Document:

Exhibit 4.6

 

RIGHTS AGREEMENT

 

This Rights Agreement (this
 “Agreement”) is made as of [●], 2022 between Monterey Capital Acquisition Corporation, a Delaware corporation
(the “Company”), and Continental Stock Transfer & Trust Company, a New York corporation (the “Rights
Agent”).

 

WHEREAS, the Company has received
a firm commitment from EF Hutton, division of Benchmark Investments, LLC. (“EF Hutton”), as representative of
the several underwriters, to purchase up to an aggregate of 10,000,000 units (including up to 1,500,000 additional units if the underwriters’
over-allotment option is exercised in full), each unit (“Unit”) comprised of one share of Class A common
stock of the Company, $0.0001 par value (the “Class A Common Stock”), one redeemable warrant entitling
the holder thereof to purchase one share of Class A Common Stock (“Public Warrants”), and one right to
receive one-tenth (1/10) of one Class A Common Stock (a “Public Right”) upon the happening of the triggering
event described herein, and in connection therewith, will issue and deliver up to an aggregate of 11,500,000 Public Rights upon consummation
of such public offering, 1,500,000 of which are attributable to the over-allotment option (“Public Offering”);

 

WHEREAS, on [●], 2022,
the Company entered into certain Private Placement Warrant Subscription Purchase Agreement with Monterrey Acquisition Sponsor, LLC (the
 “Sponsor”), pursuant to which the Sponsor agreed to purchase an aggregate of 3,200,000 Private Placement Warrants (or 3,500,000
Private Placement Warrants if the over-allotment option is exercised in full by the Underwriters) simultaneously with the closing of the
Public Offering at a purchase price of $1.00 per Warrant and in connection therewith, will issue and deliver up to an aggregate of 3,200,000
rights (or 3,500,000 if the over-allotment option is exercised in full by the Underwriters);

 

WHEREAS, the Company has filed
with the Securities and Exchange Commission (the “SEC”) a Registration Statement on Form S-1, File No. 333-[●]
(“Registration Statement”), for the registration, under the Securities Act of 1933, as amended (“Act”)
of, among other securities, the Units, Public Warrants, Public Rights, representative shares (“Representative Shares”),
and the Class A Common Stock issuable to the holders of the Units, Public Rights and Public Warrants;

 

WHEREAS, the Company desires
the Rights Agent to act on behalf of the Company, and the Rights Agent is willing to so act, in connection with the issuance, registration,
transfer and exchange of the Rights;

 

WHEREAS, the Company desires
to provide for the form and provisions of the Rights, the terms upon which they shall be issued, and the respective rights, limitation
of rights, and immunities of the Company, the Rights Agent, and the holders of the Rights; and

 

WHEREAS, all acts and things
have been done and performed which are necessary to make the Rights, when executed on behalf of the Company and countersigned by or on
behalf of the Rights Agent, as provided herein, the valid, binding and legal obligations of the Company, and to authorize the execution
and delivery of this Agreement.

 

     

     

    

 

NOW, THEREFORE, in consideration
of the mutual agreements herein contained, the parties hereto agree as follows:

 

1.            Appointment
of Rights Agent. The Company hereby appoints the Rights Agent to act as agent for the Company for the Rights, and the Rights Agent
hereby accepts such appointment and agrees to perform the same in accordance with the terms and conditions set forth in this Agreement.

 

2.            Rights.

 

2.1            Form of
Right. Each Right shall be issued in registered form only, shall be in substantially the form of Exhibit A hereto, the
provisions of which are incorporated herein and shall be signed by, or bear the facsimile signature of, the Chairman of the Board or Chief
Executive Officer and Treasurer, Secretary or Assistant Secretary of the Company and shall bear a facsimile of the Company’s seal.
In the event the person whose facsimile signature has been placed upon any Right shall have ceased to serve in the capacity in which such
person signed the Right before such Right is issued, it may be issued with the same effect as if he or she had not ceased to be such at
the date of issuance.

 

2.2            Effect
of Countersignature. Unless and until countersigned by the Rights Agent pursuant to this Agreement, a Right shall be invalid and of
no effect and may not be exchanged for Class A Common Stock.

 

2.3            Registration.

 

 2.3.1            Right
Register. The Rights Agent shall maintain books (“Right Register”) for the registration of original issuance
and the registration of transfer of the Rights. Upon the initial issuance of the Rights, the Rights Agent shall issue and register the
Rights in the names of the respective holders thereof in such denominations and otherwise in accordance with instructions delivered to
the Rights Agent by the Company.

 

  2.3.2            Registered
Holder. Prior to due presentment for registration of transfer of any Right, the Company and the Rights Agent may deem and treat
the person in whose name such Right shall be registered upon the Right Register (“registered holder”) as
the absolute owner of such Right and of each Right represented thereby (notwithstanding any notation of ownership or other writing
on the Right Certificate made by anyone other than the Company or the Rights Agent), for the purpose of the exchange thereof, and
for all other purposes, and neither the Company nor the Rights Agent shall be affected by any notice to the contrary.

 

2.4            Detachability
of Rights. The securities comprising the Units, including the Rights, will not be separately transferable until the ninetieth (90th)
day after the date hereof unless EF Hutton informs the Company of its decision to allow earlier separate trading, but in no event will
separate trading of the securities comprising the Units begin until (i) the Company files a Current Report on Form 8-K which
includes an audited balance sheet reflecting the receipt by the Company of the gross proceeds of the Public Offering including the proceeds
received by the Company from the exercise of the over-allotment option, if the over-allotment option is exercised on the date hereof,
and (ii) the Company issues a press release and files a Current Report on Form 8-K announcing when such separate trading shall
begin.

