LOCKUP AGREEMENT

     
___________, 2007

Key Hospitality Acquisition Corporation
4 Becker Farm Road
Roseland, NJ 07068

Re: Lockup Agreement (the “Agreement”)
 
Ladies and Gentlemen:
 
1. The undersigned securityholder of Key Hospitality Acquisition Corporation, a
Delaware corporation (“KHAC”), understands that KHAC and Key Merger Sub, LLC, a
Delaware corporation and a wholly-owned subsidiary of KHAC (the “Merger Sub”),
have entered into an Agreement and Plan of Merger, dated as of March 22, 2007
(as the same may be amended and restated from time to time, the “Merger
Agreement”), with Cay Clubs LLC (“Cay Clubs”) pursuant to which Merger Sub will
merge with and into Cay Clubs, and, in connection therewith, holders of the
outstanding shares of capital stock of Cay Clubs will receive the right to
acquire shares of common stock, $.0001 par value, of KHAC (the “KHAC Common
Stock”). Capitalized terms used but not defined herein shall have the meanings
ascribed to them in the Merger Agreement.

2. In order to facilitate the transactions contemplated by the Merger Agreement,
the undersigned agrees to, neither directly nor indirectly, during the
“Restricted Period” (as hereinafter defined):
 
(i) sell or offer or contract to sell or offer, grant any option or warrant for
the sale of, assign, transfer, pledge, hypothecate, or otherwise encumber or
dispose of (all being referred to as a “Transfer”) any legal or beneficial
interest in, or right to purchase, any shares of KHAC Common Stock FOR DAVIDSON
AND TOLEDANO: [owned by the undersigned] FOR CAY CLUBS MEMBERS: [issued to the
undersigned in connection with the Merger or the transactions related thereto]
(the “Restricted Securities”); or
 
(ii) enter into any swap or any other agreement or any transaction that
transfers, in whole or in part, directly or indirectly, the economic consequence
of ownership of any of the Restricted Securities, whether such swap transaction
is to be settled by delivery of any Restricted Securities or other securities of
any person, in cash or otherwise.
 
FOR CAY CLUBS MEMBERS: [Notwithstanding the foregoing, the undersigned may
pledge (or engage in any hedging, straddling or other strategies with respect
to) up to [15,000,000] shares to a financial institution as collateral for
personal loans.]
 
 
 

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As used herein, “Restricted Period” means the period commencing on the Closing
Date (as defined in the Merger Agreement) and ending on January 1, 2009.
 
3. Notwithstanding the foregoing, the restrictions on Transfer set forth in this
Agreement shall not apply to (i) transactions relating to shares of KHAC Common
Stock or other securities acquired in open market transactions after the
Effective Date, or (ii) the following Transfers: (A) gifts to family members (or
trusts for the direct or indirect benefit of family members); (B) charitable
contributions of Restricted Shares made by the holder of such Restricted Shares;
or (C) Transfers to “affiliates”, limited partners, members or stockholders of
the undersigned; provided that in the case of any Transfer pursuant to clause
(A), (B) or (C), each transferee agrees in writing as a condition precedent to
such Transfer to be bound by the terms hereof. The term “affiliate” shall have
the meaning given such term in Rule 144 under the Securities Act of 1933, as
amended.
 
4. It is understood that if the Merger Agreement shall be terminated in
accordance with the provisions thereof at any time prior to the Effective Date,
this Agreement shall terminate.
 
5. This Agreement shall be governed by and construed in accordance with the laws
of the State of Delaware. This Agreement may not be amended, modified, revoked
or terminated in any respect without the written consent of the undersigned and
KHAC. This Agreement shall be binding upon the undersigned and the undersigned’s
heirs, successors and assigns.

 

 
Very truly yours,

____________________________ 
[Name]

 
 
 
 

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