UNIT
      PURCHASE OPTION

    


    FOR
      THE PURCHASE OF

    


    500,000
      UNITS

    


    OF

    


    KEY
      HOSPITALITY ACQUISITION CORPORATION 

     

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    


    TABLE
      OF
      CONTENTS

    


    Page

    

      
        	
                1.

              	PURCHASE
                OPTION.	
                1

              
	
                2.

              	EXERCISE.	
                2

              
	 	
                2.1

              	EXERCISE
                FORM	
                2

              
	 	
                2.2

              	LEGEND	
                2

              
	 	
                2.3

              	CASHLESS
                EXERCISE.	
                2

              
	 	 	
                2.3.1

              	
                DETERMINATION
                  OF AMOUNT

              	
                2

              
	 	 	
                2.3.2

              	
                MECHANICS
                  OF CASHLESS EXERCISE

              	
                3

              
	
                3.

              	TRANSFER.	
                3

              
	 	
                3.1

              	GENERAL
                RESTRICTIONS	
                3

              
	 	
                3.2

              	RESTRICTIONS
                IMPOSED BY THE ACT	
                3

              
	
                4.

              	NEW
                PURCHASE OPTIONS TO BE ISSUED.	
                3

              
	 	
                4.1

              	PARTIAL
                EXERCISE OR TRANSFER	
                3

              
	 	
                4.2

              	LOST
                CERTIFICATE	
                3

              
	
                5.

              	REGISTRATION
                RIGHTS.	
                4

              
	 	
                5.1

              	DEMAND
                REGISTRATION.	
                4

              
	 	 	
                5.1.1

              	
                GRANT
                  OF RIGHT

              	
                4

              
	 	 	
                5.1.2

              	
                TERMS

              	
                4

              
	 	
                5.2

              	“PIGGY-BACK”
                REGISTRATION.	
                4

              
	 	 	
                5.2.1

              	
                GRANT
                  OF RIGHT

              	
                4

              
	 	 	
                5.2.2

              	
                TERMS

              	
                5

              
	 	
                5.3

              	DAMAGES	
                5

              
	 	
                5.4

              	GENERAL
                TERMS.	
                5

              
	 	 	
                5.4.1

              	
                INDEMNIFICATION

              	
                5

              
	 	 	
                5.4.2

              	
                EXERCISE
                  OF PURCHASE OPTIONS

              	
                6

              
	 	 	
                5.4.3

              	
                DOCUMENTS
                  DELIVERED TO HOLDERS

              	
                6

              
	 	 	
                5.4.4

              	
                UNDERWRITING
                  AGREEMENT

              	
                6

              
	 	 	
                5.4.5

              	
                RULE
                  144 SALE

              	
                7

              
	 	 	
                5.4.6

              	
                SUPPLEMENTAL
                  PROSPECTUS

              	
                7

              
	
                6.

              	ADJUSTMENTS.	
                7

              
	 	
                6.1

              	ADJUSTMENTS
                TO EXERCISE PRICE AND NUMBER OF SECURITIES	
                7

              
	 	 	
                6.1.1

              	
                STOCK
                  DIVIDENDS - SPLIT-UPS

              	
                7

              
	 	 	
                6.1.2

              	
                AGGREGATION
                  OF SHARES

              	
                8

              
	 	 	
                6.1.3

              	
                REPLACEMENT
                  OF SECURITIES UPON REORGANIZATION, ETC

              	
                8

              
	 	 	
                6.1.4

              	
                CHANGES
                  IN FORM OF PURCHASE OPTION

              	
                8

              
	 	
                6.2

              	SUBSTITUTE
                PURCHASE OPTION	
                8

              
	 	
                6.3

              	ELIMINATION
                OF FRACTIONAL INTERESTS	
                9

              


         

        
          
             

          

          
             

            
              

            

          

          
             

          

           

        

        
          	
                  7.

                	RESERVATION
                  AND LISTING	
                  9

                
	
                  8.

                	CERTAIN
                  NOTICE REQUIREMENTS.	
                  9

                
	 	
                  8.1

                	HOLDER’S
                  RIGHT TO RECEIVE NOTICE	
                  9

                
	 	
                  8.2

                	EVENTS
                  REQUIRING NOTICE	
                  9

                
	 	
                  8.3

                	NOTICE
                  OF CHANGE IN EXERCISE PRICE	
                  10

                
	 	
                  8.4

                	TRANSMITTAL
                  OF NOTICES	
                  10

                
	
                  9.

                	MISCELLANEOUS.	
                  10

                
	 	
                  9.1

                	AMENDMENTS	
                  10

                
	 	
                  9.2

                	HEADINGS	
                  10

                
	
                  10.

                	ENTIRE
                  AGREEMENT	
                  10

                
	 	
                  10.1

                	BINDING
                  EFFECT	
                  10

                
	 	
                  10.2

                	GOVERNING
                  LAW; SUBMISSION TO JURISDICTION	
                  10

                
	 	
                  10.3

                	WAIVER,
                  ETC	
                  11

                
	 	
                  10.4

                	EXCHANGE
                  AGREEMENT	
                  11

                
	 	
                  10.5

                	UNDERLYING
                  WARRANTS	
                  11

                


        

      

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    

      THE
        REGISTERED HOLDER OF THIS PURCHASE OPTION, BY ITS ACCEPTANCE HEREOF, AGREES
        THAT
        IT WILL NOT SELL, TRANSFER OR ASSIGN THIS PURCHASE OPTION, EXCEPT AS HEREIN
        PROVIDED, AND THE REGISTERED HOLDER OF THIS PURCHASE OPTION AGREES THAT IT
        WILL
        NOT SELL, TRANSFER, ASSIGN, PLEDGE OR HYPOTHECATE THIS PURCHASE OPTION FOR
        A
        PERIOD OF ONE YEAR FOLLOWING THE EFFECTIVE DATE (DEFINED BELOW) TO ANYONE
        OTHER
        THAN (I) MAXIM GROUP LLC OR ITS AFFILIATES (“MAXIM”) OR AN UNDERWRITER OR A
        SELECTED DEALER IN CONNECTION WITH THE OFFERING (DEFINED HEREIN), OR (II)
        A BONA
        FIDE OFFICER, PARTNER OR EMPLOYEE OF MAXIM OR OF ANY SUCH UNDERWRITER OR
        SELECTED DEALER.

