INVESTMENT MANAGEMENT TRUST AGREEMENT
This
Agreement is made as of ______, 2005 by and between AFFINITY MEDIA INTERNATIONAL
CORP. (the "Company")
and
AMERICAN STOCK TRANSFER & TRUST COMPANY (the "Trustee").
WHEREAS,
the
Company's Registration Statement on Form S-1, File No. 333-________ (the
"Registration
Statement"),
for
its initial public offering of securities (the "IPO")
has
been declared effective as of the date hereof by the Securities and Exchange
Commission (the "Effective
Date");
and
WHEREAS,
Maxim
Group LLC ("Maxim")
is
acting as the representative of the underwriters in the IPO; and
WHEREAS,
as
described in the Company's Registration Statement, and in accordance with
the
Company's Certificate of Incorporation, $17,400,000 of the gross proceeds
of the
IPO ($20,010,000 if the underwriters over-allotment option is exercised in
full)
will be delivered to the Trustee to be deposited and held in a trust account
for
the benefit of the Company and the holders of the Company's common stock,
par
value $.0001 per share, issued in the IPO as hereinafter provided and in
the
event the Units are registered in Colorado, pursuant to Section 11-51-302(6)
of
the Colorado Securities Act. A copy of the Colorado Securities Act is attached
hereto and made a part hereof (the amount to be delivered to the Trustee
will be
referred to herein as the "Property";
the
stockholders for whose benefit the Trustee shall hold the Property will be
referred to as the "Public
Stockholders,"
and
the Public Stockholders and the Company will be referred to together as the
"Beneficiaries");
and
WHEREAS,
the
Company and the Trustee desire to enter into this Agreement to set forth
the
terms and conditions pursuant to which the Trustee shall hold the
Property;
NOW,
THEREFORE,
in
consideration of the mutual agreements herein contained, the parties hereto
agree as follows:
1. Agreements
and Covenants of Trustee.
The
Trustee hereby agrees and covenants to:
(a)
Hold
the
Property in trust for the Beneficiaries in accordance with the terms of this
Agreement, including the terms of Section 11-51-302(6) of the Colorado
Securities Act with respect to Public Stockholders in Colorado, in a segregated
trust account ("Trust
Account")
established by the Trustee at a branch of JPMorgan Chase NY Bank selected
by the
Trustee;
(b) Manage,
supervise and administer the Trust Account subject to the terms and conditions
set forth herein;
(c) In
a
timely manner, upon the instruction of the Company, to invest and reinvest
the
Property in any "Government
Security."
As
used herein, Government Security means any Treasury Xxxx issued by the United
States, having a maturity of one hundred and eighty days or
less;
(d) Collect
and receive, when due, all principal and income arising from the Property,
which
shall become part of the "Property,"
as
such term is used herein;
(e) Promptly
notify the Company of all communications received by it with respect to any
Property requiring action by the Company;
(f) Supply
any necessary information or documents as may be requested by the Company
in
connection with the Company's preparation of the tax returns for the Trust
Account;
(g) Participate
in any plan or proceeding for protecting or enforcing any right or interest
arising from the Property if, as and when instructed by the Company to do
so;
(h) Render
to
the Company and to Maxim, and to such other person as the Company may instruct,
monthly written statements of the activities of and amounts in the Trust
Account
reflecting all receipts and disbursements of the Trust Account; and
(i) Commence
liquidation of the Trust Account only after receipt of and only in accordance
with the terms of a letter ("Termination
Letter"),
in a
form substantially similar to that attached hereto as either Exhibit
A
or
Exhibit
B,
signed
on behalf of the Company by its Chief Executive Officer or President and
Secretary, and complete the liquidation of the Trust Account and distribute
the
Property in the Trust Account only as directed in the Termination Letter
and the
other documents referred to therein. The Trustee understands and agrees that
disbursements from the Trust Account shall be made only pursuant to a duly
executed Termination Letter, together with the other documents referenced
herein. In all cases, the Trustee shall provide Maxim with a copy of any
Termination Letters and/or any other correspondence that it receives with
respect to any proposed withdrawal from the Trust Account promptly after
it
receives same.
2. Agreements
and Covenants of the Company.
