Exhibit 10.4 


 


[•],
2021


 


Fifth Wall Acquisition Corp. III

6060 Center Drive 10th Floor

Los Angeles, California 90045


 


Re:     Initial Public Offering


 


Ladies and Gentlemen:


 


This letter (this “Letter Agreement”)
is being delivered to you in accordance with the Underwriting Agreement (the “Underwriting Agreement”) entered
into by and among Fifth Wall Acquisition Corp. III, a Cayman Islands exempted company (the “Company”), Deutsche
Bank Securities Inc., Goldman Sachs & Co. LLC and BofA Securities, Inc. as representatives (the “Representatives”)
of the several underwriters (each, an “Underwriter” and collectively, the “Underwriters”),
relating to an underwritten initial public offering (the “Public Offering”), of up to 28,750,000 of the Company’s
shares (the “Shares”) of Class A ordinary shares, par value $0.0001 per share (the “Class A Ordinary
Shares”), including up to 3,750,000 Shares that may be purchased to cover over-allotments, if any. The Shares 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 Shares 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 Fifth Wall Acquisition Sponsor III LLC (the “Sponsor”)
and the undersigned individuals, each of whom is a member of the Company’s board of directors and/or management team (each of the
undersigned individuals, an “Insider” and collectively, the “Insiders”), hereby agrees
with the Company as follows:


 


		1.	The Sponsor and each Insider agrees that if the Company seeks shareholder approval of a proposed Business Combination, then in connection
with such proposed Business Combination, it, he or she shall (i) vote any Ordinary Shares (as defined below) owned by it, him or her in
favor of any proposed Business Combination and (ii) not redeem any Ordinary Shares owned by it, him or her in connection with such shareholder
approval. If the Company seeks to consummate a proposed Business Combination by engaging in a tender offer, the Sponsor and each Insider
agrees that it, he or she will not sell or tender any Ordinary Shares owned by it, him or her in connection therewith.



 






     


     


    

 


		2.	The Sponsor and each Insider hereby agrees that in the event that the Company fails to consummate a
                                                                                                  Business Combination within 24 months from the closing of the Public Offering, or such later period approved by the Company’s
                                                                                                  shareholders in accordance with the Company’s amended and restated memorandum and articles of association (as it may be
                                                                                                  amended from time to time, the “Articles”), 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 business days thereafter, redeem 100% of the Class A Ordinary Shares sold 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 taxes payable and up to $100,000 of interest to pay dissolution expenses), divided by the
number of then outstanding Offering Shares, which redemption will completely extinguish all Public Shareholders’ (as defined below)
rights as shareholders (including the right to receive further liquidating distributions, if any), and (iii) as promptly as reasonably
possible following such redemption, subject to the approval of the Company’s remaining shareholders and the Company’s board
of directors, liquidate and dissolve, 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
Articles to 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 the required time period set forth in the Articles or with respect to any other material provisions
relating to shareholders’ rights or pre-initial business combination activity, unless the Company provides its Public Shareholders
with the opportunity to redeem their Offering Shares upon approval of any such amendment at a per-share price, payable in cash, equal
to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not
previously released to the Company to pay its taxes, divided by the number of then outstanding Offering Shares.



 


The Sponsor and each Insider
acknowledges that it, he or she has no right, title, interest or claim of any kind in or to any monies held in the Trust Account or
any other asset of the Company as a result of any liquidation of the Company with respect to the Founder Shares (as defined below)
held by it, him or her. The Sponsor and each Insider hereby further waives, with respect to any Ordinary Shares held by it, him or
her, if any, any redemption rights it, he or she may have in connection with (A) the consummation of a Business Combination,
including, without limitation, any such rights available in the context of a shareholder vote to approve such Business Combination,
or (B) a shareholder vote to approve an amendment to the Articles to modify 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 Articles or with respect to any other material provisions relating to shareholders’ rights or pre-initial
business combination activity or in the context of a tender offer made by the Company to purchase Offering Shares (although the
Sponsor, the Insiders and their respective affiliates shall be entitled to redemption and liquidation rights with respect to any
Offering Shares it or they hold if the Company fails to consummate a Business Combination within the time period set forth in the
Articles).