      


      THIS
        PURCHASE OPTION IS NOT EXERCISABLE PRIOR TO THE LATER OF (I) ______________,
        2006 AND (II) THE CONSUMMATION BY KEY HOSPITALITY ACQUISITION CORPORATION
        (“COMPANY”) OF A MERGER, CAPITAL STOCK EXCHANGE, ASSET ACQUISITION OR OTHER
        SIMILAR BUSINESS COMBINATION (“BUSINESS COMBINATION”) (AS DESCRIBED MORE FULLY
        IN THE COMPANY’S REGISTRATION STATEMENT (DEFINED HEREIN)). THIS PURCHASE OPTION
        SHALL BE VOID AFTER 5:00 P.M, NEW YORK CITY TIME, ON _____________,
        2010.

      


      UNIT
        PURCHASE OPTION

      


      FOR
        THE
        PURCHASE OF

      


      500,000
        UNITS

      


      OF

      


      KEY
        HOSPITALITY ACQUISITION CORPORATION

       

      1. Purchase
        Option.

      


      THIS
        CERTIFIES THAT, in consideration of $100 duly paid by or on behalf of Maxim
        Partners LLC (collectively, with its successors and permitted assigns and/or
        transferees, the “Holder”), as registered owner of this Purchase Option (the
“Purchase Option”), to Key Hospitality Acquisition Corporation (“Company”),
        Holder is entitled, at any time or from time to time upon the later of (i)
        ___________, 2006 and (ii) the consummation of a Business Combination
        (“Commencement Date”), and at or before 5:00 p.m., New York City Time,
        _____________, 2010 (“Expiration Date”), but not thereafter, to subscribe for,
        purchase and receive, in whole or in part, up to Five Hundred Thousand (500,000)
        units (“Units”) of the Company, with each Unit consisting of one share of common
        stock of the Company, par value $.001 per share (“Common Stock”), and one
        warrant (“Warrant(s)”) expiring four years from the effective date (“Effective
        Date”) of the registration statement (“Registration Statement”) pursuant to
        which Units are offered for sale to the public (“Offering”). Each Warrant is the
        same as the warrants included in the Units being registered for sale to the
        public by way of the Registration Statement (“Public Warrants”), except that the
        Warrants underlying the Units comprising this Purchase Option have an exercise
        price of $7.50 per share. If the Expiration Date is a day on which banking
        institutions are authorized by law to close, then this Purchase Option may
        be
        exercised on the next succeeding day which is not such a day in accordance
        with
        the terms herein. During the period ending on the Expiration Date, the Company
        agrees not to take any action that would terminate the Purchase Option. This
        Purchase Option is initially exercisable at $8.80 per Unit so purchased;
        provided, however, that upon the occurrence of any of the events specified
        in
        Section 6 hereof, the rights granted by this Purchase Option, including the
        exercise price per Unit and the number of Units (and shares of Common Stock
        and
        Warrants) to be received upon such exercise, shall be adjusted as therein
        specified. The term “Exercise Price” shall mean the initial exercise price or
        the adjusted exercise price, as the context requires.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

         

      

      2. Exercise.

       

      2.1 Exercise
        Form.
        In
        order to exercise this Purchase Option, the exercise form attached hereto
        must
        be duly executed and completed and delivered to the Company, together with
        this
        Purchase Option and payment of the Exercise Price for the Units being purchased
        payable in cash or by certified check or official bank check. If the
        subscription rights represented hereby shall not be exercised at or before
        5:00
        p.m., New York City Time, on the Expiration Date, this Purchase Option shall
        become and be void without further force or effect, and all rights represented
        hereby shall cease and expire.

       

      2.2 Legend.
        If
        necessary, each certificate for the securities purchased under this Purchase
        Option shall bear a legend as follows unless such securities have been
        registered under the Securities Act of 1933, as amended (“Act”):

      


      “The
        securities represented by this certificate have not been registered under
        the
        Securities Act of 1933, as amended (“Act”) or applicable state law. The
        securities may not be offered for sale, sold or otherwise transferred except
        pursuant to an effective registration statement under the Act, or pursuant
        to an
        exemption from registration under the Act and applicable state
        law.”

       

      2.3 Cashless
        Exercise.

       

      2.3.1 Determination
        of Amount.
        In lieu
        of the payment of the Exercise Price multiplied by the number of Units for
        which
        this Purchase Option is exercisable (and in lieu of being entitled to receive
        Common Stock and Warrants) in the manner required by Section 2.1, the Holder
        shall have the right (but not the obligation) to convert any exercisable
        but
        unexercised portion of this Purchase Option into Units (“Cashless Exercise
        Right”) as follows: upon exercise of the Cashless Exercise Right, the Company
        shall deliver to the Holder (without payment by the Holder of any of the
        Exercise Price in cash) that number of shares of Common Stock and Warrants
        comprising that number of Units equal to the quotient obtained by dividing
        (x)
        the “Value” (as defined below) of the portion of the Purchase Option being
        converted by (y) the Current Market Value (as defined below). The “Value” of the
        portion of the Purchase Option being converted shall equal the remainder
        derived
        from subtracting (a) (i) the Exercise Price multiplied by (ii) the number
        of
        Units underlying the portion of this Purchase Option being converted from
        (b)
        the Current Market Value of a Unit multiplied by the number of Units underlying
        the portion of the Purchase Option being converted. As used herein, the term
        “Current Market Value” per Unit at any date means the remainder derived from
        subtracting (x) the exercise price of the Warrants multiplied by the number
        of
        shares of Common Stock issuable upon exercise of the Warrants underlying
        one
        Unit from (y) (i) the Current Market Price of the Common Stock multiplied
        by
        (ii) the number of shares of Common Stock underlying one Unit, which shall
        include the shares of Common Stock underlying the Warrants included in such
        Unit. The “Current Market Price” of a share of Common Stock shall mean (i) if
        the Common Stock is listed on a national securities exchange or quoted on
        the
        Nasdaq National Market, Nasdaq SmallCap Market or NASD OTC Bulletin Board
        (or
        successor trading market), the average last sale price of the Common Stock
        in
        the principal trading market for the Common Stock as reported by the exchange,
        Nasdaq or the NASD, as the case may be, for the 5 trading days prior to
        exercise; (ii) if the Common Stock is not listed on a national securities
        exchange or quoted on the Nasdaq National Market, Nasdaq SmallCap Market
        or the
        NASD OTC Bulletin Board (or successor trading market), but is traded in the
        residual over-the-counter market, the average closing sale price for the
        Common
        Stock for the 5 trading days preceding the date of exercise for which such
        quotations are reported by the Pink Sheets, LLC or similar publisher of such
        quotations; and (iii) if the fair market value of the Common Stock cannot
        be
        determined pursuant to clause (i) or (ii) above, such price as the Board
        of
        Directors of the Company shall determine, in good faith, with reference to
        industry standard methods of evaluating fair market value.