The
Company hereby agrees and covenants to:
(a) Give
all
instructions to the Trustee hereunder in writing, signed by the Company's
Chief
Executive Officer or President. In addition, except with respect to its duties
under paragraph 1(i) above, the Trustee shall be entitled to rely on, and
shall
be protected in relying on, any verbal or telephonic advice or instruction
which
it in good faith believes to be given by any one of the persons authorized
above
to give written instructions, provided
that the
Company shall promptly confirm such instructions in writing;
(b) Hold
the
Trustee harmless and indemnify the Trustee from and against, any and all
expenses, including reasonable counsel fees and disbursements, or loss suffered
by the Trustee in connection with any action, suit or other proceeding brought
against the Trustee involving any claim, or in connection with any claim
or
demand which in any way arises out of or relates to this Agreement, the services
of the Trustee hereunder, or the Property or any income earned from investment
of the Property, except for expenses and losses resulting from the Trustee's
gross negligence or willful misconduct. Promptly after the receipt by the
Trustee of notice of demand or claim or the commencement of any action, suit
or
proceeding, pursuant to which the Trustee intends to seek indemnification
under
this paragraph, it shall notify the Company in writing of such claim
(hereinafter referred to as the "Indemnified
Claim").
The
Trustee shall have the right to conduct and manage the defense against such
Indemnified Claim, provided,
that
the Trustee shall obtain the consent of the Company with respect to the
selection of counsel, which consent shall not be unreasonably withheld. The
Trustee may not agree to settle any Indemnified Claim without the prior written
consent of the Company. The Company may participate in such action with its
own
counsel; and
2
(c) Pay
the
Trustee an initial acceptance fee of $1,000 and an annual fee of $3,000 (it
being expressly understood that the Property shall not be used to pay such
fee).
The Company shall pay the Trustee the initial acceptance fee and first year's
fee at the consummation of the IPO and thereafter on the anniversary of the
Effective Date. The Trustee shall refund to the Company the fee (on a pro
rata
basis) with respect to any period after the liquidation of the Trust Fund.
The
Company shall not be responsible for any other fees or charges of the Trustee
except as may be provided in paragraph 2(b) hereof (it being expressly
understood that the Property shall not be used to make any payments to the
Trustee or be subject to any setoff or claim by the Trustee, under such
paragraph or under any other section of this Agreement).
3. Limitations
of Liability.
The
Trustee shall have no responsibility or liability to:
(a) Take
any
action with respect to the Property, other than as directed in paragraph
1
hereof and the Trustee shall have no liability to any party except for liability
arising out of its own gross negligence or willful misconduct;
(b) Institute
any proceeding for the collection of any principal and income arising from,
or
institute, appear in or defend any proceeding of any kind with respect to,
any
of the Property unless and until it shall have received instructions from
the
Company given as provided herein to do so and the Company shall have advanced
or
guaranteed to it funds sufficient to pay any expenses incident
thereto;
(c) Change
the investment of any Property, other than in compliance with paragraph
1(c);
(d) Refund
any depreciation in principal of any Property;
(e) Assume
that the authority of any person designated by the Company to give instructions
hereunder shall not be continuing unless provided otherwise in such designation,
or unless the Company shall have delivered a written revocation of such
authority to the Trustee;
(f) The
other
parties hereto or to anyone else for any action taken or omitted by it, or
any
action suffered by it to be taken or omitted, in good faith and in the exercise
of its own best judgment, except for its gross negligence or willful misconduct.
The Trustee 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 Trustee), 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 Trustee, in good faith, to be
genuine and to be signed or presented by the proper person or persons. The
Trustee shall not be bound by any notice or demand, or any waiver, modification,
termination or rescission of this agreement or any of the terms hereof, unless
evidenced by a written instrument delivered to the Trustee signed by the
proper
party or parties and, if the duties or rights of the Trustee are affected,
unless it shall give its prior written
consent
thereto;
3
(g) Verify
the correctness of the information set forth in the Registration Statement
or to
confirm or assure that any acquisition made by the Company or any other action
taken by it is as contemplated by the Registration Statement; and
(h) Pay
any
taxes on behalf of the Trust Account (it being expressly understood that
the
Property shall not be used to pay any such taxes and that such taxes, if
any,
shall be paid by the Company from funds not held in the Trust
Account).
4. Termination.
This
Agreement shall terminate as follows:
(a) If
the
Trustee gives written notice to the Company that it desires to resign under
this
Agreement, the Company shall use its reasonable efforts to locate a successor
trustee,
during
which time the Trustee shall continue to act in accordance with this
Agreement.
