STOCK ESCROW AGREEMENT
STOCK
ESCROW AGREEMENT, dated as of __________, 2006 (the "Agreement"),
by
and among AFFINITY MEDIA INTERNATIONAL CORP., a Delaware corporation (the
"Company"),
XXXXX
X. XXXXX, XXXXXX XXXX, XXXXX XXXXXXXXXX, XXXXXXX XXXXXX, XXXX XXXXX AND XXXX
XXXXXX (collectively the "Initial
Stockholders")
and
AMERICAN STOCK TRANSFER & TRUST COMPANY, a New York corporation (the
"Escrow
Agent").
WHEREAS,
the
Company has entered into an Underwriting Agreement, dated __________, 2006
(the
"Underwriting
Agreement"),
with
Maxim Group LLC ("Maxim")
acting
as representative of the several underwriters (collectively, the "Underwriters"),
pursuant to which, among other matters, the Underwriters have agreed to purchase
2,750,000 units (the "Units")
of the
Company. Each Unit consists of one share of the Company's Common Stock, par
value $.0001 per share, and two Warrants, each Warrant to purchase one share
of
Common Stock, all as more fully described in the Company's final Prospectus,
dated ___________, 2006 (the "Prospectus")
comprising part of the Company's Registration Statement on Form S-1 (File No.
333-128707) under the Securities Act of 1933, as amended (the "Registration
Statement"),
declared effective on _________, 2006 (the "Effective
Date").
WHEREAS,
the
Initial Stockholders have agreed as a condition of the sale of the Units to
deposit their shares of Common Stock of the Company, as set forth opposite
their
respective names in Exhibit A attached hereto (collectively the "Escrow
Shares"),
in
escrow as hereinafter provided.
WHEREAS,
the
Company and the Initial Stockholders desire that the Escrow Agent accept the
Escrow Shares, in escrow, to be held and disbursed as hereinafter
provided.
IT
IS AGREED:
1.
Appointment
of Escrow Agent.
The
Company and the Initial Stockholders hereby appoint the Escrow Agent to act
in
accordance with and subject to the terms of this Agreement and the Escrow Agent
hereby accepts such appointment and agrees to act in accordance with and subject
to such terms.
2.
Deposit
of Escrow Shares.
On or
before the Effective Date, each of the Initial Stockholders shall deliver to
the
Escrow Agent certificates representing his respective Escrow Shares, to be
held
and disbursed subject to the terms and conditions of this Agreement. Each
Initial Stockholder acknowledges that the certificate representing his Escrow
Shares is legended to reflect the deposit of such Escrow Shares under this
Agreement.
3.
Disbursement
of the Escrow Shares.
The
Escrow Agent shall hold the Escrow Shares until the third anniversary of the
Effective Date (the "Escrow
Period"),
on
which date it shall, upon written instructions from each Initial Stockholder,
disburse each of the Initial Stockholder's Escrow Shares to such Initial
Stockholder; provided,
however,
that if
the Escrow Agent is notified by the Company pursuant to Section 6.7 hereof
that
the Company is being liquidated at any time during the Escrow Period, then
the
Escrow Agent shall promptly destroy the certificates representing the Escrow
Shares and; provided
further,
that
if, after the Company consummates a Business Combination (as such term is
defined in the Registration Statement), it (or the surviving entity)
subsequently consummates a liquidation, merger, stock exchange or other similar
transaction which results in all of the stockholders of such entity having
the
right to exchange their shares of Common Stock for cash, securities or other
property, then the Escrow Agent will, upon receipt of a certificate, executed
by
the Chief Executive Officer or Chief Operating Officer of the Company, in form
reasonably acceptable to the Escrow Agent, that such transaction is then being
consummated, release the Escrow Shares to the Initial Stockholders upon
consummation of the transaction so that they can similarly participate. The
Escrow Agent shall have no further duties hereunder after the disbursement
or
destruction of the Escrow Shares in accordance with this Section 3.
4.
Rights
of Initial Stockholders in Escrow Shares.
4.1 Voting
Rights as a Stockholder.
Subject
to the terms of the Insider Letter described in Section 4.4 hereof and except
as
herein provided, the Initial Stockholders shall retain all of their rights
as
stockholders of the Company during the Escrow Period, including, without
limitation, the right to vote such shares.
4.2
Dividends
and Other Distributions in Respect of the Escrow Shares.
During
the Escrow Period, all dividends payable in cash with respect to the Escrow
Shares shall be paid to the Initial Stockholders, but all dividends payable
in
stock or other non-cash property (the "Non-Cash
Dividends")
shall
be delivered to the Escrow Agent to hold in accordance with the terms hereof.