       

      
        
           

        

        
          2

          
            

          

        

        
           

        

         

      

      2.3.2 Mechanics
        of Cashless Exercise.
        The
        Cashless Exercise Right may be exercised by the Holder on any business day
        on or
        after the Commencement Date and not later than the Expiration Date by delivering
        the Purchase Option with the duly executed exercise form attached hereto
        with
        the cashless exercise section completed to the Company, exercising the Cashless
        Exercise Right and specifying the total number of Units the Holder will purchase
        pursuant to such Cashless Exercise Right.

       

      3. Transfer.

       

      3.1 General
        Restrictions.
        The
        registered Holder of this Purchase Option, by its acceptance hereof, agrees
        that
        it will not sell, transfer, assign, pledge or hypothecate this Purchase Option
        for a period of one year following the Effective Date to anyone other than
        (i)
        Maxim or its affiliates or an underwriter or a selected dealer in connection
        with the Offering, or (ii) a bona fide officer, partner or employee of Maxim
        or
        of any such underwriter or selected dealer. On and after the first anniversary
        of the Effective Date, transfers to others may be made subject to compliance
        with or exemptions from applicable securities laws. In order to make any
        permitted assignment, the Holder must deliver to the Company the assignment
        form
        attached hereto duly executed and completed, together with the Purchase Option
        and payment of all transfer taxes, if any, payable in connection therewith.
        The
        Company shall, within five business days of its receipt of such assignment,
        transfer this Purchase Option on the books of the Company and shall execute
        and
        deliver a new Purchase Option or Purchase Options of like tenor to the
        appropriate assignee(s) expressly evidencing the right to purchase the aggregate
        number of Units purchasable hereunder or such portion of such number as shall
        be
        contemplated by any such assignment.

       

      3.2 Restrictions
        Imposed by the Act.
        The
        securities evidenced by this Purchase Option shall not be transferred unless
        and
        until (i) the Company has received the opinion of counsel for the Holder
        that
        the securities may be transferred pursuant to an exemption from registration
        under the Act and applicable state securities laws, the availability of which
        is
        established to the reasonable satisfaction of the Company (the Company hereby
        agreeing that the opinion of Ellenoff Grossman & Schole LLP shall be deemed
        satisfactory evidence of the availability of an exemption), or (ii) the
        Registration Statement (which shall register all Registrable Securities (as
        defined below), and including any post-effective amendment thereto) or another
        registration statement relating to such securities has been filed by the
        Company
        and declared effective by the Securities and Exchange Commission and compliance
        with applicable state securities law has been established.

       

      4. New
        Purchase Options to be Issued.

       

      4.1 Partial
        Exercise or Transfer.
        Subject
        to the restrictions in Section 3 hereof, this Purchase Option may be exercised
        or assigned in whole or in part, in the discretion of the Holder. In the
        event
        of the exercise or assignment hereof in part only, upon surrender of this
        Purchase Option for cancellation, together with the duly executed exercise
        or
        assignment form and, except in the case of an exercise of this Purchase Option
        contemplated by Section 2.3 hereof, funds sufficient to pay any Exercise
        Price
        and/or transfer tax, the Company shall cause to be delivered to the Holder
        without charge a new Purchase Option of like tenor to this Purchase Option
        in
        the name of the Holder evidencing the right of the Holder to purchase the
        number
        of Units purchasable hereunder as to which this Purchase Option has not been
        exercised or assigned.

       

      4.2 Lost
        Certificate.
        Upon
        receipt by the Company of evidence satisfactory to it of the loss, theft,
        destruction or mutilation of this Purchase Option and of reasonably satisfactory
        indemnification or the posting of a bond, the Company shall execute and deliver
        a new Purchase Option of like tenor and date. Any such new Purchase Option
        executed and delivered as a result of such loss, theft, mutilation or
        destruction shall constitute a substitute contractual obligation on the part
        of
        the Company.

       

      
        
           

        

        
          3

          
            

          

        

        
           

        

         

      

      5. Registration
        Rights.

       

      5.1 Demand
        Registration.

       

      5.1.1 Grant
        of Right.
        The
        Company, upon written demand (“Initial Demand Notice”) of the Holder(s) of at
        least 51% of the Purchase Options and/or the underlying Units and/or the
        underlying securities (“Majority Holders”), register, on one occasion, all or
        any portion of the Purchase Options requested by the Majority Holders in
        the
        Initial Demand Notice and all of the securities underlying such Purchase
        Options, including the Units, Common Stock, the Warrants and the Common Stock
        underlying the Warrants (collectively, the “Registrable Securities”). On such
        occasion, the Company will file a registration statement or a post-effective
        amendment to the Registration Statement covering the Registrable Securities
        within thirty days after receipt of the Initial Demand Notice and use its
        best
        efforts to have such registration statement or post-effective amendment declared
        effective as soon as possible thereafter. The demand for registration may
        be
        made at any time during a period of five years beginning on the Effective
        Date.
        The Company covenants and agrees to give written notice of its receipt of
        any
        Initial Demand Notice by any Holder(s) to all other registered Holders of
        the
        Purchase Options and/or the Registrable Securities within ten days from the
        date
        of the receipt of any such Initial Demand Notice.