 

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3.            Terms
and Exchange of Rights.

 

3.1            Rights.
Each Right shall entitle the holder thereof to receive one-tenth of one share of Class A Common Stock upon the happening of the Exchange
Event (described below). Subject to Section 3.3.1 below with respect to the registered holders of Rights, in the event that the Company
is not the surviving entity immediately following the Exchange Event, holders of Rights shall automatically receive the kind and amount
of securities or properties of the surviving entity as the holders of each one-tenth of one share of Class A Common Stock is entitled
to receive in the Exchange Event. No additional consideration shall be paid by a holder of Rights in order to receive his, her or its
shares of Class A Common Stock upon the Exchange Event as the purchase price for such shares of Class A Common Stock has been
included in the purchase price for the Units. In no event will the Company be required to net cash settle the Rights or issue fractional
shares of Class A Common Stock.

 

3.2            Exchange
Event. The Exchange Event shall be the Company’s consummation of an initial Business Combination (as defined in the Company’s
Certificate of Incorporation and all amendments thereto).

 

3.3            Exchange
of Rights.

 

3.3.1            Issuance
of Certificates. As soon as practicable upon the occurrence of the Exchange Event, the Company shall direct registered holders of
the Rights to return their Rights Certificates to the Rights Agent. Upon receipt of a valid Rights Certificate, the Company shall issue
to the registered holder of such Right(s) a certificate or certificates for the number of full Class A Common Stock to which
he, she or it is entitled, registered in such name or names as may be directed by him, her or it; provided that in the event that the
Company is not the surviving entity following the Exchange Event, the Company shall notify the registered holders of Rights at least two
business days prior to the occurrence of the Exchange Event and the registered holders of Rights shall have the right to receive the kind
and amount of securities or properties of the surviving entity pursuant to Section 3.3.4 of this Agreement provided that they affirmatively
elect to such conversion. Notwithstanding the foregoing, or any provision contained in this Agreement to the contrary, in no event will
the Company be required to net cash settle the Rights. The Company shall not issue fractional Class A Common Stock upon exchange
of Rights. At the time of the Exchange Event, the Company will instruct the Rights Agent to round down to the nearest whole Class A
Common Stock.

 

3.3.2            Valid
Issuance. All shares of Class A Common Stock issued upon an Exchange Event in conformity with this Agreement and the Amended
and Restated Certificate of Incorporation of the Company shall be validly issued, fully paid and nonassessable.

 

3.3.3            Date
of Issuance. Each person in whose name any such certificate for Class A Common Stock is issued shall for all purposes be deemed
to have become the holder of record of such shares on the date of the Exchange Event, irrespective of the date of delivery of such certificate.

 

3.3.4            Company
Not Surviving Following Exchange Event. If the Exchange Event results in the Company is not the surviving entity, the definitive agreement
will provide for the holders of Rights to receive the same kind and amount of securities or properties of the surviving entity as the
holders of the Class A Common Stock will receive in with the Exchange Event, for the number of shares of Class A Common Stock
such holder is entitled to pursuant to Section 3.3.1 above.

 

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3.4            Duration
of Rights. If the Exchange Event does not occur within the time period as described in the Company’s Memorandum and Articles
of Association and all amendments thereto, and such Business Combination has not yet been consummated within the applicable time period,
the Rights shall expire and shall be worthless.

 

4.            Transfer
and Exchange of Rights.

 

4.1            Registration
of Transfer. The Rights Agent shall register the transfer, from time to time, of any outstanding Right upon the Right Register, upon
surrender of such Right for transfer, properly endorsed with signatures properly guaranteed and accompanied by appropriate instructions
for transfer. Upon any such transfer, a new Right representing an equal aggregate number of Rights shall be issued and the old Right
shall be cancelled by the Rights Agent. The Rights so cancelled shall be delivered by the Rights Agent to the Company from time to time
upon request.

 

4.2            Procedure
for Surrender of Rights. Rights may be surrendered to the Rights Agent, together with a written request for exchange or transfer,
and thereupon the Rights Agent shall issue in exchange therefor one or more new Rights as requested by the registered holder of the Rights
so surrendered, representing an equal aggregate number of Rights; provided, however, that in the event that a Right surrendered for transfer
bears a restrictive legend, the Rights Agent shall not cancel such Right and issue new Rights in exchange therefor until the Rights Agent
has received an opinion of counsel for the Company stating that such transfer may be made and indicating whether the new Rights must also
bear a restrictive legend.

 

4.3            Fractional
Rights. The Rights Agent will not issue fractional shares in connection with an exchange or transfer of rights. Fractional shares
will either be rounded down to the nearest whole share or otherwise addressed in accordance with the applicable provisions of the Delaware
General Corporations Law. As a result, you must hold rights in multiples of 10 in order to receive shares for all of your rights upon
closing of a business combination.

 

4.4            Service
Charges. No service charge shall be made for any exchange or registration of transfer of Rights.

 

4.5            Adjustments
to Conversion Ratios. The number of shares of Class A Common Stock that the holders of Rights are entitled to receive as a result
of the occurrence of an Exchange Event shall be equitably adjusted to reflect appropriately the effect of any stock split, reverse stock
split, stock dividend, reorganization, recapitalization, reclassification, combination, exchange of stock or other like change with respect
to the Class A Common Stock occurring on or after the date hereof and prior to the Exchange Event.