At such
time that the Company notifies the Trustee that a successor trustee has been
appointed by the Company and has agreed to become subject to the terms of
this
Agreement, the Trustee shall transfer the management of the Trust Account
to the
successor trustee, including but not limited to the transfer of copies of
the
reports and statements relating to the Trust Account, whereupon this Agreement
shall terminate; provided,
however,
that,
in the event that the Company does not locate a successor trustee within
ninety
days of receipt of the resignation notice from the Trustee, the Trustee may
submit an application to have the Property deposited with the United States
District Court for the Southern District of New York and upon such deposit,
the
Trustee shall be immune from any liability whatsoever;
(b) At
such
time that the Trustee has completed the liquidation of the Trust Account
in
accordance with the provisions of paragraph 1(i) hereof, and distributed
the
Property in accordance with the provisions of the Termination Letter, this
Agreement shall terminate except with respect to Paragraph 2(b); or
(c) On
such
date after _____________, 2007 (unless the Company has delivered a copy of
an
executed letter of intent, agreement in principle or other definitive agreement
to the Trustee prior to _________________, in which case, such date shall
be
extended until ___________, 2007), when the Trustee deposits the Property
with
the United States District Court for the Southern District of New York in
the
event that, prior to such date, the Trustee has not received a Termination
Letter from the Company pursuant to paragraph 1(i).
4
5. Miscellaneous.
(a) The
Company and the Trustee each acknowledge that the Trustee will follow the
security procedures set forth below with respect to funds transferred from
the
Trust Account. Upon receipt of written instructions, the Trustee will confirm
such instructions with an Authorized Individual at an Authorized Telephone
Number listed on the attached Exhibit
C.
The
Company and the Trustee will each restrict access to confidential information
relating to such security procedures to authorized persons. Each party must
notify the other party immediately if it has reason to believe unauthorized
persons may have obtained access to such information, or of any change in
its
authorized personnel. In executing funds transfers, the Trustee will rely
upon
account numbers or other identifying numbers of a beneficiary, beneficiary's
bank or intermediary bank, rather than names. The Trustee shall not be liable
for any loss, liability or expense resulting from any error in an account
number
or other identifying number, provided
it has
accurately transmitted the numbers provided.
(b) This
Agreement 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.
It may
be executed in several counterparts, each one of which may be delivered by
facsimile transmission and each of which shall constitute an original, and
together shall constitute but one instrument.
(c) This
Agreement contains the entire agreement and understanding of the parties
hereto
with respect to the subject matter hereof. This Agreement or any provision
hereof may only be changed, amended or modified by a writing signed by each
of
the parties hereto; provided, however, that no such change, amendment or
modification may be made without the prior written consent of Maxim, who,
along
with the other underwriters of the IPO, the parties specifically agree, are
and
shall be a third-party beneficiary for purposes of this Agreement. As to
any
claim, cross-claim or counterclaim in any way relating to this Agreement,
each
party waives the right to trial by jury.
(d) The
parties hereto consent to the jurisdiction and venue of any state or federal
court located in the State and County of New York for purposes of resolving
any
disputes hereunder. The parties hereto irrevocably submit to such jurisdiction,
which jurisdiction shall be exclusive. The parties hereto hereby waive any
objection to such exclusive jurisdiction and that such courts represent an
inconvenient forum.
(e) Any
notice, consent or request to be given in connection with any of the terms
or
provisions of this Agreement shall be in writing and shall be sent by express
mail or similar private courier service, by certified mail (return receipt
requested), by hand delivery or by facsimile transmission:
5
if to the Trustee, to:
American
Stock Transfer & Trust Company
00
Xxxxxx
Xxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attn:
Xxxxxxx X. Xxxxxx, Esq.
Fax
No.:
(000) 000-0000
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
in
either
case with a copy to:
Maxim
Group LLC
000
Xxxxxxxxx Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attn:
Xxxxxxxx Xxxxxx
Fax
No.:
(000) 000-0000
(f) This
Agreement may not be assigned by the Trustee without the prior consent of
the
Company.
(g) Each
of
the Trustee and the Company hereby represents that it has the full right
and
power and has been duly authorized to enter into this Agreement and to perform
its respective obligations as contemplated hereunder. The Trustee acknowledges
and agrees that it shall not make any claims or proceed against the Trust
Account, including by way of set-off, and shall not be entitled to any funds
in
the Trust Account under any circumstance.
(h) Each
of
the Company and the Trustee hereby acknowledge that Maxim is a third party
beneficiary of this Agreement.
[Remainder
of Page Intentionally Left Blank]
6
IN
WITNESS WHEREOF, the parties have duly executed this Investment Management
Trust
Agreement as of the date first written above.
AMERICAN
STOCK TRANSFER & TRUST
COMPANY,
as Trustee
By:
__________________________
Name:
Title:
AFFINITY
MEDIA INTERNATIONAL CORP.
By:
___________________________
Name:
Xxxxxx Xxxx
Title: President
7
[LETTERHEAD
OF COMPANY]
[INSERT
DATE]
American
Stock Transfer & Trust Company
00
Xxxxxx
Xxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attn:
Xxxxxxx X. Xxxxxx, Esq.