       

      5.1.2 Terms.
        The
        Company shall bear all fees and expenses attendant to registering the
        Registrable Securities, including the expenses of any legal counsel selected
        by
        the Holders to represent them in connection with the sale of the Registrable
        Securities, but the Holders shall pay any and all underwriting commissions,
        if
        any. The Company agrees, at its sole expenses, to use its reasonable best
        efforts to qualify or register the Registrable Securities in such States
        as are
        reasonably requested by the Majority Holder(s); provided, however, that in
        no
        event shall the Company be required to register the Registrable Securities
        in a
        State in which such registration would cause (i) the Company to be obligated
        to
        qualify to do business in such State, or would subject the Company to taxation
        as a foreign corporation doing business in such jurisdiction or (ii) the
        principal stockholders of the Company to be obligated to escrow their shares
        of
        capital stock of the Company. The Company shall cause any registration statement
        or post-effective amendment filed pursuant to the demand rights granted under
        Section 5.1.1 to remain effective for a period of twelve consecutive months
        from
        the effective date of such registration statement or post-effective
        amendment.

       

      5.2 “Piggy-Back”
        Registration.

       

      5.2.1 Grant
        of Right.
        In
        addition to the demand right of registration provided for in Section 5.1,
        the
        Holders of the Purchase Options shall have the right, for a period of seven
        years commencing on the Effective Date, and to the extent that the Registrable
        Securities are not registered with the Registration Statement for any reason,
        to
        include the Registrable Securities as part of any other registration of
        securities filed by the Company (other than in connection with a transaction
        contemplated by Rule 145(a) promulgated under the Act or pursuant to Form
        S-8);
        provided, however, that if, in the written opinion of the Company’s managing
        underwriter or underwriters, if any, for such offering, the inclusion of
        the
        Registrable Securities, when added to the securities being registered by
        the
        Company or the selling stockholder(s), will exceed the maximum amount of
        the
        Company’s securities which can be marketed (i) at a price reasonably related to
        their then current market value, and (ii) without materially and adversely
        affecting the entire offering, then the Company will still be required to
        include the Registrable Securities, but may require the Holders to agree,
        in
        writing, to delay the sale of all or any portion of the Registrable Securities
        for a period of 90 days from the effective date of the offering, provided,
        further, that if the sale of any Registrable Securities is so delayed, then
        the
        number of securities to be sold by all stockholders in such public offering
        during such 90 day period shall be apportioned pro rata among all such selling
        stockholders, including all holders of the Registrable Securities, according
        to
        the total amount of securities of the Company owned by said selling
        stockholders, including all holders of the Registrable Securities.

       

      
        
           

        

        
          4

          
            

          

        

        
           

        

         

      

      5.2.2 Terms.
        The
        Company shall bear all fees and expenses attendant to registering the
        Registrable Securities, including the expenses of any legal counsel selected
        by
        the Holders to represent them in connection with the sale of the Registrable
        Securities but the Holders shall pay any and all underwriting commissions
        related to the Registrable Securities. In the event of such a proposed
        registration, the Company shall furnish the then Holders of outstanding
        Registrable Securities with not less than fifteen days written notice prior
        to
        the proposed date of filing of such registration statement. Such notice to
        the
        Holders shall continue to be given for each applicable registration statement
        filed (during the period in which the Purchase Option is exercisable) by
        the
        Company until such time as all of the Registrable Securities have been
        registered and sold. The holders of the Registrable Securities shall exercise
        the “piggy-back” rights provided for herein by giving written notice, within ten
        days of the receipt of the Company’s notice of its intention to file a
        registration statement. The Company shall cause any registration statement
        filed
        pursuant to the above “piggyback” rights to remain effective for at least nine
        months from the date that the Holders of the Registrable Securities are first
        given the opportunity to sell all of such securities.
        The
        Company agrees, at its sole expenses, to use its reasonable best efforts
        to
        qualify or register the Registrable Securities in such States as are reasonably
        requested by the Majority Holder(s); provided, however, that in no event
        shall
        the Company be required to register the Registrable Securities in a State
        in
        which such registration would cause (i) the Company to be obligated to qualify
        to do business in such State, or would subject the Company to taxation as
        a
        foreign corporation doing business in such jurisdiction or (ii) the principal
        stockholders of the Company to be obligated to escrow their shares of capital
        stock of the Company. 

       

      5.3 Damages.
        Should
        the registration or the effectiveness thereof required by Sections 5.1 and
        5.2
        hereof be delayed by the Company or the Company otherwise fails to comply
        with
        such provisions, the Company shall, in addition to any other equitable or
        other
        relief available to the Holder(s), be liable for any and all incidental,
        special
        and consequential damages sustained by the Holder(s), including, but not
        limited
        to, the loss of any profits that might have been received by the holder upon
        the
        sale of shares of Common Stock or Warrants (and shares of Common Stock
        underlying the Warrants) underlying this Purchase Option.

       

      5.4 General
        Terms.

       

      5.4.1 Indemnification.
        The
        Company shall indemnify the Holder(s) of the Registrable Securities to be
        sold
        pursuant to the Registration Statement or any other registration statement
        contemplated hereunder and each person, if any, who controls such Holders
        within
        the meaning of Section 15 of the Act or Section 20(a) of the Securities Exchange
        Act of 1934, as amended (“Exchange Act”), and any of their respective heirs,
        successors, permitted assigns and transfers, and agents and representatives,
        against all loss, claim, damage, expense or liability (including all reasonable
        attorneys’ fees and other expenses reasonably incurred in investigating,
        preparing or defending against litigation, commenced or threatened, or any
        claim
        whatsoever whether arising out of any action between the underwriter and
        the
        Company or between the underwriter and any third party or otherwise) to which
        any of them may become subject under the Act, the Exchange Act or otherwise,
        arising from such registration statement but only to the same extent and
        with
        the same effect as the provisions pursuant to which the Company has agreed
        to
        indemnify the underwriters contained in Section 5 of the Underwriting Agreement
        between the Company, Maxim and the other underwriters named therein dated
        the
        Effective Date. The Holder(s) of the Registrable Securities to be sold pursuant
        to such registration statement, and their successors and assigns, shall
        severally, and not jointly, indemnify the Company, its officers and directors
        and each person, if any, who controls the Company within the meaning of Section
        15 of the Act or Section 20(a) of the Exchange Act, against all loss, claim,
        damage, expense or liability (including all reasonable attorneys’ fees and other
        expenses reasonably incurred in investigating, preparing or defending against
        any claim whatsoever) to which they may become subject under the Act, the
        Exchange Act or otherwise, arising from information furnished by or on behalf
        of
        such Holders, or their successors or assigns, in writing, for specific inclusion
        in such registration statement to the same extent and with the same effect
        as
        the provisions contained in Section 5 of the Underwriting Agreement pursuant
        to
        which the underwriters have agreed to indemnify the Company.