 

4.6            Right
Execution and Countersignature. The Rights Agent is hereby authorized to countersign and to deliver, in accordance with the terms
of this Agreement, the Rights required to be issued pursuant to the provisions of this Section 4, and the Company, whenever
required by the Rights Agent, will supply the Rights Agent with Rights duly executed on behalf of the Company for such purpose.

 

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5.            Other
Provisions Relating to Rights of Holders of Rights.

 

5.1            No
Rights as Stockholder. Until exchange of a Right for Class A Common Stock as provided for herein, a Right does not entitle the
registered holder thereof to any of the rights of a stockholder of the Company, including, without limitation, the right to receive dividends,
or other distributions, exercise any preemptive rights to vote or to consent or to receive notice as stockholders in respect of the meetings
of stockholders or the election of directors of the Company or any other matter.

 

5.2            Lost,
Stolen, Mutilated, or Destroyed Rights. If any Right is lost, stolen, mutilated, or destroyed, the Company and the Rights Agent may
on such terms as to indemnity or otherwise as they may in their discretion impose (which shall, in the case of a mutilated Right, include
the surrender thereof), issue a new Right of like denomination, tenor, and date as the Right so lost, stolen, mutilated, or destroyed.
Any such new Right shall constitute a substitute contractual obligation of the Company, whether or not the allegedly lost, stolen, mutilated,
or destroyed Right shall be at any time enforceable by anyone.

 

5.3            Reservation
of Class A Common Stock. The Company shall at all times reserve and keep available a number of its authorized but unissued shares
of Class A Common Stock that will be sufficient to permit the exchange of all outstanding Rights issued pursuant to this Agreement.

 

6.            Concerning
the Rights Agent and Other Matters.

 

6.1            Payment
of Taxes. The Company will from time to time promptly pay all taxes and charges that may be imposed upon the Company or the Rights
Agent in respect of the issuance or delivery of shares of Class A Common Stock upon the exchange of Rights, but the Company shall
not be obligated to pay any transfer taxes in respect of the Rights or such shares.

 

6.2            Resignation,
Consolidation, or Merger of Rights Agent.

 

 6.2.1           Appointment
of Successor Rights Agent. The Rights Agent, or any successor to it hereafter appointed, may resign its duties and be discharged
from all further duties and liabilities hereunder after giving sixty (60) days’ notice in writing to the Company. If the office
of the Rights Agent becomes vacant by resignation or incapacity to act or otherwise, the Company shall appoint in writing a successor
Rights Agent in place of the Rights Agent. If the Company shall fail to make such appointment within a period of 30 days after it has
been notified in writing of such resignation or incapacity by the Rights Agent or by the holder of the Right (who shall, with such notice,
submit his, her or its Right for inspection by the Company), then the holder of any Right may apply to the Supreme Court of the State
of New York for the County of New York for the appointment of a successor Rights Agent at the Company’s cost. Any successor Rights
Agent, whether appointed by the Company or by such court, shall be a corporation organized and existing under the laws of the State of
New York, in good standing and having its principal office in the Borough of Manhattan, City and State of New York, and authorized under
such laws to exercise corporate trust powers and subject to supervision or examination by federal or state authority. After appointment,
any successor Rights Agent shall be vested with all the authority, powers, rights, immunities, duties, and obligations of its predecessor
Rights Agent with like effect as if originally named as Rights Agent hereunder, without any further act or deed; but if for any reason
it becomes necessary or appropriate, the predecessor Rights Agent shall execute and deliver, at the expense of the Company, an instrument
transferring to such successor Rights Agent all the authority, powers, and rights of such predecessor Rights Agent hereunder; and upon
request of any successor Rights Agent the Company shall make, execute, acknowledge, and deliver any and all instruments in writing for
more fully and effectually vesting in and confirming to such successor Rights Agent all such authority, powers, rights, immunities, duties,
and obligations.

 

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 6.2.2           Notice
of Successor Rights Agent. In the event a successor Rights Agent shall be appointed, the Company shall give notice thereof to the
predecessor Rights Agent and the transfer agent for the Class A Common Stock not later than the effective date of any such appointment.

 

 6.2.3           Merger
or Consolidation of Rights Agent. Any corporation into which the Rights Agent may be merged or with which it may be consolidated
or any corporation resulting from any merger or consolidation to which the Rights Agent shall be a party shall be the successor Rights
Agent under this Agreement without any further act.

 

6.3            Fees
and Expenses of Rights Agent.

 

 6.3.1           Remuneration.
The Company agrees to pay the Rights Agent reasonable remuneration for its services as such Rights Agent hereunder and will reimburse
the Rights Agent upon demand for all expenditures that the Rights Agent may reasonably incur in the execution of its duties hereunder.

 

6.3.2            Further
Assurances. The Company agrees to perform, execute, acknowledge, and deliver or cause to be performed, executed, acknowledged, and
delivered all such further and other acts, instruments, and assurances as may reasonably be required by the Rights Agent for the carrying
out or performing of the provisions of this Agreement.

 

6.4            Liability
of Rights Agent.

 

6.4.1            Reliance
on Company Statement. Whenever in the performance of its duties under this Agreement, the Rights Agent shall deem it necessary or
desirable that any fact or matter be proved or established by the Company prior to taking or suffering any action hereunder, such fact
or matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established
by a statement signed by the Chief Executive Officer or Chief Financial Officer and delivered to the Rights Agent. The Rights Agent may
rely upon such statement for any action taken or suffered in good faith by it pursuant to the provisions of this Agreement.