 






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		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 Ordinary Shares (including, but not limited to, Founder Shares) or any securities convertible into, or
exercisable, or exchangeable for, Ordinary Shares owned by it, him or her, (ii) enter into any swap or other arrangement that transfers
to another, in whole or in part, any of the economic consequences of ownership of any Ordinary Shares (including, but not limited to,
Founder Shares) or any securities convertible into, or exercisable, or exchangeable for, Ordinary Shares owned by it, him or her, whether
any such transaction is to be settled by delivery of such securities, in cash or otherwise, or (iii) publicly announce any intention to
effect any transaction specified in clause (i) or (ii); provided, however, that the foregoing does not apply to the forfeiture of any
Founder Shares pursuant to their terms or any transfer of Founder Shares to any current or future independent director of the company
(as long as such current or future independent director transferee is subject to this Letter Agreement or executes an agreement substantially
identical to the terms of this Letter Agreement, as applicable to directors and officers at the time of such transfer; and as long as,
to the extent any Section 16 reporting obligation is triggered as a result of such transfer, any related Section 16 filing includes a
practical explanation as to the nature of the 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 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. Notwithstanding the foregoing, nothing in this Section 3 will prohibit (1)
the issuance and sale of Private Placement Shares (as defined below), (2) the issuance and sale of any Shares in the Public Offering,
including any Shares issued and sold to cover over-allotments, if any, (3) the registration with the SEC pursuant to an agreement to be
entered into concurrently with the execution of this Agreement, the resale of the Private Placement Shares and the Founder Shares and
(4) issuance of securities in connection with a Business Combination.



 






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		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 Articles, the Sponsor (the “Indemnitor”) agrees to indemnify and hold
harmless the Company against any and all loss, liability, claim, damage and expense whatsoever (including, but not limited to, any and
all legal or other expenses reasonably incurred in investigating, preparing or defending against any litigation, whether pending or threatened)
to which the Company may become subject as a result of any claim by (i) any third party for services rendered or products sold to the
Company or (ii) any prospective target business with which the Company has entered into a written letter of intent, confidentiality or
other similar agreement or Business Combination agreement (a “Target”); provided, however, that
such indemnification of the Company by the Indemnitor (x) shall apply only to the extent necessary to ensure that such claims by a third
party or a Target do not reduce the amount of funds in the Trust Account to below the lesser of (i) $10.00 per Offering Share and (ii)
the actual amount per Offering Share held in the Trust Account as of the date of the liquidation of the Trust Account, if less than $10.00
per Offering Share is then held in the Trust Account due to reductions in the value of the trust assets, less taxes payable, (y) shall
not apply to any claims by a third party or a Target which executed a waiver of any and all rights to the monies held in the Trust Account
(whether or not such waiver is enforceable) and (z) shall not apply to any claims under the Company’s indemnity of the Underwriters
against certain liabilities, including liabilities under the Securities Act of 1933, as amended. The Indemnitor shall have the right to
defend against any such claim with counsel of its choice reasonably satisfactory to the Company if, within 15 days following written receipt
of notice of the claim to the Indemnitor, the Indemnitor notifies the Company in writing that it shall undertake such defense.



 


		5.	To the extent that the Underwriters do not exercise their over-allotment option to purchase up to an additional 3,750,000 Shares 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 937,500 multiplied by a fraction, (i) the numerator of which is 3,750,000 minus the number
of Shares purchased by the Underwriters upon the exercise of their over-allotment option, and (ii) the denominator of which is 3,750,000.
The forfeiture will be adjusted to the extent that the over-allotment option is not exercised in full by the Underwriters so that the
Founder Shares will represent an aggregate of 20.0% of the Company’s issued and outstanding Class A Ordinary Shares after the Public
Offering (not including the Private Placement Shares (as defined below)). The Sponsor further agrees that to the extent that the size
of the Public Offering is increased or decreased, the Company will purchase or sell Shares or effect a share repurchase or share capitalization,
as applicable, immediately prior to the consummation of the Public Offering in such amount as to maintain the ownership of the Initial
Shareholders prior to the Public Offering at 20.0% of its issued and outstanding Capital Shares upon the consummation of the Public Offering.
In connection with such increase or decrease in the size of the Public Offering, then (A) the references to 3,750,000 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 Public Shares issued in the Public Offering and (B) the reference to 937,500 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 surrender to the Company in order for the Initial Shareholders to hold an aggregate of 20.0% of the Company’s issued and outstanding
Class A Ordinary Shares after the Public Offering (not including Private Placement Shares).