       

      
        
           

        

        
          5

          
            

          

        

        
           

        

         

      

      5.4.2 Exercise
        of Purchase Options.
        Nothing
        contained in this Purchase Option shall be construed as requiring the Holder(s)
        to exercise their Purchase Options or Warrants underlying such Purchase Options
        prior to or after the initial filing of any registration statement or the
        effectiveness thereof.

       

      5.4.3 Documents
        Delivered to Holders.
        The
        Company shall furnish Maxim, as representative of the Holders participating
        in
        any of the foregoing offerings, a signed counterpart, addressed to the
        participating Holders, of:
        (i)
        an opinion of counsel to the Company, dated the effective date of such
        registration statement (and, if such registration includes an underwritten
        public offering, an opinion dated the date of the closing under any underwriting
        agreement related thereto), and (ii) a “cold comfort” letter dated the effective
        date of such registration statement (and, if such registration includes an
        underwritten public offering, a letter dated the date of the closing under
        the
        underwriting agreement) signed by the independent public accountants who
        have
        issued a report on the Company’s financial statements included in such
        registration statement, in each case covering substantially the same matters
        with respect to such registration statement (and the prospectus included
        therein) and, in the case of such accountants’ letter, with respect to events
        subsequent to the date of such financial statements, as are customarily covered
        in opinions of issuer’s counsel and in accountants’ letters delivered to
        underwriters in underwritten public offerings of securities. The Company
        shall
        also deliver promptly to Maxim, as representative of the Holders participating
        in any of the foregoing offerings, the correspondence and memoranda described
        below and copies of all correspondence between the Commission and the Company,
        its counsel or auditors and all memoranda relating to discussions with the
        Commission or its staff with respect to the registration statement and permit
        Maxim, as representative of the Holders, to do such investigation, upon
        reasonable advance notice, with respect to information contained in or omitted
        from the registration statement as it deems reasonably necessary to comply
        with
        applicable securities laws or rules of the National Association of Securities
        Dealers, Inc (“NASD”). Such investigation shall include access to books, records
        and properties and opportunities to discuss the business of the Company with
        its
        officers and independent auditors, all to such reasonable extent and at such
        reasonable times and as often as Maxim, as representative of the Holders,
        shall
        reasonably request. The Company shall not be required to disclose any
        confidential information or other records to Maxim, as representative of
        the
        Holders, or to any other person, until and unless such persons shall have
        entered into reasonable confidentiality agreements (in form and substance
        reasonably satisfactory to the Company), with the Company with respect
        thereto.

       

      5.4.4 Underwriting
        Agreement.
        The
        Company shall enter into an underwriting agreement with the managing
        underwriter(s), if any, selected by any Holders whose Registrable Securities
        are
        being registered pursuant to this Section 5, which managing underwriter shall
        be
        reasonably acceptable to the Company. Such agreement shall be reasonably
        satisfactory in form and substance to the Company, each Holder and such managing
        underwriters, and shall contain such representations, warranties and covenants
        by the Company and such other terms as are customarily contained in agreements
        of that type used by the managing underwriter. The Holders shall be parties
        to
        any underwriting agreement relating to an underwritten sale of their Registrable
        Securities and may, at their option, require that any or all the
        representations, warranties and covenants of the Company to or for the benefit
        of such underwriters shall also be made to and for the benefit of such Holders.
        Such Holders shall not be required to make any representations or warranties
        to
        or agreements with the Company or the underwriters except as they may relate
        to
        such Holders and their intended methods of distribution. Such Holders, however,
        shall agree to such covenants and indemnification and contribution obligations
        for selling stockholders as are customarily contained in agreements of that
        type
        used by the managing underwriter. Further, such Holders shall execute
        appropriate custody agreements and otherwise cooperate fully in the preparation
        of the registration statement and other documents relating to any offering
        in
        which they include securities pursuant to this Section 5. Each Holder shall
        also
        furnish to the Company such information regarding itself, the Registrable
        Securities held by it, and the intended method of disposition of such securities
        as shall be reasonably required to effect the registration of the Registrable
        Securities.

       

      
        
           

        

        
          6

          
            

          

        

        
           

        

         

      

      5.4.5 Rule
        144 Sale.
        Notwithstanding anything contained in this Section 5 to the contrary, the
        Company shall have no obligation pursuant to Sections 5.1 or 5.2 for the
        registration of Registrable Securities held by any Holder (i) where such
        Holder
        would then be entitled to sell under Rule 144 within any three-month period
        (or
        such other period prescribed under Rule 144 as may be provided by amendment
        thereof) all of the Registrable Securities then held by such Holder, and
        (ii)
        where the number of Registrable Securities held by such Holder is within
        the
        volume limitations under paragraph (e) of Rule 144 (calculated as if such
        Holder
        were an affiliate within the meaning of Rule 144).

       

      5.4.6 Supplemental
        Prospectus.
        Each
        Holder agrees, that upon receipt of any notice from the Company of the happening
        of any event as a result of which the prospectus included in the Registration
        Statement or any other applicable registration statement, as then in effect,
        includes an untrue statement of a material fact or omits to state a material
        fact required to be stated therein or necessary to make the statements therein
        not misleading in light of the circumstances then existing, such Holder will
        immediately discontinue disposition of Registrable Securities pursuant to
        the
        Registration Statement covering such Registrable Securities until such Holder’s
        receipt of the copies of a supplemental or amended prospectus, and, if so
        desired by the Company, such Holder shall deliver to the Company (at the
        expense
        of the Company) or destroy (and deliver to the Company a certificate of such
        destruction) all copies, other than permanent file copies then in such Holder’s
        possession, of the prospectus covering such Registrable Securities current
        at
        the time of receipt of such notice.