 

6.4.2            Indemnity.
The Rights Agent shall be liable hereunder only for its own gross negligence, willful misconduct or bad faith. Subject to Section 6.6,
the Company agrees to indemnify the Rights Agent and save it harmless against any and all liabilities, including judgments, costs and
reasonable counsel fees, for anything done or omitted by the Rights Agent in the execution of this Agreement except as a result of the
Rights Agent’s gross negligence, willful misconduct, or bad faith.

 

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 6.4.3           Exclusions.
The Rights Agent shall have no responsibility with respect to the validity of this Agreement or with respect to the validity or execution
of any Right (except its countersignature thereof); nor shall it be responsible for any breach by the Company of any covenant or condition
contained in this Agreement or in any Right; nor shall it by any act hereunder be deemed to make any representation or warranty as to
the authorization or reservation of any shares of Class A Common Stock to be issued pursuant to this Agreement or any Right or as
to whether any shares of Class A Common Stock will, when issued, be valid and fully paid and nonassessable.

 

6.5            Acceptance
of Agency. The Rights Agent hereby accepts the agency established by this Agreement and agrees to perform the same upon the terms
and conditions herein set forth.

 

6.6            Waiver.
The Rights Agent hereby waives any right of set-off or any other right, title, interest or claim of any kind (“Claim”)
in, or to any distribution of, the Trust Account (as defined in that certain Investment Management Trust Agreement, dated as of the date
hereof, by and between the Company and the Rights Agent as trustee thereunder) and hereby agrees not to seek recourse, reimbursement,
payment or satisfaction for any Claim against the Trust Account for any reason whatsoever.

 

7.            Miscellaneous
Provisions.

 

7.1            Successors.
All the covenants and provisions of this Agreement by or for the benefit of the Company or the Rights Agent shall bind and inure to the
benefit of their respective successors and assigns.

 

7.2            Notices.
Any notice, statement or demand authorized by this Agreement to be given or made by the Rights Agent or by the holder of any Right to
or on the Company shall be sufficiently given when so delivered if by hand or overnight delivery or if sent by certified mail or private
courier service within five days after deposit of such notice, postage prepaid, addressed (until another address is filed in writing by
the Company with the Rights Agent), as follows:

 

Monterey Capital Acquisition Corporation

419 Webster Street

Monterey, California 93940

Attn: Bala Padmakumar

 

Any notice, statement or demand
authorized by this Agreement to be given or made by the holder of any Right or by the Company to or on the Rights Agent shall be sufficiently
given when so delivered if by hand or overnight delivery or if sent by certified mail or private courier service within five days after
deposit of such notice, postage prepaid, addressed (until another address is filed in writing by the Rights Agent with the Company), as
follows:

 

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Continental Stock Transfer &
Trust Company One State Street, 30th Floor New York, NY 10004 Attn: Compliance Department

 

and

 

Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C.

One Financial Center

Boston, MA 02111

Attn: Thomas R. Burton, III, Esq.,
and Jeffrey P. Schultz

 

and

 

EF Hutton, division of Benchmark Investments,
LLC

590 Madison Avenue,
39th Floor

New York, NY 10022

Attn.: [_____]

 

and

 

Seward & Kissel LLP

One Battery Park Plaza

New York, New York, 10004

Attn: Keith J. Billotti, Esq.

 

7.3            Applicable
Law. The validity, interpretation, and performance of this Agreement and of the Rights shall be governed in all respects by 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 Company hereby agrees that any action, proceeding or claim against it arising out of or relating in
any way to this Agreement shall be brought and enforced in the courts of the State of New York or the United States District Court for
the Southern District of New York, and irrevocably submits to such jurisdiction, which jurisdiction shall be exclusive. The Company hereby
waives any objection to such exclusive jurisdiction and that such courts represent an inconvenient forum. Any such process or summons
to be served upon the Company may be served by transmitting a copy thereof by registered or certified mail, return receipt requested,
postage prepaid, addressed to it at the address set forth in Section 7.2 hereof. Such mailing shall be deemed personal service and
shall be legal and binding upon the Company in any action, proceeding or claim.

 

7.4            Persons
Having Rights under this Agreement. Nothing in this Agreement expressed and nothing that may be implied from any of the provisions
hereof is intended, or shall be construed, to confer upon, or give to, any person or corporation other than the parties hereto and the
registered holders of the Rights and, any right, remedy, or claim under or by reason of this Agreement or of any covenant, condition,
stipulation, promise, or agreement hereof. All covenants, conditions, stipulations, promises, and agreements contained in this Agreement
shall be for the sole and exclusive benefit of the parties hereto and their successors and assigns and of the registered holders of the
Rights.

 

7.5            Examination
of this Agreement. A copy of this Agreement shall be available at all reasonable times at the office of the Rights Agent in the Borough
of Manhattan, City and State of New York, for inspection by the registered holder of any Right. The Rights Agent may require any such
holder to submit his, her or its Right for inspection by it.

 

    8 

     

    

 

7.6            Counterparts.
This 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.

 

7.7            Effect
of Headings. The Section headings herein are for convenience only and are not part of this Agreement and shall not affect the
interpretation thereof.

 

7.8            Amendments.
This Agreement may be amended by the parties hereto without the consent of any registered holder for the purpose of curing any ambiguity,
or of curing, correcting or supplementing any defective provision contained herein or adding or changing any other provisions with respect
to matters or questions arising under this Agreement as the parties may deem necessary or desirable and that the parties deem shall not
adversely affect the interest of the registered holders. All other modifications or amendments shall require the written consent or vote
of the registered holders of a majority of the then outstanding Rights. The provisions of Section 3, Section 7.4 and this Section 7.8
may not be modified, amended or deleted without the prior written consent of EF Hutton.