 






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		6.	The Sponsor and each Insider hereby agrees and acknowledges that: (i) the Underwriters and the Company would be irreparably injured
in the event of a breach by such Sponsor or an Insider of its, his or her obligations under paragraphs 1, 2, 3, 4, 5, 7(a), and 7(b),
as applicable, of this Letter Agreement (ii) monetary damages may not be an adequate remedy for such breach and (iii) the non-breaching
party shall be entitled to injunctive relief, in addition to any other remedy that such party may have in law or in equity, in the event
of such breach.



 


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



 


		 	(b)   The Sponsor and each Insider agrees that it, he or she shall
not Transfer any Private Placement Shares, until 30 days after the completion of a Business Combination (the “Private Placement
Shares 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 7(a)
and (b), Transfers of the Founder Shares, Private Placement Shares or the Founder Shares that are held by the Sponsor, any Insider or
any of their permitted transferees (that have complied with this paragraph 7(c)), are permitted (a) to the Company’s officers or
directors, any affiliates or family members of any of the Company’s officers or directors, to the Sponsor, any members or partners
of the Sponsor or their affiliates, or any affiliates 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 any forward purchase agreement or similar arrangement or in connection with the consummation of an initial Business
Combination at prices no greater than the price at which the securities were originally purchased; (f) by virtue of the laws of the Cayman
Islands or the Sponsor’s limited liability company agreement upon dissolution of the Sponsor; (g) to the Company for no value for
cancellation in connection with the consummation of a Business Combination; (h) in the event of the Company’s liquidation prior
to the consummation of a Business Combination; or (i) in the event of the Company’s liquidation, merger, share exchange or other
similar transaction which results in all of the Company’s shareholders having the right to exchange their Class A Ordinary Shares
for cash, securities or other property subsequent to the Company’s completion of an initial Business Combination; provided,
however, that in the case of clauses (a) through (f), these permitted transferees must enter into a written agreement with the
Company agreeing to be bound by the transfer restrictions herein and the other restrictions contained in this Agreement (including provisions
relating to voting, the Trust Account and liquidating distributions).



 


		8.	The Sponsor and each Insider represents and warrants that it, he or she has never been suspended or expelled from membership in any
securities or commodities exchange or association or had a securities or commodities license or registration denied, suspended or revoked.
Each Insider’s biographical information furnished to the Company (including any such information included in the Prospectus) is
true and accurate in all respects and does not omit any material information with respect to the Insider’s background. The Sponsor
and each Insider’s questionnaire furnished to the Company is true and accurate in all respects. The Sponsor and each Insider represents
and warrants that: it, he or she is not subject to or a respondent in any legal action for, any injunction, cease-and-desist order or
order or stipulation to desist or refrain from any act or practice relating to the offering of securities in any jurisdiction; it, he
or she has never been convicted of, or pleaded guilty to, any crime (i) involving fraud, (ii) relating to any financial transaction or
handling of funds of another person, or (iii) pertaining to any dealings in any securities and it, he or she is not currently a defendant
in any such criminal proceeding.



 


		9.	Except as disclosed in the Prospectus, neither the Sponsor nor any officer, nor any affiliate of the Sponsor or any officer, nor any
director of the Company, shall receive from the Company any finder’s fee, reimbursement, consulting fee, non-cash payments, monies
in respect of any repayment of a loan or other compensation prior to, or in connection with any services rendered in order to effectuate,
the consummation of the Company’s initial Business Combination (regardless of the type of transaction that it is), other than the
following, none of which will be made from the proceeds held in the Trust Account prior to the completion of the initial Business Combination:
repayment of a loan and advances up to an aggregate of $300,000 made to the Company by the Sponsor; payment of up to $17,500 per month, for up to 24 months, for
office space and professional, secretarial, administrative and support services; reimbursement for any reasonable out-of-pocket expenses
related to identifying, investigating, negotiating and completing an initial Business Combination, and repayment of loans, if any, and
on such terms as to be determined by the Company from time to time, made by the Sponsor or an affiliate of the Sponsor or any of the Company’s
officers or directors to finance transaction costs in connection with an intended initial Business Combination, provided, that, if the
Company does not consummate an initial Business Combination, a portion of the working capital held outside the Trust Account may be used
by the Company to repay such loaned amounts so long as no proceeds from the Trust Account are used for such repayment. Up to $1,500,000
of such loans may be convertible into shares at a price of $10.00 per share at the option of the lender. Such shares would be identical
to the Private Placement Shares.