       

      6. Adjustments.

       

      6.1 Adjustments
        to Exercise Price and Number of Securities.
        The
        Exercise Price and the number of Units underlying the Purchase Option shall
        be
        subject to adjustment from time to time as hereinafter set forth:

       

      6.1.1 Stock
        Dividends - Split-Ups.
        If
        after the date hereof, and subject to the provisions of Section 6.4 below,
        the
        number of outstanding shares of Common Stock is increased by a stock dividend
        payable in shares of Common Stock or by a split-up of shares of Common Stock
        or
        other similar event, then, on the effective date thereof, the number of shares
        of Common Stock underlying each of the Units purchasable hereunder shall
        be
        increased in proportion to such increase in outstanding shares. In such case,
        the number of shares of Common Stock, and the exercise price applicable thereto,
        underlying the Warrants underlying each of the Units purchasable hereunder
        shall
        be adjusted in accordance with the terms of the Warrants. For example, if
        the
        Company declares a two-for-one stock dividend and at the time of such dividend
        this Purchase Option is for the purchase of one Unit at $8.80 per whole Unit
        (each Warrant underlying the Units is exercisable for $6.00 per share), upon
        effectiveness of the dividend, this Purchase Option will be adjusted to allow
        for the purchase of one Unit at $8.80 per Unit, each Unit entitling the holder
        to receive two shares of Common Stock and two Warrants (each Warrant exercisable
        for $3.00 per share).

       

      
        
           

        

        
          7

          
            

          

        

        
           

        

         

      

      6.1.2 Aggregation
        of Shares.
        If
        after the date hereof, and subject to the provisions of Section 6.4, the
        number
        of outstanding shares of Common Stock is decreased by a consolidation,
        combination or reclassification of shares of Common Stock or other similar
        event, then, on the effective date thereof, the number of shares of Common
        Stock
        underlying each of the Units purchasable hereunder shall be decreased in
        proportion to such decrease in outstanding shares. In such case, the number
        of
        shares of Common Stock, and the exercise price applicable thereto, underlying
        the Warrants underlying each of the Units purchasable hereunder shall be
        adjusted in accordance with the terms of the Warrants.

       

      6.1.3 Replacement
        of Securities upon Reorganization, etc.
        In case
        of any reclassification or reorganization of the outstanding shares of Common
        Stock other than a change covered by Section 6.1.1 or 6.1.2 hereof or that
        solely affects the par value of such shares of Common Stock, or in the case
        of
        any merger or consolidation of the Company with or into another corporation
        (other than a consolidation or merger in which the Company is the continuing
        corporation and that does not result in any reclassification or reorganization
        of the outstanding shares of Common Stock), or in the case of any sale or
        conveyance to another corporation or entity of the property of the Company
        as an
        entirety or substantially as an entirety in connection with which the Company
        is
        dissolved, the Holder of this Purchase Option shall have the right thereafter
        (until the expiration of the right of exercise of this Purchase Option) to
        receive upon the exercise hereof, for the same aggregate Exercise Price payable
        hereunder immediately prior to such event, the kind and amount of shares
        of
        stock or other securities or property (including cash) receivable upon such
        reclassification, reorganization, merger or consolidation, or upon a dissolution
        following any such sale or transfer, by a Holder of the number of shares
        of
        Common Stock of the Company obtainable upon exercise of this Purchase Option
        and
        the underlying Warrants immediately prior to such event; and if any
        reclassification also results in a change in shares of Common Stock covered
        by
        Section 6.1.1 or 6.1.2, then such adjustment shall be made pursuant to Sections
        6.1.1, 6.1.2 and this Section 6.1.3 The provisions of this Section 6.1.3
        shall
        similarly apply to successive reclassifications, reorganizations, mergers
        or
        consolidations, sales or other transfers.

       

      6.1.4 Changes
        in Form of Purchase Option.
        This
        form of Purchase Option need not be changed because of any change pursuant
        to
        this Section, and Purchase Options issued after such change may state the
        same
        Exercise Price and the same number of Units as are stated in the Purchase
        Options initially issued pursuant to this Agreement. The acceptance by any
        Holder of the issuance of new Purchase Options reflecting a required or
        permissive change shall not be deemed to waive any rights to an adjustment
        occurring after the Commencement Date or the computation thereof.

       

      6.2 Substitute
        Purchase Option.
        In case
        of any consolidation of the Company with, or merger of the Company with,
        or
        merger of the Company into, another corporation (other than a consolidation
        or
        merger which does not result in any reclassification or change of the
        outstanding Common Stock), the corporation formed by such consolidation or
        merger shall execute and deliver to the Holder a supplemental Purchase Option
        providing that the holder of each Purchase Option then outstanding or to
        be
        outstanding shall have the right thereafter (until the stated expiration
        of such
        Purchase Option) to receive, upon exercise of such Purchase Option, the kind
        and
        amount of shares of stock and other securities and property receivable upon
        such
        consolidation or merger, by a holder of the number of shares of Common Stock
        of
        the Company for which such Purchase Option might have been exercised immediately
        prior to such consolidation, merger, sale or transfer. Such supplemental
        Purchase Option shall provide for adjustments which shall be identical to
        the
        adjustments provided in Section 6. The above provision of this Section shall
        similarly apply to successive consolidations or mergers.

       

      
        
           

        

        
          8

          
            

          

        

        
           

        

         

      

      6.3 Elimination
        of Fractional Interests.
        The
        Company shall not be required to issue certificates representing fractions
        of
        shares of Common Stock or Warrants upon the exercise of the Purchase Option,
        nor
        shall it be required to issue scrip or pay cash in lieu of any fractional
        interests, it being the intent of the parties that all fractional interests
        shall be eliminated by rounding any fraction up to the nearest whole number
        of
        Warrants, shares of Common Stock or other securities, properties or
        rights.