 

7.9            Severability.
This 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 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 Agreement a provision as similar in terms to
such invalid or unenforceable provision as may be possible and be valid and enforceable.

 

[Signature Page Follows]

 

    9 

     

    

 

IN WITNESS WHEREOF, this Agreement
has been duly executed by the parties hereto as of the day and year first above written.

 

	 	MONTEREY CONTINENTAL ACQUISITION CORPORATION
	 	 
	 	By:	 
	 	 	Name: Bala Padmakumar
	 	 	Title: Chief Executive Officer

 

	 	CONTINENTAL STOCK TRANSFER &
TRUST COMPANY
	 	 
	 	By:	                        
	 	 	Name:
	 	 	Title:

 

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EXHIBIT A

 

		[●]
                            NUMBER	RIGHTS

 

MONTEREY CAPITAL ACQUISITION CORPORATION.

INCORPORATED UNDER THE LAWS OF THE STATE OF
DELAWARE

RIGHT

 

SEE REVERSE FOR

CERTAIN DEFINITIONS

CUSIP

 

THIS
CERTIFIES THAT, for value received [                                   ] is the registered holder of a right or rights (the “Right”)
to automatically receive one-tenth of one share of Class A common stock, $0.0001 par value (“Class A Common Stock”),
of Monterey Capital Acquisition Corporation (the “Company”) for each Right evidenced by this Rights Certificate
on the Company’s completion of an initial business combination (as defined in the prospectus relating to the Company’s initial
public offering (“Prospectus”)) upon surrender of this Right Certificate pursuant to the Rights Agreement between
the Company and Continental Stock Transfer & Trust Company, as Rights Agent. In no event will the Company be required to net
cash settle any Right.

 

Upon liquidation of the Company
in the event an initial business combination is not consummated during the required period as identified in the Company’s Amended
and Restated Certificate of Incorporation, the Right shall expire and be worthless. As more fully described in the Prospectus, the holder
of a Right shall have no right or interest of any kind in the Company’s trust account (as defined in the Prospectus) established
in connection with the Company’s initial public offering.

 

Upon due presentment for registration
of transfer of the Right Certificate at the office or agency of the Rights Agent, a new Right Certificate or Right Certificates of like
tenor and evidencing in the aggregate a like number of Rights shall be issued to the transferee in exchange for this Right Certificate,
without charge except for any applicable tax or other governmental charge. The Company shall not issue fractional shares of Class A
Common Stock upon exchange of Rights. The Company reserves the right to deal with any fractional entitlement at the relevant time in any
manner (as provided in the Rights Agreement).

 

The Company and the Right
Agent may deem and treat the registered holder as the absolute owner of this Right Certificate (notwithstanding any notation of ownership
or other writing hereon made by anyone), for the purpose of any conversion hereof, of any distribution to the registered holder, and for
all other purposes, and neither the Company nor the Right Agent shall be affected by any notice to the contrary.

 

This Right does not entitle
the registered holder to any of the rights of a stockholder of the Company.

 

Dated:

 

		CHAIRMAN	 	CHIEF FINANCIAL
OFFICER

 

The following abbreviations, when used in the inscription
on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations:

 

	TEN COM       -
as tenants in common	UNIF
GIFT MIN ACT	-____________	Custodian	 
	 	 	 (Cust) 	 	(Minor)

 

	TEN ENT       - as tenants by the entireties		under Uniform Gifts to Minors Act
	 	 	(State)
	JT TEN            - as joint tenants with right of survivorship and not as tenants in common	 

 

Additional Abbreviations may also be used though
not in the above list.

 

     

     

    

 

Monterey Capital Acquisition Corporation

 

The Company will furnish without
charge to each stockholder who so requests the powers, designations, preferences and relative, participating, optional or other special
rights of each class of shares or series thereof of the Company and the qualifications, limitations, or restrictions of such preferences
and/or rights. This certificate and the rights represented thereby are issued and shall be held subject to all the provisions of the Amended
and Restated Certificate of Incorporation and all amendments thereto and resolutions of the Board of Directors providing for the issue
of Class A Common Stock (copies of which may be obtained from the secretary of the Company), to all of which the holder of this certificate
by acceptance hereof assents.

 

	 	For value received,		  hereby sell, assign and transfer unto

 

PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE

		 	 
	 	 	 

 

(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING
ZIP CODE, OF ASSIGNEE)

		 	 
	 	 	 

 

Rights represented by the within Certificate, and do hereby irrevocably
constitute and appoint

 

Attorney to transfer said rights on the books of the within named
Company will full power of substitution in the premises.

 

Dated

		 	 	Notice:	The signature to this assignment must correspond with the name as written upon the face of the certificate
in every particular, without alteration or enlargement or any change whatever.

 

Signature(s) Guaranteed:

		 	 
	 	 	 

 

THE SIGNATURE(S) SHOULD
BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP
IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM, PURSUANT TO S.E.C. RULE 17Ad-15).

