Exhibit 10.1


 


__ __, 2021


  


CENAQ Energy Corp.


4550 Post Oak Place Drive, Suite 300


Houston, Texas 77027


 


Re: Initial Public Offering


 


Ladies and Gentlemen:


 


This letter agreement (this “Letter Agreement”)
is being delivered to you in accordance with the Underwriting Agreement (the “Underwriting Agreement”) to be entered
into by and between CENAQ Energy Corp., a Delaware corporation (the “Company”), and Imperial Capital, 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
15,000,000 of the Company’s units (including up to 2,250,000 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-half of one warrant. Each whole warrant (each, a “Warrant”) entitles the
holder thereof to purchase one share of Common Stock 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 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, CENAQ Sponsor LLC (the “Sponsor”) and each of the undersigned individuals,
each of whom is a member of the Company’s board of directors and/or management team (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.


 


2. The Sponsor and each
Insider hereby agrees that in the event that the Company fails to consummate a Business Combination within 18 months (or within 24
months if the Company extends the period of time to consummate the Business Combination in accordance with the terms described in
the Registration Statement) from the closing of the Public Offering, or such later period as may be approved by the Company’s
stockholders in accordance with the Company’s amended and restated certificate of incorporation, 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, including interest earned on the funds
held in the Trust Account and not previously released to the Company to pay its franchise and income taxes as well as any expenses
related to the administration of the Trust Account (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 of the 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 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 agree not to
propose any amendment to the Company’s amended and restated certificate of incorporation that would modify (a) 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 18 months (or within 24 months if the Company extends the period of time to consummate the Business Combination
in accordance with the terms described in the Registration Statement) from the closing of the Public Offering or (b) any provisions
of the Company’s amended and restated certificate of incorporation 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 not previously released to the Company to pay its franchise and income taxes as well as any
expenses related to the administration of the Trust Account, 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 shares of Common Stock 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 stockholder vote to approve such Business Combination or 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, he, she or they hold if the Company fails to consummate a Business Combination
within 18 months (or within 24 months if the Company extends the period of time to consummate the Business Combination in accordance with the terms described
in the Registration Statement) from the date of the closing of the Public Offering).


 


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 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,
and the rules and regulations of the Commission promulgated thereunder, with respect to any Units, shares of Common Stock, Founder Shares,
Warrants or any securities convertible into, or exercisable, or exchangeable for, shares of 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, 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). 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, the Sponsor (which for purposes of clarification shall not extend to any other shareholders, 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 for services rendered or products sold to the Company or (ii) a prospective target business with which the Company
has entered into an acquisition 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 or products
sold to the Company or a Target do not reduce the amount of funds in the Trust Account to below (i) $10.10 per Offering Share or (ii)
such lesser amount per Offering Share 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 and expenses related to the administration of the Trust Account, 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.


 






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5. To the extent that the
Underwriters do not exercise their over-allotment option to purchase up to an additional 2,250,000 Units 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 562,500 multiplied by a fraction, (i) the numerator of which is 2,250,000 minus the number of Units purchased
by the Underwriters upon the exercise of their over-allotment option, and (ii) the denominator of which is 2,250,000. The forfeiture will
be adjusted to the extent that the over-allotment option is not exercised in full by the Underwriters so that the 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 Insider of its, his or her obligations under paragraphs 1, 2, 3, 4, 5, 7(a), 7(b), and 9 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) six months 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 75 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 Warrants (or shares of 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
Warrants Lock-up Period” and, 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 shares of Common Stock issued or
issuable upon the exercise or conversion of the Private Placement Warrants or the Founder Shares, as applicable, and that are held by
the Sponsor, an Insider or any of their permitted transferees (that have complied with this paragraph 7(c)), are permitted (a) to the
Company’s officers, directors, any affiliates or family members of any of the Company’s officers, directors, any members of
the Sponsor or any affiliates of the Sponsor; (b) in the case of an individual, transfers by gift to a member of the individual’s
immediate family, 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, transfers by virtue of laws of descent and distribution upon
death of the individual; (d) in the case of an individual, transfers pursuant to a qualified domestic relations order; (e) transfers by
private sales or transfers made in connection with the consummation of a Business Combination at prices no greater than the price at which
the securities were originally purchased; (f) transfers in the event of the Company’s liquidation prior to the completion of an
initial Business Combination; (g) transfers by virtue of the laws of the State of Delaware or the Sponsor’s limited liability company
agreement upon dissolution of the Sponsor; and (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 (g), these permitted transferees must enter into a written agreement agreeing to be bound
by the restrictions herein.


