LOCKUP AGREEMENT
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___________,
2007
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0
Xxxxxx
Xxxx Xxxx
Xxxxxxxx,
XX 00000
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.]
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.
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Very
truly yours,
____________________________
[Name]
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