October 12, 2005
Kenneth R. Koch
Re: Key Hospitality Acquisition Corporation
Dear Mr. Koch:
In your letter dated October 12, 2005, as supplemented by conversations with the staff of the Division of Market Regulation (Division), you request on behalf of Key Hospitality Acquisition Corporation (Company) that the Division will not recommend to the Securities and Exchange Commission (Commission) enforcement action in connection with the bid represented by the Warrant Purchase Agreement (WPA) during the restricted period. We have attached a copy of your letter to avoid reciting the facts that it presents. Unless otherwise noted, each defined term in this letter has the same meaning as defined in your letter.
As a consequence of the unit offering, the Company is engaged in a distribution of units subject to Rules 101 and 102 of Regulation M.1 The WPA among the existing stockholders, officers and directors of the Company, and Maxim Group LLC, accompanied by the disclosed agreement in the registration statement to conduct a warrant repurchase program subsequent to the offering, constitutes a bid during the restricted period for purposes of Regulation M.
In your letter, you make the following representations, among others:
Accordingly, on the basis of your representations and the facts presented, and without necessarily concurring in your analysis, the Division will not recommend to the Commission enforcement action under Rules 101 and 102 Regulation M, subject to the following conditions:
This position concerns enforcement action only and does not represent a legal conclusion with respect to the applicability of statutory or regulatory provisions of the federal securities laws. Moreover, this position is based on the facts you have presented and the representations you have made, and any different facts or conditions may require a different response. In addition, this position is subject to modification or revocation if at any time the Commission or the Division determines that such action is necessary or appropriate in furtherance of the purposes of the Exchange Act.
In addition, your attention is directed to the anti-fraud and anti-manipulation provisions of the Exchange Act, particularly Sections 9(a) and 10(b), and Rule 10b-5 thereunder. Responsibility for compliance with these and any other applicable provisions of the federal securities laws must rest with the Company and Maxim Group LLC. This Division expresses no view with respect to any other questions that the proposed transactions may raise, including, but not limited to, the adequacy of the disclosure concerning, and the applicability of any federal or state laws to, the proposed transactions.
Very truly yours,
James A. Brigagliano
1 17 CFR §§ 242.101, 242.102.