 






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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 questionnaire of the Sponsor and each Insider
furnished to the Company is true and accurate in all respects.


 


9. 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 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), 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: (a) reimbursement for any out-of-pocket
expenses related to the Company’s formation and Public Offering and to identifying, investigating and completing an initial Business
Combination; (b) 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 any Insider 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; and (c) payments to the Sponsor, any Insiders or their respective affiliates in connection with the successful
completion of the Company’s initial Business Combination. Up to $1,500,000 of the loans referenced in clause (b) above may be convertible
into warrants at a price of $1.00 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.


 


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 a 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) “Capital Stock” shall mean, collectively, the Common
Stock and the Founder Shares; (iii) “Founder Shares” shall mean the 4,315,500 shares of the Company’s Class B
common stock, par value $0.0001 per share, (of which 562,500 shares will be forfeited by the Sponsor if the over-allotment option is not
exercised by the Underwriters) owned by the Initial Stockholders; (iv) “Initial Stockholders” shall mean the Sponsor
and other holders of Founder Shares immediately prior to the Public Offering; (v) “Private Placement Warrants” shall
mean the warrants to purchase up to 4,500,00 shares of Common Stock of the Company (or 4,950,000 shares of Common Stock if the over-allotment
option is exercised in full) that the Sponsor agreed to purchase for an aggregate purchase price of $4,500,000 in the aggregate (or $4,950,000
if the over-allotment option is exercised in full), for $1.00 per warrant, in a private placement that shall occur simultaneously with
the consummation of the Public Offering; (vi) “Public Stockholders” shall mean the holders of securities issued in
the Public Offering; (vii) “Trust Account” shall mean the trust account 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 Securities Exchange Act of 1934, as
amended, 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).


 






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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.


 


16. This Letter Agreement
may be executed in any number of original or electronic 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 Texas, 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 Houston, in the State of Texas, 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 electronic 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.


 


[Signature Pages Follow]


 






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	Sincerely,	 
	 	 	 
	CENAQ Energy Corp.	 
	 	 	 
	By:	 	 
	Name:	Michael J. Mayell	 
	Title:	President	 
	 	 	 
	SPONSOR:	 
	 	 	 
	CENAQ Sponsor LLC	 
	 	 	 
	By: 	 	 
	Name: 	Michael J. Mayell	 
	Title:	President	 
	 	 	 
	INSIDER:	 
	 	 	 
	By: 	 	 
	Name:	John B. Connally III	 
	 	 	 
	INSIDER:	 
	 	 	 
	By: 	 	 
	Name:	Michael J. Mayell	 
	 	 	 
	INSIDER:	 
	 	 	 
	By: 	 	 
	Name:	J. Russel Porter	 
	 	 	 
	INSIDER:	 
	 	 	 
	By: 	 	 
	Name:	Michael J. Mayell	 
	 	 	 
	INSIDER:	 
	 	 	 
	By: 	 	 
	Name: 	Benjamin Francisco Salinas Sada	 
	 	 	 
	INSIDER:	 
	 	 	 
	By: 	 	 
	Name:	Denise DuBard	 
	 	 	 
	INSIDER:	 
	 	 	 
	By: 	 	 
	Name:	Michael S. Bahorich	 
	 	 	 
	INSIDER:	 
	 	 	 
	By: 	 	 
	Name:	David Bullion	 
	 	              	 
	INSIDER:	 
	 	 	 
	By: 	 	 
	Name:	David J. Porter