aggregate purchase price of $3,000,000 (or $4,000,000 if the over-allotment option is exercised in full) in the
aggregate, or $10.00 per Unit, in a private placement that shall occur simultaneously with the consummation of the Public Offering; (vi)
“Private Rights” shall mean the rights underlying the Private Units, (vi) “Private Common Stock”
shall mean the Ordinary Shares underlying the Private Units, (vii) “Public Stockholders” shall mean the holders
of securities issued in the Public Offering; (viii) “Trust Account” shall mean the trust fund into which a
portion of the net proceeds of the Public Offering shall be deposited; and (ix) “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 of the Company 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.




 


	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.




 


	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; provided, however, that the Representatives on behalf of the Underwriters
are third party beneficiaries of this Letter Agreement.




 






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	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, without giving effect to conflicts of law principles that would result
in the application of the substantive laws of another jurisdiction. 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 December 31, 2021; provided further that paragraph 4
of this Letter Agreement shall survive such liquidation.




 




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	 	Sincerely,
    
	 	 	 
	 	SAGALIAM
    SPONSOR LLC
	 	 	 
	 	By:	 
	 	Name:	Barry
    Kostiner
	 	Title:	Managing
    Member


 


	 	 	 
	 	Name:	Barry
    Kostiner


 


	 	 	 
	 	Name:	Thomas
    Neukranz


 


	 	 	 
	 	Name:	Jane
    Liu


 


	 	 	 
	 	Name:	George
    Caruolo


 


	 	 	 
	 	Name:	Gabriel
    Del Virginia


 


	 	 	 
	 	Name:	Glauco
    Lolli-Ghetti


 


	Acknowledged
    and Agreed:	 
	 	 
	SAGALIAM
    ACQUISITION CORP.	 
	 	 	 
	By:	 	 
	Name:	Barry
    Kostiner	 
	Title:	Chief
    Executive Officer	 


 


[Signature
Page to Letter Agreement]