Exhibit 10.2


 


______, 2021


 


Cactus Acquisition Corp. 1 Limited


4B Cedar Brook Drive


Cranbury, NJ 08512


 


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”)
to be entered into by and between Cactus Acquisition Corp. 1 Limited, a Cayman Islands exempted company (the “Company”),
and Oppenheimer & Co. (the “Representative”), as the representative of the several underwriters (the “Underwriters”),
relating to an underwritten initial public offering (the “Public Offering”) of 10,000,000 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 Class A ordinary share of the Company, par value $0.0001 per share (the “Class A ordinary shares”),
and one-third of one warrant (each, a “Warrant”). Each whole Warrant entitles the holder thereof to purchase
one Class A ordinary share at a price of $11.50 per share, subject to adjustment. The Units shall 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 Securities
and Exchange Commission (the “Commission”) and the Company shall apply to have the Units listed on the Nasdaq
Capital Market. Certain capitalized terms used herein are defined in paragraph 10 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, Cactus Healthcare Management LP, a Delaware limited partnership
(the “Sponsor”), and the other undersigned persons (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 shareholder approval of a proposed Business Combination, then in connection
with such proposed Business Combination, it, he or she shall (i) vote any Shares owned by it, him or her in favor of any proposed Business
Combination and (ii) not redeem any Shares owned by it, him or her in connection with such shareholder approval.


 


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, 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, subject to lawfully available funds therefor, 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, including interest (which interest shall be net of taxes payable and less 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’ rights as shareholders (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 shareholders and the Company’s board of directors, dissolve and liquidate, subject in each case to the
Company’s obligations under Cayman Islands 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 Company’s amended and restated memorandum and articles of association
(a) that would affect the ability of Public Shareholders to exercise redemption rights with respect to the Offering Shares or 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 24 months from the closing of the Public Offering or (b) with respect to any other provision 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 (which interest shall be net of taxes payable), 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 (including any Class A ordinary
shares issuable upon conversion thereof) held by such Sponsor or Insider. The Sponsor and each Insider hereby further waives, with respect
to the Founder Shares (including any Class A ordinary shares issuable upon conversion thereof) held by it, him or her, if any, any redemption
rights it, he or she may have in connection with 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 in the context of a tender offer made by the Company
to purchase Class A ordinary shares (although the Sponsor and the Insiders 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 24 months from the date
of 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).


 


3. In
the event of the liquidation of the Trust Account, the Sponsor (which for purposes of clarification shall not extend to any other equityholders,
members or managers of the Sponsor) 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, or any claim whatsoever) to which the Company may become subject as
a result of any claim by (i) any third party (other than the Company’s independent public accountants) for services rendered or
products sold to the Company or (ii) a prospective target business with which the Company has discussed entering into a transaction agreement
(a “Target”); provided, however, that such indemnification of the Company by the Sponsor
shall apply only to the extent necessary to ensure that such claims by a third party for services rendered (other than the Company’s
independent public accountants) or products sold to the Company or a Target do not reduce the amount of funds in the Trust Account to
below (i) $10.00 per share of the Offering Shares or (ii) such lesser amount per share of the Offering Shares held in the Trust Account
due to reductions in the value of the trust assets as of the date of the liquidation of the Trust Account, in each case, net of the amount
of interest earned on the property in the Trust Account which may be withdrawn to pay taxes, except as to any claims by a third party
(including a Target) who executed a waiver of any and all rights to seek access to the Trust Account and except as to any claims under
the Company’s indemnity of the Underwriters against certain liabilities, including liabilities under the Securities Act of 1933,
as amended. In the event that any such executed waiver is deemed to be unenforceable against such third party, the Sponsor shall not be
responsible to the extent of any liability for such third party claims. The Sponsor 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 Sponsor, the Sponsor notifies the Company in writing that it shall undertake such defense.


 


4. To
the extent that the Underwriters do not exercise their over-allotment option to purchase up to an additional 1,500,000 Units within 45
days from the date of the Prospectus (and as further described in the Prospectus), the Sponsor agrees that it shall 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.


 


All references in this Letter
Agreement to Founder Shares of the Company being forfeited shall take effect as surrenders for no consideration of such Founder Shares
as a matter of Cayman Islands law. 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 20.0% of the Company’s issued and outstanding Shares after the Public
Offering (assuming the Initial Shareholders do not purchase any units in the Public Offering). The Initial Shareholders further agree
that to the extent that the size of the Public Offering is increased or decreased, the Company will effect a capitalization or share repurchase
or redemption or other appropriate mechanism, as applicable, immediately prior to the consummation of the Public Offering in such amount
as to maintain the ownership of the Initial Shareholders prior to the Public Offering at 20.0% of the Company’s issued and outstanding
Shares upon the consummation of the Public Offering (assuming the Initial Shareholders do not purchase any units in the Public Offering).
In connection with such increase or decrease in the size of the Public Offering, then (A) the references to 1,500,000 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 375,000 in the formula set forth in the
immediately preceding sentence shall be adjusted to such number of Founder Shares that the Founder Shares would represent an aggregate
of 20.0% of the Company’s issued and outstanding Shares after the Public Offering (assuming the Initial Shareholders do not purchase
any Units in the Public Offering).