 

The holder of this certificate
shall have no right or interest of any kind in or to the funds held in the Company’s trust account (as defined in the Prospectus).Exhibit 10.1

 

[____________], 2022

 

Monterey Capital Acquisition Corporation

419 Webster Street

Monterey, CA 93940

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 Monterey Capital Acquisition Corporation, a Delaware corporation (the “Company”),
and EF Hutton, division of Benchmark Investments, LLC, as representative (the “Representative”) of the several
underwriters (each, an “Underwriter” and collectively, the “Underwriters”), relating
to an underwritten initial public offering (the “Public Offering”), of 11,500,000 of the Company’s units
(including up to 1,500,000 units that may be purchased to cover over-allotments, if any) (the “Units”), each
comprised of one share of the Company’s Class A common stock, par value $0.0001 per share (the “Common Stock”),
one redeemable warrant and one right to receive one-tenth (1/10) of one share of Common Stock (the “Rights”).
Each warrant (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 will be sold in the Public Offering pursuant to a registration statement on Form S-1
(File No. 333-[_____]) 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 Monterrey Acquisition Sponsor, LLC, a Delaware limited
liability company (the “Sponsor”), and the undersigned individuals, each of whom is a member of the Company’s
board of directors and/or management team or an advisor of the Company (each, an “Insider” and collectively,
the “Insiders”), hereby agrees with the Company as follows:

 

1.            The
Sponsor and each Insider agrees that if the Company seeks stockholder approval of a proposed Business Combination, then in connection
with such proposed Business Combination, it, he or she shall (i) vote any shares of Capital Stock owned by it, him or her in favor
of any proposed Business Combination and (ii) not redeem any shares of Common Stock owned by it, him or her in connection with such
stockholder approval. If the Company engages in a tender offer in connection with any proposed Business Combination, the Sponsor and
each Insider agrees that it, he or she will not seek to sell its, his or her shares of Capital Stock to the Company in connection with
such tender offer.

 

     

     

    

 

2.            The
Sponsor and each Insider hereby agrees that in the event that the Company fails to consummate a Business Combination within the timeframe
set forth in the Company’s amended and restated certificate of incorporation, as it may be amended from time to time (the “Charter”),
the Sponsor and each Insider shall take all reasonable steps to cause the Company to (i) cease all operations except for the purpose
of winding up, (ii) as promptly as reasonably possible but not more than 10 business days thereafter, subject to lawfully available
funds therefor, redeem 100% of the Common Stock sold as part of the Units in the Public Offering (the “Offering Shares”),
at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account (as defined below), including
interest earned on the funds held in the Trust Account and not previously released to the Company to pay its taxes (less up to $100,000
of interest to pay dissolution expenses), divided by the number of then outstanding Offering Shares, which redemption will completely
extinguish all Public Stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if
any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval
of the Company’s remaining stockholders and the Company’s board of directors, dissolve and liquidate, subject in the case
of clauses (ii) and (iii) to the Company’s obligations under Delaware law to provide for claims of creditors and other
requirements of applicable law. The Sponsor and each Insider agrees not to propose any amendment to the Charter to modify (i) the
substance or timing of the ability of holders of Offering Shares to allow redemption in connection with a Business Combination or amendments
to the Charter prior thereto or (ii) (A) the Company’s obligation to redeem 100% of the Offering Shares if the Company
does not complete a Business Combination within such time set forth in the Charter or (B) any other provisions relating to stockholders’
rights or pre-initial Business Combination activity, unless the Company provides its public stockholders with the opportunity to redeem
their shares of Common Stock upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount
then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to
the Company to pay its taxes, divided by the number of then outstanding Offering Shares.

 

The Sponsor and each Insider
acknowledges that it, he or she has no right, title, interest or claim of any kind in or to any monies held in the Trust Account or any
other asset of the Company as a result of any liquidation of the Company with respect to the Founder Shares held by it, him or her. The
Sponsor and each Insider hereby further waives, with respect to any shares of Common Stock held by it, him or her, if any, whether acquired
now or hereafter, any redemption rights it, he or she may have in connection with the consummation of a Business Combination or amendments
to the Charter prior thereto, including, without limitation, any such rights available in the context of a stockholder vote to approve
such Business Combination or a stockholder vote to approve an amendment to the Charter to modify (i) (A) the substance or timing
of the Company’s obligation to allow redemption in connection with a Business Combination or to redeem 100% of the Offering Shares
if the Company has not consummated a Business Combination within the time period set forth in the Charter or (B) any other provisions
relating to stockholders’ rights or pre-initial Business Combination activity or (ii) in the context of a tender offer made
by the Company to purchase shares of Common Stock (although the Sponsor, the Insiders and their respective affiliates shall be entitled
to redemption and liquidation rights with respect to any Offering Shares it or they hold if the Company fails to consummate a Business
Combination within the time period set forth in the Charter).

 

     

     

    

 

3.            During
the period commencing on the date of the Underwriting Agreement and ending 180 days after such date, the Sponsor and each Insider shall
not, without the prior written consent of the Representative, (i) sell, offer to sell, contract or agree to sell, hypothecate, pledge,
grant any option to purchase or otherwise dispose of or agree to dispose of, directly or indirectly, or establish or increase a put equivalent
position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Securities Exchange Act of 1934,
as amended (the “Exchange Act”), and the rules and regulations of the Commission promulgated thereunder,
with respect to any Units, shares of Capital Stock, Warrants, Rights or any securities convertible into, or exercisable, or exchangeable
for, shares of Capital Stock owned by it, him or her, (ii) enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of any Units, shares of Capital Stock, Warrants, Rights or any securities
convertible into, or exercisable, or exchangeable for, shares of Capital Stock owned by it, him or her, whether any such transaction is
to be settled by delivery of such securities, in cash or otherwise, or (iii) publicly announce any intention to effect any transaction
specified in clause (i) or (ii). Each of the Insiders and the Sponsor acknowledges and agrees that, prior to the effective date of
any release or waiver, of the restrictions set forth in this paragraph 3 or paragraph 7 below, the Company shall announce the impending
release or waiver by press release through a major news service at least two business days before the effective date of the release or
waiver. Any release or waiver granted shall only be effective two business days after the publication date of such press release. The
provisions of this paragraph will not apply if the release or waiver is effected solely to permit a transfer not for consideration and
the transferee has agreed in writing to be bound by the same terms described in this Letter Agreement to the extent and for the duration
that such terms remain in effect at the time of the transfer.