As
used herein, the term "Escrow Shares" shall be deemed to include the Non-Cash
Dividends distributed thereon, if any.
4.3
Restrictions
on Transfer.
During
the Escrow Period, no sale, transfer or other disposition may be made of any
or
all of the Escrow Shares except (i) by gift to a member of Initial Stockholder's
immediate family or to a trust, the beneficiary of which is an Initial
Stockholder or a member of an Initial Stockholder's immediate family, (ii)
by
virtue of the laws of descent and distribution upon death of any Initial
Stockholder, or (iii) pursuant to a qualified domestic relations order;
provided,
however,
that
such permissive transfers may be implemented only upon the respective
transferee's written agreement to be bound by the terms and conditions of this
Agreement and of the Insider Letter signed by the Initial Stockholder
transferring the Escrow Shares. During the Escrow Period, the Initial
Stockholders shall not pledge or grant a security interest in the Escrow Shares
or grant a security interest in their rights under this Agreement.
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5.
Concerning
the Escrow Agent.
5.1
Good
Faith Reliance.
The
Escrow Agent shall not be liable for any action taken or omitted by it in good
faith and in the exercise of its own best judgment, and may rely conclusively
and shall be protected in acting upon any order, notice, demand, certificate,
opinion or advice of counsel (including counsel chosen by the Escrow Agent),
statement, instrument, report or other paper or document (not only as to its
due
execution and the validity and effectiveness of its provisions, but also as
to
the truth and acceptability of any information therein contained) which is
believed by the Escrow Agent to be genuine and to be signed or presented by
the
proper person or persons. The Escrow Agent shall not be bound by any notice
or
demand, or any waiver, modification, termination or rescission of this Agreement
unless evidenced by a writing delivered to the Escrow Agent signed by the proper
party or parties and, if the duties or rights of the Escrow Agent are affected,
unless it shall have given its prior written consent thereto.
5.2
Indemnification.
The
Escrow Agent shall be indemnified and held harmless by the Company from and
against any expenses, including counsel fees and disbursements, or loss suffered
by the Escrow Agent in connection with any action, suit or other proceeding
involving any claim which in any way, directly or indirectly, arises out of
or
relates to this Agreement, the services of the Escrow Agent hereunder, or the
Escrow Shares held by it hereunder, other than expenses or losses arising from
the gross negligence or willful misconduct of the Escrow Agent. Promptly after
the receipt by the Escrow Agent of notice of any demand or claim or the
commencement of any action, suit or proceeding, the Escrow Agent shall notify
the other parties hereto in writing. In the event of the receipt of such notice,
the Escrow Agent, in its sole discretion, may commence an action in the nature
of interpleader in an appropriate court to determine ownership or disposition
of
the Escrow Shares or it may deposit the Escrow Shares with the clerk of any
appropriate court or it may retain the Escrow Shares pending receipt of a final,
non-appealable order of a court having jurisdiction over all of the parties
hereto directing to whom and under what circumstances the Escrow Shares are
to
be disbursed and delivered. The provisions of this Section 5.2 shall survive
in
the event the Escrow Agent resigns or is discharged pursuant to Sections 5.5
or
5.6 below.
5.3
Compensation.
The
Escrow Agent shall be entitled to reasonable compensation from the Company
for
all services rendered by it under the specific terms of this Agreement. The
Escrow Agent shall also be entitled to reimbursement from the Company for all
reasonable expenses paid or incurred by it in the administration of its duties
hereunder including, but not limited to, all counsel, advisors' and agents'
fees
and disbursements and all taxes or other governmental charges, subject to the
prior written consent of the Company, not to be unreasonably
withheld.
5.4
Further
Assurances.
From
time to time on and after the date hereof, the Company and the Initial
Stockholders shall deliver or cause to be delivered to the Escrow Agent such
further documents and instruments and shall do or cause to be done such further
acts as the Escrow Agent shall reasonably request to carry out more effectively
the provisions and purposes of this Agreement, to evidence compliance herewith
or to assure itself that it is protected in acting hereunder.
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5.6
Discharge
of Escrow Agent.
The
Escrow Agent shall resign and be discharged from its duties as escrow agent
hereunder if so requested in writing at any time by the Company and a majority
of the Initial Stockholders, jointly, provided,
however,
that
such resignation shall become effective only upon acceptance of appointment
by a
successor escrow agent as provided in Section 5.5.
5.7
Liability.
Notwithstanding anything herein to the contrary, the Escrow Agent shall not
be
relieved from liability hereunder for its own gross negligence or its own
willful misconduct.
6.
Miscellaneous.
6.1
Governing
Law.
This
Agreement shall for all purposes be deemed to be made under and shall be
construed in accordance with the laws of the State of New York, without regard
to the conflicts of laws principles thereof.
