Exhibit 10.3


 





June 15, 2021


Zimmer Energy Transition Acquisition Corp.

9 West 57th Street


33rd Floor


New York, NY 10019


(212) 710-2347


 


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 among Zimmer Energy Transition Acquisition Corp., a Delaware corporation (the
 “Company”), on the one hand, and Citigroup Global Markets Inc. and Barclays Capital Inc., as representatives (the
 “Representatives”) of the several underwriters (the “Underwriters”), on the other hand,
relating to an underwritten initial public offering (the “Public Offering”) of up to 34,500,000 of the
Company’s units (including up to 4,500,000 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-third of one redeemable warrant (each, a “Warrant”). Each whole
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 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 Global 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 ZETA Sponsor LLC (the “Sponsor”) and the undersigned individuals,
each of whom is a member of the Company’s board of directors, or a member of the Company’s management team (each, an “Insider”
and collectively, the “Insiders”), hereby severally (and not jointly and severally) 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 Capital Stock owned by it, him or her in connection with
such stockholder approval. If the Company seeks to consummate a proposed Business Combination by engaging in a tender offer, the Sponsor
and each Insider agrees that it, he or she will not sell or tender any shares of Capital Stock owned by it, him or her in connection
therewith. 


 


2.                  
The Sponsor and each Insider hereby agrees that in the event that the Company fails to consummate a Business Combination within
24 months from the closing of the Public Offering, or such later period approved by the Company’s stockholders in accordance with
the Company’s amended and restated certificate of incorporation (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, including interest (net of amounts withdrawn to pay the
Company’s taxes (“Permitted Withdrawals”) and up to $105,000 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 of the Company (including the right to receive further liquidating 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 to not propose any
amendment to the Charter that would 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 with respect to 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 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 (net of Permitted Withdrawals), 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 Capital 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 or they hold if the Company fails to consummate a Business Combination within the 24 months
from the closing of the Public Offering) or in connection with a stockholder vote to approve an amendment to the Charter to modify the
substance or timing of the Company’s obligation to provide holders of Common Stock the right to have their shares redeemed or to
provide for the redemption of or to redeem 100% of the Offering Shares if the Company does not complete a Business Combination within
the 24 months from the Closing of the Public Offering or with respect to any other material provisions relating to stockholders’
rights or pre-initial Business Combination activity.


 


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, 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, Warrants 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, Warrants 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); provided, however, that the foregoing shall not apply to the forfeiture of any Founder Shares pursuant
to their terms or any transfer of Founder Shares to current or future independent directors of the Company (as long as such current or
future independent director is or becomes subject to the terms of this Letter Agreement with respect to such Founder Shares at the time
of such transfer). Each of the Insiders and the Sponsor acknowledges and agrees that, prior to the effective date of any release or waiver
of the restrictions set forth in this paragraph 3 or paragraph 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 such 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 (i) the release or waiver is effected solely to permit a transfer of securities without consideration and
(ii) 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
shareholders, members, managers of the Sponsor or any Insider), solely in its corporate capacity, 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 registered public accounting firm) for services rendered or products sold to the Company or (ii) any 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 (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 or
(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, in each case, less Permitted
Withdrawals, (y) shall not apply to any claims by a third party (including a Target) that 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 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. For the avoidance of doubt, none of the Company’s officers or directors will indemnify the Company for claims by
third parties, including, without limitation, claims by vendors and prospective target businesses.


 






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5.                  
To the extent that the Underwriters do not exercise their over-allotment option to purchase up to an additional 4,500,000 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 an aggregate equal to 1,125,000 multiplied by a fraction, (i) the numerator of which is 4,500,000 minus
the number of Units purchased by the Underwriters upon the exercise of their over-allotment option, if any, and (ii) the denominator of
which is 4,500,000. To the extent that the size of the Public Offering is increased or decreased, the Company will effect a capitalization
or share repurchase, redemption or stock split 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 Capital Stock of the Initial Stockholders at 20.0% of the Company’s
issued and outstanding Capital Stock upon the consummation of the Public Offering. In connection with such increase or decrease in the
size of the Public Offering, (A) references to 4,500,000 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 shares included in the Units issued in the Public Offering and (B)
the reference to 1,125,000 in the formula set forth in the first sentence of this paragraph shall be adjusted to such number of Founder
Shares that the Sponsor would have to return to the Company in order to hold (with all of the Initial Stockholders) an aggregate of 20.0%
of the Company’s issued and outstanding 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,
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 closing 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
public 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 agrees that it 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”, together with
the Founder Shares Lock-up Period, the “Lock-up Periods”).