 

4.            In
the event of the liquidation of the Trust Account upon the failure of the Company to consummate its initial Business Combination within
the time period set forth in the Charter, the Sponsor (which for purposes of clarification shall not extend to any other shareholders,
members or managers of the Sponsor) (the “Indemnitor”) agrees to indemnify and hold harmless the Company against
any and all loss, liability, claim, damage and expense whatsoever (including, but not limited to, any and all legal or other expenses
reasonably incurred in investigating, preparing or defending against any litigation, whether pending or threatened) to which the Company
may become subject as a result of any claim by (i) any third party for services rendered (other than the Company’s independent
public accountants) or products sold to the Company or (ii) any prospective target business with which the Company has entered into
a written letter of intent, confidentiality or other similar agreement or Business Combination agreement (a “Target”);
provided, however, that such indemnification of the Company by the Indemnitor shall (x) apply only to the extent necessary to ensure
that such claims by a third party or a Target do not reduce the amount of funds in the Trust Account to below the lesser of (i) $10.00
per Offering Share and (ii) the actual amount per Offering Share held in the Trust Account as of the date of the liquidation of
the Trust Account, if less than $10.10 per Offering Share is then held in the Trust Account due to reductions in the value of the trust
assets, less interest earned on the Trust Account which may be withdrawn to pay taxes, (y) not apply to any claims by a third party
or a Target which executed a waiver of any and all rights to the monies held in the Trust Account (whether or not such waiver is enforceable)
and (z) not apply to any claims under the Company’s indemnity of the Underwriters against certain liabilities, including liabilities
under the Securities Act of 1933, as amended. The Indemnitor shall have the right to defend against any such claim with counsel of its
choice reasonably satisfactory to the Company if, within 15 days following written receipt of notice of the claim to the Indemnitor,
the Indemnitor notifies the Company in writing that it shall undertake such defense.

 

     

     

    

 

5.            To
the extent that the Underwriters do not exercise their over-allotment option to purchase up to an additional 1,500,000 Units in full
within 45 days from the date of the Prospectus (and as further described in the Prospectus), the Sponsor agrees to forfeit, at no cost,
a number of Founder Shares in the aggregate equal to 375,000 multiplied by a fraction, (i) the numerator of which is 1,500,000 minus
the number of Units purchased by the Underwriters upon the exercise of their over-allotment option, and (ii) the denominator of
which is 1,500,000. The Sponsor will be required to forfeit only that number of Founder Shares as is necessary so that the Initial Stockholders
will own an aggregate of 20.0% of the Company’s issued and outstanding shares of Capital Stock after the Public Offering.

 

6.            (a) Each
of the officers and directors of the Company hereby agrees not to participate in the formation of, or become an officer or director of,
any other special purpose acquisition company with a class of securities registered under the Exchange Act until the Company has entered
into a definitive agreement regarding an initial Business Combination or until the Company has liquidated the Trust Account.

 

(b)            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, 6(a), 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) 180 days after the completion of the Company’s initial Business Combination or (B) subsequent
to the Business Combination, (x) if the last sale price of the Common Stock equals or exceeds $12.00 per share (as adjusted for
stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period
commencing at least 150 days after the Company’s initial Business Combination or (y) the date on which the Company completes
a liquidation, merger, capital stock exchange, reorganization or other similar transaction that results in all of the Company’s
stockholders having the right to exchange their shares of Common Stock for cash, securities or other property (the “Founder
Shares Lock-up Period”).

 

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

 

     

     

    

 

(c)            Notwithstanding
the provisions set forth in paragraphs 7(a) and (b), Transfers of the Founder Shares, 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 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 affiliate or family member of any of the Company’s officers or directors or any affiliate
of the Sponsor or to any member(s) of the Sponsor; (b) in the case of an individual, by gift to a member of such individual’s
immediate family or to a trust, the beneficiary of which is a member of such individual’s immediate family, an affiliate of such
individual or to a charitable organization; (c) in the case of an individual, by virtue of laws of descent and distribution upon
death of such individual; (d) in the case of an individual, pursuant to a qualified domestic relations order; (e) by private
sales or transfers made in connection with the consummation of an initial Business Combination at prices no greater than the price at
which the shares or warrants were originally purchased; (f) in the event of the Company’s liquidation prior to the completion
of an initial Business Combination; (g) by virtue of the laws of the State of Delaware or the Sponsor’s limited liability
company agreement upon dissolution of the Sponsor, or (h) in the event of the Company’s liquidation, merger, capital stock
exchange, reorganization or other similar transaction which results in all of the Company’s stockholders having the right to exchange
their shares of common stock for cash, securities or other property subsequent to the completion of the Company’s initial Business
Combination; provided, however, that in the case of clauses (a) through (e) or (g), these permitted transferees
must enter into a written agreement with the Company agreeing to be bound by the transfer restrictions herein.