       

      7. Reservation
        and Listing.
        The
        Company shall at all times reserve and keep available out of its authorized
        shares of Common Stock, solely for the purpose of issuance upon exercise
        of the
        Purchase Options or the Warrants underlying the Purchase Option, such number
        of
        shares of Common Stock or other securities, properties or rights as shall
        be
        issuable upon the exercise thereof. The Company covenants and agrees that,
        upon
        exercise of the Purchase Options and payment of the Exercise Price therefor,
        all
        shares of Common Stock and other securities issuable upon such exercise shall
        be
        duly and validly issued, fully paid and non-assessable and not subject to
        preemptive rights of any stockholder. The Company further covenants and agrees
        that upon exercise of the Warrants underlying the Purchase Options and payment
        of the respective Warrant exercise price therefor, all shares of Common Stock
        and other securities issuable upon such exercise shall be duly and validly
        issued, fully paid and non-assessable and not subject to preemptive rights
        of
        any stockholder. As long as the Purchase Options shall be outstanding, the
        Company shall use its best efforts to cause all (i) Units and shares of Common
        Stock issuable upon exercise of the Purchase Options, (iii) Warrants issuable
        upon exercise of the Purchase Options and (iv) shares of Common Stock issuable
        upon exercise of the Warrants included in the Units issuable upon exercise
        of
        the Purchase Option to be listed (subject to official notice of issuance)
        on all
        securities exchanges (or, if applicable on the Nasdaq National Market, SmallCap
        Market, OTC Bulletin Board or any successor trading market) on which the
        Units,
        the Common Stock or the Public Warrants issued to the public in connection
        herewith may then be listed and/or quoted.

       

      8. Certain
        Notice Requirements.

       

      8.1 Holder’s
        Right to Receive Notice.
        Nothing
        herein shall be construed as conferring upon the Holders the right to vote
        or
        consent as a stockholder for the election of directors or any other matter,
        or
        as having any rights whatsoever as a stockholder of the Company. If, however,
        at
        any time prior to the expiration of the Purchase Options and their exercise,
        any
        of the events described in Section 8.2 shall occur, then, in one or more
        of said
        events, the Company shall give written notice of such event at least fifteen
        days prior to the date fixed as a record date or the date of closing the
        transfer books for the determination of the stockholders entitled to such
        dividend, distribution, conversion or exchange of securities or subscription
        rights, or entitled to vote on such proposed dissolution, liquidation, winding
        up or sale. Such notice shall specify such record date or the date of the
        closing of the transfer books, as the case may be. Notwithstanding the
        foregoing, the Company shall deliver to each Holder a copy of each notice
        given
        to the other stockholders of the Company at the same time and in the same
        manner
        that such notice is given to the stockholders.

       

      8.2 Events
        Requiring Notice.
        The
        Company shall be required to give the notice described in this Section 8
        upon
        one or more of the following events: (i) if the Company shall take a record
        of
        the holders of its shares of Common Stock for the purpose of entitling them
        to
        receive a dividend or distribution payable otherwise than in cash, or a cash
        dividend or distribution payable otherwise than out of retained earnings,
        as
        indicated by the accounting treatment of such dividend or distribution on
        the
        books of the Company, or (ii) the Company shall offer to all the holders
        of its
        Common Stock any additional shares of capital stock of the Company or securities
        convertible into or exchangeable for shares of capital stock of the Company,
        or
        any option, right or warrant to subscribe therefor, or (iii) a dissolution,
        liquidation or winding up of the Company or a sale of all or substantially
        all
        of its property, assets and business or a merger of the Company wherein the
        separate existence of the Company shall cease shall be proposed.

       

      
        
           

        

        
          9

          
            

          

        

        
           

        

         

      

      8.3 Notice
        of Change in Exercise Price.
        The
        Company shall, promptly after an event requiring a change in the Exercise
        Price
        pursuant to Section 6 hereof, send notice to the Holders of such event and
        change (“Price Notice”). The Price Notice shall describe the event causing the
        change and the method of calculating same and shall be certified as being
        true
        and accurate by the Company’s President and Chief Financial
        Officer.

       

      8.4 Transmittal
        of Notices.
        All
        notices, requests, consents and other communications under this Purchase
        Option
        shall be in writing and shall be deemed to have been duly made when hand
        delivered, mailed by express mail or private courier service, or sent by
        facsimile transmission, with confirmation of receipt: (i) If to the registered
        Holder of the Purchase Option, to the address and/or fax number of such Holder
        as shown on the books of the Company, or (ii) if to the Company, to the
        following address and/or fax number or to such other address or and fax number
        as the Company may designate by notice to the Holders:

      


      Key
        Hospitality Acquisition Corporation

      1775
        Broadway, Suite 604

      New
        York,
        New York 10019

      Attn:
        Chairman

      Fax
        No.:
        _______________________________

      


      9. Miscellaneous.

       

      9.1 Amendments.
        The
        Company and Maxim may from time to time supplement or amend this Purchase
        Option
        without the approval of any of the Holders in order to cure any ambiguity,
        to
        correct or supplement any provision contained herein that may be defective
        or
        inconsistent with any other provisions herein, or to make any other provisions
        in regard to matters or questions arising hereunder that the Company and
        Maxim
        may deem necessary or desirable and that the Company and Maxim deem shall
        not
        adversely affect the interest of the Holders. All other modifications or
        amendments shall require the written consent of and be signed by the party
        against whom enforcement of the modification or amendment is
        sought.

       

      9.2 Headings.
        The
        headings contained herein are for the sole purpose of convenience of reference,
        and shall not in any way limit or affect the meaning or interpretation of
        any of
        the terms or provisions of this Purchase Option.

       

      10. Entire
        Agreement.
        This
        Purchase Option (together with the other agreements and documents being
        delivered pursuant to or in connection with this Purchase Option) constitutes
        the entire agreement of the parties hereto with respect to the subject matter
        hereof, and supersedes all prior agreements and understandings of the parties,
        oral and written, with respect to the subject matter hereof.

       

      10.1 Binding
        Effect.
        This
        Purchase Option shall inure solely to the benefit of and shall be binding
        upon,
        the Holder and the Company and their permitted assignees, respective successors,
        legal representative and assigns, and no other person shall have or be construed
        to have any legal or equitable right, remedy or claim under or in respect
        of or
        by virtue of this Purchase Option or any provisions herein
        contained.