 






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(c) Notwithstanding the provisions set forth
in paragraphs 3 and 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 and that are held by the Sponsor,
any Insider or any of their permitted transferees (that have complied with this paragraph 7(c)), are permitted (i) 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, including to funds affiliated with Zimmer Partners, LP, and to investors
of funds affiliated with Zimmer Partners, LP; (ii) in the case of an individual, 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 individual, or to a charitable organization; (iii) in the case of an individual, by virtue of laws of descent and distribution
upon death of the individual; (iv) in the case of an individual, pursuant to a qualified domestic relations order; (v) 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; (vi) in the event of the Company’s liquidation prior to the completion of an initial
Business Combination; (vii) by virtue of the laws of the State of Delaware or the Sponsor’s limited liability company
agreement upon dissolution of the Sponsor; (viii) in the event of the Company’s completion of a liquidation, merger, capital
stock exchange, reorganization or other similar transaction which results in all of the Company’s public stockholders having
the right to exchange their shares of Common Stock for cash, securities or other property subsequent to the Company’s
completion of a Business Combination; (ix) to any “transferee” as defined in the Forward Purchase Agreements; (x)
solely with respect to the Founder Shares, to Bluescape Resources Company LLC or any of its affiliates; or (xi) to a nominee or
custodian of a person or entity to whom a disposition or transfer would be permissible under clauses (i) through (x) above; provided, however,
that in the case of clauses (i) through (v) and (ix) through (xi), 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 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: repayment of a loan and advances of up to $300,000 made to the Company by the Sponsor to cover
expenses related to the organization of the Company and the Public Offering; payment to Zimmer Partners, LP for office space and
related support services for a total of $10,000 per month for up to 24 months; reimbursement for any reasonable out-of-pocket
expenses related to identifying, investigating and consummating 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, Zimmer Partners, LP or certain of the
Company’s officers and 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 of the post Business Combination entity 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.


 


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 a director on the board of directors of the Company and hereby consents to being named
in the Prospectus as an officer and/or a director of the Company.


 






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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 the 8,625,000 shares of the Company’s Class B common stock, par value $0.0001 per share (up to 1,125,000 of which are
subject to forfeiture depending on the extent to which the Underwriters’ over-allotment option is exercised); (iv)
 “Forward Purchase Agreements” shall mean those certain forward purchase agreements by and between (a) the Company
and ZP Master Utility Fund, Ltd. and (b) the Company and Bluescape Resources Company LLC; (v) “Initial
Stockholders” shall mean the Sponsor and any other holder of Founder Shares immediately prior to the Public Offering; (vi)
 “Private Placement Warrants” shall mean the warrants to purchase up to 9,500,000 shares of Common Stock of the
Company (or 10,550,000 shares of Common Stock if the over-allotment option is exercised in full) that the Sponsor has agreed to
purchase for an aggregate purchase price of $9,500,000 in the aggregate (or $10,550,000 if the over-allotment option is exercised in
full), or $1.00 per warrant, in a private placement that shall occur simultaneously with the consummation of the Public Offering;
(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 and the
sale of the Private Placement Warrants shall be deposited; and (ix) “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 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.               
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. 


 


13.               
Except as otherwise provided herein, 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. 


 


14.               
Nothing in this Letter Agreement shall be construed to confer upon, or give to, any person or entity 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.


 


15.               
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. 


 


16.               
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.


 






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17.               
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.


 


18.               
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. 


 


19.               
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 Page Follows]


 






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	 	Sincerely,
	 	ZETA Sponsor LLC
	 	 
	 	By:	/s/ Stuart J. Zimmer
	 	 	Name: Stuart J. Zimmer
	 	 	
    Title: Chief Executive Officer

	 	 	 
	 	 	/s/ Stuart J. Zimmer
	 	 	Stuart J. Zimmer
	 	 	 
	 	 	/s/ Jonathan Cohen
	 	 	
    Jonathan Cohen 

	 	 	 
	 	 	/s/ William F. Sloan
	 	 	
    William F. Sloan

	 	 	 
	 	 	/s/ Kimberly M. Blank
	 	 	
    Kimberly M. Blank

	 	 	 
	 	 	/s/ Paul J. Evanson
	 	 	
    Paul J. Evanson

	 	 	 
	 	 	/s/ Benjamin M. Fink
	 	 	Benjamin M. Fink
	 	 	 


 


Acknowledged and Agreed:


 


Zimmer Energy Transition Acquisition Corp.


 


	By:	/s/ Stuart J. Zimmer	 
	 	Name: Stuart J. Zimmer	 
	 	Title:   Chief Executive Officer and Chairman of the Board	 


 


Insider Letter Agreement