 






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		10.	The Sponsor and each Insider has full right and power, without violating any agreement to which it is bound (including, without limitation,
any non-competition or non-solicitation agreement with any employer or former employer), to enter into this Letter Agreement and, as applicable,
to serve as an officer and/or director on the board of directors of the Company and hereby consents to being named in the Prospectus as
an officer and/or director of the Company.



 


		11.	As used herein, (i) “Business Combination” shall mean a merger, share exchange, asset acquisition, share
purchase, reorganization or similar business combination, involving the Company and one or more businesses; (ii) “Ordinary
Shares” shall mean the Class A ordinary shares and Class B ordinary shares; (iii) “Founder Shares”
shall mean the 7,187,500 Class B ordinary shares issued and outstanding (up to 937,500 Shares of which are subject to complete or partial
forfeiture if the over-allotment option is not exercised by the Underwriters); (iv) “Initial Shareholders” shall
mean the Sponsor and any Insider that holds Founder Shares; (v) “Private Placement Shares” shall mean the up
to 857,000 shares (or up to 932,000 shares if the over-allotment option is exercised in full) that the Sponsor has agreed to purchase
for an aggregate purchase price of $8,570,000 (or $9,320,000 if the over-allotment option is exercised in full), or $10.00 per Share,
in a private placement that shall occur simultaneously with the consummation of the Public Offering; (vi) “Public Shareholders”
shall mean the holders of securities issued in the Public Offering; (vii) “Trust Account” shall mean the trust
fund into which a portion of the net proceeds of the Public Offering and the sale of the Private Placement Shares shall be deposited;
(viii) “Transfer” shall mean the (a) sale of, offer to sell, contract or agreement to sell, hypothecate, pledge,
grant of any option to purchase or otherwise dispose of or agreement to dispose of, directly or indirectly, or establishment or increase
of a put equivalent position or liquidation with respect to or decrease of a call equivalent position within the meaning of Section 16
of the Exchange Act, and the rules and regulations of the Commission promulgated thereunder with respect to, any security, (b) entry into
any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any security,
whether any such transaction is to be settled by delivery of such securities, in cash or otherwise, or (c) public announcement of any
intention to effect any transaction specified in clause (a) or (b); and (ix) “Shares” shall mean the Private
Placement Shares and public shares.



 






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



 


		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.



 






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		18.	This Letter Agreement shall be governed by and construed and enforced in accordance with the laws of the State of New York. The parties
hereto (i) all agree that any action, proceeding, claim or dispute arising out of, or relating in any way to, this Letter Agreement shall
be brought and enforced in the courts of New York City or 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.	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, and no party shall be liable or responsible for the obligations of another party, including, without limitation,
indemnification obligations and notice obligations.



 


		21.	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,
	 	 
	 	FIFTH WALL ACQUISITION SPONSOR
    III LLC
	 	 
	 	 
	 	By:	                  
	 	 	Name:  Brendan Wallace
	 	 	Title:    Manager




 


	Acknowledged and Agreed:	 
	 	 
	FIFTH WALL ACQUISITION CORP.
    III	 
	 	 
	 	 
	By:	              	 
	 	Name:  Brendan Wallace	 
	 	Title:    Chief Executive Officer	 




 


	 	 
	 	 
	Brendan Wallace	 
	 	 
	 	 
	Andriy Mykhaylovskyy	 
	 	 
	 	 
	Adeyemi Ajao	 
	 	 
	 	 
	Alana Beard	 
	 	 
	 	 
	Poonam Sharma Mathis	 
	 	 
	 	 
	Amanda Parness	 




 


[Signature Page to Letter
Agreement]