       

      10.2 Governing
        Law; Submission to Jurisdiction.
        This
        Purchase Option shall be governed by and construed and enforced in accordance
        with the laws of the State of New York, without giving effect to conflict
        of
        laws. The Company hereby agrees that any action, proceeding or claim against
        it
        arising out of, or relating in any way to this Purchase Option shall be brought
        and enforced in the courts of the State of New York located in New York County
        or of the United States of America 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 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 8 hereof. Such mailing shall be deemed personal
        service and shall be legal and binding upon the Company in any action,
        proceeding or claim. The Company and the Holder agree that the prevailing
        party(ies) in any such action shall be entitled to recover from the other
        party(ies) all of its reasonable attorneys’ fees and expenses relating to such
        action or proceeding and/or incurred in connection with the preparation
        therefor.

       

      
        
           

        

        
          10

          
            

          

        

        
           

        

         

      

      10.3 Waiver,
        Etc.
        The
        failure of the Company or the Holder to at any time enforce any of the
        provisions of this Purchase Option shall not be deemed or construed to be
        a
        waiver of any such provision, nor to in any way affect the validity of this
        Purchase Option or any provision hereof or the right of the Company or any
        Holder to thereafter enforce each and every provision of this Purchase Option.
        No waiver of any breach, non-compliance or non-fulfillment of any of the
        provisions of this Purchase Option shall be effective unless set forth in
        a
        written instrument executed by the party or parties against whom or which
        enforcement of such waiver is sought; and no waiver of any such breach,
        non-compliance
        or non-fulfillment shall be construed or deemed to be a waiver of any other
        or
        subsequent breach, non-compliance or non-fulfillment.

       

      10.4 Exchange
        Agreement.
        As a
        condition of the Holder’s receipt and acceptance of this Purchase Option, Holder
        agrees that, at any time prior to the complete exercise of this Purchase
        Option
        by Holder, if the Company and Maxim enter into an agreement (“Exchange
        Agreement”) pursuant to which they agree that all outstanding Purchase Options
        will be exchanged for securities or cash or a combination of both, then Holder
        shall agree to such exchange and become a party to the Exchange
        Agreement.

       

      10.5 Underlying
        Warrants.
        At any
        time after exercise by the Holder of this Purchase Option, the Holder may
        exchange his Warrants (with a $7.50 exercise price) for Public Warrants (with
        a
        $6.00 exercise price) upon payment to the Company of the difference between
        the
        exercise price of his Warrant and the exercise price of the Public
        Warrants.

      


      IN
        WITNESS WHEREOF, the Company has caused this Purchase Option to be signed
        by its
        duly authorized officer as of the ____ day of __________, 2005.

      


      
        	 	
                KEY
                  HOSPITALITY ACQUISITION CORPORATION

                


                


                By:
                                                                                                          
                  

                Name:

                Title:

              


      

      



      
        
           

        

        
          11

          
            

          

        

        
           

          
          

        

      


      Form
        to
        be used to exercise Purchase Option:

      


      Key
        Hospitality Acquisition Corporation

      1775
        Broadway, Suite 604

      New
        York
        , New York

      


      Date:_________________,
        200__

      


      The
        undersigned hereby elects irrevocably to exercise all or a portion of the
        within
        Purchase Option and to purchase ____ Units of Key Hospitality Acquisition
        Corporation and hereby makes payment of $____________ (at the rate of $_________
        per Unit) in payment of the Exercise Price pursuant thereto. Please issue
        the
        Common Stock and Warrants as to which this Purchase Option is exercised in
        accordance with the instructions given below.

      


      or

      


      The
        undersigned hereby elects irrevocably to convert its right to purchase _________
        Units purchasable under the within Purchase Option by surrender of the
        unexercised portion of the attached Purchase Option (with a “Value” based of
        $_______ based on a “Market Price” of $_______). Please issue the securities
        comprising the Units as to which this Purchase Option is exercised in accordance
        with the instructions given below.

      


      
        	 	
                 

                                                                                                                  
                  

                Signature

                 

                
                                                                                                  
                  

                Signature
                  Guaranteed

              


      

      
         

         

      

      INSTRUCTIONS
        FOR REGISTRATION OF SECURITIES

      


      Name                                                                                                     
        

      (Print
        in
        Block Letters)

      


      Address
                                                                                                    
           

      


      NOTICE:
        THE SIGNATURE TO THIS FORM MUST CORRESPOND WITH THE NAME AS WRITTEN UPON
        THE
        FACE OF THE WITHIN PURCHASE OPTION IN EVERY PARTICULAR WITHOUT ALTERATION
        OR
        ENLARGEMENT OR ANY CHANGE WHATSOEVER, AND MUST BE GUARANTEED BY A BANK, OTHER
        THAN A SAVINGS BANK, OR BY A TRUST COMPANY OR BY A FIRM HAVING MEMBERSHIP
        ON A
        REGISTERED NATIONAL SECURITIES EXCHANGE.


      
        
           

        

        
           

          
            

          

        

        
           

          
          

        

      


      Form
        to
        be used to assign Purchase Option:

      


      ASSIGNMENT

      


      (To
        be
        executed by the registered Holder to effect a transfer of the within Purchase
        Option):

      


      FOR
        VALUE
        RECEIVED,___________________________________________ does hereby sell, assign
        and transfer unto______________________________________ the right to purchase
        __________ Units of Key Hospitality Acquisition Corporation (“Company”)
        evidenced by the within Purchase Option and does hereby authorize the Company
        to
        transfer such right on the books of the Company.

      


      Dated:___________________,
        200_

       

      
        	 	
                 

                                                                                                                  
                  

                Signature

                 

                
                                                                                                  
                  

                Signature
                  Guaranteed

              


      

       

      NOTICE:
        THE SIGNATURE TO THIS FORM MUST CORRESPOND WITH THE NAME AS WRITTEN UPON
        THE
        FACE OF THE WITHIN PURCHASE OPTION IN EVERY PARTICULAR WITHOUT ALTERATION
        OR
        ENLARGEMENT OR ANY CHANGE WHATSOEVER, AND MUST BE GUARANTEED BY A BANK, OTHER
        THAN A SAVINGS BANK, OR BY A TRUST COMPANY OR BY A FIRM HAVING MEMBERSHIP
        ON A
        REGISTERED NATIONAL SECURITIES EXCHANGE.