Re:
Trust
Account No. _______________ Termination Letter
Gentlemen:
Pursuant
to paragraph 1(i) of the Investment Management Trust Agreement between Affinity
Media International Corp. ("Company")
and
American Stock Transfer & Trust Company ("Trustee"),
dated
as of ________, 2005 ("Trust
Agreement"),
this
is to advise you that the Company has entered into an agreement ("Business
Agreement")
with
__________________ ("Target
Business")
to
consummate a business combination with Target Business (a "Business
Combination")
on or
about [INSERT DATE]. The Company shall notify you at least 48 hours in advance
of the actual date of the consummation of the Business Combination
("Consummation
Date").
In
accordance with the terms of the Trust Agreement, we hereby authorize you
to
commence liquidation of the Trust Account to the effect that, on the
Consummation Date, all of funds held in the Trust Account will be immediately
available for transfer to the account or accounts that the Company shall
direct
on the Consummation Date.
On
the
Consummation Date (i) counsel for the Company shall deliver to you written
notification that the Business Combination has been consummated and (ii)
the
Company shall deliver to you written instructions with respect to the transfer
of the funds held in the Trust Account ("Instruction
Letter").
You
are hereby directed and authorized to transfer the funds held in the Trust
Account immediately upon your receipt of the counsel's letter and the
Instruction Letter, in accordance with the terms of the Instruction Letter.
In
the event that certain deposits held in the Trust Account may not be liquidated
by the Consummation Date without penalty, you will notify the Company of
the
same and the Company shall direct you as to whether such funds should remain
in
the Trust Account and distributed after the Consummation Date to the Company.
Upon the distribution of all the funds in the Trust Account pursuant to the
terms hereof, the Trust Agreement shall be terminated.
In
the
event that the Business Combination is not consummated on the Consummation
Date
described in the notice thereof and we have not notified you on or before
the
original Consummation Date of a new Consummation Date, then the funds held
in
the Trust Account shall be reinvested as provided in the Trust Agreement
on the
business day immediately following the Consummation Date as set forth in
the
notice.
A-1
Very
truly yours,
AFFINITY
MEDIA INTERNATIONAL CORP.
By:
_________________________________
Name:
Title:
By:
_________________________________
Name:
Title:
cc: Maxim
Group LLC
A-2
[LETTERHEAD
OF COMPANY]
[INSERT
DATE]
American
Stock Transfer & Trust Company
00
Xxxxxx
Xxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attn:
Xxxxxxx X. Xxxxxx, Esq.
Re:
Trust
Account No. _______________ Termination Letter
Gentlemen:
Pursuant
to paragraph 1(i) of the Investment Management Trust Agreement between Affinity
Media International Corp. ("Company")
and
American Stock Transfer & Trust Company ("Trustee"),
dated
as of __________, 2005 ("Trust
Agreement"),
this
is to advise you that the Board of Directors of the Company has voted to
dissolve and liquidate the Trust Account. Attached hereto is a copy of the
minutes of the meeting of the Board of Directors of the Company relating
thereto, certified by the Secretary of the Company as true and correct and
in
full force and effect.
In
accordance with the terms of the Trust Agreement, we hereby authorize you,
to
commence liquidation of the Trust Account. You will notify the Company and
JPMorgan Chase NY Bank ("Designated
Paying Agent")
in
writing as to when all of the funds in the Trust Account will be available
for
immediate transfer ("Transfer
Date").
The
Designated Paying Agent shall thereafter notify you as to the account or
accounts of the Designated Paying Agent that the funds in the Trust Account
should be transferred to on the Transfer Date so that the Designated Paying
Agent may commence distribution of such funds in accordance with the Company's
instructions. You shall have no obligation to oversee the Designated Paying
Agent's distribution of the funds. Upon the payment to the Designated Paying
Agent of all the funds in the Trust Account, the Trust Agreement shall be
terminated.
[Remainder
of Page Intentionally Left Blank]
B-1
Very
truly yours,
AFFINITY
MEDIA INTERNATIONAL CORP.
By:
________________________________
Name:
Title
By:
________________________________
Name:
Title:
cc: Maxim
Group LLC
B-2
EXHIBIT
C
AUTHORIZED
INDIVIDUAL(S) AUTHORIZED
FOR
TELEPHONE CALL BACK TELEPHONE
NUMBER(S)
COMPANY:
Affinity
Media International Corp.
00000
Xxxxxxxx Xxxx., Xxxxx 0000
Xxx
Xxxxxxx, XX 00000
Attn:
Xxxxxx Xxxx, President (000)
000-0000
TRUSTEE:
American
Stock Transfer & Trust Company
00
Xxxxxx
Xxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attn:
Xxxxxxx X. Xxxxxx, Esq. (000)
000-0000
C-1