 

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

 

9.            Except
as disclosed in the Prospectus, neither the Sponsor nor any officer, director, advisor or affiliate of the Sponsor, nor any officer,
director or advisor of the Company, shall receive from the Company any finder’s fee, reimbursement, consulting fee, monies in respect
of any repayment of a loan or other compensation prior to, or in connection with any services rendered in order to effectuate, the consummation
of the Company’s initial Business Combination (regardless of the type of transaction that it is).

 

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

 

     

     

    

 

11.          As
used herein, (i) “Business Combination” shall mean a merger, capital stock exchange, asset acquisition,
stock purchase, reorganization or similar business combination, involving the Company and one or more businesses; (ii) “Capital
Stock” shall mean, collectively, the Common Stock and the Founder Shares; (iii) “Founder Shares”
shall mean (a) the 2,875,000 shares of the Company’s Class B common stock, par value $0.0001 per share, initially issued
to the Sponsor (up to 375,000 Shares of which are subject to complete or partial forfeiture by the Sponsor if the over-allotment option
is not exercised by the Underwriters) for an aggregate purchase price of $25,000, or $0.009 per share, prior to the consummation of the
Public Offering; (iv) “Initial Stockholders” shall mean the Sponsor and any Insider that holds Founder
Shares; (v) “Private Placement Warrants” shall mean the 3,200,000 Warrants (or 3,500,000 Warrants if the
over-allotment option is exercised in full) that the Sponsor has agreed to purchase for an aggregate purchase price of $3,200,000 (or
$3,500,000 if the over-allotment option is exercised in full) in the aggregate, or $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 fund
into which a portion of the net proceeds of the Public Offering 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 Exchange Act, and the
rules and regulations of the Commission promulgated thereunder with respect to, any security, (b) entry into any swap or other
arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any security, whether any
such transaction is to be settled by delivery of such securities, in cash or otherwise, or (c) public announcement of any intention
to effect any transaction specified in clause (a) or (b).

 

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

 

13.          This
Letter Agreement constitutes the entire agreement and understanding of the parties hereto in respect of the subject matter hereof and
supersedes all prior understandings, agreements, or representations by or among the parties hereto, written or oral, to the extent they
relate in any way to the subject matter hereof or the transactions contemplated hereby. This Letter Agreement may not be changed, amended,
modified or waived (other than to correct a typographical error) as to any particular provision, except by a written instrument executed
by all parties hereto.

 

14.          No
party hereto may assign either this Letter Agreement or any of its rights, interests, or obligations hereunder without the prior written
consent of the other parties. Any purported assignment in violation of this paragraph shall be void and ineffectual and shall not operate
to transfer or assign any interest or title to the purported assignee. This Letter Agreement shall be binding on the Sponsor and each
Insider and their respective successors, heirs and assigns and permitted transferees.

 

     

     

    

 

15.          Nothing
in this Letter Agreement shall be construed to confer upon, or give to, any person or corporation other than the parties hereto any right,
remedy or claim under or by reason of this Letter Agreement or of any covenant, condition, stipulation, promise or agreement hereof. All
covenants, conditions, stipulations, promises and agreements contained in this Letter Agreement shall be for the sole and exclusive benefit
of the parties hereto and their successors, heirs, personal representatives and assigns and permitted transferees; provided, however,
that the Representatives on behalf of the Underwriters are third party beneficiaries of this Letter Agreement.

 

16.          This
Letter Agreement may be executed in any number of original or facsimile counterparts and each of such counterparts shall for all purposes
be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument.

 

17.          This
Letter Agreement shall be deemed severable, and the invalidity or unenforceability of any term or provision hereof shall not affect the
validity or enforceability of this Letter Agreement or of any other term or provision hereof. Furthermore, in lieu of any such invalid
or unenforceable term or provision, the parties hereto intend that there shall be added as a part of this Letter Agreement a provision
as similar in terms to such invalid or unenforceable provision as may be possible and be valid and enforceable.

 

18.          This
Letter Agreement shall be governed by and construed and enforced in accordance with the laws of the State of New York, without giving
effect to conflicts of law principles that would result in the application of the substantive laws of another jurisdiction. The parties
hereto (i) all agree that any action, proceeding, claim or dispute arising out of, or relating in any way to, this Letter Agreement
shall be brought and enforced in the courts of New York City, in the State of New York, and irrevocably submit to such jurisdiction and
venue, which jurisdiction and venue shall be exclusive and (ii) waive any objection to such exclusive jurisdiction and venue or that
such courts represent an inconvenient forum.

 

19.          Any
notice, consent or request to be given in connection with any of the terms or provisions of this Letter Agreement shall be in writing
and shall be sent by express mail or similar private courier service, by certified mail (return receipt requested), by hand delivery or
facsimile transmission.

 

20.          This
Letter Agreement shall terminate on the earlier of (i) the expiration of the Lock-up Periods or (ii) the liquidation of the
Company; provided, however, that this Letter Agreement shall earlier terminate in the event that the Public Offering is not consummated
and closed by August 31, 2022; provided further that paragraph 4 of this Letter Agreement shall survive such liquidation.

 

[Signature Page Follows]

 

     

     

    

 

Sincerely,

 

	 	By	 
	 	 	Name:
	 	 	Title:

 

Acknowledged and Agreed:

 

MONTEREY CAPITAL ACQUISITION CORPORATION 

 

	By:	 	
	Name:  Bala Padmakumar	
	Title:  Chief Executive Officer	

 

[Signature
Page to Letter Agreement]

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