6.2
Third
Party Beneficiaries.
Each of
the Initial Stockholders, the Company, and Escrow Agent hereby specifically
acknowledge and agree that the Underwriters are third party beneficiaries of
this Agreement and this Agreement may not be modified or changed without the
prior written consent of Maxim.
6.3
Entire
Agreement.
This
Agreement contains the entire agreement of the parties hereto with respect
to
the subject matter hereof and, except as expressly provided herein, may not
be
changed or modified except by an instrument in writing signed by the party
to be
charged.
6.4
Headings.
The
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation thereof.
6.5
Binding
Effect.
This
Agreement shall be binding upon and inure to the benefit of the respective
parties hereto and their legal representatives, successors and
assigns.
6.6
Notices.
Any
notice or other communication required or which may be given hereunder 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, or sent by facsimile transmission (with
confirmation of receipt), addressed as follows:
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If
to the
Company, to:
Affinity
Media International Corp.
00000
Xxxxxxxx Xxxx., Xxxxx 0000
Xxx
Xxxxxxx, XX 00000
Attn:
Xxxxxx Xxxx, President
Fax
No.:
000.000.0000
If
to a
Stockholder, to his address set forth in Exhibit A.
and
if to
the Escrow Agent, to:
American
Stock Transfer & Trust Company
00
Xxxxxx
Xxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attn:
Xxxxxxx X. Xxxxxx, Esq.
Fax:
(000) 000-0000
A
copy of
any notice sent hereunder shall be sent to:
Ellenoff
Xxxxxxxx & Schole LLP
000
Xxxxxxxxx Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attn:
Xxxxxx Xxxxxxxxx, Esq.
Fax:
(000) 000-0000
and:
Maxim
Group LLC
000
Xxxxxxxxx Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attn:
Xxxxxxxx Xxxxxx, Managing Director
Fax:
(000) 000-0000
and:
Xxxxxxxxxx
Xxxxxxx PC
00
Xxxxxxxxxx Xxxxxx
Xxxxxxxx,
Xxx Xxxxxx 00000
Attn:
Xxxxxx Xxxxxxxx, Esq.
Fax:
(000) 000-0000
The
parties may change the persons and addresses to which the notices or other
communications are to be sent by giving written notice to any such change in
the
manner provided herein for giving notice.
-5-
6.7
Liquidation
of Company.
The
Company shall give the Escrow Agent written notification of the liquidation
and
dissolution of the Company in the event that the Company fails to consummate
a
Business Combination within the time period(s) specified in the
Prospectus.
-6-
WITNESS
the execution of this Agreement as of the date first above written.
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AFFINITY
MEDIA INTERNATIONAL CORP.
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| By: | ||
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Name: Xxxxxx Xxxx |
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| Title: President | ||
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| INITIAL STOCKHOLDERS | ||
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Xxxxx X. Xxxxx |
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Xxxxxx Xxxx |
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Xxxxx Xxxxxxxxxx |
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Xxxxxxx Xxxxxx |
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Xxxx Xxxxx |
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Xxxx Xxxxxx |
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AMERICAN
STOCK TRANSFER
&
TRUST COMPANY
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By:
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| Name Title |
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-7-
EXHIBIT
A
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Name
and Address of
Initial
Stockholder
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Number
of Shares
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Stock
Certificate Number
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Date of
Insider
Letter
|
| Xxxxx
X. Xxxxx
c/o
Affinity Media International Corp.
00000
Xxxxxxxx Xxxx., Xxxxx 0000
Xxx
Xxxxxxx, XX 00000
|
397,500 | ||
|
Xxxxxx Xxxx
c/o
Affinity Media International Corp.
00000
Xxxxxxxx Xxxx., Xxxxx 0000
Xxx
Xxxxxxx, XX 00000
|
266,250 | ||
|
Xxxxx Xxxxxxxxxx
c/o
Affinity Media International Corp.
00000
Xxxxxxxx Xxxx., Xxxxx 0000
Xxx
Xxxxxxx, XX 00000
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45,000 | ||
|
Xxxxxxx
Xxxxxx
c/o
Affinity Media International Corp.
00000
Xxxxxxxx Xxxx., Xxxxx 0000
Xxx
Xxxxxxx, XX 00000
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13,750 | ||
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Xxxx Xxxxx
c/o
Affinity Media International Corp.
00000
Xxxxxxxx Xxxx., Xxxxx 0000
Xxx
Xxxxxxx, XX 00000
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13,750 | ||
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Xxxx
Xxxxxx
c/o
Affinity Media International Corp.
00000
Xxxxxxxx Xxxx., Xxxxx 0000
Xxx
Xxxxxxx, XX 00000
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13,750 | ||
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