 






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5. 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 Insider of its, his or her obligations under paragraphs 1, 2, 3, 4, 6(a), 6(b) and 8 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 seek
injunctive relief, in addition to any other remedy that such party may have in law or in equity, in the event of such breach.


 


6. (a)
The Sponsor and each Insider agrees that it, he or she shall not Transfer any Founder Shares (or Class A ordinary shares issuable upon
conversion thereof) held by such Sponsor or Insider until the earlier of (A) six months after the completion of the Company’s initial
Business Combination or (B) the date on which the Company will consummate a liquidation, merger, amalgamation, share exchange, reorganization,
or other similar transaction after initial Business Combination that results in all of the Company’s shareholders having the right
to exchange their ordinary shares for cash, securities or other property (the “Founder Shares Lock-up Period”),
provided, however, that the Sponsor and each Insider may Transfer during the Founder Shares Lock-up Period up to 50% of the Founder Shares
(or Class A ordinary shares issuable upon conversion thereof) held by the Sponsor or such Insider if following the completion of the Company’s
initial Business Combination the last reported sale price of the Class A ordinary shares equals or exceeds $12.00 per share (as adjusted
for share splits, share dividends, rights issuances, subdivisions, reorganizations, recapitalizations and the like) for any 20 trading
days within any 30-trading day period.


 


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


 


(c) Notwithstanding
the provisions set forth in paragraphs 6(a) and 6(b), Transfers of the Founder Shares, Private Placement Warrants and Class A ordinary
shares issued or issuable upon the exercise or conversion of the Private Placement Warrants or the Founder Shares by the Sponsor and the
Insiders during the Lock-up Periods 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 of the Sponsor or any affiliates of the Sponsor; (b) in the case of an individual,
by gift to a member of the individual’s immediate family, or to a trust, the beneficiary of which is a member of the individual’s
immediate family or an affiliate of such person, or to a charitable organization; (c) in the case of an individual, by virtue of laws
of descent and distribution upon death of the 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 the Company’s 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 Company’s completion of an initial Business Combination; (g) by virtue of the laws of the Cayman Islands or the Sponsor’s
limited partnership agreement, as amended from time to time, upon dissolution of the Sponsor; or (h) in the event of the Company’s
completion of a liquidation, merger, amalgamation, share exchange, reorganization 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 completion of the Company’s initial Business Combination; provided, however, that, except in the case of clause (f) or with
the Company’s prior consent, these permitted transferees (the “Permitted Transferees”) must enter into
a written agreement with the Company agreeing to be bound by the transfer restrictions in this Agreement.


 






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7. 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, if any (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’s
questionnaire furnished to the Company, if any, 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. 


 


8. Except
as disclosed in the Prospectus, neither the Sponsor nor any Insider nor any affiliate of the Sponsor or any Insider, nor any director
or officer 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).


 


9. 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.


 


10. As
used herein, (i) “Business Combination” shall mean a merger, amalgamation, share exchange, asset acquisition,
share purchase, reorganization or similar business combination, involving the Company and one or more businesses; (ii) “Shares”
shall mean, collectively, the Class A ordinary shares and the Class B ordinary shares; (iii) “Founder Shares”
shall mean the 2,875,000 Class B ordinary shares, par value $0.0001 per share, issued and outstanding immediately prior to the consummation
of the Public Offering; (iv) “Initial Shareholders” shall mean the Sponsor and any Insider that holds Founder
Shares; (v) “Private Placement Warrants” shall mean the 2,400,000 warrants to purchase Class A ordinary shares,
exercisable at a price of $11.50 per underlying Class A ordinary share, that the Sponsor has agreed to purchase in a private placement
that shall occur simultaneously with the consummation of the Public Offering, at a price of $1.50 per Private Placement Warrant, for an
aggregate purchase price of $3,600,000; (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 shall be deposited; and (viii) “Transfer” shall mean the (a) sale or assignment 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 Securities Exchange Act of 1934, as amended (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).


 


11. 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 the Sponsor and each Insider that is the subject of any such change, amendment modification or waiver.


 






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12. 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.


 


13. 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.


 


14. 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.


 


15. 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.


 


16. 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,
facsimile transmission or email transmission (read receipt requested).


 


17. Each
party hereto shall not be liable for any breaches or misrepresentations contained in this Letter Agreement by any other party to this
Letter Agreement (including, for the avoidance of doubt, any Insider with respect to any other Insider), and no party shall be liable
or responsible for the obligations of another party, including, without limitation, indemnification obligations and notice obligations.


 


18. 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 3 of this Letter Agreement shall survive any such liquidation.


 




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	 	Sincerely,
	 	 
	 	CACTUS HEALTHCARE MANAGEMENT LP
	 	 
	 	By: Cactus Healthcare Management LLC, its sole General Partner
	 	 	 	 
	 	By:	 
	 	 	Name:	Stephen T. Wills
	 	 	Title:	Secretary



 


	 	 
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Acknowledged and Agreed:


 


CACTUS ACQUISITION CORP. 1 LIMITED    




 


	By:	 	 
	 	Name:	Ofer Gonen	 
	 	Title:	Chief Executive Officer	 



 


[Signature Page - Letter Agreement]